The Weak In Rock

So, what does it take to get me to crawl out of my blogging hidey-hole?  Oh, nothing much, just a near total collapse of the US credit & financial system.

Seriously folks, this is very, very bad.  And naturally, since it’s very, very bad, the Government needs to get involved in order to make it truly, horribly bad.  Here’s a very good summary (in layman’s terms) of what’s happening: http://theamericanscene.com/2008/09/19/welcome-to-history

Money quote:

3. Promulgated a temporary ban on naked shortselling for about 800 financial stocks (in related news, the new recommended medical practice when you discover that you have a fever is to smash the thermometer against the wall, since this makes the problem go away).

And Paul Krugman, who has, by the way, been trying to tell us this particular sky was going to fall for, oh, four or five years now, has chimed in to explain exactly why this massive bailout plan is a bad deal all around:

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

Of course no one should really be surprised that the Bush Administration would have no intention of in any way punishing the cretins who caused this problem.  The line I’ve heard over and over since this bailout plan was leaked on Friday is that this plan is a perfect example of Bush era economics - privatize the profits when things are going well and socialize the consequences when things are going badly.

Somehow I don’t think Milton Friedman would be too happy about this.

Ok, all right, I know.  This crisis has the potential, if the Government did nothing, to be devastating for the average schlubs of America (and actually most of the world, since financial markets are so entwined with one another).  But and however, the solutions so far offered by the Bush Administration are near completely letting the architects of this mess off the hook.  The S&L crisis of the late 80’s was bad for taxpayers, but ultimately the actions of the Government in that situation were the prudent and sensible ones, and the individuals responsible were punished (a certain sibling of the current President included - Neil Bush has been barred for participating in any banking activities since).  If the current plan of the Government to handle this crisis is the sum total of what we can expect to be done then the perpetrators of this mess will continue in their jobs, no doubt patting themselves on the backs for getting the taxpayers to absorb a good portion of their losses.

Technorati Tags: US credit & financial system, Paul Krugman, bailout plan, Milton Friedman, The S&L crisis, Neil Bush

Good lord.  So much for my plan to write more this year.

So, what, you may ask, has awakened me from my blogging slumber?  Oh, nothing much.  Just a RAND Corporation report that repeats crap I’ve been saying since late 2001.  The report is the result of a research analysis into how terrorist groups have ceased to be historically between 1968 and the present.   Seems that terrorist organizations are slightly more likely to cease operations because they achieve victory than due to military force exerted against them.

I’ll let you mull that one over for a moment.

Done?

Yup, we’re more likely, statistically speaking, to lose the so-called war on terror than we are to win it.   Of course that’s not really the main point of the study.  The realy money-shot is that terrorist organizations are actually most often put on the shelf of history because of either a negotiated political settlement or policing and intelligence work.  Military efforts to combat terrorism only succeed about 7% of the time.

The British, by the way, figured this out right out the gate (granted, they’ve been dealing with guerilla wars and terrorists since, oh, about 1776, so they ought to have learned a little about it by now).  The US government still hasn’t got even a shadow of a clue on this subject.  That’s why I’m making a small effort to bring this report to your attention, gentle readers.  Anyone who supports a continuation of the so-called war on terror needs to be denied your vote this fall.  And I’m not just talking about McCain and Obama.  There are House and Senate seats up for grabs in November, and we need to put the boot in to anyone who thinks we’re spending our money and time wisely with this alleged war.

My favorite quote from the summary of the RAND report:

Key to this strategy is replacing the war-on-terrorism orientation with the kind of counterterrorism approach that is employed by most governments facing significant terrorist threats today. Calling the efforts a war on terrorism raises public expectations — both in the United States and elsewhere — that there is a battlefield solution. It also tends to legitimize the terrorists’ view that they are conducting a jihad (holy war) against the United States and elevates them to the status of holy warriors. Terrorists should be perceived as criminals, not holy warriors.

Emphasis mine.

Read the report and summary here.

Technorati Tags: RAND Corporation, terrorism