The "New" New Deal
I am having a hard time keeping up with all of the bailouts and special facilities created for dealing with this crisis. Am I missing any?
- Bear Stearns
- Economic Stimulus progam
- Housing Bailout Program
- Fannie & Freddie
- AIG
- No Short selling rules
- Fed liquidity programs (Term Lending facility, Term Auction facility)
- Money Market fund insurance program
- Special Loans for GM & Ford
- New RTC type program
If you are a fan of irony, consider this: The conservative movement has utterly hated FDR, and his New Deal programs like Medicaid, Social Security, FDIC, Fannie Mae (1938), and the SEC for nearly 80 years. And for the past 8 years, a conservative was in the White House, with a very conservative agenda. For something like 16 of the past 18 years, the conservative dominated GOP has controlled Congress. Those are the facts.
We now see that the grand experiment of deregulation has ended, and ended badly. The deregulation movement is now an historical footnote, just another interest group, and once in power they turned into socialists. Indeed, judging by the actions of the conservatives in power, and not the empty rhetoric that comes out of think tanks, the conservative movement has effectively turned the United States into a massive Socialist state, an appendage of Communist Russia, China and Venezuela.
To paraphrase Floyd Norris, we have become Marxists, but of the Groucho, not Karl, variety . . .
Friday, September 19, 2008 | 10:02 AM | Permalink
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Not to worry, cognitive dissonance among the conservative crowd will find a way to blame all of this on Clinton.
Posted by: Nobody | Sep 19, 2008 10:07:52 AM
I think it's hardly a coincidence that these most recent and massive bailouts have been instituted right at a time that the Wall St. problems were bringing economic issues to the fore, and were starting to turn the campaign in Obama's favor. Give Paulson and his friends credit: they know what their job is (protect their own), and they took care of business quickly, at least in a short term sense.
Now, with the market deliriously happy that the can has been kicked far down the road past election day, the GOP can get back to its main job of capturing the Presidency. If you think the campaign season has been ugly and/or stupid up till now, you ain't seen nothing yet.
Posted by: blustatedon | Sep 19, 2008 10:12:03 AM
Sounds like Chris Cox, a worthy heir to Mr. Magoo notable Harvey Pitt, is the first head on the chopping block.
Posted by: Chief Tomahawk | Sep 19, 2008 10:13:18 AM
turn to page 13 in the japanese manuscript of deflation. right there in black and white gov directly intervening to support equity prices. we are following the script page by page. eventual outcome is asset prices far below anyone ever dreams. i'd say s+p 650
Posted by: harold hecuba | Sep 19, 2008 10:14:38 AM
Hope for Homeowners (the HOLC adaptation passed by Dodd/Frank).
Posted by: RedSox04 | Sep 19, 2008 10:14:40 AM
This has got to be one of the saddest days in life.
I remember in 1973 or 74 when I drove into a major city and applied for stock broker position. I talked to a really nice guy. He said something like, look around, we're losing brokers. We're just hanging on. I later realized that he was feeling in serious distress and pain himself. It made a lasting impression.
In 2007-08,we have experienced no pain like the 73-75 recession. Everything is to avoid consequences of our own actions.
When my relative's brokerage went broke in 1907, he made everyone whole out of his personal funds. It was a big deal. Something maybe today we would call reputation risk.
The ethical dimensions of this are just staggering.
As to terrorism, when I went out to pick up my newspaper this morning, the Border Patrol and city police were 2 houses down arresting illegal immigrants. (Yes, I live on a border town where there is a big fence along the border already) "What's your name?" For all we knew, he could have been Osama himself with a portable nuclear weapon in his backpack or a vial of anthrax. So if terrorists want to harm us, they still can. They don't need to do it through the stock market.
Posted by: cloudy | Sep 19, 2008 10:17:36 AM
You forgot to mention autos! How unAmerican of you...
Personally, I am waiting for someone to save pharma and entertainment; they must be feeling kind of lonely and unappreciated.
Posted by: jon | Sep 19, 2008 10:18:26 AM
Can't you americans do something to stop this robbery? call your congressman...do something!
Wall Street is robbing you and we in the rest of the world (you directly, to us in the rest of the world indirectly thru the inflation caused by the debase of the US Dollar). America is now a negative force in the world.
Posted by: LooksLikeItIsTooLateToWakeUpAmerica | Sep 19, 2008 10:18:44 AM
I did nothing to create this mess. Go seize all the assets that were paid with Wall Street bonuses in the last 5 years and auction that crap off instead of taking from our grand kids.
Posted by: br549 | Sep 19, 2008 10:20:27 AM
Barry,
Let me start - I am no fan of the current administration or either political party.
To blame this on deregulation (lack of government involvement) is to miss the point of what created the problem – which you have pointed out yourself many times in this blog. The reason we are in the mess we are in is GOVERNMENT involvement.
Reason One - If the easy Al and the government would not have started us down this path of bailouts (starting with Chrysler) and up to today we would not be in this situation. A moral hazard would have existed and this would have blown up long ago on a much smaller scale.
Reason Two - If easy Al and the government had not kept interest rates so low for so long, printed money as if there was no issue with doing so we would not have blown such a bubble into the housing/financial industries.
Reason Three - If the government would not have pushed Fannie/Freddie to ease up on standards so that everyone could buy a house we would not have as big an issue with bad mortgages.
Now I am the first to blame individuals for getting themselves in any situation the are personally in and say the CEOs were/are hypocritical greedy whores.
It was not the lack of government that created this situation it was the GOVERNMENT involvement that created the environment situation.
Posted by: Jeff | Sep 19, 2008 10:21:13 AM
trading halted on SKF? I can't get a quote update beyond 9:33 AM.
Posted by: E | Sep 19, 2008 10:21:49 AM
The Mother of All Bailouts = The Death of Fiscal Conservatism
"And this is a Republican White House presiding over the Mother of All Bailouts. Every step along the way since stimuluspalooza began last summer, we’ve heard that every bailout step was just a one-off. Each step was supposed to calm the markets. Each new government intervention and allocation of taxpayer dollars was supposed to achieve “stability.” Each new package of goodies rewarding irresponsible behavior and bad financial decisions was supposed to prevent new ones."
Posted by: Michelle Malkin | Sep 19, 2008 10:21:55 AM
In socialism (at least in theory), the people own the means of production and have a major say in how they are run. That clearly isn't what's happening here.
Seems more like we have a plutocracy.
The deregulation state is dead, having been a colossal failure.
Not sure how this helps McCain. The economy here is terrible. No problems have been resolved except for stopping the market dropping off a cliff.
Posted by: Bob Morris | Sep 19, 2008 10:22:15 AM
This wasn't the effect of deregulation, per se. It was the effect of a total absence of enforcing regulations and standards that existed. Excessive regulation strangles, total lack of regulation and oversight leads to greed that is only limited by opportunity. Opportunity seemed to be decreasing daily due to economic forces promoting deleveraging, but it seems as though our gov has decided to provide more opportunity.
Maybe those Wall Street employees who still exist as of next week might get ill-earned bonuses after all. After last year's RECORD haul, obviously every dollar justified during a total RAPE of our economic system. But wait, some of our esteemed members of Congress held AIG and LEH stock. Who can blame them for protecting their interests going forward? And how COULD Paulson possibly let his buddies at Goldman go down, really?
Posted by: bk | Sep 19, 2008 10:22:26 AM
Socialism for who Barry? The rich of course.
Not me and my kind - I'm a working slob.
Any further news on upcoming investigations and changes in SEC regulations?
Posted by: c. fornmen | Sep 19, 2008 10:23:31 AM
Narrative Fallacy at work, knowing that I do not know what caused it and trying not to "make" a reason allows me to think a little more clear not much but a little. Cramer babbling about financial terrorism is just that babble. We have no clue why these things happen.
Posted by: JT | Sep 19, 2008 10:23:52 AM
"For all we knew, he could have been Osama himself with a portable nuclear weapon in his backpack or a vial of anthrax. So if terrorists want to harm us, they still can. They don't need to do it through the stock market."
Sorry, but you're really talking nonsense here. What on earth does that have to do with Barry's post ? Are you trying to bring out the terrorist boogeyman to scare us all into voting Republican again ?
Posted by: OhNoNotAgain | Sep 19, 2008 10:25:31 AM
and what's amazing is we still have an electorate split 50/50.
Spooky. This country is going over the falls and if we survive you can bet some damn konservative is going to poke his head out of the barrel and claim gravity has a Liberal bias.
the right has become extremely deranged in this country and coming from a family of Goldwater voters I can not for the life of me say how.
Posted by: brion | Sep 19, 2008 10:25:43 AM
Expect mega cognitive dissonance from the conservatives. They know nothing else, and have been taught by Rove and Bush to never admit any wrong.
They will absolutely go down with the ship.
Posted by: Tony Shifflett | Sep 19, 2008 10:26:38 AM
I pay my mortgage on time, have not overextended my self; And what do I get for it? I will have to pay for this list of bailouts until I die.
In hindsight, I should have spent my economic stimulus check on a pallet of Vaseline for me, my children, and grandchildren, and great grandchildren.
Sobering.
Posted by: big al | Sep 19, 2008 10:28:29 AM
I am SO glad someone with a decent web presence has stated what I've been touting for weeks! Thank you Barry for finally calling it like it is! I can't believe the Conservative Base is not up in arms over all this Socialist movement!
Posted by: Joe McCann | Sep 19, 2008 10:29:41 AM
This is the most cynical, desperate charade I can imagine. Who thinks the federal government has the capacity to do this?
Moral Hazard? This is the Treasury and the Fed abandoning their responsibilities to the American people and throwing in with the banks.
The worst of the worst in terms of moral responsibility. These people do not have the right to call themselves public servants any more. There has to be a law.
Posted by: Alan | Sep 19, 2008 10:29:53 AM
Personally I am glad the experiment is over. It's a carbon copy replay of the Hoover years with an out of touch President fiddling while Rome burns...
It will be up to Obama to clean up the mess, and I'm sure that he and his running mate are more than up to the task.
When Joe Sixpack finally realizes the extent of the rape and plunder committed by the assclowns in office, he'll swallow hard and pull the lever for the guys that weren't in power when it happened.
None of which is good for McPalin!
Posted by: musicmatters | Sep 19, 2008 10:30:39 AM
"The grand experiment of deregulation has ended, and ended badly."
Bullshit. There are ups, downs, and manias in the free capitalistic market, but it is a hell of a lot better then than a heavy gov't hand over the long term.
Would we even be in this crisis if the Fed didn't open the monetary floodgates 2003 - 2004? What about the GSE's and their HUD required malinvestments.
Government is the problem, not deregulation.
http://www.youtube.com/watch?v=KX9r-L1gKQc
Posted by: hop | Sep 19, 2008 10:31:38 AM
I just lost a lot of respect for you and your blog. It's true the Republicans have been in office, but to not see the real problem of the Democratic socialistic ideas to plan the economy as the true cause of failure - clearly shows your misguided understanding of economy. Maybe you also recieved some money from Fannie and Freddie like the other leading Dems.
Ron Paul was right, I suggest you re-read what he has been saying and realize the path we are on.
~~~
BR: Curt, I am a huge Ron Paul fan (except his views of government's involvement in private medical decisions)
But the naked truth is this is what happens when ideology replace pragmatism.
Posted by: Curt | Sep 19, 2008 10:34:24 AM
