Friday, September 26, 2008

Washington Mutual & John McCain

Well, it is official, but no surprise to readers of the American Energy Crisis that Washington Mutual has collapsed. 

The Flame Out in the McCain campaign just goes to show that it does not pay to be a member of the Party in the White House when the the world appears to be coming apart at the seems.  (Looking back on my decision early in my career to work on Wall Street rather than a political operative working in campaigns feels better all the time...)  See?  Life's not fair, even to establishment member politicians.

But lets get back to the debate on bank funding bill going on in Washington.

This is some high stakes stuff.  In their desire to "punish" the "evil doers" (Corporate CEO's), the American public is asking their representatives to vote "NO" or HELL NO".  Be careful what you ask for, you may just get it.

America's most important contribution to the world economy, at this time in history, is the American Dollar and the export thereof.  We are as close to US$/Banking collapse as one can possibly get.

Stay tuned.

Mentatt (at) yahoo (d0t) com


SMGewanter said...

History is replete with political leaders and wannabes telling the public that the sky has begun to fall, and will crush them all unless they are immediately given virtually unlimited power to "solve" the problem.

Invariably, when that power is given the public is much worse off than before and armegeddon comes anyway.

Der Alte

Anonymous said...

"They [the US] get our oil and give us a worthless piece of paper." - President Ahmadinejad of Iran.

Pretty sad when this yahoo has more credibility than the whole US political and financial leadership....

Anonymous said...

Its going to collapse eventually. Better to get it over with sooner rather than later. The higher you climb the harder you fall.

Look at it as a revolution. Because thats what it is. The bankers and politicos better find a good place to hide.

Bureaucrat said...

Wachovia is next!!!

Maybe a little less credit wouldn't be such a bad thing ....

(and Iran doesn't get any dollars from us. We haven't imported oil from Iran for decades.)

Dan said...

Why would one need to want to punish Wall Street to oppose the bailout? Isn’t preserving the republic a good enough reason?

Also, our creditors are already getting nervous and China wants a no dumping agreement on U.S. debt amongst major U.S. creditors. Since the first one out the door would get a much better deal than latecomers there is no reason to expect anything but a mad rush to the door if this gets started.

A lot a people are falling victim to tunnel-vision, there are other problems in the larger picture that are just as if not more important in the long run. Even in combat one needs to pause and look around every so often least they get outflanked and killed while focusing solely on the original problem.

Anonymous said...

The USS Titanic will default. As Roubini says "deleveraging will not be denied".

Now it's a matter of whether our so-called "leaders" will be allowed a last hail-mary pass across the casino betting floor which will likely fail- and leave our kids with a few extra trillion in obligations.

I would rather take it on the chin now and not pass on a toxic behemoth to the future generations.

Anonymous said...

Lets think about this for a bit. If we bail them out we just delay this horror show for a while. Maybe a couple of months maybe a couple of years. If we don't bail them out we collapse now or in a couple of months. Either way we collapse but the bailout buys us a bit more time. So given that we are all going to die eventually do we chose to die now or later? Tough choices but most people would chose to postpone the inevitable.

Likely what is going to happen is that the bailout will come but it will be so watered down with changes that it will not have any impact when it does come. Then I would expect a collapse anyway. Even if it is not watered down here is what is going to happen.

The system is broken beyond saving and the insiders know it. They are scurrying for the exits. They will be soaking up any liquidity they can get their hands on and putting it into their own pockets - not into strengthening their companies. So most of the bailout money will be bailing out the insiders who were too slow in taking care of themselves prior to this crisis. We will not be rebuilding the financial system but propping open the exit door for a couple of more months. Given that the system cannot be fixed what do we do? Is the money well spent to delay the collapse or is it better spent on something else? What else? I have no idea. When the system destabilizes to this point with rapidly escalating failure rate of bigger and bigger financial institutions it is really every man for themselves. When even the size is no guarantee of safety, the air is coming out of the room as everyone takes a deep breath and holds it in. No global banking institution will survive unscathed or without being propped by government.

I look at politics as irrelevant at this point. As an appendage to financial and military institutions it will be paralyzed by ineffectual action, reduced overseas borrowing and reduced tax revenues. I am going to vote for Obama but I am sickened by his choice of Joe Bidden. Expect the same old Washington in a new wrapper.

I think we are about to learn the meaning of humility. We have gotten too big for our breeches. When I was in the high tech world I would meet some young people at companies like Netscape and Yahoo and BEA and Siebel, etc. I was a CEO of a 160 person company and they treated me like I was a servant. They thought that because they got lucky by going to the right schools, in the right country and being hired by the right company that they were masters of the universe. They thought it was them who were that good, and smart and awesome. That it was them who made their companies great and not the other way around. Later, after the dot com crash, they found out that it was not them after all and some of them called me to try to get work at my company. But after the crash I had no room for former masters of the universe. So it will be again. We will all find out how lucky we were with our once in history endowment of fossil fuels and how we blew it on stupid trinkets and wasteful consumption. All our supposed ingenuity and genius will avail us nothing. This is all good character building stuff and a great learning experience. We should be thankful for these lessons. But I doubt that most will see it quite the same way.

Best regards,
Chuck H.