The Fundamentalists of the Economy Are Strong
Kenneth Rogoff, Harvard professor and former chief economist of the International Monetary Fund, says the U.S.A. needs a $1 trillion bailout.
Today the Bush Administration announced that a deal has been made. In return for a liquidity injection from the Peoples Republic of China and the Japanese Central Bank, the U.S. would change its name to the United Socialist States of America (USSA). Hong Kong, Taiwan, and South Korea would be annexed by the PRC, while the Philippines, Indonesia, Hawaii, Malibu, and the Los Angeles Angels would merge with the Japanese Co-Prosperity Sphere. Australia would be given over to the two nations as a dumping ground for waste disposal and malcontents. Mexico is reportedly interested in taking a minority share of the package in return for Arizona, New Mexico, and Colorado.
On the brighter side, instead of bean soup the Senate cafeteria will be serving sushi and dim sum.
In related news, Republican presidential candidate John McCain said he would never sell America short, he would only sell it long. Running mate Sarah Palin said she was prepared to deal with the nation's finances, since she is adept at managing her grocery coupons.
One of the most extraordinary features of the past month is the extent to which the dollar has remained immune to a once-in-a-lifetime financial crisis. Kenneth Rogoff
What does he think? Holders of dollars are going to exchange them for Icelandic krónur? Idiot!
September 18, 2008 9:07 PM | Reply | Permalink
I'd buy gold and silver. But that's just me.
Call me an idiot, if you want.
-- ARG
September 18, 2008 9:38 PM | Reply | Permalink
If you had $2+ trillion dollars -- and that's just the Chinese -- and you bought gold and silver with it, I'd definitely call you an idiot -- or maybe just a Hunt brothers wannabe.
September 18, 2008 9:57 PM | Reply | Permalink
If I had $2+ trillion (dollars -- isn't that redundant, with the "$" out in front?), you could call me anything you want and I wouldn't give a damn.
And I'm no Hunt Brothers wannabe. Plus I'm too conservative to use leverage. (Of course, with $2T I wouldn't need any leverage, would I?)
-- ARG
September 18, 2008 11:18 PM | Reply | Permalink
No -- but you sure as hell would have cornered the market -- and then, having bid it up to -- what? say conservatively, $3000/oz. -- what would you do with all that gold?
September 18, 2008 11:57 PM | Reply | Permalink
dump it!!!!!!!!
September 19, 2008 3:12 AM | Reply | Permalink
Brad Setser guesses that the dollar's advance is traceable to "the quiet bailout. The worst the dollar does, the more central banks tend to buy."
He also guesses that as foreign markets have fallen (especially emerging markets) American investors have sold and brought their money home.
September 19, 2008 12:10 PM | Reply | Permalink
Dr. Rotwang,
Couldn't we just nationalize Wall St.? I know it's stupid and evil when tin-pot Latin American presidents rely upon their 65% approval ratings to steal private property like oil wells and bananas and DeLorean's plantation, but we are an exceptional people. Maybe we could leave BofA and GoldmanSachsMorganStanley in private hands to compete with USFed/Treasury like the wizard health plans being floated? I think we're paying too much to people who don't even have an Air Force to buy their junky stuff. So redeploy from Iraq to lower Manhattan; those brokers are cowards and are way outgunned.
September 18, 2008 9:42 PM | Reply | Permalink
This is just something me and shooter242 have been working on.
September 18, 2008 9:44 PM | Reply | Permalink
All we have to do is drill things for stuff and everything will be fine. The Palinbot 3600 says so.
September 18, 2008 10:58 PM | Reply | Permalink
Rotwang on a roll....
September 18, 2008 11:28 PM | Reply | Permalink
I'll take mine on a croissant, please.
September 18, 2008 11:55 PM | Reply | Permalink
September 19, 2008 3:46 AM | Reply | Permalink
Completely off topic, we now learn -- it was probably published in the Federal Register but did anyone see it in the MSM -- that in 2004 the SEC adopted a special regulation exempting 5 broker-dealer firms from the old (1975) regulation limiting leverage to 12-1 and permitting them to gear up to 40-1.
The firms: Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.
Three down and two to go.
Way to go Chairman Cox.
September 19, 2008 9:36 AM | Reply | Permalink
And why stop at 40-1. That seems awfully arbitrary. Why not 400-1. 4000-1. I mean, it's not like these numbers or rules derive from any sense of 'risk mitigation' or actuarial tables...why not 4,000,000 to 1? I mean, doesn't the value of collateral always rise--immutably?
Anyway, if anything DOES go wrong, we will be either on our Yacht or in the Chateau in the South of France, sipping machiato, by then...let the savages cannibalize one another...
September 19, 2008 10:13 AM | Reply | Permalink
Haven't seen the 2004 reg in the MSM, but the Economist's View has it under discussion, along with a President's ability (or not) to fire the SEC Chair.
Have you ever looked at the Office of the Comptroller of the Currency's webpage or read any of their testimony to Congress? These are the Masters of the Masters of the Universe. I want what they're smoking.
September 19, 2008 10:36 AM | Reply | Permalink
Ellen,
Wall Street had an orgasm when Bush appointed Cox to head the SEC.
September 19, 2008 4:24 PM | Reply | Permalink
It's like I have been saying. The Chinese have been waging an asymetrical war against us. They used our own capacity for greed as the weapon that has now turned us into communists. Now that they brought us down by giving us a reason to sell them junk bonds in the first place, they are willing to come to our aid--which makes us completely and utterly dependent upon them. Anybody see any new stiff trade restrictions against China going up soon? How about protests against the Chinese selling organs harvested from the Falun Gong against their will?
Will the public ever, ever awaken from their coma? Would the situation be different if we had not invaded and occupied Afghanistan and Iraq?
September 19, 2008 10:09 AM | Reply | Permalink
Oh come on. If you haven't noticed, it's the US that wages asymmetrical war on others. Except we call it the Bush Doctrine.
The Chinese haven't done friggin' anything except try to haul themselves out of poverty, avoid conflict in their sphere, learn to play the game of world power the way we taught them, and watch us fall over ourselves like drunken Bush at the Olympics. Enough with the China hysteria.
September 19, 2008 10:20 AM | Reply | Permalink
Have you studied Chuang Tse? Have you noticed that the Chinese bought every junk bond offered up for sale. So much that the Mortgage Brokers scoured America looking for ANYONE who would take a mortgage. NO documentatin. NO problem. NO down payment. NO problem. Over appraised property. NO problem.
You think the Chinese did not know they were buying junk? This is called--long term strategy.
Who gets to call all the shots now? Who are the new landlords of America? I mean--think about it. Don't react emotionally. Think strategically. Who are the actors? Who benefits?
September 19, 2008 10:49 AM | Reply | Permalink
There is no need to reach into Chinese history to see very clearly that Americans elected the Monkey King all by ourselves. All I'm saying.
September 19, 2008 12:11 PM | Reply | Permalink
If you are proposing that Americans are stupid you will get no argument from me. But even the dumbing down of American is a form of Aymetrical warfare by the ruling class. Who is easier to rable rouse, a stupid American or a highly educated, skeptical American? Who is easier to frighten, a stupid American or a highly educated, skeptical American? Who is easier to manipulate and control,a stupid American or a highly educated, skeptical American? Who is easier to turn into a Zombie consumer of useless crap, a stupid American or a highly educated, skeptical American? Can you see how increasing the number of stupid Americans is a strategy to increase the power of the Ruling Class. Think about it. You think all of this is just chance. Just an accident of Chaos. You think nobody is staying up late trying to figure out how to game the system? Ni hao?
September 19, 2008 1:30 PM | Reply | Permalink
c4,
exactly. The Republican Party's worst nightmare is a politically sophisticaetd electorate.
September 19, 2008 4:26 PM | Reply | Permalink
This is hardly a hysterical analysis. Are you familiar with Chinese history?
September 19, 2008 10:51 AM | Reply | Permalink
Who are those two Asian guys in the photo behind Bush? They are not Hu Jintao, Wen Jiaobao, or Yasuo Fukuda... Are they just two random Asian men?
September 19, 2008 10:24 AM | Reply | Permalink
Gentleman on the left is Zhou Xiaochuan, governor of the People's Bank, China's central bank, on the right is Toshihiko Fukui of the Bank of Japan. The significance of the latter's name is obvious.
September 19, 2008 11:06 AM | Reply | Permalink
Good call.
September 19, 2008 12:05 PM | Reply | Permalink
Thanks for clarifying that. Let me ask you -- would you prefer they bought Euros instead?
September 19, 2008 12:21 PM | Reply | Permalink
I for one welcome our new Asian overlords.
September 19, 2008 12:40 PM | Reply | Permalink
Ni hao!
September 19, 2008 1:25 PM | Reply | Permalink
You DO understand that the Europeans were not selling mortgage backed securities, don't you?
Are you aware that it is mostly Americans in this whole wide world that own their own homes, and that Fannie and Freddie exist to creat securites backed by those mortgages? Are you familiar with the world of International Finance? Can in conceive how bright guys might see the game of finance as a weapon?
How do you think a Heroin dealer gets new customers? How do you think the Tobacco industry gets new customers. Are you aware that during the previous world wars, every kit of rations for soldiers contained two cigarettes a piece, donated for the cause by American Tobacco companies? What lesson did the Chinese learn from the British, after they refused to trade with the British. What was the lesson that the British taught them?
September 19, 2008 1:23 PM | Reply | Permalink
Can in conceive how bright guys might see the game of finance as a weapon?
Vincent Mancini: Don Lucchesi, you are a man of finance and politics. These things I don't understand.
Don Lucchesi: You understand guns?
Vincent Mancini: Yes.
Don Lucchesi: Finance is a gun. Politics is knowing when to pull the trigger.
September 19, 2008 4:52 PM | Reply | Permalink
You are hilarious!
September 19, 2008 11:23 PM | Reply | Permalink
Rotwang,
Since they were appearing with Bush, I thought the two guys were John Dillinger and Willy Sutton.
Ole dopey me.
September 19, 2008 4:28 PM | Reply | Permalink
Have you noticed that the Chinese bought every junk bond offered up for sale.
Did you notice who concieved and offered those junk bonds for sale? Or did the clever Celestials make us do it with their dark asymetrical arts?
What was the lesson that the British taught them? (the Chinese)
We'll sell our damned opium wherever we want, and you Chinese can't stop us?
Using a "heroin pusher" as an example was not wise in this case.
September 19, 2008 3:34 PM | Reply | Permalink
Gosh, I never get anything right at first. c4Logic, are you trying to say that our US Rich Peoples are in "cahoots" with the Orientals?
September 19, 2008 3:45 PM | Reply | Permalink
Mooser,
I expect the day will come when these Orientals will say;
"The United States will no longer determine their destiny, we will."
September 19, 2008 4:31 PM | Reply | Permalink
John, it looks like the Chinese have found an American weakness much more powerful than opium craving.
But it might be worth the loss of destiny control if the Chinese food is first-rate. General Tso, I will fight to the death! His chicken, on the other hand, I'm not sure I can resist.
September 19, 2008 6:07 PM | Reply | Permalink
BTW, where the hell did TPM get my picture for the avatar? I can't recall having one taken.
September 19, 2008 6:09 PM | Reply | Permalink