Next stop: Weimar America?
"That's how we got here -- a near total breakdown of responsibility at every link in our financial chain, and now we either bail out the people who brought us here or risk a total systemic crash." Thomas Friedman - NYT
"Excessively cheap money in the US was a driver of today's crisis," (Angela Merkel, the German chancellor) told the German parliament. "I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis." - Financial Times
A link at Doonesbury led me to this fascinating information.
Big Bailouts, Bigger Bucks - The Big PictureIIf a currency is supposed to have any relation to actual value, when I see these numbers it seems obvious to me that the dollar is entering the territory of the Wiemar Republic Deutsch mark: meaningless paper.
(...)If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let's give this some context. The current Credit Crisis bailout is now the largest outlay In American history. Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures - combined:
• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion
TOTAL: $3.92 trillion
The fear, of course is deflation, but a dollar that once bought victory in WWII and trips to the Moon, but today cannot save a few banks, must be a ticket to coming hyperinflation.
It is impossible to escape certain unpleasant realities of world power
No matter how seductive the figure of Barack Obama might be, glamor cannot offset the drag of worthless money combined with military impotence.
Joseph Nye's "soft power" is just that "soft". The brutal truth is that candy and flowers, a thoughtful word are important rites of seduction, but after these rites are performed, something hard is expected. If the USA cannot "cut the mustard", other, perhaps ruder suitors will be sought and found.
To me these numbers mean that we are living suspended over an abyss, held only in the slippery hands of a fraudulent system.
http://seaton-newslinks.blogspot.com/
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I suspect the choice is not between Weimar and a powerful milataristic country ie Nazi Germany.
An alternative would just be to put up a wall, lock the gates and make our garden grow.
AOBTW the spending which you correctly bemoan has already happened. By the lenders who financed the real estate bubble.And is now in the hands of those who profited from the bubble. What Bernanke, Paulson&Co are doing is putting money back into the economy to replace the funds which those lenders provided to those profiteers.
In a sense it might seem as if a fair strategy would be to recoup those bubble profits from the profiteers. Which is the kind of seductive slogan that has historically powered revolutions from the Terror to the Finland Station.None of which ever achieved that objective always being diverted into unproductive violence to entertain the populace.
Better to recognize we'be been fools, stop being fools and try to become a caring, healthy society instead of a rude suitor.
November 27, 2008 7:57 AM | Reply | Permalink
Maybe to an addlepated lout.
Gentlemen, of course, expect no such thing.
November 27, 2008 8:56 AM | Reply | Permalink
Ladies sure do.
November 27, 2008 12:25 PM | Reply | Permalink
Oy.
"...seductive the figure of Barack Obama..."
Jealous?
The comparison of the financial rescue numbers with the other programs listed is facile but meaningless. The quantities are money exposed to some risk, but not simply spent. It is really like any investment.
Wars are money spent on vanished goods, exploded bombs, ammo expended, planes shot down.
Money spent on Apollo was closer to investment, going directly into manufacture, albeit of exotic machinery. The spinoff benefits of Apollo are not arguable.
The Marshall Plan was more like the financial rescue, but still better considered seed money, venture capital.
WTF is the NASA number? Its entire history?
Louisana Purchase, great deal, in retrospect (not saying that about Alaska).
I don't get the point of the total number. Let's add up the annual number of pigs slaughtered in China, the total number of wolves shot from helicopters in Alaska, the annual number of unwanted pets euthanized, and then let's add in the history of people dying young because of poor sanitation. The total is something, but means nothing.
November 27, 2008 10:00 AM | Reply | Permalink
I didn't do these numbers myself. I got the link from Doonesbury,I suppose the math is correct.
Tom, I'm really disappointed that you refer so flippantly to WWII. We are talking about spending money to free the world from Adolph Hitler. Those were dollars well spent.
Saving the world from fascism, putting a man on the moon... these are the things that history remembers countries and people's for. Obviously, a dollar that could do that cannot be compared to the dollar we possess at the moment... These numbers spell disaster in my book, disaster of "Kunstlerian" dimensions.
November 27, 2008 12:04 PM | Reply | Permalink
Saving the world needs no cost analysis, true. I don't speak flippantly of WW II. I speak of Vietnam and Iraq. Still, the point is that the comparison is invalid, non-comparables.
Spending on infrastructure is no way comparable to spending on war, is no way comparable to investing in shoring up major economic sectors. Whether those efforts are wise is a good question. That the number seems bigger than the mentioned non-comparables is meaningless.
Not news that you did not do the numbers yourself. But you take them as fact and conclude we are doomed. Maybe so, but this is not news. Got anything interesting to tell us? Like when we were doing stupid War on Terror stuff and foreign news sources reported on things American media missed?
November 27, 2008 2:34 PM | Reply | Permalink
This has been today's edition of:
Daily Doom With David
You are really on a tear, Mr. Crazy Man. You are already the blogging equivalent of the guy who roams the streets mumbling to himself and wearing a sandwich board proclaiming THE END IS NEAR. Pull your head out of it and give it a rest before you become the guy in the locked ward screaming "If only they knew the truth!"
Turn off your computer and take a walk. Today is for giving thanks, so look around and find something or someone who deserves your gratitude.
November 27, 2008 12:16 PM | Reply | Permalink
I have fun doing this. I enjoy you guys, I really do. You are much funnier than you think. I am grateful.
November 27, 2008 4:36 PM | Reply | Permalink
Shorter DS: "Economic experts fear deflation, but I, David Seaton, know better and I'm here to tell you that the real danger is hyper-inflation, but obviously I don't have an actual argument to support that silly claim so instead please look at the photoshopped picture I found and let me close by asserting for the thousandth time that Obama is an empty suit and the evil American empire is doomed, doomed, doomed I tell you!"
November 27, 2008 10:39 PM | Reply | Permalink
Interesting point, but the comparisons are a bit of a stretch. If there is anyone out there who is not worried about the value of the dollar, or for that matter any world currency, they have not been paying attention. The fundemental essence of the value of a dollar comes down to an agreement that everyone in society holds to be true. A certain amount of dollars equals the value of a certain good or service. This changes over the course of time, for example in 1970 $5000 dollars could buy you the top end of automobile, $5000 in todays standards, well lets just say you better know how to turn a wrench. But the rapid fluctuations in currency exchange, commodity, real estate, and stock equity prices over the course of the last few years strain the fundemental nature of the shared agreement of value. Oil was $140 a barrel back 6 months ago, and has fallen 65% to $50 a barrel. Real Estate doubled and trippled in value from 2003 to 2006 and has since fallen 10-30% Copper prices were cut in half in months. Many financial stocks have cut value almost 90%. So the government prints money it does not have, makes loans without asset backing, and floods the market to bolster failing industries. This country, and the world as a whole is close to a point at which the very idea of currency becomes suspect due to the volitility of these changes. Inflation and deflation, even stagflation can be dealt with, but when the fundemental agreement of value to currency becomes questioned, the problems get out of hand.
November 28, 2008 1:35 AM | Reply | Permalink