tinfoily

[lapsedmodernist]

Does anyone else think that the reason that our brave Republican leaders were desperate to privatize Social Security a couple of years ago was because they knew that this Atlas-Shrugged-In-Reverse was coming?

Comments

[cos]

I wish they knew this was coming. They really did believe their market fundamentalism, and mostly still do. They didn't see this coming :/

[bord-du-rasoir.livejournal.com]

Here's another vote for they don't know what they're doing.

Bush is proposing to spend a half-trillion dollars on bailouts on top of a nearly half-trillion dollar deficit this year. Who's loaning the federal government this money? It appears they're completely oblivious to this deficit spending catching up to them, especially in light of advocating for the privatization of social security. Losing revenue from social security taxes only serves to enlarge federal deficits. I don't get it. I don't think they do either.

[lapsedmodernist.livejournal.com]

I don't think they were thinking long-term, I think they just wanted to cook the books through November.

I just read that now the gov't is going to buy the shitty mortgages and secure them with GOLD.

[lapsedmodernist.livejournal.com]

I believe they didn't see this coming just like they didn't see 9/11 coming.

[lapsedmodernist.livejournal.com]

or maybe this is all just a set-up for a full-on implementation of the shock doctrine in America.

[cos]

... another thing they could've prevented if they'd cared enough to pay attention.

[lapsedmodernist.livejournal.com]

oh, I was being sarcastic. They saw 9/11 coming, and it was just what they needed to launch PNAC.

[lapsedmodernist.livejournal.com]

they paid attention. 9/11 was like a godsend for PNAC-ers.

[bord-du-rasoir.livejournal.com]

What's the shock doctrine?

[cos]

Oddly, your second statement was demonstrated to be true pretty obviously, and the first statement was proven false very solidly, with lots of documentation, yet you're stating both of them as if they necessarily imply each other (that is, if one is true the other must be).

[bord-du-rasoir.livejournal.com]

I just don't get the motivation. 9/11 enabled the U.S. to invade Afghanistan and Iraq. The wars there brought with them contracts that enabled growth in the privatized military ops industry Cheney has championed for decades. Is the extra money really just that great that they'd be willing to go through with all of of that? It just doesn't make sense to me. The benefits just don't seem all that great to me. Perhaps I just don't understand greed?

Now, if you get into establishing a military base over Iraq in light of peak oil, I guess that makes sense. In that scenario, I can see them going to those lengths given the vast economic repercussions of peak oil.

[landoffools.livejournal.com]

This. (http://en.wikipedia.org/wiki/The_Shock_Doctrine)

[cos]

I think McCain is ... not exactly wrong, but missing the point, in that quotation. Fannie Mae & Freddie Mac's oversight & management problems had been around for a long time, and were not the cause of the current meltdown, just one piece of it. I'd be interested in evidence that McCain actually saw the real problems.

[jellomarx.livejournal.com]

Anybody in power who claims not to have seen this coming is a liar. They deregulated the mortgage industry allowing loans to people who could not afford them. These loans very often were interest only, adjustable, negative amortization. Before the loans stopped performing the lenders sold them to FHLMC and FNMA, who was left holding the bag.

Everybody was greedy.

[the-macnab.livejournal.com]

For fuck's sake, no. Had the markets continued to work the way they had, our friends on Wall Street would have made so much money we'd be using Knuth arrows to talk about it. Surely short-sighted greed is a more parsimonious explanation than "plotting the collapse of the financial system like a fox!" reasoning.

The push to privatize social security has been going on since we were in high school. It predates the internet boom, it predates the first Gulf War. The Democrats waged a very successful mid-term campaign in 1982 partly in defense of the then-Republican Senate's noises about privatizing social security.

[stanleylieber.livejournal.com]

we are surrounding china and building a wall around israel

[lapsedmodernist.livejournal.com]

I am a little confused--which statement do you think was demonstrated to be true--the 9/11 thing? I guess my interpretation of the documents (especially the whole NORAD weirdness on the day of) is different. I wasn't suggesting causation, I was using an analogy.

w a i t f o r i t . . .

[vertigo1021.livejournal.com]

eh...my reading of Klein's version of TSD is that it involves the privatization of formerly public wealth and resources. It "gets all up yo grill" following a rapid deterioration of economic life (or just prior to the perceived, impending deterioration of the same).

THIS situation seems to me to be different. I have tried to use TSD as a lens to view what is going on but it doesn't seem to work. What we have here is the Nationalization of companies--in the short term at least.

An argument could very well be made that the day will come when the government will face insolvency. If so, there could be runs on the actual honest to god CURRENCY (think: "THE ATL" performs Act III of Menem's Argentina) and that could create crisis conditions where in the face of everything we think we have learned right now, some non-Keynesian folks will Friedfuck the rest of us with their revelations from God, er, I mean, Chcago. (or a hundred other scenarios) But that would be an argument that TSD will be the ultimate solution. We aren't there now... are we?

Re: w a i t f o r i t . . .

[lapsedmodernist.livejournal.com]

right--well, in the short run we have BushCo's bizarro world of socialism for the rich, where the risks are nationalized and the profits are privatized.

My TSD train of thought is super-apocalyptic, but goes something like this: they mean to shock people with a collapse of the economic system, and after this "nationalization" (air quotes because this gov't is the epitome of a corporate oligarchy)--which will be done, as we find out today from Paulson, without ANY congressional oversight--everything that's not privatized yet will be privatized "to help economy recover," under some insane plan cheerled by some old economists from Chicago.

Re: w a i t f o r i t . . .

[(Anonymous)]

so what are you saying here, exactly? That you agree with the role of Gov'mint here to assume some of these losses, but perhaps not to the tune of the proposed $800Billion?

[mjmj.livejournal.com]

it appears to me that they did not see it coming.

my current understanding is that the banks have lots of liabilities (those "non-performing" mortgages), quite possibly in excess of their assets (that is, they may be having not a simple problem with liquidity, but a problem with solvency). they would never plan to do that.

from my reading and listening, it appears that the problem came about because of a combination of several factors:

1) "securitization" of loans, which led the banks to accept loans without traditional checks to make it likely that the loans would be repaid. for example, they accepted the so-called "NINA" loans (No Income, No Assets). these loans were made because the retail brokers didn't have to take on the risk that those loans would not be repaid. and because the loans were "securitized" (divided up among many banks and other companies that were loaning money), the end holders of the loans could not know how risky the loans were.

2) the ratings companies gave these "securitized" loans high ratings when they should not have, based on flawed thinking that these loans weren't risky. "add lots of divided risky loans together to create un-risky loans. it's genius!"

3) the housing bubble -- the belief that house prices would always increase, so even if the borrowers couldn't pay, the borrower or loaner could still sell it for, at worst, a break-even price.

4) insurance companies (for example, AIG) took in premiums and gave out insurance ("credit default swaps" -- CDSs) making the banks even more willing to take on the loans.

5) extreme leveraging: the five largest investment banks got an exemption from SEC rules (http://bigpicture.typepad.com/comments/2008/09/regulatory-exem.html) that required brokerages to a debt-to-asset ratio of at most 12-to-1. for the five banks, they were allowed to have a debt-to-asset ratio of 30-to-1 or 40-to-1. the five banks are (were?) bear stearns, lehman, merrill lynch, morgan stanley, and goldman sachs.

the combination of these have funneled lots of bad loans into the banks. they're trying to get rid of them, but pretty much everyone knows what they're trying to do which is leading to people running from the banks so they won't get stuck with the "toxic waste." now paulson & co. want to get the u.s. gov't. to buy them rather than demand the banks accept the losses and, if necessary, declare bankruptcy.

Re: w a i t f o r i t . . .

[mjmj.livejournal.com]

clearly, paulson's "plan" is a shock doctrine gambit.

if the democratic party was worth its name, then they would simply ignore the "plan" -- pretend he never even proposed it. instead, propose their own shock doctrine legislation, including election reform with auditable paper trails, universal health care, repeal of taft-hartley, repeal of shrub's tax cut for the wealthy, repeal of all of shrub's unconstitutional legislation (military commissions act, patriot act, telecom retroactive immunity, etc.), repeal of all of the Delay-led House's legislation, repeal the 1999 Gramm-Leach-Bliley act, restore Legal Services for the poor, repeal Clinton's "welfare" repeal act, and anything else that they can think of that would give tonyS and dickC heart attacks. and shrub&co have to respond to all of the subpoenas that have been issued over the past two terms.

when those have been signed into law, then we'll talk about your banking problem where you are about to lose your shirt because you bought a ton of bad debt.

Re: w a i t f o r i t . . .

[lapsedmodernist.livejournal.com]

no, that's not what I am saying. how did you get that from what I said?

[lapsedmodernist.livejournal.com]

yes. I completely agree.