Tuesday, September 16, 2008
The Sky is Falling
The sky is falling. Well, it might feel like the sky is falling, but it is not really falling. What we are experiencing is panic. Why is there panic? There is panic because many people do not know how many studs have been removed from the wall that supports the markets. When a structure is covered such as a wall is covered with either drywall or plaster, the structural integrity is hidden from view. The question then becomes, are there enough studs in that wall to support the structural integrity of that wall? Unfortunately, no one really knows for sure. One reason that investors are running for the door is that since the Reagan administration and continuing to the present and including the present Bush administration the protections that were designed in the 1930’s and 1940’s, more ancient history, have been disassembled. So, here we are in September 2008 and we really don’t know what is going to happen. We have seen the sub-prime mortgage crisis, the meltdown of the mortgage bond market and now the collapse of another investment banking firm (Lehman) on Wall Street. And, now everyone is wondering, how bad can things get?
Well, my fellow Americans, elect John McCain and his future Secretary of the Treasurer, Phil (Ph.D.) Gramm, and as Paul Krugman thinks, we have a very good chance to have another Depression. But, don’t worry, the rich Republicans will be OK. And all the rest of you out there, well, at least you have your beat up Ford F-150 pick up truck, your pro-life candidate in the White House, no stem cell research, no gay marriage and last but not least our flag. So, the economy may be in depression, but certainly man doesn’t live by bread alone? Oh, you need a job to eat and support your family? But, I thought you were a Republican? And, I thought Republicans only need faith.
There is this clever little saying that those who do not learn from history are doomed to repeat it. The Federal laws that dealt with banking and the securities industry and markets that came out the Great Depression attempted to prevent this country from going through another Great Depression. But over the years, as things held together, the Republicans wanted to destroy what President Franklin D. Roosevelt and the men of the New Deal put together. The safety nets were slowly removed and the lines were blurred and the sharks swam free to feast where they choose. So, trying to put the integrity back into the wall after the Republicans for years have been tearing its structural integrity apart, is not going to happen over night. Unfortunately, another generation will come and go before the wall will be repaired again.
The drama and economic dislocations that our domestic economy is going through right now did not have to happen. These events were man made. There are more than just a few of us out here that know this to be the truth. The presidential election this November may be the most important presidential election since FDR beat Herbert Hoover in 1932. The world markets are watching to see just how dump Americans are. Will the American electorate vote their stomachs? That remains to be seen.