You don't read stuff like this in the paper every day:
It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.
"When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.
As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program "Good Morning America," the congressional leaders were told "that we're literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally."
Mr. Schumer added, "History was sort of hanging over it, like this was a moment."
When Mr. Schumer described the meeting as "somber," Mr. Dodd cut in. "Somber doesn't begin to justify the words," he said. "We have never heard language like this."
UPDATE: Jim Manzi says all the things that Bernanke and Paulson have done in the past few days were bad -- except in light of the alternative. Excerpt:
Against all [the bad stuff] we have one huge consideration. If investors lose confidence in the safety of money market funds, mutual funds, demand deposit accounts and the other storehouses of value in the modern economy, we would have a problem that would make somewhat higher taxes and moral hazard seem like child's play. Trust me - you do not want to experience a full-scale bank run in contemporary America. I'm not sure how many people realize how close we were to the wheels coming off at about noon yesterday, as major commercial-paper processing banks like State Street lost 30% - 60% of their value in about 2 hours. Want evidence: When was the last time you heard of the U.S. government identifying a problem, developing a multi-hundred-billion-dollar program and announcing it within about 48 hours?
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Doug,
You've clearly gotten my point about Obama and Ayers and clearly it's getting to you, clearly it's making you question your faith in Obama.
Good -- it ought to. (And you wouldn't bring it up if it wasn't doing so.)
Which is why I'll continue to talk about it and to do so as much and as often as I see fit.
If you are worried that reading any more of what I have to say on this subject will lead to your not voting for Obama and you don't want that to happen, then fine -- don't read any more.
I don't know much about economics at all. I just wonder if the government can really handle what it is taking on. I guess there aren't a lot of alternatives really. We are now backing up our economy with last "name brand" we can still count on, the U.S. government. It's staggering, but that's what this has come down to.
Can we handle this, and two wars, and low taxes, and a missile defense system, and repairing our infrastructure (bridges etc.)? Something has to give. We may be rich, but our resources are not indefinite.
Series 6 -- en.wikipedia.org/wiki/Series_6 -- and 7 -- en.wikipedia.org/wiki/General_Securities_Representative_Exam -- are the financial trading/brokerage equivalents of the Bar, CPA and Enrolled Actuary certification programs. It essentially gives the recipient legal access to the practices involved.
It does not make the certification holder an expert, a moral person, or capable of explaining the esoterica of the field.
Bfinlay, there is indeed value in having a formal education in a subject. However, it is of no value to claim that experience is not a valid way to learn a subject. It may take longer, or be less accurate in some details, but demonstration of understanding is good enough in most cases.
Anyway, my deceased equine in all this: let the companies fail, let the people suffer. It's the only way to make them learn the lesson. Every generation, lacking a memory of events during which it was not alive, requires the lesson: once burned, twice shy.
Posted by: | September 20, 2008 2:42 PM is mine.
Not to denigrate those who paid good money to qualify for Series 6 and 7 credentials, but the "credence" anyone give them is worth no more, no less than the fiducary trust of the institutions they trade amongst with their vast knowledge.
Now do not get me wrong, I am no lollard, here -- the sad thing is that mere mortals in the "real" economy (which fundamentally is ticking along nicely since we're all still buying foodstuffs and essentials we think are good value for money and using services whose benefits to our existence outweigh their costs, right, even those of us who do so using public funds such as food stamps and Medicaid?) face the same conundrum as the "brights" with their series 6 or 7s in the financial sector: when the monetary units of exchange do not hold up under scrutiny we are hosed!
Scrutiny is the key here. It is another word for regulation to be sure, but by a process of subsidiarity, we are all called to scrutinize those with whom we interact, privately as clients, or publically as citizens. The fault for the suddenness of the crisis lies not with the private parties who bought and sold bundles of debt, but with those that gave them the funds -- on credit -- to do so, our government. Ironically since they created the mess, its actually quite fair that they bail it out I suppose. The problem is who should have been scrutinizing their poor judgement in printing FIAT money to flood the markets with cheap credit? Our congressional leaders (Paul, Dodd, Franks, Schumer et al) and our Treasury Secretary had their hands tied, since they aren't given the power to turn the fawcet off - not even the Fed has that power. So who do we grant inscrutable powers to? The president? No, he can only play along to get along, since to interfere with sound money would be tantamount to embezzelment, right?
I lay the blame at our educators who have misled the populace into believing they are too dumb to understand the economy, and must have blind faith in Mammon not their Maker. Poppycock! We the holders of the Federal Reserve Notes must demand "revelation" on their origins, and scrutinize carefully the public's interest in their credentials (oh would that there were "series 6" and "series 7" banknotes we could entrust our wealth too, sadly not we have the toxic contagion we have, and now must learn to live with it)
I hope our public television and radio stations ( I can recommend Terri Gross's "Fresh Air" from last Wed with the Prof from Uni Maryland who disagreed with Rubin all those years ago in the Clinton administration, but has been vindicated by recent events) are doing their public service to study and inform us of the history of embezzelment that has occurred these past 90 years since the Fed was forced upon an unsuspecting public. Perhaps they will find some philanthropist, even a ragged trousered philanthropist, who will fund it?
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