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>World Economy On Brink of Collapse

>by Don White

World leaders are suddenly realizing the global economy is sinking many times faster than expected.

Yesterday, the World Bank abandoned all attempts to sugar coat this crisis. In a shocking report, the global institution warned that the world economy will shrink for the first time since World War II and that industrial production will plunge a staggering 15% — a global depression reminiscent of the 1930s.

Last week Britian’s prime minister, Gordon Brown, came to their closest ally, America, and suggested politely that Obama may want to consider organizing some kind of global monetary attack to forestall the absolute collapse of nations financially.

I think this caught the president and his treasury secretary off guard. They haven’t the slightest idea — or resources– of how to “bailout” America, let alone the world. The Obama administration has been playing “catch up.” Every move they’ve made so far has failed because it’s either not enough or too late. At least, that’s the liberal view of things.

But conservatives believe he has gone way too far. Indeed, if it takes ten or fifty trillion dollars, that is way out of bounds, say anyone concerned with the welfare of our children and grandchildren who will have to foot the horrendous bills Obama and his secretary of treasury, Patrick Gaithner, have concocted to alleviate problems. So far, the only thing they have done is to make matters worse. What we have here is a gas fire. No amount of water will help. In fact it will make the fire spread and become more destructive.

Consider what’s going on in the major banks today and the news is all pessimistic across the globe:

* The Asian Development Bank reported that more than $50 trillion in invested wealth vanished into thin air last year.
* Superstar investor Warren Buffett warned on CNBC that the U.S. economy “has fallen off a cliff” … is “in a shambles” … and that we are experiencing “close to the worst-case scenario.”
* The feared “D” word has spread swiftly through the news media, as the reality of depression finally sinks in.

I believe the only way to corale this financial mess we’re in is to stop spreading the “fire” by spending money. We should have let the GMs, AIGs, Bear Sterns, City Banks, and any other insolvent company go under. It’s as if we’re at Yellowstone Park during a fire. There are conservationists, real smart scientists, who believe trying to put out a forest fire is not smart. Like forests, economies need “fires” to clean out the incompentent failing companies — companies that have not earned the right to exist. The problem with us is the Democrats have no stomach for putting more union employees on the bread lines.

At the same time, they have no conscience or qualms about letting Peter pay Paul — asking American taxpayers, many of whom make far less than their union brethren, to bailout car companies where union workers have huge benefits and salaries almost no other blue collar workers enjoy.

President Obama should sit down with John Key, New Zealand president. He says his country tried to spend it’s way out of a financial crisis a few years ago and it didn’t work. Nations who do this always fail, he says, citing the Great Depression and how Europe was able to overcome the world depression far faster than in the US where President Roosevelt used the same tactics Obama is trying. Why can’t we learn from the past. Those who fail to heed lessons of the past are destined to fail. Who said that?

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>Hank Paulson’s New Financial Governance

>I wholeheartedly suggest you click onto a column in the usually liberal Washington Post by Sebastian Mallaby. My comments and others follow. DWhite

dusanotes wrote:
I’m used to seeing a lot of liberal ideas that make no sense to a conservative. But today Sebastian Mallaby was right on, dead center. This is a great article by a very articulate writer. Long live
Sebastian and the American dollar.
Don White
http://political disconnect.blogspot.com
9/16/2008 10:37:41 AM
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chawsheen wrote:
Paulson seems to be a decent man but what can he do if he is trammelled by a tightly knit group of oligopolists whose motto is: WE ARE ALWAYS RIGHT, others, if not with us, are un-Americans.
9/16/2008 10:32:27 AM
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rcc_2000 wrote:
When George the First was President and ran against Clinton our economy was in turmoil. Clinton came to office on the mantra “it is the economy stupid”. The Dow was around 3000 when Clinton came into office. When he left office it was at 11,400. Then Bush came into office. after 8 years in office the Dow is actually lower than when he took office. Yet the GOP says that it is the party of business? All I know is that McCAin is weak on the economy, he has said he will rely on people like Phil Gramm, a man who is partially responsible for the mortgage crisis (see Gramm-Leach-Bliley Act) by loosening regulation on the mortgage markets and for investment banks. But that is not Phil Gramm’s only claim to fame he also had a hand in creating the “Enron Loophole” that basically set-up Enron’s crash because of the greed of his Enron buddies.

Historically, over the past 20 years it has been the Democrats that have been in power during the most prosperous years. BTW this stuff effects millions of working Americans who have their retirement tied to investments, these are the working folks who the GOP has screwed by stagnating their investments, lowered their property values and set the markets tumbling while the CEO’s of these failed companies make tens of millions of dollars (which they pass some on to the GOP).

The GOP is not pro-business it is pro-greed of corporate executives..
9/16/2008 10:08:29 AM
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charleydan wrote:
Bold gamble on Lehman? Nada.

Mac and Mae is a government entity and had to be covered, or for the government to claim bankruptcy and let countries dissolve it for assets. Not quite that simple, but the basic idea.

The others are all free enterprise. Many enterprises gambled(high risk) with their loans and lost and now pay. American people were involved because of their greed and now will pay with a depression if not a recession. Many with lost of home for buying more then they can afford. The whole mess is because of greed and many seen it coming, but like always only the responsible know the end.

The largest banks will be covered as they could trigger other banks to go in a domino affect.

The economy is sound. Money is being generated. Debt needs to be managed.

Government biggest debt is Medi and expected in short order to cost as much every year as our present expenditures for the whole government. 3 trillion a year.

Obama wants to add on to that by adding national health. Years ago health was a charity and was very affordable. Then went free-enterprise and look the mess we have now. National Health will be worse economically and service will be rock bottom.

Till the biggest lobbyist’s in America cut their wants and desires. America will increase it’s debt till it folds.

Who is the biggest Lobbyist in America, American Voters. And that is only the start. Of course it always is for a noble cause that the biggest lobbyist in America will not take care of for themselves or have not and now want others to do it for them.
9/16/2008 10:05:38 AM
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tc125231 wrote:
A comment on this mess by Stiglitz –who actually knows something, unlike this mouthpiece.

“Financial markets hinge on trust, and that trust has eroded. Lehman’s collapse marks at the very least a powerful symbol of a new low in confidence, and the reverberations will continue.”

http://www.guardian.co.uk/commentisfree/2008/sep/16/economics.wallstreet/print
9/16/2008 9:45:13 AM
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LeftGuy wrote:
It may be impossible to understand the global scope of this problem, but Mallaby hints at it if we read between the lines.

For once, let’s all put idealogy aside. O’Neill was able to bail out foreign governments (so did Rubin under Clinton)because investors believed that there was plenty of money in the US capital system (not the government alone, but in the entire system including the private sector). Today, the US would be unable to help Argentina, Brazil and Turkey due to lack of internal resources.

The central problem today is that no one in the world has the same level of faith in today’s system–please keep your idealogy aside for a moment before you respond.

Our capitalist system depends upon faith in private enterprise and the ability to financial markets to serve them. The last piece of this partnership has evaporated. And no one knows how long it will take before the partnership can be restored…months, years?

Worse, the problem is not confined to the US financial markets and the corporations that depend upon them. The entire global enterprise is holding a lot of worthless paper in the form of debt that can never be repaid. Hence the global system is teetering and foreign markets are reeling in turmoil like those in the US.

Every retiree and every worker who ultimately depends upon some type of private pension, whether self-directed or company sponsored, has a vested interest in seeing these global capital markets survive and ultimately recover. So we all have a stake in this.

Paulson faces the same question as Rubin and O’Neill: Intervene or let the markets collapse? The stakes this time around, however, are an order of magnitude higher than that faced in the past few decades. The S&L collapse and the demise of long term capital were managed successfully by a partnership between the government and the private financial sector. But this time around, it is the private financial sector that is in need of help.

I don’t know whether Paulson can avert total disaster, but I do know that he has the background and intelligence to do so.

He has my vote of confidence, as did Robert Rubin a decade ago. Bush did the right thing by getting him into this post at this time. Future presidents need to do the same.
9/16/2008 9:45:02 AM
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billcarr542 wrote: