The Treasury's newly formed Office of Financial Stability
may be renamed "The Office of Financial Stability, Tee Hee
Hee".
The change of name for the office made responsible for
administration of the 700 billion dollar bailout fund under
the Emergency Economic Stabilization Act of 2008, is being
considered in view of market reaction to its creation.
Other possibilities include, "The President's Working Group
on Fubar", "The Wall Street Employment Opportunity
Commission", "Malinvestment, Inc.", or if a folksy sound
polls best, "Paulson and Friends, We Inject the Capitul
into Capitulation".
Secretary Paulson said in a statement last week following
the meeting of the G7 nations (and o.k., now this part of
my editorial is true), that "it's naïve of the
markets" to expect that different governments with
different structures would all want the same solutions.
(The markets will probably apologize the only way they
know, by naively plummeting in horror.)
But is the market's wish really all that naïve?
Capitalism is capitalism, surely, and a capitalist solution
might be better in the long run than a solution from
someone's secret police. Secretary Paulson's comment is an
odd one for a capitalist to make-- though it makes perfect
sense as a comment from one of a gang of fascists, where
after the quest for raw masses of power is taken care of,
priorities may need a little fine tuning from one fascist
state to the next.
Different structures aside (or not), the G7 has vowed to
take action, and the G20 agreed (Gee, 20?). If there was a
G100, it probably would agree too-- in government logic,
the key to everything now is to "inject capital", and
portray confidence (with a confectioner's coating of
empathy for the little people they've screwed out of hopes
and dreams.)
In the "naïve" logic of the markets however, this is
no longer credible. While spokespersons for the markets
hopefully express support for the government moves (perhaps
as a trial balloon for a job in government before Wall
Street lays off everyone except a skeleton cleaning staff),
the markets themselves are no longer clearing this
disinformation. There isn't a reason for confidence when
there's now recognized massive malinvestment, and the
government solution is to add more.
The plunging and "freezing" markets were actually trying to
fix the systemic problem, in the same way that the
necessary but unpleasant gag reflex would try to fix the
systemic problem of a seven year old who just ate half a
bag of Halloween candy. However, the G7 (and the Gee,
20?), are offering up banana splits with chocolate sauce
and pudding cake.
This is beyond Treasury Secretary Paulson's capability to
understand-- not because he's stupid, but because a
lifetime of finely tuned self-serving bias (a Wall Street
specialty) makes him incapable of seeing himself as not
part of the solution. Unfortunately for all of us, the
markets and the economy will continue to try to teach him
that his is not a creative power.
----------------------------------------------------
Les Lafave
Abolish The Federal Reserve - http://www.themaestrosrep.org
The true story of how the term "free market" became
history's greatest oxymoron (and some of the morons who
oxed it).
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