Why Are You Blaming The Guy Next To You?
Lots of people angry at the guy next to them who took the risky mortgages, or the money market, to the same degree they are angry at Wall Street. I can’t even fathom why. So – why?
The Fed is Broke?
TOD has an interesting idea:
The theory here is that the Fed has destroyed its balance sheet by taking on increasingly large chunks of non performing assets (the “toxic waste” made from mortgage-backed securities and the like) in exchange for loans of “real” cash to banks that may still end up not repaying them.
It is effectively “broke.” This is not what is supposed to happen to a central bank, which can print money without restriction, so let me explain what this means: it can no longer help the banks in a non-inflationary way. In order to take on more toxic collateral from the banks, it would need to actually print money, which would immediately be visible and would be seen as very inflationary. Instead, by getting government to take on more public debt, the impact is diluted in a much larger pool (public debt, rather than cash).
So this is a desperate gamble by Paulson and Bernanke to avoid the run on the dollar that would be triggered by direct cash creation.
Special Kind of Asshole
Mark Krikorian is clearly trying to exceed his intellectual capacity (and failing):
But we’re in this mess, ultimately, because our political elites thought it was good social policy to encourage banks to give mortgages to uncreditworthy people, resulting in what Sailer months ago called the “Diversity Recession” (if this doesn’t work, make that the Diversity Depression). In other words, if poor people in general, or blacks or Hispanics in particular, were less likely to be approved for a mortgage, the only possible reason was racism or classism or whatever. Thus “creditworthiness” was an illegitimate, dead-white-male concept, like middleclassness. Because, after all, isn’t everyone entitled to credit?
Thoughts on Red On Red Conflict
I wouldn’t applaud this development.
Consulting the Iraqi civil war as catalyzed by Zarqawi, here’s why:
- Set up red on red conflict.
- Let the ideologies take hold. Find a critical point to encourage this development if necessary.
- This slaves the state, embodying development and stability, to the basic survival imperative
In Robbian terms – a hollow state emerges as the war consumes people, resources, and weaponry. Most hollow states (or TAZ’s) will be perpetual because of the lack of a clear stronger tribe (U.S. forces in Iraq). This will likely be the case of Gaza.
Wired’s Smart List of 15
Frankly, I’m underwhelmed. These guys could have fit in the administration between Bush and X, but transpiring global events have pushed the timeline forward. Time to rethink who you listen to.