It's the Economy Stupid

Well one thing's for true - when the toilet begins to flush it goes slowly and moves faster as time goes on until we get that nice toilet gurgle there at the end that signals 'all clear - go wash your hands'

A month or so ago Paul Krugman was at Northwestern giving a talk about 'where we are and what got us here' - i was privileged enough to get an MP3 of it and for a guy running off the cuff before some of America's best and brightest he's remarkably good at piecing some very complex ideas together in a simple to follow explanation for 'why this is so screwed up'. Well - a couple days ago he lobbed a short version of that talk out there in 'opinion' format (the date's off by a month - don't freak). The net of it is 'we need to do a lot more than we're doing - whether we like it or not'.

Then the other day former treasury secretary O'Neill (you may remember him as the Bush secy that was asked to resign because he didnt agree with Bushco's crazy economic policies) chimed in with a much gloomier analysis. "We're headed for the wall at lightning speed. And every day that we don't deal with that set of problems is another day closer to absolutely vaporizing our economy."

Well, today's job report numbers tend to sing the same song - this thing is going down faster than R Kelly on an underage girl.

You've got guys like Michael Moore saying 'dont give the big 3 $34b' - but he's conflicted that somehow he wants the companies to survive for the workers - and without the workers no one is around to buy the cars (some crazy economics there Michael)... he rightly points out that GM has a market cap of $3b - so why would the govt give them 20?

The reality here is that a LOT of companies need to fail... fail hard... fail in a big catastrophic OMFG way... They made BAD decisions, built the WRONG cars, kept employees on when they shouldnt have, failed to find new products for their workforce and adapt, or took STUPID risks with money they didn't have - and that's going to take out a lot of the rest of us as all of us who have money in money market funds and stock in 401ks will see the value of it evaporate.

Now we, as a nation, have a choice.

We can nationalize a LOT of stuff... not a little... not 30% of citibank or 20% of BofA or 80% of AIG... i mean take it all. Krugman points at it without saying it out loud - but i think we're finally seeing Fed/Treasury acting to get in FRONT of this thing rather than do as little as possible to try to slow the direction. The reality is that even as this thing is spiraling down - lots of powerful people are gaming the system to try to make it out the back - because anyone that survives this is going to be a LOT bigger. Everything in the country that quacks like a bank - it has to be owned by the govt. We can re-privatize later - with some corporate size cap that's set as some minuscule percentage of GDP (no bank can be worth more than $5b lets say)...

Personally - i think we need to go farther. Seize the oil companies... Seize the telecommunications providers... force price limits on their services the way we treat public utilities. There's a reason 7 of the 10 largest oil companies in the world are owned by their respective govts - and dont tell me Shell and BP are horribly inefficient bureaucratic nightmares. This is the lesson we should be learning about unfettered markets for non-innovative product... but i seriously doubt America has the intestinal fortitude to step up and say 'yeah, that whole Reagan/Clinton thing, it was totally fucked up...'

The alternative?

We can leave it... and let it all be owned by foreign entities with capital - let the market sort it all out, let the companies fail, let the chinese buy GM for $3b and make M1-A1 Abrams for the US Army - because when this thing settles the Chinese and Saudis are going to own everything.