Friday, February 22, 2008

Financial Crisis

From a comment left on the excellent news blog War and Piece:

The Germans are suggesting that all of the central banks get together and figure out a way to create a market by offering to start buying certain instruments. When they sell, the price will be set, transparency will be re-established over time and the market will relax.

The problem is that it will mean that the price will likely be somewhere between 20 and 60 cents on the dollar for most instruments, if that much, and some very very wealthy people will have to take huge losses. These are the same people who have the power (under Bush and Merkel and Sarkozy) to prevent the central banks from taking that action, which means every day we get closer to the brink and the Arabs get richer, with their commodity markets absorbing all of the liquid capital that refuses to go into frozen credit markets. The sovereign wealth funds are just an expression of this problem, not the problem itself.

In short, the super rich, "Homo Davos," are playing musical chairs and seem perfectly willing to take the whole system down rather than be the first to take their losses. Shorter yet--capitalism can't function without losers, but the losers are so big that they can postpone their fate indefinitely. Or until someone bails them out. Guess who!

Um, that would be taxpayers, folks. As usual, the rich want us to flip the bill for their folly. Just as money has been steadily trickling out of the pockets of the middle class and poor and into the pockets of the wealthy via a variety of actions, many with government complicity, they want us to take the soaking for their poor judgment. Nothing new here. Move on.
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