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Free Market Profit, Socialized Debt?

Submitted by MainLineThoughts on Mon, 2008-09-15 07:31.
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We've had Federal bailouts announced on Fannie Mae and Freddie Mac, and this morning we are waking up to the news that Merrill Lynch has a new owner and Lehman is going under? Add to the fact that Big Oil has treated all of us to "hurricane pricing" - yep Main Line gas stations have jumped their prices by 20 cents or more per gallon.

But now we wonder, will the U.S. Government be bailing out Lehman and who is the other one, WaMu? Should they? Should we have free market profits and socialized debt in this country as a best practice?

Lehman has announced bankruptcy a few moments ago:

Business News:Lehman Bros. to seek bankruptcy protection

NEW YORK, Sept. 15 (UPI) -- The troubled securities firmed Lehman Brothers (NYSE:LEH), failing to find a buyer during the weekend, said Monday it would seek Chapter 11 bankruptcy protection.

As Lehman officials talked of liquidation, Merrill Lynch (AMEX:BXA) said it found a buyer -- Bank of America -- that will pay about $50 billion for the brokerage, The New York Times reported.

All of this neatly can be traced back to the housing market and energy crisis in this country, amd what does that say about big oil, realtors, mortgage brokers and, lenders of all kinds? How many on the Main Line, for example, are actually living in homes they can't afford? How many are driving vehicles they can't really afford? How many of the affluent and not so affluent in this area will be affected by this?

How many in our region are house and cash poor (as in they have lots of expensive stuff but it is all on paper), yet all we see are more developments being proposed in our local municipalities? More ads aimed at the super rich?

How can we afford to even discuss these plans, continue to buy these products? How can developers afford to build these plans, when those who back them along the way are struggling to survive? How can manufacturers afford to keep producing high end stuff no one needs yet spin doctors pimp? When are we going to get back to less can be more in this country?

Is it R for recession out in the open now? How will our area fare? And when will the U.S. Presidential Candidates stop attacking each other long enough to discuss possible solutions here? I agree with John Nagle over at RoundRadnor and whomever commented on his blog. Enough with the spin doctors running this country...it's probably what helped get us here in the first place. The gap between the HAVES and HAVE NOTS is ever widening, and no one is addressing that at all.

Are we headed on the path to depression if we do not pay attention to this recession?

Some suggested reading:

Shearman, Wachtell in Merrill Lynch takeover Kian Ganz

Greenspan calls crisis the worst ever
Argentina News.Net
Monday 15th September, 2008

Changes rock Wall Street

MONDAY, SEPTEMBER 15, 2008
FEATURES MAIN
A Little Respect for Preferreds, Please
By ANDREW BARY

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Submitted by lmwatcher on Mon, 2008-09-15 21:31.
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Here are some interesting thoughts - just click anywhere on this sentence.

The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday. "We expect a depression in the United States. We expect a depression, very possibly, also in Europe," Hennecke said on "Worldwide Exchange."

A thousand more "economic stimulus packages" will do nothing; it's akin the emptying the ocean with a teaspoon. This past wave of foreclosures will birth new ones and Americans will continue to sink into quicksand while Obama and McCain blather on with their gibberish. Congress will continue spending when the people's purse is overdrawn $9.6 TRILLION dollars.

I hope things are not this bad, but they are not as rosy as what our senseless government and presidential candidates have to say.
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Submitted by politeia on Tue, 2008-09-16 11:11.
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Here's what one former presidential candidate had to say 5 months ago in in U.S. News and World Report.

What he also had to say before Congress 5 years ago regarding Fannie Mae and Freddie Mac (not surprisingly the House did not vote to enact Ron Paul's common sense Free Housing Market Enhancement Act).

This was all rather predictable and foreseeable, yet Bush and Congress could not let the correction occur because they wanted to get re-elected.

Now McCain is blaming Wall Street and wants more government regulation (this from a Republican, eh?) while Obama is blaming White House policy and both are wrong.

The problem is with our entire economic system and the primary blame is on Congress (thus McCain and Obama don't blame Congress as members of Congress), which has the ability to vote on the correct congressional legislation and to regulate and control the Federal Reserve Bank that escalated this mess - if it so desired.

However, leaving the Fed alone to create the bubbles and to make the crash worse lets Congress off the hook while they get all the money they want for the special interests and wars from the money the Fed prints out of thin air.

This whole crisis can be tied to irresponsible government intervention in the economy, and the roots go back to the S&L crisis in the 1980’s. This never would have happened in a truly free market. What we have today are the unintended consequences (some might say intended consequences as this ain't rocket science) of government intervention in the markets.

If they decide to publish it, I’ll have more on this in an op-ed in Main Line Life next week.
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