A Little Background

The takeover of Citi is so ludicrous a use of taxpayer moneys that it has been greeted with contempt by just about everyone. I have seen so much excellent skewering of it that I just recommend to you that you look around, it's pervasive. That myth of being 'too big to fail' has become laughable as increasingly the absence of consumers for supporting the economy testifies to the real weakness in present economic 'policies'.

As background, I liked a post at Walled-In Pond, and will give it to you here.


The jig is, as they say, up.
This piece, copied here from the Guardian, appeared in the Observer of London in September. It's been reproduced in this month's Harper's. It should be read by everyone with the brain function of an amoeba.

The global financial crisis will see the US falter in the same way the Soviet Union did when the Berlin Wall came down. The era of American dominance is over.

Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.

You can see it in the way America's dominion has slipped away in its own backyard, with Venezuelan President Hugo Chávez taunting and ridiculing the superpower with impunity. Yet the setback of America's standing at the global level is even more striking. With the nationalisation of crucial parts of the financial system, the American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.

Ever since the end of the Cold War, successive American administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the American orthodoxy. China in particular was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic yesterday that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.

More Nuggets:

The populist rant about greedy banks that is being loudly ventilated in Congress is a distraction from the true causes of the crisis. The dire condition of America's financial markets is the result of American banks operating in a free-for-all environment that these same American legislators created. It is America's political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess
....
The Iraq War and the credit bubble have fatally undermined America's economic primacy. The US will continue to be the world's largest economy for a while longer, but it will be the new rising powers that, once the crisis is over, buy up what remains intact in the wreckage of America's financial system.
...
The irony of the post-Cold War period is that the fall of communism was followed by the rise of another utopian ideology. In American and Britain, and to a lesser extent other Western countries, a type of market fundamentalism became the guiding philosophy. The collapse of American power that is underway is the predictable upshot. Like the Soviet collapse, it will have large geopolitical repercussions. An enfeebled economy cannot support America's over-extended military commitments for much longer. Retrenchment is inevitable and it is unlikely to be gradual or well planned. (Emphasis added.)


The article continues, rich (if you will) with insight and interpretation, and it seems to me damn near irrebuttable.

I have long believed that we middle-class Murkins alive today lived more luxuriously, and better--no matter our individual status--than any members of our class since it emerged in the 16th century. However, the middle class has always been target of the elites and oligarchs who rightly recognized it as a far greater threat to their own perqs and prerogatives than the groaning, oppressed peasants. As such, they have sought the myriad ways to bring down the middle-class, to weaken it and to strip it of its economic power. Economic depression has been just about infallible in that regard.

If you don't go over to Woody's post and take a look at the cartoon he used, you will be missing out on a treat.

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And there is going to be no end to it until January 20, 2009. We are in deep, deep doodoo, folks. President Bush said Monday that the first step toward economic recovery is to stabilize the financial system - and that the government may step in to help financial institutions again the way it did with Citigroup. An appropriate label for this news would be Highway Robbery.