Thursday, 24 January 2008

Nanny State Rescues Stockbrokers

Now that the ticker-tape is settling after the stock market panic of last weekend, some minority voices are emerging to question whether the Fed’s drastic interest rate cut was the best medicine at the right time. It certainly made Wall Street happy, and there is an assumption on those business-oriented TV shows that Wall Street = Us.

That’s not true although the equation Their Whiny Snuffling = Our Pneumonia remains painfully accurate.

One yearns for a sober voice to deconstruct some of the blather we’re hearing about economics these days instead of the non-stop honking from the testosterone-poisoned experts on the airwaves.

It’s hard to work up the same level of worry about the state of equities as when they bore some relation to actual workers making actual products. But since so much of fancy finance today is an elaborate, reified guessing-game based on derivatives of derivatives of derivatives, why shouldn’t large chunks of it suffer ignominious collapse?

Or perhaps more to the point, what guarantee do we have that the cure is not merely postponing the inevitable? In which case should not our leaders be putting in place something that will ease our likely suffering, i.e. NOT a wad of quickly-spent cash?

But don’t hold your breath expecting any sort of proposal along these lines to emerge from the lapdog Democrats who rushed over to share the pain with W and show how bipartisan they are—not that anyone cares. If the positions were reversed, the Republicans first would blame the collapse on their enemies, then indignantly demand a pound of flesh for joining in any salvage operations.

Not our loyal Harry Reid and Nancy Pelosi who could hardly suppress their delighted smiles at being invited to the White House. I half expected them to pull down their knickers and submit to a sound caning before the cameras.

That didn’t happen, but who cares to wager that they won’t buckle on extending the plutocratic tax cuts that have bankrupted the state?

Bernanke’s done his best to put the beached whale back into the water. But if his manuever doesn’t work, it’s not clear how many more buckets of cheap cash he can slosh over it.

In past years whenever things looked a little shaky, the calming line was always, The fundamentals are sound. But today any lay observer can see that they’re not.

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