Have you noticed the sudden precipitious decline in the number of annoying hustles you get in the mail offering yet another unnecessary credit card? From a rate of about three per week last year, I now can’t recall when I last got one.
I assume this sudden reversal of strategy on furiously pitching more credit to everyone in sight is related to the losses coursing through the financial system, now estimated by one source at $1.6 trillion when everything is included like commercial real estate, housing of course, credit cards, construction and 6 percent structured collateralized sinking upside-down debentures.
To get a sense of that number, financial institutions so far have recognized and written down only $400 billion, or one quarter, of that amount.
For its sorry part, Detroit looks less and less likely to be the headquarters of any automobile production at all in the near future, incredible as that seems. There was even a suggestion last week that General Motors might be headed for bankruptcy.
If the end should come, a few out-of-work executives at that institution might wish that the regulatory apparatus of the mean, old government had been tougher on them back when they sneaked their way around the minimum mileage laws and cooked up the SUV market by putting a giant, gas-guzzling car on a truck chassis. Had GM and the other automakers been forced to produce more fuel-efficient vehicles, their stock might not be scraping the NYSE floor, and their fleets of unsaleable behemoths might not be rusting away in suburban showrooms from sea to shining sea.
Instead of reviewing this self-sabotage, leaders ever eager to pander to the bipedal masses will no doubt propose more quick fixes like Hillary’s ridiculous gas tax holiday so that we can all start buying more cars and gulping down as much gasoline as always.
That’s one approach, ignore the causes and sound-bite your way to the front of the uneasy crowd. But another set of voices is also emerging from the elites, none too soon of course, such as that of Treasury Secretary Paulson, erstwhile major poobah from Goldman Sachs. Paulsen has gingerly suggested that greater regulation of the financial markets is needed, now that the system’s own uncontrolled momentum has led it down a slippery precipice with no bottom in sight.
If our presidential debates rise to the occasion, we should be hearing about how to save the capitalist system from itself and restrain its inherently irrational tendencies, rather than silly pitches to ‘Relieve Pain Fast’ as if the state were a Tylenol dispenser.