While professional entrails-analysts pick over the body language of Biden v. Palin and determine whether or not the people still undecided after 18 relentless months of presidential campaigning are tilting slightly this way or that as they are blown by the autumn zephyrs, Reality threatens to set in elsewhere, to wit:
“It is now clear that the US financial system—and even the system of financing of the corporate sector—is now in cardiac arrest and at a risk of a systemic financial meltdown. I don’t use these words lightly. . . This cannot continue for more than a few days.”
Thus wrote Nouriel Roubini a few hours ago, one of the few people pessimistic enough to have grasped where the economy was heading. He related what is occurring among his financier friends:
LIBOR bid only, no offer, i.e. the London headquarters that fixes interest rates for the entire world registers NO CREDIT ACTIVITY.
Little or no commercial paper issuance, so companies dependent on lines of credit (that is, all of them) are without access to long- or short-term cash at any price. When their current loans come due, they will default, resulting in even less available capital.
Brokers are not dealing with each other; banks are not lending to each other.
So whether or not we think Biden ‘won’ or Sarah Palin ‘beat expectations,’ or whether her glasses are cool or her stance too aggressive or if Biden choked up at the right moment or who more convincingly repeated that we could pay fewer taxes and still have everything we want—after all is said and done, we may all be donning barrels and heading for the soup kitchens.
Maybe it is just another Henny Penny faux-panic, but there was something about the debased level of political discourse on display last night that made me want to live under Philosopher-Kings for a while.
Now that Bail-Out: The Sequel has won a PG rating from the House of Representatives, we will see if Roubini’s fears are justified.