PRIVATIZING PROFITS . . . AND SOCIALIZING RISK, PART II (AKA, WHO'S GETTING BAILED OUT, AND WHO'S DOING THE BAILING?)
While the economic cost will be huge, the real damage from all this will be psychological. Bailouts are now an indelible part of our national identity. When the economy and financial markets recover -- and they will -- that new identity will shape the behavior of economic players and market participants for decades. This has implications for the next bubble, which should be a doozy. Will speculators remember the faded lessons of Bear and Lehman? Or will they be guided subconsciously by a single word -- "bailout" -- just before hitting the buy button?And this (he's speaking ironically here. The "voice" is that of the Fed/Treasury/Administration/Congress, i.e., the Stooges of Wall Street):
[B]ailouts, interventions, and the socialization of risk are only feasible with a de facto dollar standard. With a massive new expansion of government liabilities, that will become even more imperative. Last week, gold rocketed from $780 to $900 in a few hours. Oil is back over $100. That's unacceptable. Those who shun the dollar are threats, and must be treated accordingly -- now more than ever.Scary times, folks. Strange, unchartered, dangerous days at hand. Keep your powder dry.
Labels: Fear Itself