USA Becomes USSRA
There is an old saying that in America there are two parties: the stupid party and the evil party (Usually the Republicans are the stupid and the Democrats the evil, but sometimes the roles are reversed). Sometimes the two parties come together and do things that are both evil and stupid. That is called bipartisanship.
That saying came to mind when I heard that Republican Treasury Secretary Henry Paulson and Republican Fed Chairman Ben Bernanke will come together with Democratic congressional leaders Nancy Pelosi and Harry Reid to devise a "comprehensive" approach for solving the crisis.
The details of the "comprehensive" approach are not entirely clear, but it seems that the general idea is (in addition to bans and restrictions of short sales) for the government to buy bad assets from the financial institutions, as well as creating a insurance for money market mutual fund assets, similar to the one covering traditional bank deposits. These proposals amount to massive government subsidies of banks and other financial institutions, making it non-surprising that stocks in general and financial stocks in particular soared.
Like the Fannie & Freddie bailout, this will mean another step towards making the government the dominant mortgage lender, something which made Nouriel Roubini refer to the USA as being more like USSRA (United Socialist State Republic of America), and Jim Rogers call America "more communist than China" (see video below).
That saying came to mind when I heard that Republican Treasury Secretary Henry Paulson and Republican Fed Chairman Ben Bernanke will come together with Democratic congressional leaders Nancy Pelosi and Harry Reid to devise a "comprehensive" approach for solving the crisis.
The details of the "comprehensive" approach are not entirely clear, but it seems that the general idea is (in addition to bans and restrictions of short sales) for the government to buy bad assets from the financial institutions, as well as creating a insurance for money market mutual fund assets, similar to the one covering traditional bank deposits. These proposals amount to massive government subsidies of banks and other financial institutions, making it non-surprising that stocks in general and financial stocks in particular soared.
Like the Fannie & Freddie bailout, this will mean another step towards making the government the dominant mortgage lender, something which made Nouriel Roubini refer to the USA as being more like USSRA (United Socialist State Republic of America), and Jim Rogers call America "more communist than China" (see video below).
posted by stefankarlsson at 8:45 AM
3 Comments:
They have also introduced a "temporary" ban on short selling. Maybe you should write about that and what consequences this will have.
a ban on short selling will of course have the consequence of no one alowed to buy back stocks at a bottom wich will make the stock market fall even more
so called unintended consequences?
Göran
Sweden
Seems the comrades have been looking into this option for some time already. Bank of Finland said that they have exchanged information with Fed about how to setup and run a "bad bank" last spring. Hopefully that discussion also means that they don't have to make the same mistakes Finland did when setting up their own.
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