So far, no chilly onrush of the new tidal wave hitting Wall Street can be felt on Bilerico. But the outline of the towering wave can definitely be glimpsed at media like Bloomberg and the Wall Street Journal.
Earlier this week, the aftershocks of that subprime-mortgage earthquake back in 2007, that shook a whole raft of lenders into bankruptcy, was finally sending a second wave that is hitting deep with the big investment banks. First was Bear Stearns, 5th biggest in the U.S., with its loss of $1.6 billion by two hedge funds that had invested in subprime-backed assets. Last week panicky Bear Stearns clients staged such a run that the firm was close to being swept away by bankruptcy. Yesterday its desperate CEO accepted a bailout offer by JPMorgan Chase & Co to buy Bear Stearns pretty cheap.
This is a gay issue? Let's see about that.
The Federal Reserve is supposedly riding to the rescue, like the U.S. cavalry in the movies, by saying they will underwrite the JP Morgan takeover with government bonds and other fixes. They have revived an old policy of the post-1929-crash era, one that lets securities firms borrow directly from the Fed. But some observers say that the Fed's lowering of interest rates, which is supposed to help in crisis situations like this, isn't working so well any more.
Just where the government is getting the money to do this, let alone pursue its expensive war in the Middle East and Afghanistan, and fling promises of financial aid in a hundred other directions, is anybody's guess. The government is almost as bankrupt as Bear Stearns. You get the impression of a desperate shell game going on behind the scenes, with billions in credit being shunted here, then there, then over there, in an effort to keep a lot of bases covered.
The other day, the New York Times business page pondered a possible domino effect. It said: "Wall Street firms like Bear Stearns conduct business with many individuals, corporations, financial companies, pension funds and hedge funds. They also do billions of dollars of business with each other every day, borrowing and lending securities at a dizzying pace and fueling the wheels of capitalism. The sudden collapse of a major player could not only shake client confidence in the entire system, but also make it difficult for sound institutions to conduct business as usual."
So...which firm will be next? Merrill Lynch, which is marinating in $30 billion dollars' worth of subprime exposure? There are rumors and comments about a dozen other shaky firms and banks.
On the political front yesterday, while the country was arguing about Obama's "perfect union" speech and the Hillary Clinton tax returns, Congress was quietly arm-wrestling with the U.S. Treasury about another bailout -- on private housing. Our own Rep. Barney Frank is in the middle of this one, as chairman of the House Financial Services Committee. The Democrats want the government to offer threatened homeowners the same TLC as Wall Street biggies, by stepping in to insure re-financed mortgages. So many millions of homes are already in foreclosure that lenders are aghast at the growing glut of empty houses that surely won't sell for some time. There is talk of programs that will allow at-risk homeowners to negotiate temporarily better terms on their loans, especially seniors. But it seems that the Bush administration is not as interested in helping you and me as they are in helping Bear Stearns et al.
Further headlines on today's Wall Street Journal indicate further deadly cross-currents. "Car Makers Prepare for Slump." "Three Banks End Federal Loans to Students." But not many Americans read the financial press. In the more popular media, like the AOL news board that I study every day for its profile on American insanity, there was nothing overt about the deepening Wall Street crisis. It was tabloid-time as usual -- the Spitzer scandal, and who's the latest to be axed on "American Idol." The idea is to keep us all so entertained that we won't notice the tidal wave coming in.
Listening to Obama's speech the other night, the question I asked myself was this: beyond the racism that still divides our country, and what Obama proposes to heal the rift, can Obama be a President who is capable of steering our country through this worsening financial crisis that the Bushies have allowed to develop? Obama doesn't have to be a financial wiz himself, but will he be smart enough to surround himself with financial wizes who will know the right things to do? By all accounts, things are going to get worse before they get better.
And yes, these Wall Street dramas are LGBT issues. They are affecting the soaring price of food and transportation, the scarcity of jobs and affordable housing. These are definitely LGBT issues -- right up there with marriage and transgender and porn and the other things that we discuss so often here at Bilerico. Definit-nit-nitely, as the Rain Man said.
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8 Comments
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As a trans lesbian who recently lost her house to foreclosure, I'd definitely have to make my vote "yes" - it is an LGBT issue. Transition has been brutal on my credit and, with the tightening of lending policies lately, made it impossible for me to refinance out of an ARM which had more than doubled within a year and a half.
For surgically-tracked trans people in particular, even the price of the dollar is a serious issue. Most oversees surgeons quote their prices in their own currency and the sinking dollar is driving up the price of SRS quite a bit for Americans. Also, for those of us who were counting on credit like home equity loans to finance surgery, much of that has evaporated lately.
But yeah, we're all in this together and it's not looking good...
Jesster | March 20, 2008 2:48 AM
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Every once in a while it seems that Chicken Little isn’t quite the chucklehead that some claim. This may be one of those times.
The problem with really serious economic damage is that it’s hard to cure. Once it gets really bad it tends to stay really bad. It’s happened before. Beginning in 1929 the distribution of wealth income was roughly as follows; 15% of the population owned 85% of the wealth and the other 85% owned the remaining 15%. Working people and farmers literally didn’t make enough to buy what they produced. By 1930 banks failed and savings were wiped out as the ratio of savings to income went negative. Mass unemployment and extreme poverty became a regular feature of American life and it stayed that way for twelve long years. FDR’s New Deal launched twenty or so major efforts, including the CCC, FDIC, FHA, FEC, NRA, PWA / WPA, SEC, SSA and TVA to jump start the economy. Each in turn failed dismally. The Depression didn’t really end until 7AM, Sunday, December 7th, 1941.
The sub-prime housing crisis is just one of many contributing to what could turn into a serious economic meltdown. Mad George’s oil war is an enormous economic drain that to date cost over $504,000,000,000,00 ($504 billion dollars or about $500,00.00 to kill each of the about 1,000,000 Iraqis murdered in the fighting since the invasion was launched on fraudulent grounds five years ago.) This war will produce the same inflation that stubbornly smoldered through the economy after the LBJ/Nixon war against Vietnam. That inflation lasted well into Reagan’s second term. Income distribution is very near the disastrous 1929 levels because of repeated bipartisan tax breaks for the rich, cuts in welfare, unemployment insurance, health care, deregulation and the lack of investment in the infrastructure (Katrina). Tens of millions of good paying jobs have been lost to union busting, exporting jobs (NAFTA), speed ups and automation. The savings and income ratio went negative in 2007 for the first time since 1930. Very soon creditors will begin seriously jacking up interest rates to pay for their losses in the housing market. What will a 30%+ rate on your credit card or variable rate mortgage mean for your finances? (You didn’t think that when the Fed cuts banks rates they’ll cut your rate did you?)
Two or three months ago I noted what when we begin hearing about ‘fictitious capital’ we’d know that the crunch as coming. The financial crisis that engulfed Bear Stearns and threatens other banks and investment houses is a crisis of fictitious capital. They have billions on the books but its paper wealth – it’s not backed by any real assets because of losses in the financial crisis.
No one can say when but it seems we’re in for interesting times, as the Chinese proverb defines them. The financial crisis is nowhere near 1929 levels but it has every potential to get there as the Federal Reserve Boards panicky reactions indicate. Now is a very good time to stop spending money, get a union job or organize a union where you work. The next administration’s in for a bumpy ride.
Bill Perdue | March 20, 2008 5:16 AM
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Any time something affects my wallet it’s my issue rather it’s a gay issue or not. Some folks who post here seem to think that those kind of issues don’t effect the gay communitie but when your money goes poof in your savings due to losses in the markets or that fantastic loan you got really was just a fantasy yes money issues effect us all .
Btw Bill if were laying out who got us into Vietnam lets include Truman, Eisenhower, and Kennedy in the list to since we first were involved in that little affair at the end of WW2!
Cathy | March 20, 2008 10:38 AM
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we are people...we are americans...of course the economy is one of our issues. and let us not forget how minorities are often blamed for the dire straights of the majority. the "eroding culture of LGBT immorality has served to destroy American values" is almost sure to pop up somewhere - again and again and again. frightened people look for someone to blame. disgusting, but very real...
jerindc | March 20, 2008 10:58 AM
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Amen, Cathy. Amen.
Bil Browning | March 20, 2008 11:33 AM
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Yes, absolutely, the economy may not be an "LGBT issue" per se, but it is an issue that affects LGBT people and thus we should pay careful attention to it.
Another issue not-exactly-LGBT-but-still-super-important-to-us is our nation's energy policy ... or lack thereof. As gasoline creeps toward $4/gallon, our country sits with its thumbs up its rear-end in regards to any meaningful efforts toward true energy independence ... or even less-dependence, which would at least help.
Biofuels are a nice idea, but the US consumption of energy is so enormous that there is not enough agricultural land in the US to raise the corn and sugar cane and soybeans it would take. However, if we could develop "bio-cellulose" --- producing biofuels out of natural sources of cellulose, such as wood and/or plant fiber --- our energy needs could be met. Developing cellulose-based biofuels would be a research project in genetically engineering the special microbes that would "ferment" the cellulose into usable forms of fuel. The Republicans aren't doing it, nor are the Democrats promising to do it if/when they get into power.
So, yes, these essential issues are just like health care: not distinctively LGBT, but extremely important to us nonetheless.
A. J. Lopp | March 20, 2008 2:14 PM
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>>>>
I agree 100 percent, along with agreeing that using food plants for biofuels is not ethical. Food scarcity is growing, and more people die of starvation every year. Yet the production of ethanol would take a hefty percentage of the U.S. corn crop.
Personally I am in favor of cultivating jatropha curcas, a plant that is not useful for food but can be processed for a pure biodiesel or pure kerosene. It can grow in subtropical or deserty climates, doesn't need a lot of war, and new varieties mature in a year, becoming perennial plants that can produce harvest after harvest for years. It is already being grown and refined more extensively in Southeast Asia and China.
More about this in an upcoming item.
Patricia Nell Warren | March 20, 2008 3:21 PM
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There are only about 2 or 3 place in Austin, that you can buy ethanol mixed gas, and that is only if your car can run on it. It is also more expensive than regular gas, so. Well you do the math, someone is going to drive all over town, just to buy gas that is more expensive than the stuff they sale on the corner, right?
We have a wheat shortage, because growning corn and selling it to be processed into ethanol is much more lucrative, due to the tax breaks and the incentives that the government gives to Archer-Daniels and other big farm conglomerates.
They of course rotate out their wheat for corn so they can get all those nice breaks and incentives. Less wheat, less flour, less bread, oops, supply and demand kicks in and guess what, bread and baked goods goes through the roof.
Follow the money trail, and you will see who is getting rich and fat off of all this.
Dollars to soon to be too expensive donuts georgy has a nice board position waiting for him at archer-daniels once he gets out of office.
diddlygrl | March 20, 2008 11:08 PM
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