With the economy in danger of blowing up and the biggest government bailout in history in the offing, you may be wondering exactly what’s going on. I know I was, which is why I was glad I came across an essay called “Three Times is Enemy Action.”
This piece traces the history of Republican deregulation efforts from the Reagan era on and looks at the S&L; Scandal, the Enron Scandal, and now Bush’s “One More Scandal Before I Leave Office” Scandal. Without too much jargon, the essay breaks down what happened and who we have to thank for these crises. Worth reading, particularly if you are undecided on your presidential pick.
Here’s the money quote: “Um, sirs? Is it altogether a good idea to run up debts exceeding all the assets it’s even possible to hold?”
At Flying Lab I’ve done some research on the South Sea Bubble, a huge economic crisis in Britain in 1720 (coincidentally, the year Pirates of the Burning Sea takes place). It started as people rushed to buy stock in the South Sea Company and based on the crazy speculation that followed all sorts of companies formed, trying to attract the frenzied investors from all social classes. Here are just some of the ventures floated:
For supplying the town of Deal with fresh water.
For trading in hair.
For assuring of seamen’s wages.
For insuring of horses.
For improving the art of making soap.
For insuring and increasing children’s fortunes.
For a wheel for perpetual motion.
For importing walnut-trees from Virginia.
For making of rape-oil.
For paying pensions to widows and others, at a small discount.
For the transmutation of quicksilver into a malleable fine metal.
For carrying on an undertaking of great advantage; but nobody to know what it is.
I laughed at the idea of people investing in a perpetual motion machine or an unknown undertaking of great advantage. Oh, those silly 18th century people; we know better today.
No. No, we don’t.
Look at this from the bright side: now at least future game designers will have things to base their games on too…
DailyKos isn’t getting to the root cause of this financial crisis. The fundamental problem is the Federal Reserve bank and its legal cartel, and fractional reserve lending, which makes credit too plentiful.
I recommend reviewing Michael Hudson’s take at Counterpunch, which can be found here.
Especially this paragraph-
In the fifth place, we need to start discussing whether we really need a banking system that behaves in the way the present one does. In recent decades banks have made loans mainly to inflate asset prices by loading real estate and industry with interest-bearing debt. What if all banks were to be organized along the lines of savings banks, with 100% reserves. This is the Chicago Plan from the 1930s (currently revived by the American Monetary Institute, which holds its annual meeting this week in Chicago, by the way). This at least would go back to basics to provide a foundation from which to re-begin to discuss just what kind of credit the economy needs and what would be the best terms on which to structure financial markets.
Oil from Rape seed. It is a yellow plant that is no where near as interesting as you may be thinking.
In the U.S. rape seed oil is euphemized as canola.
Spike Y Jones