The Federal Reserve will pump an additional$630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.
The Fed’s expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a$700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.
David Callaway fromCBS Marketwatch:
While groups of politicians bickered like schoolchildren over the failure of the House of Representatives to pass Treasury Secretary Henry Paulson’s $700 billion bailout plan, the S&P 500 Index plunged to its worst day since the week of the 1987 stock-market crash, wiping out more than $700 billion in the index’s market value.
In total, more than $1 trillion was wiped off the value of the entire U.S. stock market Monday, as measured by the Dow Jones Wilshire 5000 Index. Asian markets will certainly plunge tonight, followed by the European markets Tuesday morning — and many of the latter suffered their worst losses ever Monday.
So, to recap, yesterday the Fed injected $630 billion into the global financial system, then Congress voted down a $700 billion bailout, and thenthe stock market lost over atrillion dollars in value.
Yet we’re farther away from an (alleged) policy solution, and there’s not even a pretense of leadership in Washington or on the campaign trail. Sen. Obama has Warren Buffet and Paul Volcker on his economic team. These guys know things. Use them! Take charge! What’s John McCain going to respond with? His own economic ignorance? Or will he point to his advisorsDoug Holtz Eakin,
Al Hrabosky, Phil “the recession is mental” Gramm, Carly Fiorina and the douchenozzle who wroteDow 36,000?
Athenae is rightly skeptical that anything good will come from the “fascists and fools” on Capitol Hill, so perhaps it’s prudent to keep the entire situation in perspective. Financial panics and severe recessions are no picnic, but the U.S. has been through them before, and will go through them again. It’s no reason for normally sensible people to get …oops, too late.
FromRay in New Orleans we learn of this unfortunate story and quote:
Greenwich, Connecticut is a rich enclave of hedge fund managers- and
thus is feeling the pain of the current financial crisis like a ton of
bricks.Ned Lamont, a Greenwich resident who ran for Senate in 2006,
says, ‘This is our Katrina.’
First Selectman Peter Tesei said Wall Street affects everything from
philanthropic contributions to a potential increase in public school
enrollment if some families can no longer afford private schools. A
recently laid-off trader who was making several million dollars
annually ‘is not going to be able to donate the $200,000 they did in
the past’ to charities, Tesei said.
[Ray writes:] Ned Lamont, you are hereby designated Fuckmook of the Week.
If this was really your Katrina, then you would feel more pain than
not being able to donate $200,000 to charities. You’d be looking to
charities to feed you. Your kids would not be going to public schools,
because there wouldn’t be any more public schools. You wouldn’t be
looking at downsizing your house, your house would be gone, you would
be unemployed and homeless and still making payments on a mold-infested
wreck while your insurer ass-raped you and Congress and the President
didn’t think your problems were worth more than a few floor speeches,
never mind a special session to hand out $700 billion to you and your
If this was really your Katrina, I would feel for you, man. Because
you would be facing such total destruction and demoralization, and you
would have to face it without being able to take solace in brass bands
or real food or Mardi Gras, because when all is said and done, you
still live in a shithole called Connecticut.
Amen, Ray! In that story, I love the horrifying phrase “potential increase in public school enrollment”. Heaven forfend! What an incredible catastrophe!
For a little perspective, here’s a quote fromDan Baum’s account of students attending O.Perry Walker High School in New Orleans during the 2006-07 school year:
Wandering around O. Perry Walker a few days later, I found Big Mike sitting alone in a classroom. He laughed when I told him what the boy had said. “I’m the interventionist,” Big Mike, who is thirty, told me. And then he began talking about his job. Neither disciplinarian nor interventionist accurately describes it. A better description might be parent. Nine hundred teen-agers attend O. Perry Walker. Of those, Big Mike estimates that a hundred and fifty live with two parents and about four hundred with one. “The rest, what—live with grandmothers?” I asked.
“Well, I consider a grandmother a parent,” Big Mike said.The rest of the school’s students—somewhere between a third and half—live alone, he said. “They roommate with each other, they stay with friends, work till two and three o’clock in the morning, and come to school at seven. Some wash their clothes upstairs here. I have fifteen students that I call every morning at seven o’clock to wake them up, from my cell phone. Food? Sometimes they have money. I give them money, Miss Laurie”—the principal—”gives them money, and sometimes they’ll eat by other people houses. The football coach, he has about nine boys living with him.
For a follow up, readBaum’s post on the high school’s graduation ceremonies, an “event bordering on the miraculous”. And if you equate a stock market/hedge fund disaster with Katrina, or if you equate having to attend public school to the Federal Flood, then you can suck my left nutmeg.
Update: Originally, I thoughtAl Hrabosky was one of McCain’s economic advisors, but I’ve been informed that he’s not. He’s McCain’s temperament coach. I regret the error.