Tuesday, September 30, 2008


Thursday 25 September 2008
by: Patrick Lagacè, La Presse

Posted today by Mark from today's truthout.org

"There's too many of you!" (Art: Pancho / Le Monde)

O.K., let's begin at the beginning, all right? Let's begin with the cost of this Wall Street rescue plan by Uncle Sam.

We're talking about 700 billion American dollars.




Yeah! Seven hundred billion dollars is Taiwan's GDP; it's the equivalent of the world's 21st economy. It's only slightly less than the 829 billion US dollars that circulate as bills and coins in the world.

I know; it's still rather vague. It's still abstract.

Let's bring it down to what we can understand: Laying 700 billion US one dollar bills end to end would allow us to go two-thirds of the distance from the Earth to the Sun, or 104 million kilometers. They would weigh the same as seven American aircraft carriers.

O.K., I see in your eyes that this all is still hazy. I'll try to do a better summary.

You see, the problem is credit. The banks don't have enough dough and so they are reluctant to lend any. The value of houses has fallen; that of securities backed by mortgage payments also. So those assets are no longer salable by the banks. Financial institutions are choking.

They're choking so much that some have had to renounce the market's invisible hand to embrace - kiss kiss - the government's, which came to the rescue of giants like AIG.

So, American banks hesitate to lend what dough they have.

In an economy based on credit and $20 DVD players sold at Wal-Mart - so many $20 financed by mortgage loans against their house - Americans can't not borrow the money to finance their legitimate pursuit of happiness, guaranteed, as everyone knows, by the Declaration of Independence.

This happiness, as everyone knows, is guaranteed by the purchase of $20 DVD players (but that's not in the Declaration because Wal-Mart didn't exist in 1776) and - up until just recently - by the purchase of $200,000 houses for $450,000, the price set by the market, which market is always perceptive and right.

So, to correct the excesses of an economy doped-up by a real estate bubble, itself doped-up by the easy credit banks were giving their clients like Santa Claus giving out presents to kids on December 25, the American government has decided to administer horse medicine.

I mentioned those 700 billion dollars intended to reestablish the era of easy credit with the goal of allowing every American to buy a new $20 DVD player at Wal-Mart every day. And perhaps even to go back to paying $450,000 for houses worth $200,000 (with no down payment).

That's basic, right?

Good, now we're on the same wavelength.

That's why President George W. Bush took desperate remedies, that is, to delay the extreeeeeemely popular show, America's Got Talent (referring to talent in singing, dancing, acting, of course, not to talent in financial planning) 17 minutes.

So, Mr. Bush, with all the conviction he is famous for, no doubt after having prattled with his personal friend, Mr. Jesus-Christ, addressed the American people in one of those solemn speeches the Americans adore.

"Our economy is in danger," he soberly announced, with a sincerity rivaling that which he displayed before the invasion of Iraq. Then, the 43rd president assured the American people that the present dead-end was, "according to most economists," the fruit of problems that had been developing over the last ten years linked to the massive influx of foreign capital into the chosen country of God Himself.

Strangely, Mr. Bush did not mention that these last 18 months, all the ornaments of his administration snubbed the (many) economists who dared assert that a significant part of the American economy resembled a kind of pyramid scheme based on too-easy access to home ownership and, more properly, a defective government regulatory framework.

Why did Mr. Bush forget to mention that? No doubt an omission on the part of the technician in charge of parading Mr. Bush's text through the teleprompter.

So there we are, blissfully wondering whether 700 billion dollars stuck together can trace a path to the Sun. And whether the American economy will not experience a black and white period like the Great Depression.

Of course, we could worry. After all, if the Americans catch a cold, it's well-known, Canada ends up sneezing. Imagine when they have a Depression: that's the schizophrenia in store for us ...

Personally, I see absolutely no reason to worry: if George W. Bush conducts the war on economic gloom with the same dexterity with which he conducts the war on terrorism, I think we can rest easy.

Mr. Bush, after all, is the man who struck down Saddam Hussein. No little credit crisis is going to scare him; that's for sure.

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