Wednesday, June 17, 2009

The party is over? Nah, just a toilet break...pass the beer

There's been a lot of great economic news over the last few days informing us that the worst recession since the Great Depression may be coming to an end. Actually, such a disastrous recession seems to have been little more than a slight blip. Things are said to be leveling out now, and naturally the only way to go is up.

Last September, as I watched the news over the weekend that the Lehman Brothers collapsed and Merrill Lynch was purchased by the BOA, I thought the world had changed for good. For one thing, I thought that the old idea that the US could live on the credit of foreign countries while those countries depended on over-consumption by US consumers would have to end. It seems I went a bit overboard as I don't see any evidence that any country involved is preparing for such a supposedly inevitable change.

PBS Frontline just ran a program about that September weekend and what went on behind the scenes in the deal for the Bank of America to buy Merrill Lynch. It reminds me of the story of JP Morgan in the 1907 Panic in which he locked a group of bankers in a room and would not let them out until they all agreed to sign an agreement to bail out Wall Street. This time, however, it was not a private banker doing the arm-twisting (or kneecap-breaking), but the US government in the person of Hank Paulson.

"If you don't get with the program and you don't sign this piece of paper, tomorrow morning you could turn on the television and see Hank Paulson talking about your bank in a negative way..."

and I'm beginning to get about enough of Paul Krugman again, who appears in the program just long enough to utter this brilliant insight:

"...[Paulson] doesn't strike me as the most reflective guy...but he must have been sitting there saying..."My god, we may be presiding over the second Great Depression..."

I can sure see why Mr. Krugman won a Noble Prize. Time to go back to the day job at the New York Times of blaming everything on earth on Little Bush. No, wait, Bush is gone. Maybe Sarah Palin.

At the end, we are assured that:

"This was one of the pivot points in American history. That old way of looking at things; that old way of puttin' on a party...It's over.

How can we tell? Other than the government running half the private sector now, and perhaps a few adjustments in financial regulations, what exactly has changed?

The program is one hour and a much better way to spend time than watching some goofy movie on WOWOW or a noisy variety show.

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