What a week it’s been on Wall Street! As I consider the events of this week I couldn’t resist doing something of a scoreboard for the winners and losers. I doubt that we’ve seen the end of financial crisis but as I watch the world markets leap, like a gazelle on too much caffeine, I can’t resist a cynical smile, and shake of my head, amid the jubilation going on in the markets this morning. Here are my notes on the winners and losers: anyone want to bet on what’ll happen next week?
· Big Transnational Financial Institutions who gobbled up the small fry to become even bigger.
· The Federal Reserve (Global Money Trust) with Greatly Expanded Powers.
· All the major central banks of the world for coming up with a global solution to a global problem
· Socialists, Nationalizing all those companies makes our market economy look like a complete fraud. “Deregulation” is about to become a swear word.
· Barak Obama, before the crisis he was in deep trouble now he back on top with a real issue that resonates with the people. He could well ride this crisis to the White House.
· Those who favor big government to ride herd on the “corporations” to make sure the “people are protected”.
· Regulators: the wave of regulation reform that’s about to hit Wall Street and spill over to Main Street is going to be a tsunami unseen in modern history.
· The environmentalists: With less than two months to go until the election, this give Obama a big leg up, and means that “pie in the sky” energy sources like wind and solar will get the money while drilling and new domestic sources of oil will get the back burner.
· The World Government Proponents who have been pushing the need to have global institutions for a global economy. Surely we’ve seen the need for a “Global Central Bank” for problems that are bigger than any one country?
· The Opponents of the Nation State: A transnational solution was affected when the power of our Federal Reserve and Treasury Department weren’t quite enough to restore confidence. The rhetoric will tend more and more to a “citizen of the world” mentality and “nationalism” will be seen as passé as well as unworkable in a globally competitive environment. Nationalism will be a new swear word soon.
· China: They’re making extraordinary gains by their new economic warfare as their ability to economically crush the economies of the West in general and the USA in particular goes on unabated and even welcomed. They are the creditor nation we used to be and they’re the manufacturing nation we used to be. They have the money. We have a mountain of debt
· Iran: There’s nothing like the threat of a financial Armageddon to take the minds of Israel and the USA off the needed attack on Iran. (I still think that Israel will attack Iran before the new year and that’s going to be another big crisis with economic as well as geopolitical repercussions!)
· Competition in the financial industry: Lots of companies of various sizes ensure competitions which make the system much fairer for everyone. Concentration of financial companies into super transnational companies gives too much power to massive transnational banks who’s allegiance it to itself not any given nation state.
· The United States Government: No crisis in my lifetime has served to illustrate the impotence and obsolescence of our current government, as when the Congress and the President turned control of our fate over to the Global Money Trust, also known as the Federal Reserve. It makes our model of government look like a fraud. as perhaps it may be. as Ben Bernanke calls the shots and the politicians quail in the shadows.
· Conservatives: The market economy died in this crisis without a meaningful word of protest by the conservative movement who wanted a painless solution to the economy, just as much as everyone else, and went along with this policy of nationalizing everything rather than taking the course best for the country. Conservatives talk a good game but placed the value of their stock portfolios above the nation’s interests on this occasion.
· John McCain: He lost the initiative and he made some bone headed comments about the “strength of the economy” that will haunt him until Election Day. Obama is regaining his mystique as the “change agent” and making McCain look like the Washington insider who helped create this mess. Obama asked a telling question at one of his rally’s this week: What does John McCain call the old boys’ network on Wall Street and in Congress? A staff meeting. That’s going to resonate with the voters in the weeks remaining until Election Day.
· Those who favor smaller government: People will simply demand that this sort of thing never happen again and they want the government to do something about it. The Government is going to dust off another huge organization, like the Resolution Trust Corporation, and buy bad debt while helping struggling corporations survive because their failure might upset Wall Street’s bottom line. It’s still massive and crazy government intervention, using our tax dollars, but hidden in such a way as not to alarm Wall Street: or be noticed by the American Tax Payer.
· Smaller Companies and banks: With the regulation and staying power needed to stay in the banking and finance game, the idea of new companies starting up in banking and finance seems quite unlikely. The big companies will have a huge advantage and doubtless crush smaller competitors at will. The concentration of financial power will loom large in the future.
· American Industries: The wave of regulation won’t just stop in the finance industry but the wave will continue into environmental and energy regulation as well. All this regulation will harm smaller companies who can’t seem to cut through the red tape as well as the bigger companies with all the money. Our economy is going to slow down a lot. It’s already begun. Just wait until the carbon cap and trade measures are enacted and see what happens to American Industries.
· Defenders of National Sovereignty: Anyone who tries to roll back the clock on this increasing “globalism” is going to continue to look more and more crazy; just as anyone who favors “unilateral action” if necessary, will be condemned for being dangerously out of touch. Unilateralist will take its place beside “Racist” and “Sexist” and “Homophobe” as a new swearword. A craven “group think” will triumph over individualism and “morality” as well as “truth” will become a product of consensus.
· Proponents of the Nation State: As Global solutions, like the bail out of the credit market by the world central banks, are seen as necessary, credible and desirable, the cry for global governance in other fields like the “environment” and perhaps “peace keeping” will naturally follow. The farther removed the government from the people the more corruption and the more prone to misuse it becomes.
· The United States: We’re out of control on spending and debt and we needed the world central banks to save our sorry butts. Social Security and Medicare can’t continue in this form much longer and the US Dollar is in the dumper and may well fail. If you add up all our debt it may be around the 53 trillion mark and there’s no “solution” other than radical economic change and very likely a much lower standard of living for everyone; it’s just a matter of time. We’re being shaped and remade by our responses to the markets ups and downs; the market’s in charge, not us.
· Russia: Putin got a bloody nose from the “markets” lately and while it’s likely not a permanent setback; I suspect that Vladimir will take into account the economic realities of our world before he flaunts his military power again. He can use all the quite power of economic pressure and covert action to intimidate the former client states back into his empire but the overt use of military has economic consequences that he won’t forget in the future. Right now he’s got egg all over his face and looks kinda stupid. That won’t last and he’ll be back worse than before. You can take that to the bank.