Told y'all so. Repeatedly. Last two years or so.

'This points to one of the system’s most fundamental, and ultimately irreconcilable, contradictions: mature capitalism has no endogenous means to guarantee an adequate level of private investment, yet by the same token it cannot tolerate any rise in wages that would erode the profits of the owning class. This has left the system dependent upon debt-fueled consumption. The internal contradiction shows up in the form of subpar growth and economic stagnation, or credit-driven booms and bubbles followed by crisis once the expansion of financial claims on earnings collides with the realities of wage stagnation for the majority of the U.S. working class.'
http://monthlyreview.org/080512beitel.php
The Subprime Debacle by Karl Beitel

WAIT! I know what you're thinking....

You're thinking, "Ah-HA! Now the stupid Americans who support Johh McCain will realize what a degenerate apologist for Bush's policies he is, and will now support Obama!"

Well, how wrong you are....

The worse things get, the more people will fall back on superstition and habit. John McCain, he's an old white guy. America loves old white guys when things are bad. And they're bad now.

So: don't get your hopes up. There's going to be no spiritual awakening. Sarah Palin IS the messiah. And John McCain will keep lying his ass off about how Obama's going to raise everyone's taxes, and the press won't call him on it, and by Wednesday everyone will be talking about something else.

America: so fucking stupid you just can't really get your mind around it.

America: so fucking stupid you just can't really get your mind around it.
Posted by: The Phantom

Pretty much.

Only two things are infinite, the universe and human stupidity, and I'm not sure about the former. - Albert Einstein

"This crisis brought to you by twenty-eight years of Republican Fiscal and Regulatory Policy." - Barack Obama

The worse things get, the more people will fall back on superstition and habit.

There's a name for this -- "threat-rigidity". When all else fails, burn more witches.

And yes, it's McCain's pals -- Phil Gramm in particular -- that paved this road for us.

Please answer once again, "Who won the cold war?"

It is fair to ask in times like this if an extreme form of capitalism is about to meet the same fate that an extreme form of communism previously met. And whether both of these extremes were fashioned to benefit the few at the top rung.

On top of all of our other crises I am feeling that the long emergency is upon us.

Ah, crises. A fundamentally new architecture for the financial world but designed by the same old lamebrains. That's not change we can believe in.

We need to make sure everybody in America knows that the Rethugs own this mess. (I promise not to mention that Glass-Steagall was repealed on Clinton's watch if you won't mention it...)

The slow motion collapse that spread through world capital and trade markets from ~late 1928 through the summer of 1931 (no, the Great Depression did not start in October of 1929) was punctuated, and inflected into catastrophe, by the serial collapses of the Austrian Vienna Creditanstalt, and the Dresdner and Danat banks in Germany. The Vienna Creditanstalt, the largest bank in Austria, had been forced to assume the liabilities of numerous weaker institutions over the late 1920s and '30s, and was extremely weak, and highly dependent on short term liquidity from the French, English, and American banks. The difficulties in the US and British capital markets made those short-term loans inaccessible. The 1931 customs union with Germany convinced the French government to withdraw credit and funds from the Austrian banking system. As the Austrians sought to shore up the Creditanstalt, they withdrew billions from the German banking system, primarily the Dresdner banks and the Danat Bank (which lost ten and forty percent of deposits, respectively). The Deutsche Bank even lost eight percent of its deposits.

This banking crisis was the knife to the heart that sent central Europe much deeper into economic depression. The impossibility of government had already become obvious in Germany under the deflationary Article 48 Bruening chancellorship. Because of this, no radical government action could be devised to meet the catastrophic circumstances. Eighteen months later, Hitler.

The United States has a degree of partisan gridlock and institutional failure, which, if not of the same ferocity as Germany in 1931, is of the same kind. I fear for the Constitution and the Republic.

Problems on Wall Street? I take Yahoo and AP. The stories about Wall Street's collapse are below OJ Simpson.

In fairness I also take Reuters and they are screaming about Merrill and Lehman Bros. Damn those socialist Europeans.

My point is I wonder how many Americans will realize their retirement plans are in the toilet.

Yes, and the full results are surfacing, showing up and setting in right on schedule.
The trucks with all the loot are finishing up, all the vaults have been emptied, the economy drained and the bushcon celebration begins.
Now the key to staying out of jail.....get the old pardon man elected.No matter what!
Don't forget this has been planned for over 30 years.
You better know they have a plan to stay out of jail.

From just a few minutes ago at MSN market news desk:

Nikkei 225 (Tokyo) 12,214.76 +112.26 +0.93%
FTSE 100 (London) 5,191.00 -225.70 -4.17%
DAX (Frankfurt) 6,021.75 -213.14 -3.42%
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
What about the Nikkei makes its reaction to this weekend's banking troubles so different from the European exchanges?

Who knew a house of cards could be so unstable?

"mature capitalism has no endogenous means to guarantee an adequate level of private investment, yet by the same token it cannot tolerate any rise in wages that would erode the profits of the owning class. This has left the system dependent upon debt-fueled consumption."

Can't this be resolved by average population growth, a balanced federal budget, targeted tax incentives for private investment, practical capital requirement regulations, and consistent regulatory enforcement. As long as productivity outperforms inflation rate, capitalists will continue to invest.

These are the circumstances we had during the Clinton years. We were not dependent on debt-fueled consumption. That happens when you start a two wars AND cut taxes. Back then, we were irrationally exuberant about speculative private investments.

It was greed, fueled by the ability - not necessity - to borrow cheaply for purely speculative investments, that ended the last business cycle before Bush arrived. The Fed did not raise rates quickly enough. Accounting standards made it easy for corporations to bullshit themselves about their performance. And the Republican dominated legislature starved the enforcement agencies.

Republicans in office like to pretend that greed is not a problem because their ideology offers no policy instruments to combat it. They will whole-heartedly praise the benefits of lowering taxes; They are too stubborn to admit the benefits of raising them.

When CEO's leave a company with $120 million severance package for performing poorly, or Wall Street wants to bid Pets.com up to $20 billion valuation, it might be time to think about shifting the tax policy towards higher taxes to discourage speculation.

Of course, that assumes the federal government can find higher rates of return on public investments than those on a Pets.com with a $20 billion valuation.

We're apparently in the beginning stages of working out a "fundamentally new architecture for the financial world."

Can't we just go back to the old architecture from before Phil Gramm and company gutted the building? It seemed to work pretty well for half a century.

Are Wall Street investors what Phil Gramm would characterize as "a bunch of whiners?" Did all these wealthy investors with their Ivy League MBAs truly think that Bush's tax cuts would grow the economy out of its malaise? Is that why they invested so heavily in sub-prime mortgages?

Is it we didn't give the investing classes enough tax cuts or is dribble down economics failing?

Bob M., don't forget, for most of the years of Clinton as President, we had repugs in charge of Congress with gingrich, armey, and delay at the head.

It does, however, seem that the worse things get under w, the stronger mccain/palin show up in the polls. If we get this pair, we will get an administration similar to what we have now. st. john will be no more than a figurehead because he doesn't really want to govern, he only wants to win. palin, on the other hand, really does want to be in charge just like cheney is, except she will have others directing her actions that will be even worse than cheney.

Wil this fundamentally new architecture include a totally deregulated banking system upon which the top 1% of the population will gorge at will?

The apologia begins. Funniest paragraphs in the WaPo piece:

Indeed, it is increasingly clear that Wall Street chief executives themselves didn't fully understand the risks they were taking on during the boom years of this decade; they have seemed as blindsided as any regulator.

The problems on Wall Street may go deeper. Financial firms have expanded vastly in the past decade, hiring tens of thousands of bright business school graduates to engineer new financial products, find ever more complicated ways to manage other peoples' money, and dream up new ways to combine, divide, and recombine corporate America.

Some large portion of that work, it now appears, wasn't really creating any value for the company's clients or for the U.S. economy.

Pretty soon, it will all be the fault of predatory borrowers and Krugman pessimists.

“There is the dangerous cliché in the financial world [that] everything depends on confidence. One could better argue the importance of unremitting suspicion.” - John Kenneth Galbraith

Jenga!

And McCain just restated today that "The economy is fundamentally sound."

Which fundamentals?

There are films available of Hoover saying 'the economy is fundamentally sound' as well, and Obama would be a fool not to use them.

This is the time for his 'speech of a lifetime' on economic policies, tying deregulation not just to the current melt-down but to the whole series of scandals, Penn Square, Long Term Capital Management, and Enron as well, and then to say that it was Phil Gramm whose ideas were behind the deregulation crisis, 'the same Phil Gramm who has been McCain's economic guru.'

And here's where surrogates have to attack Palin. This is a crisis, and an immediate one, and 'praying ourselves out of it' isn't going to work. She has no conception of the problem, or any ideas for solutions, and we can't afford any chance of her suddenly being 'in charge.'

But Obama has to go back to being more positive -- I disagree that he hasn't been negative enough. He's been doing a good job of arguing why we shouldn't elect McCain, but it has been a while since he's been arguing why we should elect him. (I always felt that was Kerry's mistake, not 'failing to fight back against swiftboating' but failing to argue why he deserved to be elected.)

Obama can do this, but he hasn't been, and he needs to.

For all the ninnyhammers who continue to believe, as John McFool still believes, that "the fundamentals of our economy are still strong, I have just one word for you, before your Kamikaze-like, mass-idiocy "lemming-ness" takes you over the edge, and into the abyss:

BANZAI!!!

And as for Palin, I wonder how all her big-oil friends are doing, now that oil is flirting with $95 dollars a barrel? A wholesale collapse of the petroleum markets, driven by a global economic slowdown, is a guaranteed "belly-cutting" ritual for the GOP....

I have to give Paulson and Bernanke some credit: the grown-ups really are in charge now. If Greenspan were still running the economy, he's approve a Lehman bailout so that McCain had a better chance of getting elected.

Basically, you have a Republican appointee prescribing financial chemotherapy during a Republican administration, with an election weeks away. Surely unprecedented, and probably right on the merits.

What about the Nikkei makes its reaction to this weekend's banking troubles so different from the European exchanges?

Because that's last Friday's close. The Japanese stock markets, like most of the Asian markets, are closed today (public holiday).