A big mess we've noticed probably twenty years too late

This mess didn't start last week or last year.  I'm guessing the Reagan presidency followed by the Clinton bubble.

Jamie Galbraith knows his stuff and has both experience and good judgment.  I listened when he said nothing could have persuaded him to support the original bailout package.  The "compromise" voted on today was not quite as dreadful.  Passing it, he said as though he were holding his nose, was probably less bad than not passing it because of the mood of the markets here and overseas. 

But it didn't pass.  I don't know Galbraith's reaction to the latest news, but here's Paul Krugman:

"So what we now have is non-functional government in the face of a major crisis, because Congress includes a quorum of crazies and nobody trusts the White House an inch.

"As a friend said last night, we’ve become a banana republic with nukes."

I find I'm not the only one who thinks the whole culture has to change and no bail out is going to be more than a temporary fix until we face the debt problem from top to bottom -- snake oil salesmen right down to their eager, self-deceiving customers out in the field.  But the process could be and probably will be hell on wheels.

Don't look at the Dow.  Keep your eyes on the S&P.  It gives a wider view of market activity.  And it lost damn near 9% today.

Comments

[Will Divide]

Yea verily, we are witnessing a cultural collapse, played out in the arena most important to that culture.

I'm with Krugman, but clearly the choices going forward were between a sickening drop with probably (maybe) a quick recovery, or a moderated fall and longer down time. There are consequent variables on both sides too. No one could say for certain the end of either path, only make guesses based on models of other recent financial disasters in Japan and Sweden.

As it is they chose the sickening drop, so we'll get to see what happens.

The sticking point today was that the GOP lost it's grip not so much because of the amount of money involved or the details of the plan, but by adhering to the letter of a freshly-disgraced philosophy--that of the so-called free market--which was only free insofar as players ignored or undid government's legitimate role in oversight and monetary policy.

The GOP rank and file acted out their dream after the dream had ended (as fine a definition of a cultural collapse as I can think of right now) and as a result, very soon now, they will be leaving us for good.