Tuesday, September 23, 2008
They are all up on Capitol Hill at the moment - Treasury Secretary Hank Paulson, Fed Chairman Ben Bernanke, and SEC Chairman Christopher Cox - talking about the financial crisis and the $700 billion proposed bailout.
It's going to be like one big group therapy session. Hopefully, someone will feel better after it's all done, but it probably won't be the U.S. taxpayer.
You can watch it live on CSPAN 3 if you're looking for something to do to pass the time.
Senator Chris Dodd (D-Conn.), who chairs the Senate Banking Committee, spoke first and, right off the bat, you know that we are all just sooooo screwed in this whole affair.
In yet another example of how the entire country is in denial regarding the unsustainable nature of the current system of seemingly endless money and credit expansion (well, actually, credit expansion seems to be stopping rather abruptly lately), Senator Dodd said just a few moments ago:
As I and many members of this committee have argued in the past 17 months, since I became chairman of this committee, the root cause of our economic crisis is in the collapse of the housing market triggered by what Secretary Paulson himself has called bad lending practices.The root cause of the collapse of the housing market doesn't seem to get much attention these days - it should. It's kind of like the history of the Great Depression that, according to most economists, begins in 1929 when the stock market collapsed and conveniently omits the nearly decade-long expansion of money and credit that preceded it.
Most people would like to think that the history of the financial crisis begins when we were all wealthy beyond our wildest dreams due to rising home prices and that, somehow, we can just revert back to that time. But, it actually begins long before that - back when this particular asset bubble began to inflate.
Sadly, with this kind of thinking, we'll get nothing but Band-Aids from here on out.