So, the establishment is coming to think that it will live to fight another day. And the zona has been cooked. No more to worry about! This pause in the panic is like unto the six months between Bear Stearns stroke and the demise of Lehman, swinging dick banker for the stars. I should say, it is like unto it in as much as during this time, the establishment goes through the rituals of self assurance. These will include defending the institutions it has made its money on, patting itself on the back for being so smart, and finding heroes. Apparently, WAPO has discovered that Bernanke is our Achilles.
Predictable songs waft out of the Gated Community. Meanwhile, I’m with the guy who said: “Son of man, what is the vine tree more than any tree, or than a branch which is among the trees of the forest? Shall wood be taken thereof to do any work? or will men take a pin of it to hang any vessel thereon? Behold, it is cast into the fire for fuel; the fire devoureth both the ends of it, and the midst of it is burned. Is it meet for any work? Behold, when it was whole, it was meet for no work: how much less shall it be meet yet for any work, when the fire hath devoured it, and it is burned? In the meantime, four points for a legislative program.
1. All interstate companies must incorporate on the Federal level, with the Commerce department. Break the tyranny of Delaware and North Dakota, 2. The amount of all stock issued by a company must equal and be worth no more than the company’s real gross value. 3. Repeal the exemption for 401(k)s and 401(k) like programs. 4. Put in place Therese Ghilarducci’s much better retirement money fund scheme. To quote her testimony from last year: “…since 401(k) accounts and the like are financial institutions -- the bank about where 38% of the workforce2 can intend to save for their retirement – Congress [should] let workers trade their 401(k) and 401(k) - type plan assets (perhaps valued at mid-August prices) for a Guaranteed Retirement Account composedof governm ent bonds (earning a 3% return, adjusted for inflation). When the worker collects Social Security, the Guaranteed Retirement Account will pay an inflation adjusted annuity, based on the accumulated funds."
No. 2, by the way, is the most important. Eventually, we will have to come to grips with the fact that a speculative sector requires limits. In the progressive era, there was quite a lot of worry about watered stock. Now we watch calmly as stock prices normalize around 14-20 times earnings. This is watered stock. In actuality, if there were some speculative leaway – 2 times earnings – this could actually be of benefit in the capital hoho system we live and breathe in. But what is not of benefit is allowing the amount of stock and prices to discover itself.
MANY YEARS LATER as he faced the firing squad, Roger Gathman was to remember that distant afternoon when his father took him to discover
ice. Or rather, to discover the profit making potential of selling bags of ice to picnicking Atlantans, the most glorious of the old man's Get Rich schemes, the one that devoured the most energy, the one that seemed so rational for a time, the one that, like all the others - the farm, the housebuilding business, the plastic sign business, chimney cleaning, well drilling, candy machine renting - was drawn by an inexorable black hole that opened up between skill and lack of business sense, imagination and macro-economics, to blow a huge hole in the family savings account. But before discovering the ice machine at 12, Roger had discovered many other things - for instance, he had a distinct memory of learning how to tie his shoes. It was in the big colonial, a house in the Syracuse metro area that had been built to sell and that stubbornly wouldn't - hence, the family had moved into it. He remembered bending over the shoes, he remembered that clumsy feeling in his hands - clumsiness, for the first time, had a habitation, it was made up of this obscure machine, the shoe, and it presaged a lifetime of struggle with machine after machine.