A Diversionary Crisis, Part One

How soon we forget. Sometimes it's a good thing to take a look back at events of the not too distant past so we jar our memories, and then hopefully our common sense, back into place.

In March 2008, large investment bank "Bear-Stearns" teetered on the brink of insolvency, largely as a result of the then developing mortgage and foreclosure crisis. Bear-Stearns could not get loans from other banks, as confidence in the old bank (the bank dated from the early 1920s) went out the window, and financial markets were shaky over the whole situation. The Federal Reserve (aka, "the Fed") stepped in and through a complex deal, including bailout money, orchestrated a deal whereby Bear-Stearns was acquired by J.P. Morgan Chase.* Fed Chairman Ben Bernanke said the Fed's decision to intervene was made in order to prevent a spill over into the rest of the economy if Bear-Stearns went down. The "free marketers" nearly had a collective stroke, as this whole process went against their vaunted principles of "free market capitalism;" known to some of us as "dog-eat-dog capitalism." I also explain the concept as, "We can do ANYTHING to the public, and we mean ANYTHING, and they can't do a damn thing to us. We don't a give a good damn about people, only about money!" I actually think the public should return the "favor," and not a give a good damn about these miserable, insatiable merchants of greed.**

The Fed intervention didn't come close to righting the miserable shape of the American financial system, but it calmed things briefly. A few months later, it became more and more evident the American banking system, and, therefore, the entire American economy (and the world's, for that matter), was on the ropes, and that the predicament with Bear-Stearns had not been an isolated incident. We waited for the other shoe to fall. Lehman Brothers, another large investment bank dating to the mid 1800s (yes, 1800s!), was next to suffer the consequences of irresponsible capitalism. After serious declines in its stock price and announced layoffs of personnel, clients abandoned the bank in droves, withdrawing their money and assets almost instantly. The bank announced it would file for bankruptcy, and the DOW dropped 500 points in one day, with further staggering losses to follow. The Fed did not intervene, thus giving the "free marketers" their wish. With Lehman's collapse, the situation became so serious, the Bush administration, that bulwark of "free market capitalism," having oft essentially said to American economic problems, "we can't do anything about anything, because its a free market economy," announced, along with the support of the Fed, that they needed a special fund of $700 billion (with a "b") to shore up the financial system or that the country faced a new DEPRESSION, perhaps worse than the one dubbed "the Great Depression." With that name taken, what the hell would we call it?

Folks, having principles is one thing, but carrying principles to an extreme is lunacy. Driving off a cliff doesn't make you pure, it makes you NUTS, and then DEAD!

Part Two to follow, about debt.

* The actual deal is not the subject of this article, but for those interested, there has been plenty written about the subject, and you should have no trouble finding the details of the acquisition.

** The basic argument by the "free marketers" is, capitalists take risks hoping to make a profit on something. If that risk blows up on them, they should suffer the consequences, and government should do nothing to help them out. I would dare say, most of us probably agree with that whole concept "on paper." The problem is, these banks had become so big (remember "too big to fail?"), the failure of any one of them posed a threat to the entire economy and people's livelihoods. Further, suspicions were then rising that Bear-Stearns was not the only big bank in serious trouble.

WORD HISTORY:
Market-This word "may" trace back to Etruscan, a language primarily once spoken in central and northern Italy. Etruscan is not Indo European, or at least, linguists have not thus far connected it to Indo European. The modern Italian region of "Tuscany" is named after the Etruscans. Latin, an Indo European language related to English further down the family tree, obviously came into much contact with Etruscan in Italy, where "some" believe Latin picked up what would be the ancestor of "market," but not all agree with that hypothesis, and these people just feel the origin of the word is unknown. Whatever the case, Latin had "merx," which meant, "things for sale, wares." This spawned Latin "mercatus," which meant "trade, sale of wares; thus, "market." Now we enter another uncertain area, as some believe English acquired "market" from Old French "marchiet," which was "market" in northern French dialect. Old French had inherited, so to speak, the basic form of the word from Latin, as French is a Latin-based language. Another point of view is that English and other Germanic languages acquired the word directly from Latin, as the result of trade with the Romans, or rather their descendants in northern Italy, as apparently the word only shows up in Germanic AFTER the Roman Empire. To be quite honest, it could have come into the Germanic languages via both sources, with some acquiring it from Old French (I lean toward this for English) and others from the Latin dialects of northern Italy. The word shows up in English during the 1100s with the meaning, "a time and place set for buying and selling," with the word continuing when actual buildings were later erected for the sale of goods. The verb form came from the noun during the 1200s. German and Dutch have "Markt, although the Dutch word is spelled with a small case "m." Swedish has "marknad;" Icelandic has "markathi;" Danish and Norwegian have "marked;" Frisian has "merk."