It is uncertain, there’s no question about it. Wall Street got drunk, it got drunk, (it’s one of the reasons I asked you to turn off your TV cameras.) It got drunk and now it’s got a hangover. The question is how long will it sober up, and not try to do all these fancy financial instruments.

Bush at Pete Olson’s fundraiser, July 18th 2008

But who was mostly responsible for letting this fandango of ‘fancy financial instruments’ go into a wild frenzy?

Who else, but the Maestro, the Mr Magoo of Central Bankers? (”Bubble? I can’t see any bubble”). None other than the long time Chairman of the Federal Reserve Bank, a man who once famously assured the anxious souls in Washington that there was no need to worry, derivatives were just spreading the risk globally. This was, assured the Maestro, a good thing.

Working to a grand design, to give the US continual dominance in world markets by serving the interest of the “Money Trust” (the cabal of bankers who own the Federal Reserve), perhaps nobody had more influence on what is happening today in world markets, and for a concise summary, let’s see what F. William Engdahl wrote in January this year:

This is the true significance of the crisis today unfolding in US and global capital markets. Greenspan’s 18 year tenure can be described as rolling the financial markets from successive crises into ever larger ones, to accomplish the over-riding objectives of the Money Trust guiding the Greenspan agenda. Unanswered at this juncture is whether Greenspan’s securitization revolution was a “bridge too far,” spelling the end of the dollar and of dollar financial institutions’ global dominance for decades or more to come.

Greenspan’s adamant rejection of every attempt by Congress to impose some minimal regulation on OTC derivatives trading between banks; on margin requirements on buying stock on borrowed money; his repeated support for securitization of sub-prime low quality high-risk mortgage lending; his relentless decade-long push to weaken and finally repeal Glass-Steagall restrictions on banks owning investment banks and insurance companies; his support for the Bush radical tax cuts which exploded federal deficits after 2001; his support for the privatization of the Social Security Trust Fund in order to funnel those trillions of dollars cash flow into his cronies in Wall Street finance—all this was a well-planned execution of what some today call the securitization revolution, the creation of a world of New Finance where risk would be detached from banks and spread across the globe to the point no one could identify where real risk lay.

Ironic, when you consider that the Idiot Decider now thinks all these ‘fancy financial instruments’ may have something to do with the catastrophic state of their financial and credit markets, isn’t it?

Not only was Alan Greenspan allowing the pumping of Agent Orange by all and sundry, dispersing it far and wide with no checks on its usage, he was all the while singing its praises, even in the face of many who expressed their well founded concerns to him. Some years later, there are scorched earth losses hitting the US banks and investment houses and a lot of very sick borrowers who are pretty sure where they contracted their diseases. (Not to mention investors worldwide who are taking a severe haircut on vast tranches of this toxic subprime muck and anything else which has the label US mortgage in the fine print.)

Today, another 8,000 US householders got foreclosure notices. Yesterday there were 8,000 and tomorrow 8,000, and the day after that another lot. Pretty soon that adds up to millions and the cost to families and entire neighbourhoods is immeasurable. It’s estimated the final tally will be around 6.5 million foreclosures, but if this market really collapses, it could go much higher.

Currently there are worrying signs that the next level up from subprime, the Alt-A market, is starting to crack too. And this does not include the possible tens of millions of homes which will be ‘underwater’, with the value sinking under the level of debt being carried. People are now posting in their keys to the bank and simply walking away figuring it’s the cheaper way out. Throw the credit cards onto the bonfire as well.

“What bubble? I don’t see any bubble,” was always Greenspan’s answer.
Voters on the whole don’t know the details, but look at the polls that ask them about which way their country is headed. They point in one direction, and the mood is decidedly, well, un-American. The can-do nation is watching itself bobbing around in the can, and it’s not a national mood that sits well with them. They don’t do pessimism comfortably (they aren’t French or Russians, after all), but they’re not averse to revenge. Come November, they’ll unleash this, and it won’t be to vote for McSame…same policies, same incompetence, and same lies.

Obama set the national discourse with one word: ‘change’. And that word is getting amplified on so many levels, none more spectacular than his candidacy itself. A candidate who so defied the pundits’ paradigm of US politics that it almost universally took them by surprise. (It sure took Hillary Clinton by surprise!). How much change can he implement after nearly a generation of ‘regulatory debauchery’ is open to question, but maybe the voters will not be reading the fine print nor the arcane details, they’ll be going with their gut reaction, an aversion to what has gotten them into this mess.

Trillions of dollars of householders’ wealth is being torched in the bonfire of the inanities, and while none of this ‘had to be’, it was definitely ‘allowed’ to be.

If all of this financial meltdown wasn’t enough ballast for the good ship McCain, he’s still desperate to tell his story, and clutches the albatross he calls the ’surge’, imploring anyone still listening, and tries to convince them it’s working. (He decided that telling voters the economy had made progress under Bush was not going to sail in the face of the shocking reality.) But it’s too late now because the voters hardly care anymore, they just want out, and so does Obama, and so does al Maliki, and nearly all the Iraqis who aren’t dead yet, or haven’t left the country (or what’s left of it). It’s a dead albatross, but it’s nearly the only thing he has, and he’ll go on wearing its bedraggled corpse until November, for all the good it will do him.

The death of the US dollar hegemony? Even the death of Reaganism?

Uncertain? Well, it’s quite possibly both.

But one thing IS for certain: that’s a very dead albatross that old guy is wearing.

“Ah! well-a-day! what evil looks
Had I from old and young!
Instead of the cross, the Albatross
About my neck was hung.”

(Samuel Taylor Coleridge, “The Rhyme of the Ancient Mariner”)

For those with a Monty Python bent (and those terms go together so well!), perhaps they could try a variation on the famous Dead Parrot Sketch, with McCain as the storekeeper and the irate voter demanding a refund for his now very defunct albatross. Perhaps the bird was called Serge, and the confusion begins right there… over to you!