Saturday, October 25, 2008

CRASH TALK SATURDAY OCT 25

Asbury Park Press, NJ - Five bodies and the cremated remains of 22 people were evicted from a suburban Detroit funeral home after the building went into foreclosure. The House of Burns Memorial Chapel in Pontiac, Mich., was closed and contents of the building were removed, including empty caskets. The bodies were delivered to the Oakland County medical examiner's office for storage after the evictions. Some of the cremated remains dated back to the 1990s. The bodies will be sent to another funeral home when family members make a claim.

Washington Post -
The Treasury Department is dramatically expanding the scope of its bailout of the financial system with a plan to take ownership stakes in the nation's insurance companies, signaling new concerns about a sector of the economy whose troubles until now have been overshadowed by the banking industry, government and industry sources said. Insurers, including The Hartford, Prudential and MetLife, have pushed the Bush administration to include them in the plan. Many firms have taken losses from mortgage-related securities and other investments and are struggling to replenish their coffers. Government officials worry that the collapse of a major insurer could further destabilize the financial system because of the crucial role the companies play in backstopping a wide range of financial transactions, although the direct impact on holders of car, life and other insurance policies would be modest, industry officials said.

The new initiative underscores the growing range of problems that Treasury is scrambling to address with the $700 billion allocated by Congress this month. The shape of the plan has changed repeatedly since Treasury Secretary Henry M. Paulson Jr. introduced it last month as an effort to rescue banks by buying their troubled mortgage-related assets. That original mandate has now been pushed aside by a plan to take equity stakes in banks and insurance companies, and other businesses are lobbying to be included.

The government has been forced to expand the plan partly because the federal guarantees previously given some institutions, such as banks, have put other companies and financial sectors at a disadvantage, making them less attractive to uneasy investors.

The government's power to choose winners and losers in the crisis was illustrated yesterday when the Cleveland-based bank National City was forced to sell itself when regulators turned down its request for a Treasury investment after deciding the firm was too weak to save, according to people familiar with the matter. Instead, the Treasury gave $7.7 billion to PNC Financial Services Group to help buy National City. It did not require that the money be used for new lending, the stated purpose of the government plan. PNC, which has a major presence in the Washington region, would become the fifth-largest bank in the country by deposits.

Howard Zinn, The Real News - To me the solution's obvious, and that is instead of giving $700 billion to the financial institutions, you take that money and you give it directly to the people who need it. In other words, the government, instead of dispensing this money, takes hold of this money it was going to give to financial institutions. It's interesting that it suddenly finds this $700 billion when it was, you know, complaining, "We don't have any money for this or that." Take the $700 billion, and the government should give that in direct aid to people who are going to lose their homes, not allow anybody to lose their homes, and the government should create millions of jobs for people who need jobs. This was done in the '30s.

Seumas Milne, Guardian, UK -
It's certainly true that the events of the past few weeks have exposed deregulated capitalism as bankrupt and its ruling elites as greedy and inept. But it is the free-market model, not capitalism, that is dying. That is reflected in public opinion: a Financial Times-Harris poll conducted across the advanced capitalist world this month found large majorities believe the financial crisis has been caused by "abuses of capitalism", rather than the "failure of capitalism itself" - only in Germany did the proportion blaming capitalism as a system rise to 30%.

As Sarkozy has pronounced: "Laissez-faire is finished." It is not Marx who has really been rehabilitated in short order, but John Maynard Keynes, out of dire necessity. In the wake of the largest-scale acts of state economic intervention in capitalist history, politicians are now having to make a virtue of it. "Much of what Keynes wrote still makes sense," the chancellor Alistair Darling declared at the weekend, as he announced plans to bring forward large capital projects and the prime minister defended higher borrowing to counter falling demand.

The symbolic significance of this official return to Keynesianism shouldn't be underestimated. It's 32 years since the then Labor prime minister Jim Callaghan bowed the knee to monetarism, nearly three years before Margaret Thatcher came to power, and announced to his party conference: "We used to believe that we could spend our way out of a crisis, but I tell you . . . it is no longer possible." Faced with financial collapse and the threat of a full-scale economic depression, such fancies have now had to be consigned to the dustbin of history.


1 Comments:

At October 26, 2008 11:15 AM, Anonymous Anonymous said...

The gubbermint is going to buy out insurance co.s? I guess we'll find out pretty quick how well people like single payer health insurance.

 

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