After Congress approved a so-called "rescue plan" for the financial industry during early October, one could not help but wonder how long it would be until other industries facing hard times would also come hat in hand to Washington for help. Before the month was out, bad news started coming out of Detroit, the center of the automotive universe. The Big Three (General Motors, Ford, and Chrysler) are running out of cash at a time when auto sales nationwide are falling off a cliff. Sure enough, the lame-duck Congress (so called because it includes lawmakers who are retiring or were defeated in the recent election) is considering a $25 billion bail-out plan for Motor City. The automakers, who have already gone to Washington hat in hand, have been asked to deliver plans showing their viability.
Vice President Dick Cheney infamously informed former Treasury Secretary Paul O'Neill in 2002: "Paul, Reagan proved deficits don't matter." Now comes news that bailout-mania combined with already out-of-control domestic spending and foreign wars may lead to the first-ever trillion dollar deficit during the current fiscal year.
The much-ballyhooed international economic summit in Washington is over, and, according to news reports, little was accomplished aside from agreement on various vague goals by the delegations from 21 nations and four international organizations in attendance. There were no flashy resolutions and no dramatic makeover of the global financial system — yet.
For years, the so-called economic experts — Ivy League economists, Federal Reserve chairmen, Treasury Secretaries, and media financial analysts — have been selling a bull market. Buy, buy, buy; spend, spend, spend; borrow, borrow, borrow. But the running of the bulls on Wall Street has now turned bloodier and uglier than the annual carnage on the streets of Pamplona.
If the language in his first post-election press conference is any indication, Senator Barack Obama will be true to his profligate campaign promises. He pledged in that November 7 press conference a variety of vague new government initiatives that would appear to require massive new federal spending.
Lost in all the Obama furor, the world's leading economic powers — the so-called G-20 nations — are quietly laying plans for a November 15th summit in Washington, D.C., that may effect a revolution in world finance and global governance, a revolution with potentially much greater long-term impact on America than anything on President-elect Obama's agenda.
In testimony that surprised many observers, former Federal Reserve Chairman Alan Greenspan professed a "state of shocked disbelief" over the unfolding global financial crisis. Where once Greenspan regarded himself as a champion of untrammeled free markets, now, Greenspan told the House of Representatives Committee on Oversight and Government Reform, he believes he was "'partially' wrong to resist regulation of some securities."