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Name: margalit
Location: Massachusetts, United States Professional writer, educational advocate, opinionated ultra liberal mother of 18 year old twins, living life in the slow lane due to hypertrophic cardiomyopathy, congestive heart failure, and diabetes.

email: margalitc at yahoo dot com

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Sunday, September 21, 2008

Economics 101 wasn't my best subject

All this doom and gloom news about the economy has got me just as down and depressed as everyone else. But unlike a lot of people, I'm here to admit that I have NO CLUE as to how things got so bad. I don't really have a passion for economics (and I have to apologize to my brother the Econ major). I don't even have much of an interest in it. Probably because I don't understand it, and again...no money for speculation means I don't really care all that much. About myself, I mean. This whole debacle really doesn't affect me...yet. But with that $700 billion dollar buyout, you can bet your ass I'm going to be suffering more than anyone else you know. Because to pay for the speculation of the rich, the government is already promising to take away medicare, medicaid, social security and other social programs that we rely on. What a shock. Punish the poor. It's the American way.

This weekend I read as much as I could tolerate before falling into a stupor to try and understand just what the hell happened to the US economy. Honestly? I missed a lot. But then I found this post on The Daily Kos. This one I got. It's written for a little guy who wants to understand the history of our economy's woes, and wants to figure out how this could possibly affect them. The part that really got my heart a-pumping:

A secondary market for trading swaps exploded into existence, and swaps were traded with absolutely no consideration for the nature or quality of the underlying investment. Swaps changed hands a dozen or more times, growing in "value" as they went. Worse still, no one regulated who could buy a swap, so it was (and is) perfectly possible for a company to acquire swaps that theoretically cover billions of dollars in loans, even if that company doesn't have a red cent on hand to cover those swaps should the loans default.

How big did this market become? Here's business correspondent Bob Moon and host Kai Ryssdal on American Public Media's Marketplace from back in the spring.

BOB MOON: OK, I'm about to unload some numbers on you here, so I'll speak slowly so you can follow this.

The value of the entire U.S. Treasuries market: $4.5 trillion.

The value of the entire mortgage market: $7 trillion.

The size of the U.S. stock market: $22 trillion.

OK, you ready?

The size of the credit default swap market last year: $45 trillion.

KAI RYSSDAL: That's a lot of money, Bob.

As in three times the whole US gross domestic product, Bob. And the truth is that Moon probably underestimated. The unregulated and poorly reported credit default swaps may have actually passed $70 trillion last year, or about $5 trillion more than the GDP of the entire world.

So, are you starting to get an idea of just how big a genie Phil Gramm and his pals unleashed?

This article scared the shit out of me. I can read numbers. I know when the credit default swap market went absolutely batshit insane. The regulations that Phil Gramm and his best buddies John McCain and Alan Greenspan threw by the wayside have brought us to this horrible moment in US history.

I didn't get before that the bills passed by congress, some of them shuffled into other bills on the very last day of congress, were for the most part both irresponsible and benefitted companies like the Keating Savings and Loan and our largest corporate bankruptcy, Enron. Remember how those two institutions took money from all these elderly investors and just walked away with it. Remember the excesses of those companies, the parties, the perqs, the golden parachutes? Well, do you honestly believe that golden age of robbing the poor to give to the rich has changed? Not one whit. And Mr McCain is a part of the problem, no matter how much he wants to lie about it.

If you're a Republican (and why would you be reading my blog if you are?) HOW can you vote for a man who has publically robbed over and over again. No matter what else he's done, and there are many crimes in his background, this is a man who is proud of his economic policies, a man who thought until the economy melted down all around him that we were still financially strong?

Read the article. Find time to learn just what havoc these people have waged on us. Read it and get angry. Read it and be scared. And then read the provisions tacked on the latest bill that are unconstitutional, illegal, and likely to pass because the government wants to act fast.

Don't be fooled. This bailout isn't just about helping the economy. It's also about saving the rich from losing their money. Again.

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