Yes, that is a Black Hole; it is sucking a nearby star system into its ravenous maw. It also illustrates the perilous nature of our economy and our modern lifestyle when confronted with an unyielding economic certainty (black hole) and the lack of direction and propulsion to evade it (Washington's leaders and their not-fully-cognizant constituents who insist on no "bailout").Yesterday, in my own stumbling fashion, I tried to sketch out the reasons a government intervention is necessary. I'm no economist, but it seems clear to me. Today, the Post includes a couple of business writers who capture the essence of the moment far better than I can:
Underlying the panic is a seizing-up of the credit markets that provide companies with financing for expenses such as payroll and inventory. Analysts said banks are lending less as they try to conserve cash for their own balance sheets, while nervous investors are forcing companies to pay higher interest rates to borrow in the debt markets.
"The credit markets are kind of like the oil for an engine that allows companies to buy something and finance it. And if they don't have the ability to finance that at a reasonable cost, then all of the sudden their profit margins are going to get squeezed and they're perhaps not going to be able to hold as much inventory, and this is happening around the globe," said Jim Hannan, managing director for fixed-income strategy at MTB Investment Advisors in Baltimore.
And here is the best short piece I've yet read on the crisis and its ramifications. It's by Steve Pearlstein, who has been warning about this debacle for a very long time now:
Steven Pearlstein - They Just Don't Get It - washingtonpost.com
Republicans (and all Americans) had better hope some sort of package gets passed pronto. If not, the subsequent global economic meltdown and consumer-driven lifestyle diminishment will be "owned" by their party for the next generation. Hello FDR!
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