Well, you know the rest of the song, provided you’re over 60.
Anyway, while the media is focused on which little Hitler will get the Republican nomination, the banks (remember them) appear to be headed for another crash. Here’s Krugman:
While we obsess over domestic politics — not that there’s anything wrong with that, since a lot depends on whether the next leader of the world’s most powerful nation is a racist xenophobe, a sinister theocrat, an empty suit, or all of the above — something scary is going on in financial markets, where bond prices in particular are indicating near-panic.
And here, in more depth, from Pam and Russ Martens (although they’re wrong in implying that the Fed should have been raising rates; it should have been breaking up the banks, as they note elsewhere in the article):
… Now, Wall Street bank stocks are plunging and the potential for a mega Wall Street bank to implode has risen dramatically from the shrinkage in the buffer of equity capital. Trillions of dollars more in derivatives exist today on bank balance sheets than were there in 2008 and the public has no clarity on whom the counterparties to this risk are. Investors are voting with their feet and stampeding out of all mega banks.
The Fed has hamstrung itself in terms of options to meet a financial threat by stalling to get off its zero-bound interest rate range until December 16 with its first minor rate hike. Slashing rates periodically in a crisis is no longer a weapon in its monetary arsenal. More quantitative easing hardly seems like an option either since the Fed’s balance sheet has already ballooned from $800 billion prior to the crisis to $4.5 trillion today and has produced only anemic GDP growth.
So there is something happening here, and it’s not exactly clear to me what to do about it on a personal level, though the optimal political solution actually seems clearer, if unlikely. As Krugman points out, if a Republican gets elected, he’s bound to do exactly the opposite of what he ought, with, in my opinion, the odd exception of Trump, who, as Jimmy Carter pointed out, is not truly wedded to any principle, and so might actually do the right thing. What Krugman doesn’t point out is that if the crash happens on Obama’s watch, the likelihood of an electoral disaster and final slide into plutocracy goes from somewhat unlikely to probable, especially if Obama responds, as he would, with yet another bailout.
Meanwhile, I’m still sort of afraid to download last month’s 401k statement. Where’s my bailout?
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