Warren Buffet’s offer to back municipal bonds insured by MBIA and Ambac has been rebuffed by at least one of these giants, and will likely be rebuffed by the other as well. Bond insurers don’t want selective help, they want a total rescue that includes the crappy sub-prime mortgage backed securities that are running their ratings into the ground. The topic is so dull and hard to understand that it isn’t getting a lot of attention in the popular press, but the way this plays out will be crucial to what happens next in the continuing saga of the end of America as we know it.
If Ambac and MBIA go bad (or more bad), then banks will start to fold. On the other hand, if the insurers that insure banks are bailed out, then that teaches banks and investment brokers that greed and corruption are good things, and everyone should do more of them, because someone will always swoop in and clean up their mess whenever they create one. Buffet’s offer was meant to help cities by backing the municipal bonds that are keeping cities (barely) afloat, while weeding out the subprime tofurkeys, which are a lost cause.
I’m not an economist, but it seems to me that the obvious and unpalatable-to-everyone solution is to 1) bail out the insurers while simultaneously 2) regulating banking and finance. I mean, come on! Do we need any better proof that laissez-faire Capitalism is not a healthy or viable strategy? With all due respect to Saint Ronald of Reagan we’ve seen quite clearly over the last eight years that the only thing that trickles down when these guys get their own way is crap. The money stays at the top. The genius who ran Countrywide into the ground was getting CEO job offers the same week he sold the whole mess to Bank of America. Countrywide employees, however, were screwed.
Cities are in trouble, and it’s going to get a lot worse unless somebody does something a lot more proactive than empathize and quote supply side doublespeak. The tax base of the American city is eroding faster than a Minneapolis bridge, and if bonds fail, what next? What does it matter who the next President is if the country descends into chaos from the bottom up for lack of basic services while we are waiting?
I work half a day today, just four hours this morning. The bank I work for was recently the target of a scathing article in a major mid-western newspaper about its greed and subsequently huge sub-prime losses. We received a list of “talking points” in case people inquire, explaining why the bank is in great shape and is returning to building personal deposit relationships at the branch level. Both assertions are lies.
I have been struggling with my attitude toward my job lately, really struggling, as it has gotten harder and harder and the opportunities for advancement have evaporated. Our sales goals are so ridiculous that at this point that few people are even coming close to hitting them, which greatly reduces our paychecks, and customers are broke and angry and inclined to be abusive. At least they don’t have to defend the bank. I find it harder and harder to do that, so mostly I don’t. I just listen, do what I can, (which is almost nothing), and collect my meager paycheck. It’s getting really depressing. I’ve been looking for other work, and it isn’t going well there either.
What next? It’s not boring, that’s one positive I guess. But it sure would be great to see something good happen for a change.
