Black Box Report

That was then:

August 8 2007
NEW YORK (CNNMoney.com) -- President Bush said Wednesday the U.S. economy is thriving and he is doing what it takes to keep it strong.
The president spoke with economic advisors at the Department of Treasury and discussed how the United States' economy has flourished and played an important role globally.
......
Bush quoted Paulson as saying, "This is far and away the strongest global economy I've seen in my business lifetime."

...and this is now:

January 21, 2008
FRANKFURT — Fears that the United States is in a recession reverberated around the world on Monday, sending stock markets from Bombay to Frankfurt into a tailspin and puncturing the hopes of many investors that Europe and Asia will be able to sidestep an American downturn.
......
“There is indeed some panic,” said Thomas Mayer, the chief European economist at Deutsche Bank in London. “What we’re seeing, in Europe and Asia, is that the markets are pricing in a recession.”
The sell-off was evenly distributed from East to West, with indexes plunging in London, Paris, Frankfurt, Tokyo, Hong Kong, Seoul and Bombay. The Frankfurt Stock Exchange’s Dax index plummeted 7.2 percent, its steepest one-day decline since Sept. 11, 2001. The 7.4 percent drop in Bombay’s Sensex index was the second-worst single-day tumble in its history.
Stocks followed suit when markets opened in the Western Hemisphere. Canadian stocks closed down 4.75 percent, and a key market index in Brazil was off 6.6 percent.

From Germany to Hong Kong, from Bombay to Brazil, foreign stock markets are taking one look at le grand monticule de la merde that is the American mortgage meltdown and decided to git while the gittin's good. Apparently the rest of the world isn't buying President Bush's happy talk about the U.S. economy or his stimulus package:

The slide began last week while President Bush was unveiling his inchoate plan to fix everything with a small handout to the peasantry and a cheerful dose of oblivious optimism. The worst week for US stocks in five years followed apace. The rest of the world has caught on that their US investments are only as sound as the withering Dollar and nothing Bush is capable of doing will do anything to postpone or lessen the coming crisis.

Al Franken once said the following:

"If you listen to a lot of conservatives, they'll tell you that the difference between them and us is that conservatives love America and liberals hate America....They don't get it. We love America just as much as they do. But in a different Way. You see, they love America the way a 4-year-old loves her Mommy. Liberals love America like grown-ups.

To a 4-year-old, everything Mommy does is wonderful and anyone who criticizes Mommy is bad. Grown-up love means actually understanding what you love, taking the good with the bad, and helping your loved one grow."

The reason I bring this up is the following post I found from the rightwing Publius Pundit. In (perhaps intentionally, perhaps not) claiming that the global markets are selling off their American investments out of spite, or by way of capitulation to the terrorists, she dismisses the fact that the mortgage debacle was the sole fault of America's businesses (who engaged in practices both manipulative and short-sighted), and the American government (who neglected to monitor the banking industry and now tries to close the barn door once the horse is out, galloped off down the road and enjoying some nice juicy apples over in the next county). In a burst of self-importance you can only find on rightwing blogs, she says those foreigners better not panic if they know what's good for them:

See, the world depends on our purchasing power, and if that's taken away, the world's economy will collapse. The world depends on American buyers just the same way America depends on foreign oil suppliers, except to a far greater extent. America has made itself indispensable to the world. Checkmate. Game over.
......
Americans routinely ask what we might do to encourage foreigners to hate us less. But when was the last time you heard a foreigner ask how he might help the American economy do better, and thus help themselves as well? When was the last time you heard one speak up and say: "Hey, our future depends on these people you want to destroy. Shut up, already." Instead, it seems there is a whole host of benighted morons who delight in American difficulties, seemingly oblivious of the horrific impact on their own lives. Or else, they're simply overcome with bitterness and suicidal impulses.

Yes, I can't imagine why foreign countries are reluctant to bolster our purchasing power by loaning us money we can't pay back:

Somewhere along the way our culture forgot the meaning of the word 'credit' and literally a generation of people have been spending like drunken sailors on borrowed--not earned, money. It appears that the bill, at long last, may be coming due.

It may be time to cut up the government's Chinese VISA card. In the meantime, the best advice I've seen comes from the Agonist:

Hold on to your job, whatever that may be. Pay down your debt and watch your expenses. Monitor the credit and market risks in your investment portfolio, and if you have any real concerns, U.S. Treasuries earning 2% will be a lot better than stocks or bonds that might collapse in value. As of now, the four horsemen of the apocalypse are mowing down the big players, but the little guy will be in their sights eventually.

Fasten your seatbelts, it's going to be a bumpy ride.

UPDATE (1/23/08): And speaking of which, the Fed Chairman "Helicopter" Ben Bernanke's decision to slash a key interest rate by .75% - the biggest cut of its kind since the last Bush recession - seems to have stemmed a potentially brutal 48-hour rollercoaster ride on Wall Street.

Good news? Not exactly:

Stephen Roach, head of Asia for US investment bank Morgan Stanley: "We have a market-friendly Fed possibly injecting a lot of liquidity in the system which will set us up for another bubble economy.

"I'm sort of worried that all they did yesterday was to hit the snooze button. (This is) excessive monetary accommodation that just takes us from bubble to bubble to bubble."

How's that saying go? "Those who fail to learn from history are...something, something, something." I can't remember how the rest of it goes.

Apparently, neither can Bernanke.