Some financial crisis links (9.24.2008)

James Henry uses a forbidden phrase to describe America's current political and economic situation:

Ladies and gentlemen: pardon my intemperance, but it is time for some moral outrage and perhaps a little good old-fashioned class warfare as well — in the sense of a return to seriously progressive taxation and equity returns for public investments. After all, as this week's proposed record-setting Wall Street bailout with taxpayer money demonstrates once again, those in charge of running this country have no problem whatsoever waging "class warfare" against the rest of us — the middle classes, workers and the poor—whenever it suits their interests.

Henry then points out that the Plan is just a program meant to throw "good money after bad."He concludes by stating his program of progressive reform.

Nomi Prins points out that the Plan would only create and give Wall Street and the relevant government agencies what amounts to "a self-licking ice cream cone." To avoid this fate any bailout plan which makes it through Congress must include a new regulatory regime. (via AlterNet and CommonDreams).

Bert Ely believes Wall Street can clean up its mess without help from the Federal Government:

I have run the numbers looking at the capacity of the industry to pay the tab. Assuming that bank insolvency losses don't get way out of line, which I don't think they will, then the industry can handle it. It's not going to be cheap, but the banks can handle it and clean up their own mess. The losses will feed back through the industry to depositors and borrowers in the form of lower rates on deposits and higher cost of loans.

One caveat: Ely's claim issues from a market fundamentalist position. (Via Naked Capitalism).

Chris Bowers of Open Left wonders if the economy is in crisis. If not, then what are the Bush administration's intentions with their Plan?

Mark Thoma of Economists View, on the other hand, would not wish to risk the consequences that could follow any failure by the government to act. His argument rejects any Main Street-Wall Street dichotomy: Saving Main Street entails saving Wall Street.

Writing in the New York Times, James Grant warns that the dollar, the world's hard currency which currently floats on air, so to speak, will not survive the crisis and return to the status quo.