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March 21, 2008

Bears Dance and Bulls Weep

Roy Meachum

The bulls generally linger out of sight. Wall Street bears lord it over the markets these days, especially for the Bear Stearns kind of traders, as you know.


Ranked among the Street's most powerful, the once-venerated firm rested comfortably, still in its billion-dollar building two weeks ago. Then the market witnessed the corporation's $170 shares fall to $30 last Friday.


On Sunday the feds forced a sale that brought in exactly two bucks a share. The formerly proud corporation, moreover, wound up under the enemy's tent. JPMorgan proposes to take over, pending a worked over contract.


Immediately there was speculation that the government was corralling Wall Street traders, forcing them under a single, more manageable setup.


Ignoring Washington assurances, the Dow Jones began Monday with a death-defying plunge. By the day's end Dow reported a minor (21.16) gain, after the feds helped and promised more.


By the time the next afternoon's clanging bell, the index stood 420 points higher. It was the second most positive day the stock exchanges had known in about five years. Of course, buyers picked the best bargains and chased the Dow down by 293 at the close of business two days ago.


The daily high peaks and mornings' lows capture the current state of the nation's economic woes. Just as Wall Street's bears are about to bring on a new Depression, the fed and the bulls come charging in, and say: Not yet. It could still happen.


The up-and-down cycles dizzy citizens, especially those who need loans and mortgages. In one week a friend saw a local bank cut in half its proposed financial package for a house she wants to buy.


Nothing had changed in her situation: she had considerable equity in her home, a solid credit report and more than enough savings to guarantee payments on the debt for months and months to come. None of those mattered when the government said banks must coddle their loans, retaining liquid cash in their tills.


Sitting behind desks in Frederick, the local decision makers are no less puzzled than New York bankers. No one can really claim to know where the economy is headed.


While various factors share the blame, the overriding villain remains the unnecessary war that rages on. Critics assert the costs have already topped three trillion dollars; others say that figure is woefully short. Government's much lower estimates join WMDs as the latest damage to Washington's credibility.


On any scale, spending that runs anywhere close to that estimated level cannot be replaced by simply printing new currency. But that's what the administration apparently does.


At the very least, the White House stands accused of trying to fight the war while failing to put the nation on a wartime footing. Corporations like Bear Stearns and civilians are not the only victims.


Story after story has been published and broadcast about how returned veterans have been cheated because of overstretched federal budgets.


Cheat's a strong word but very apt when governmental organizations protest the lack of funding. That's the argument when veterans are turned away or delays force military men and women to wait around. Many walk away, using their usually sparse incomes to seek expensive help in the private sector.


Rudyard Kipling's "Tommy" sums up the way warriors have been always shuffled off-stage and out of sight until "the guns begin to play," according to the poem. The tragic loss to Wall Street and the veterans was exactly the opposite that we were promised five years ago, in April 2003.


Defense Department high-ranking official Paul Wolfowitz promised Iraq's vast oil fields would pay costs for the invasion and beyond. The abundance of the country's "black gold" would take care of all the bills, he said.


Evading the most stringent censorship any U.S. conflict has ever faced, media revealed last week that oil-burdened tankers have been hijacked and sold for big black market bucks. As Iraq's sole major sponsor, America must replace the heisted dollars. The situation in Afghanistan is scarcely better.


United Nations' approval and the troops that U.N. members provided have not solved the chaos fomented by a United States pull-out in order to invade Iraq. No part of the hilly country, including the capitol, Kabul, can be considered truly pacified now!


The Pentagon's answer, as Vietnam, consists of sending more troops. In the past year, the surge in Iraq can claim some success; fewer Americans have died than in the most recent years. But Iraqis continue to suffer, by the tens of thousands.


Every other day, it seems, we read about scores slaughtered, and usually in Shiite circles; the increased U.S. presence keeps Sunni insurgent forces out of sight. They emerge only to slaughter, and dramatically.


When British troops retired to Basra's international airport and stopped patrolling the city's ancient streets, killings in Iraq's southern provinces bounded up. The victims were again Shiites, but Sunni insurgents were not involved.


Despite all America's trillions and casualties, especially among young recruits, the realistic prognosis has that part of the world more and more under a Shiite sway, which grants the most powerful leadership to Iran, no friend to the United States.


In other words, the war and the occupation might turn out totally futile. The sole gain may have been the capture and killing of Saddam Hussein. Nothing more substantial.


That probability doesn't begin to justify Wall Street's mess and the lower dollar that has permitted Europeans and Asians to buy American real estate, including towering office buildings.


For someone who has extensively traveled abroad, most recently to Russia, the weak U.S. currency produces pitfalls and beyond the official exchange rate.


On last September's trip, I was delighted to discover a dollar bought the same number of rubles as before. But I ran up against prices that easily tripled 2002's. The Putin government set up a lure that attracts dollars and receives a pay off in tariffs on retail sales and restaurant checks.


All my life, I have never run in the Wall Street race; it has to do with my prohibition on gambling, as taught by a French Quarter bookie. He lectured betting was a sucker's game. The dollar shrinks when everybody, including bookies, takes a bite. I was his mark-up boy until mother found a betting slip, forgotten in a jacket pocket.


Recent weeks have proven how much the stock market is a gambling risk, particularly when the government takes a cut on each dollar traded.


The Middle East wars remove the possibility the country can ever "get even," as gamblers say. The situation promises to worsen our economy for years to come. Washington can print new dollars ’til the cows come home; each will be shriveled by Wall Street's chronic condition.


Looking through eyes neither critical nor optimistic, I see the nation, which I served for nearly seven years in the Army, crippled by finances and morality. Prolonging our armed presence in the Middle East can but worsen America's dilemma.


As recent days prove, we cannot afford the dichotomy: we are at war while Washington pretends daily lives must not be changed. The White House even sponsored massive tax reductions, chiefly for people with higher incomes.


The economy's balloon was sucked up out of sight.


This approach to the problem economy is not only stupid but tremendously destructive to this land of the free. Wall Street's latest twisting and tumbling demonstrate that truth.


Yellow Cab
The Morning News Express with Bob Miller
The Covert Letter

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