Anatole France is not a household name in the U.S. He is the satirist who wrote L’île des pengouins, une farce mordant featuring the misfortunes of a penguin colony accidentally baptized by a myopic priest and acquiring human nature in consequence. France is also remembered for his saying that the rich and poor are, in the wisdom of the law, equal, and prohibited to sleep under the bridges, beg in the streets and steal bread. This week it is worth while to recall the great literary provocateur, whose books were placed on index librorum prohibitorum by the Vatican, in connection of the bailouts of the markets. Two major rescue missions were announced to protect some people in imminent danger of breaking the law.
One was unveiled by the president of the United States, who plans to bail out “the financial sector”, or whatever remains of it after hurricane Ike. It directs the Treasury to buy out the toxic mortgages to relieve the banks and the remaining two brokerage giants - up to about $700-billion mark, which the Treasury would, ……ehm, ehm, ...have to borrow. How that sort of appropriation can be made in a democracy has not been revealed. The only people known to have that kind of cash would be the Chinese communists who, while the Yanks got distracted by chasing rag-assed suicide bombers in Iraq and Afghanistan, amassed reserves of about 1.7 trillion US$. But if the U.S. lets China to buy out New York City and L.A., then naturally the Times and the Post can’t badmouth the Central Committee over lobbying and influencing U.S. elections (if it is allowed for the local insolvents) , let alone badmouth them over Tibet, when the Dalai Lama has been ready to make a deal with Beijing for years, graciously settling for Lhasa's autonomy within China.
The other rescue mission was announced in Sochi, which I am sure everyone knows is a major Russian vacation resort on the Black Sea, where the U.S. Navy is currently showboating and as of Monday kept afloat by new Treasury short term bills . The last issue gave close to nothing in yield, which strikes sheer terror in the enemies of pax Americana from the halls of Montezuma to the shores of Tripoli.
The plan of the Russian prime minister has called for a massive buyout of Russian securites badly mauled after the Georgia war. This has happened mostly in response to the U.S. generated anti-Russian mongering. The Moscow stock exchange stocks lost about 40% and Putin shut it down. But Putin’s One Russia is strong and has money to throw around. The bailout will not touch its Reserve Funds, including the National Welfare Fund which the Federation uses to manage hyper-liquidity, foreign cash reserves, excess inflation, and fluctuations in resource earnings. The little vindictive man did not think it was necessary. The Federation Reserve Funds combined stand at about US$ 180 billion.
It appears then that the “law of the markets” is quietly settling the difference of opinion between the US and Russia on the most important man on the planet, Mikheil Saakashvili. The US Treasury appears much worse for wear than the Russian, which is good to know. At any rate, I am sure that the poor will be thrilled to learn the stocks have rebounded from the scare and the American bankers and Russian investors are safe in their homes for now.