Comments

It is probably widely accepted that decentralization allows for a greater pool of understanding, the diversity of thought, needed for development. But the reality seems that after much analysis from many, centralized leadership, requiring decision-making, is needed for execution. It is this leadership that is needed in disasters, having been a part of the development and execution all along. This seems like the necessity of communication spoken of in one of TP's recent post.

Decentralization in a disaster can cause further confusion and decline. With centralized competent leadership (including Paulson, Bernanke, and the Congress), execution in desperate times is stabilizing. (I, for one, felt better. Though, like most, I would have rather not been here.) How to move forward after the disaster is also important, needless to say. But we are not there yet; the decline continues. This $700 billion may not be the end. Does this amount include the houses that are in the process of foreclosure? Six million more or so are expected.

Is decentralization like deregulation? In this case, decentralization is not to my understanding the best solution to this current disaster; neither are long drawn-out meetings or presidential candidates, acting as the president, who themselves put their own detailed economic plans forth after announcing just on last Monday that “the fundamentals of our economy is STILL strong” and calling for the firing on one who seems to have the confidence of many, including the current president, administration, and Democrats and Republicans alike.

Posted by Judith Ellis at September 22, 2008 1:53 PM

Seth?

In this case speed = confidence and stops the ensuing panic. Congress is already showing signs of playing politics here...both sides of the aisle...and the posturing will make progress take longer and cost more. It's what they do!

Why do some folks equate "centralized" leadership with no input of others into planning and decision making. Don't or shouldn't those who will be accountable for the decisions they make get to control the decision? I know I worked for folks in the Air Force who allowed us to have our input on a every issue but once the decision was made we saluted sharply and supported it. It simply meant the discussion was over. Leadership isn't about giving up control, it is about using the authority differently.

I vote for Judith...not only because I agree with her...but because I think she could bring the type of change I could believe in...I'm skeptical of the "insider's" motives and abilities to do it.

Seth? I'm sorry, is this someone I should know of?

Posted by Dave Wheeler at September 22, 2008 2:29 PM

Is it backwards day or did Tom just argue positively in the beginning of that post for heading down the National Socialism path? If you like the Patriot Act, you're gonna love what Treasury and the Fed are cooking.

Posted by DC at September 22, 2008 2:44 PM

Dave - I'm assuming it's Seth Godin. Thanks for the vote of confidence. It's others who nudge us forward even when we are in doubt or fearful of moving. I remain faithful. Faith is not the absence of doubt or fear, but moving in spite of them.

Posted by Judith Ellis at September 22, 2008 2:53 PM

Hi Tom,

I am curious at to whether " . . . a formal system [will] be in place to implement a pre-arranged sunset for authoritarian action." Read anything that suggests that this emergency will be any different than the Black Swans of the past couple hundred years, ending in, say, government returning the freedoms it has encroached upon?

Re-Reading Hayek's The Road to Serfdom.

Posted by S. Anthony Iannarino at September 22, 2008 3:03 PM

I stand corrected! I saw Seth Godin's video on social networking and it's value on debbieweil's page...I was most surprised by it for some reason...but impressed!

Posted by Dave Wheeler at September 22, 2008 3:13 PM

"When two partners (Advisors?) agree all the time then one of them is not needed" - Dale Carnegie.

I read both you and Seth regularly, and have been able to fit most of the advice into my own unique little world view. Robust debate is brilliant!!! (And helps flush out the truth of the matter)

Particularly when it is between two extra-ordinary thinkers.

Posted by Daryl Mather at September 22, 2008 3:15 PM

At times of crisis, we need centralised leadership to define the actions, prioritise them, communicate them and, well, to lead. But for me, what this shows up is the failure of leadership before the crisis.

In stable state times, surely the role of leading Treasury and Government figures is to define what is and isn't acceptable and to try prevent the crisis from happening. These people of towering competence and great authority should be capable of saying, "This is wrong, it's dangerous and it's leading us into danger." We're all being wise after the event (e.g. NINJA loans) and rather cynical about highly-paid bankers now facing unemployment. But when things were booming, most of us entered into a Faustian pact with these same bankers: all the while credit was cheap and our property values were soaring and our share portfolio's were growing, we were happy to overlook all the risks and all the moral dilemmas.

There's an old saying that if something looks too good to be true, it probably isn't true. It's probably also the case that if something is so fiendishly complicated that very few people understand it, then it's probably way too risky for everyday use. Praising a few politicians, regulators and (to be fair) bankers for sorting out the current problem misses the point: they were remiss in not speaking out and stepping in beforehand and must be prepared to do so if they sense danger in future.

Posted by Mark JF at September 22, 2008 3:58 PM

It seems to have been forgotten, but the government does have ASSIGNED jobs. Madison and his co-framers hid them from view right where people focused on commas and participles (Scalia) and those solely interested in RIGHTS (NRA, ACLU) would hardly ever look. The Preamble says we will set up and use government to do these six things... (1) Form a more perfect union, (2) establish justice, (3) insure domestic tranquility, (4) provide for the common defense, (5) promote the general welfare and (6) secure the blessings of liberty to ourselves and our posterity. (How many in Congress or the Administration or, God help us The Supreme Court can recite the Preamble and KNOW what it is saying?) These seem to me ongoing, evolving and eminently sensible good goals demanding all-the-time-attention. Full-time jobs that have been full-time ignored for the past eight years and full-time in neglect on both sides of the aisle for a quarter century or more. When an organization doesn't do its assigned jobs, trusts Adam Smith more than John Adams, we get to September 2008 ripe for authoritarianism. Any debate NOT built on these six tasks is wind.

Posted by Tom Troland at September 22, 2008 4:17 PM

I imagine most contributors on this Blog have, like me, worked in both centralised and decentralised settings. I’m a passionate advocate of decentralisation within parameters (if that’s not a contradiction).

I argue that in ANY setting whether centralised or decentralised it is all about the PEOPLE in leadership positions. Some of the most fantastic leaders I’ve worked for have been in centralised settings but they have the uncanny ability – because of WHO they are and not where they sit - to allow freedom and local autonomy within a command and control centralised structure.

Leadership and followership is about people FIRST AND LAST and not about structures. People are ALL we have for God sake.

Posted by Trevor Gay at September 22, 2008 4:40 PM

I don't think we are talking here of anything but people. Gremlins did not create this mess and they will not get us out of it. Systems exist and are made viable, being powered and maintained, by people. The most sophisticated financial instrument in and of themselves did not get us in this mess and more of the same will not get us out. Being is the essence of my blog, the existence of both human and structure from which the latter, oustide of natural order, could not be.

Posted by Judith Ellis at September 22, 2008 5:14 PM

Tom Troland - Just read your words again --very nice indeed. Thank you. Perhaps we should at least start with the electing a fresh bright-eyed constitution law professor with a penchant and passion for change for President.

Posted by Judith Ellis at September 22, 2008 6:32 PM

TP's ideal leader must be the Roman general/farmer Cincinnatus - http://ancienthistory.about.com/od/rulersleaderskings/p/Cincinnatus.htm

Posted by Mike L. at September 22, 2008 8:03 PM

Absolute power corrupts.
And the irony is front and center

Posted by nextgenradio at September 22, 2008 8:16 PM

Yes "Tom Troland" you are right, authoritarianism!

The Gov was assigned to do a job and they dropped the ball badly.

It's interesting how people can be "partially blind" to what has been occurring on a domestic and international level.

How do "they" easily control this after the facts?

SIMPLY PUT:

Have a hand in creating "the" PROBLEM.

Allow a REACTION time to take place.

Then float in, after being quiet for so long, and offer a SOLUTION.

Most of us have known that a debacle of this magnitude was coming.
We've spoken about it for so long.

American consumerism running rampant. Not making things anymore. Allowing the rules to change and business with titles as "Investment Banks" when they weren't banks, on and on and on.

It doesn't matter which administration gets there in November, this problem was created a long time ago and it ain't going to be fixed by next week!

WHAT HAVE WE KNOWN:

THE RE-DISTRIBUTION OF WEALTH has been planned and it's been on the cards for years.
You don't make the changes that have been made without "someone" paying for it all.

By 2012 - most people will be back down the bottom working their way out and up - again - paying for others manipulation of a system that should never have been tampered with in the first place.

You're partially right "DC" & "S. Anthony Iannarino" in comments regarding what Treasury and the Fed is cooking - and it's easy to say the Black Swan is cooked and now it's time for most US Citizens to live off the scraps left over.

Posted by Paul4578 at September 22, 2008 11:36 PM

The problem with concepts like, "establish justice" and "promote the general welfare" is that we all agree with them but we don't agree on what they mean, never mind how to achieve them. Indeed, some of their authors were slave-owners and didn't believe in the vote for women so they're clearly open to and in need of re-definition as times change.

My own view is that Government needs to set rules and then get the heck off the playing field. However, they need to stay on the touchlines and call timeout when the rules are being stretched or don't cover the way the game is being played.

Given that a lot of the current problem is about debt and the way it has been sold on, it seems to me that we need some tougher rules about liquidity and asset cover. The focus on pay is a red herring: star players will always be well paid. But they should be well paid for operating within rules that don't put institutions and whole economies at risk of collapse.

Posted by Mark JF at September 23, 2008 2:57 AM

If these star payers are paid well within the rules do you not think that their star salaries will be significantly lowerer? I agree with Mark, however, that star players will be paid well, but a question too perhaps is defining who these star players are? Leadership should without doubt be paid well, but as I'm sure many would agree so would the employees who make it happen. But getting over $100,000 dollars a year for working on the line at GM with health benefits for your family and children until they're out of school, even if the "child" is 24, may seem to many excessive.

The whole system seems to need overhauling, a restructuring of both executive and employee salaries. I know changes are coming for employees of the Big Three and for the executives too at least in the financial market with the new bailout--hopefully. Being competitive in this new global economy requires it. But if you look at the beginning of new industrialized nations they seem to require something else too, serfs and slaves. Consider Britian, the US then and Dubai, China and India now. The current reports of abuse are harrowing. Their hard labor seems to go unnoticed and underappreciated based on the standard of living they are forced to live by.

It used to be certain skill trades or incredible enterprenurial ventures allowed one to enter into the solid middle class, not necessarily brainlessly popping a door on a car that requires very little effort, especially with the help of technology. There should be perhaps a difference between a miner and the current auto worker. Which would seem to be more deserving of that 6 figure salary considering effort and risk? The same perhaps should be looked at when considering the salaries and bonuses for executives, both effort and risk. But you know what they say. The higher up the chain the less effort required. This may not be true of every executive, needless to say.

Many of the salaries of the average employee seems like pennies in comparison to the salaries of many of these CEOs. (I'm not sure about this. I'm just thinking of sheer numbers here. There are more employees than CEOs) But when you aggregate the whole it may not be. I'm also not talking here about the $345 million that I recently read one CEO to have received. This seems incredibly excessive. Who isn't a big proponet of leadership? "Without a leader the people parish." But with bad leadership, where there are no checks and balances and the rule of ethics, they parish too. Then again, the latter would not be true leadership, would it?

Posted by Judith Ellis at September 23, 2008 7:17 AM

‘Indeed, some of their authors were slave-owners and didn't believe in the vote for women so they're clearly open to and in need of re-definition as times change.’

Mark - The people who step out of line are ALWAYS worth listening to and they are often ahead of the rest of us average folks. My political hero the magnificent Tony Benn (now 83 and working harder than ever) when an active young Labour Party Member of Parliament was universally castigated in the media all over the world in the mid 1960’s for agreeing to meet someone who was labelled by all major governments of the day as ‘a dangerous terrorist.’

Tony tells how the next time he spoke to that person he was President of South Africa i.e. Nelson Mandela – and a leading icon for world peace.

If we do not re-define, we are just burying our head and missing a trick.

Fixed views are only useful for horses that need to wear blinkers to run straight.

Posted by Trevor Gay at September 23, 2008 7:33 AM

Good point, Trevor. Thank you.

Posted by Judith Ellis at September 23, 2008 7:37 AM

If centralised then decentralise. If decentralised then centralise.

Is it the movement and the sense of purpose in change that matters rather than the position?

Posted by PaulH at September 23, 2008 8:28 AM

Great original thought Paul - Mayo's Hawthorne effect strikes again! - Old is still best maybe? :-)

Posted by Trevor Gay at September 23, 2008 8:47 AM

PaulH's phrase sounds really nice, that notion of movement and purpose. But some things are constant. Even nature has order; this must be important. Positions seems to have evolved from the necessity of order. What is undoubtedly happening right now in the midst of the talks in Washington is undoubtedly chaos, when all along houses and the House should have been in order. My mother used to tell us to get our house in order. But his house had nothing to do with the physical but more to do with how we lived our lives daily. Perhaps in this sense we all need to get out house in order to avoid such a calamity again.

Posted by Judith Ellis at September 23, 2008 8:55 AM

Thanks Judith - appreciated.

Posted by Trevor Gay at September 23, 2008 9:28 AM

Judith - a small but pertinent comment on your query that companies need to question who their star players are. No they don't - that's putting the cart before the horse. What they need to do is to define what star performance is. The star players will emerge from the definition of star play.

Posted by Mark JF at September 23, 2008 9:29 AM

Mark

I wouldn't trust a company to define star performance - the people you really need in an org are usually different from what management thinks they need!

Posted by PaulH at September 23, 2008 9:48 AM

How I miss the honest voice and highly-tuned horse-manure detecting skills of X round here!

Posted by Rob at September 23, 2008 10:41 AM

Paul - I am with you and I would only agree the company can identify star performance within the following conditions:

• The people at the front line identified what star performance means.
• The only managers allowed a vote on star performance are those who spend at least 75% outside their office and in direct contact with front line staff and customers for 95% of every week.

Rob - I enjoy ALL the honest voices I see in the comments above and I also miss x ......

Posted by Trevor Gay at September 23, 2008 12:32 PM

Remembering our past economic problems seems to be important here. This current crisis has been likened to the Great Depression. Most times this is a scare tactic - but there is something more there. We can LEARN from it! Specifically, FDR established the SEC and a host of other reforms to help regulate the system so that the downward spiral slowed and then (admittedly with WWII) turned completely around. Now more than ever, we need to examine his leadership to see parallels and differences.

One thing is clear though. Even though not everything worked (FDR "screwed around vigorously" [thanks TP for the language] with the changes he was making to eliminate the bad and enhance the good), doing something about it was the only way to get things better. Waiting around for the "adjustment" just means that the problems get worse. His leadership was exactly what the country and world needed at that time.

So, If Paulson is going to screw around vigorously too, and not dogmatically stick to failing solutions, we may have a chance that things work out okay. The big question is exactly that.

I agree with Mark that the CEO pay issue is a red herring. Totally insignificant to the big picture, other than political/emotional. That said, kudos to AIG ex-CEO Willumstad for refusing his $22mil severance.

Posted by Martin Koning-Bastiaan at September 23, 2008 12:45 PM

Mark and Paul - One thing that is for certain is that corporations know when there has been profit. The bad thing about what's going on now is there appears to have been many masquerading as star players who did shady deals and securitized bad loans. But upper management must have tactitly or outright sanctioned such poor business and ethics. Should there be ethical charges levied here within banks and mortgage companies? Remember when banks were boring ultra conservative men in blue suits that rarely took risks? Where are these guys? By the way, are there any women at the upper level involved in this crisis?

Recently, I wrote a piece on my blog about getting in the real estate business as an agent and later becoming an investor, having been trained by one the best in the business. Popping in the office a few hours everyday, I was appalled to see the kinds of people who were getting loans. Many didn't seem to even have a stable job and most brought in utility bills as proof. Of what, I never could understand. If I knew this was wild, as someone just entering the business, certainly Wall Street did too.

Thanks also, Mark, for looking at the details in my comment. I will return the courtesy.

Posted by Judith Ellis at September 23, 2008 1:00 PM

Paul - if a company can't define star performance and starts by looking just at financial results or personality, then it'll probably get that wrong too! I think companies need to define good performance and to ensure it means not just your profit or cost centre results but also ethics, behaviour etc. By shaping the culture in this way, start performers emerge who live a much fuller and rounder set of business values.

Posted by Mark JF at September 23, 2008 1:05 PM

Hi Martin! Good to see you back. A few things that appear to be holding up the bailout are executive caps and government having shares in these private entities. (Are there lobbyists in Washington right now lobbying on behalf of their clients?) I would agree with the former but be vehemently opposed to the latter. Government has not proven to be the most efficient. Having worked on both sides, this would be detrimental to private enterprise, which does not seem so private these days. Are we going to have to change our language about these matters?

Posted by Judith Ellis at September 23, 2008 1:09 PM

Tom,

You have all along possessed the fundamental ingredient to make this centralized vs. decentralized call and it is the answer to the question as to what extent you are dealing with “towering competence” in your decentralized alternative. The probability of success is highly dependent upon the number of decisions to be made and the breadth of the competence required for a good outcome. Two examples, with simplified but adequate math:

The first is a one-decision problem (unlikely but illustrative for the purposes of comparison). If the leader has competence, meaning that they would make the right call more than 50% of the time, then centralized leadership is undeniably better than a random or incompetent call. As the level of competence increases, the decision is even easier for the leader to make the call.

However, the second example is more applicable to any important situation much less a crisis. Let’s say it takes 5 separate correct decisions to get a favorable outcome and your centralized leader possesses towering competence (makes the right call 90% of the time) in one of the five areas. This leader is likely to do no better than random guessing in the other four areas and the likelihood of the good outcome is a little more than 5%. As an alternative, if the leader has 5 decentralized leaders each with towering competence (90% hit rate) then a good outcome is likely 59% of the time (over 10 fold improved chances of success despite the perhaps surprisingly low number). Suffice it to say that the math exercise only reinforces the value of even one more decentralized leader with towering competence, even if surrounded by Bozos.

It is mathematically certain that the best a centralized leader can do is to surround himself or herself with towering competence and let the decentralized leaders do.

Posted by Terry Ransbury at September 23, 2008 9:16 PM

Tom given you spoke to both Seth and Jim your IQ must be in good shape - please use your new found intellect wisely. Jim is integrity personified and Seth is transparency personified.

Decentralised leaders must have integrity - most do not. Sub-prime lending was a decentralised activity involving people who lacked integrity. On both sides of these sub-prime lending agreements the people who signed off did not have the integrity needed to ensure this regime could continue to work for all parties. Centralised leaders must equally be able to enforce, live with, and model 'transparency' - most do not. Centralised US leaders have not been transparent about their motives nor their decisions as they continued to expand credit (low interest rates and loose credit regulations for corporates and individuals) or debt provision (deficits on the hill, in trade accounts, etc).

If you want me to choose between centralised or decentralised leaders that is simple - I choose centralised leadership if they bring 'transparency' and I choose decentralised leadership if they bring 'integrity'. Jim Collins has documented why it is essential that centralised leaders be transparent and why decentralised leaders must have integrity - go read his stuff and all will become clear.

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Did you talk to Seth about his new book "tribes" - he has come to some similar yet different conclusions about C21st social networks to those I have presented here (ie Chattering Clusters, Clans and Tribes) over the past 12 months. I guess I should disclose that along with 3 billion others I responded to a personal invitation from Seth to become one of his Facebook friends - however, I did not sign on to be a fully fledged member of his new 'Tribe'. It will be interesting to see what purpose his new tribe serves. I look forward to Seth becoming a three time guest on Cool Friends - hopefully talking about "tribes"......

Richard

Posted by Richard Lipscombe at September 23, 2008 10:53 PM

If we're going to talk about whether leadership should be centralised or decentralised, shouldn't the first debate be about what we mean by leadership?

Leadership should be centralised when it means the overall definition of what the business does, what it's values and culture should be, what it's objectives are and so forth. Dreaded word, but leadership sets the policy. The leaders should tolerate (and encourage) mavericks and skunkworks; be prepared to develop their culture, objectives etc; but they should step in when they see inappropriate behaviour.

Leadership should be decentralised when it comes to execution of the strategy within the agreed policy.

Soft is hard. Loose is tight.

Posted by Mark JF at September 24, 2008 2:19 AM

'shouldn't the first debate be about what we mean by leadership?'

buy viagra with echeck WOW Mark!! - how long have we got? On reflection I think the definition of leadership is simple - actually 'doing it' is the real test. The best definition of leadership I've seen is over 2700 years old and I use this quote at every opportunity I get. The first verse is the 'doing' bit. The second verse is the outcome of good leaderhip. In my opinion nothing written since improves verse one of this - no offence Tom :-) viagra 100mg prices

I reckon the truly great leaders 'do' verse one as their normal mode of behaviour.

Go to the people
Live with them
Learn from them
Love them
Start with what they know
Build with what they have

But with the best leaders
When the work is done
The task accomplished
The people will say
”We have done this ourselves.”

Lao Tsu (700 BC)

Posted by Trevor Gay at September 24, 2008 7:18 AM

Mark and Trevor - There is no doubt that embodied in all debates, whether speaking about foreign policy or the economy, is the question of leadership. The whole question about being prepared to serve is one of leadership. Leadership is best described through actions and is often considered after the fact. The task is the focus not the talking points. Talking about leadership does not in itself bring leadership.

Posted by Judith Ellis at September 24, 2008 9:08 AM

Richard - It's good to have you back.

Posted by Judith Ellis at September 24, 2008 9:09 AM

Simply put we are in the mess for two reasons:

1) GREED! GREED! GREED!
2) The system was setup to fail in the beginning because of my first point!

You must educate yourself to see how this all got started to understand why we are in such a mess. How many poeple acutally know that the Federal Reserve is not part of the government? I am not trying to be a whacko conspiracy theorist. More over just showing what was setup in the early 1900's is broke and doesn't work any more. Ask people in Russia what it means to be "centeralized".

There are consequences for using people's money wrongly. I for one as a taxpayer don't want to support crappy management! There should be no bail out and the cards fall where they might. We shold not reward bad management and greed. Oh yeah, it will be painful. But my grandparents who lived through the depression knew the meaning of "a penny saved is a penny earned".

Tom - you are big on pointing out that it is okay to fail. Try, Try again. We have a system that has failed. Let's learn from it, fix it and make it so it doesn't happen again! Keep the government out! Just like taxes imposed during the Wars. It was only for war time. Once they get hooked, they never want to loose control.

You think healthcare is bad - this is far worse in my opinion!

Here are links to educate yourself:

http://www.jekyllislandhistory.com/federalreserve.shtml

http://www.frugalfun.com/jekylisland.html

http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212

Posted by George at September 24, 2008 10:13 AM

Hi Judith – Action is indeed the greatest attribute of effective leadership. I still advocate in 2008 precisely what Lao Tsu was saying 2700 years ago. All the lines of Lao in verse one are ‘doing’ words – i.e. actions.

Go to the people
Live with them
Learn from them
Love them
Start with what they know
Build with what they have

It’s an astute comment you make ‘Leadership is best described through actions and is often considered after the fact.’

Great leaders are so humble they don't see themselves as ‘leaders.’ It’s ‘just the way they do things’ - it is ‘others’ who label them leaders.

And yes .... It is good to see you Richard.

Posted by Trevor Gay at September 24, 2008 10:20 AM

I agree with the premise of Lao Tsu's words here, written 2700 years ago or today. We are the people. There would be no movement towards the people if we are apart of the people. Empathy and sincerity can take us places where location can't.

Posted by Judith Ellis at September 24, 2008 5:52 PM

Uber free marketeer Lew Rockwell's two word analysis "fiat money", http://www.lewrockwell.com/rockwell/understanding-the-crisis.html. Moreover he says "there are subsidiary factors. The lifting of restrictions on Freddie and Fannie. Subsidized lending. The Fed's artificially low interest rates. The Community Reinvestment Act. Financial "deregulation." . . . There is much more besides. . . . The core issue is that there is nothing to restrain money creation." I tend to agree. The general premise is that if an individual issued money with no backing (think of a rubber check) then the individual would face civil and criminal penalties. However, the government issues money with no backing with impunity. This is wrong. Government, or more specifically the state, ought to be out of the markets altogether.

Posted by Justin McInerny at September 24, 2008 7:43 PM

George,

I'm going to print out your comment and frame it. You have echoed my sentiments exactly, that the Fed is not a central bank; it is an Office of Central Planning. Or, more appropriately, it is an Office of Central Planning Run By Village Idiots I Would Not Trust to Balance My Checkbook.

When friends tell me that the Fed will save the day, I've said the exact same thing as you: "Ask the Soviets how that whole central planning thing worked out." Of course, unlike the Soviets, we haven't racked up massive amounts of debt on endless defense expenditures all while stretching our military thin while our industries collapsed.

What? We did do all that? Oh crap.

Congress can pass whatever bailout bill it wants. While it may prevent the market from melting down in the short-term, it won't work. Things are really hanging from a thread and the only thing keeping the markets on life support right now is the desperate hope that this Hail Mary will somehow work. Think about that. We have now come to the point where the entire system is waiting on Congress to pass a bill that will subsidize approximately 0.03% of the outstanding credit liabilities in the financial system. (Those liabilities are between $180 - $550 trillion, depending on what you count. In other words, they're BIG.)

Meanwhile, Washington Mutual just became the biggest bank failure in U.S. history, by a factor of 4. Wachovia is hanging by a thread. Citi was recently given a $138 billion lifeline from the Fed in the form of a stealth loan to pay off its liabilities from the Lehman failure. (http://www.elliottwave.com/freeupdates/archives/2008/09/24/$138-Billion----Just-Inferences,-We-Hope.aspx).

The FDIC's insurance fund is approximately 1% of the total of insured U.S. banking deposits, yet the FDIC chair has repeatedly assured us the they have enough money. From where you may ask? From a line of credit from the Treasury, which is already spending our money like it's going out of style. Which it is.

Meanwhile, the Treasury market is taking a hit and is getting more and more tenuous as institutions and foreign governments are wising up to the idea that maybe holding trillions of debt of a broke country going broker isn't such a great idea.

I just heard another of the endless parade of yahoo's on CNBC claim that, other than the credit and financial markets totally freezing up and threatening to completely melt down, the global economy is "fundamentally sound". I was really hoping that someone would explain to him that the global economy has been built on the very same credit that is now disappearing faster than Congress' approval rating. But then I realized I was watching CNBC (home of the eternal bottom callers and endless recommendations to buy financial stocks as they continued on their death spirals to zero.) So I just daydreamed that someone would come smack him over the head with an oversized hammer. Or at least a fish or something.

Oh, and there's also this little thing called the Middle East, where, apparently everyone wants to kill everyone else, most of them want to kill us and all of them want to kill Israel. Also, there's apparently oil there or something. And a bunch of nukes.

Although you'd never know, I'm ordinarily a pretty positive guy, but I'm just calling it like I see it, and it ain't looking pretty. As the old country and western singer turned Texas gubernatorial candidate, Kinky Friedman said, "If you got a booger in your mustache, someone oughta tell you." buy cheap viagra online from india

Our mustache isn't looking too good right now.

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