Monday, October 06, 2008

Tyler Durden's Wall Street?

The Dow Jones Industrial Average is down 576 points thus far today, and it has lost 3,800 points in the past year. I'm afraid to even look at my thrift savings plan, most of which is invested in a S&P 500 fund. The international finance capital meltdown reminds me of Tyler Durden's scheme in Fight Club to force mankind into a primitive state of nature by blowing up the buildings housing major financial institutions simultaneously. Wall Street and its counterparts in London, Paris, Frankfurt, etc. seem to be destroying themselves just fine without the assistance of Brad Pitt, Edward Norton, and their merry band of followers. President-in-waiting Obama and his economic team have their work cut out for them.

I've no idea how far down the food chain this meltdown will go. I heard this morning that my mortgage company has settled a lawsuit by allowing some subprime borrowers to renegotiate. Hopefully they'll let the rest of us do the same thing. One proposal from Academe to stabilize the real estate market would allow all U.S. homeowners to adjust our mortgages to a flat 5.25% for 30 years. That's not such a bad idea; it strikes me as much better than allowing subprime borrowers to have bankruptcy courts adjust their mortgages, which would clog those courts and might adversely affect the credit ratings of those borrowers during a time when credit is scarce. However, the international nature of this collapse makes me wonder whether anything the U.S. Government comes up with will do much good at all.

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