This Country is Sooooo Screwed, Part I...
I really didn't want to write about the economic crisis because I would simply be repeating many of the things I've already written here; the crisis was caused by the same triad of bugbears that is always at the bottom of any tragedy: greed, stupidity and appalling lack of oversight. Anyone who's followed this rant for any appreciable amount of time knows how I feel about Wall Street -- it's legalized gambling -- and how I feel about 'financial professionals' -- they're (mostly) self-inflated, egotistical crooks with inferiority complexes that can only be satiated by Pavlovian- reflexive acts of mere acquisition and accumulation, and the only differences between them and your neighborhood bookie are a federal license, and a better suit. Anything I would have to say on the subject would be tainted by this view, and would only present me with little more than an "I-told-you-so" opportunity which doesn't put me in the mood to do the Snoopy-happy-dance.

But, unfortunately, I can't ignore it any longer. Particularly not when the American government resorts to nationalization in order to (they think) correct a problem with supposedly-free markets (itself a misnomer to begin with), and decides the right tonic is the transfer of $700 billion from public coffers (you know, money that would have otherwise been wasted on something like, oh, national defense...) to the private sector to, in effect, save the financial whiz-kid's collective ass from their own stupidity. Why? Because without it there would economic turmoil, in which the earth might spin off it's axis and hurtle into the sun.

Of course, even though Wall Street got what it wanted (someone else to pay for their mistakes), the markets are still tanking because the same jerks who caused the meltdown are still at work. The markets are dominated by speculators and short-sellers, and fueled by easy-to-obtain credit. The government just handed them $700 billion to keep the credit markets afloat, and the Federal Reserve bank just lowered rates again to make borrowing almost free (I think the Fed rate now is 1.5% or something), and the markets still fluctuate wildly. Why? Because the lesson that has been learned is not 'make-a-serious-mistake-and-lose-your-job', it's 'make-a-boo-boo-of-galactic-proportions-and-some-idiot-with-the-title-Congressman-or-Senator-will-cover-your-losses'. Short selling is still going on, speculation is still rampant -- and it's still other people's money.

This is the mechanism which is at the root of the current financial crisis; money was too easy to come by when times were good, and it's still too easy to come by when you screw the pooch. If we had a truly free market, which was run by people who were truly held accountable (like being taken out and hung in the public square, instead of being just fired with Golden Parachutes totalling millions in cash and perks), this could not have happened. Not in a million years. If the rules which prevailed in American markets before the 1990's were still in place, this could not have happened. The American government has catered to business for far too long. Government gave business what it said it wanted; it removed regulations, it made credit easy to come by with Fed policies, it has allowed business to ship jobs and capital safely out of the country without any stigma or penalty, it has bribed and bought politicians (allegedly) to run interference for them with the media and the regulatory bodies. In short, it has gotten every advantage (other people's) money could buy, and what did it do with those advantages?

A few at the top enriched themselves, got arrogant, and then engaged in risky behavior that defied logic and the immutable laws of basic economics. And look where it got us. The next time I hear a CEO complain on the idiot box that American corporations 'can't compete in the global marketplace' because of some law or regulation or somesuch, I'm going to personally shove his gold-plated Blackberry down his throat. Instead of worrying about whether the Chinese or Ethiopians can afford American goods and products, perhaps they should start worrying about whether Americans can afford them now. There's no point in being able to 'compete globally' if the price is poverty at home, and particularly when that poverty is caused by business policies that eliminate jobs, encourage crippling debt, allow stupid and unscrupulous people to rise to the top, and then destroy the wealth of the people who aren't fortunate enough to have the option of resigning (therefore dodging the consequences attendant with responsibility) with a 'two-comma' severance package which some other sucker has to pay for.

Another lesson Americans will learn, painfully, in the next few years is this: the American government, despite what it says or the mystical powers granted to it by a mostly-ignorant populace, does *not* run 'the Economy'. The President of the United States does not run it, the Congress does not run it. The Fed doesn't either. True, they have the ability to affect it with regulations, tax and monetary policy, but they don't have a handle on it. When people demand that government 'do something about the economy' there is very little that any individual, or even a collective group like Congress, can do. The primary reason is because economic activity often takes place in a realm outside the political. True, political factors may condition the practice of capitalism, but capitalism takes place no matter who is in charge or what policies they espouse. One need only need to note that drug dealing, prostitution, illicit gambling, and other criminal behaviors still continue, despite legal sanction -- because there's money to be made in them for the individual who is willing to take the risks associated with making his/her money in those endeavors. Despite the dictates and policies of government, these trades still flourish, proving that government is often irrelevant when it comes to economic activity. That such activity takes place 'under the radar' and with the general acceptance of many in government, only futher bolsters the case; they can't stop it, regulate it or tax it, for a variety or reasons (mostly sloth), so they pretty much leave it alone. Much of the 'legitimate' market operates on the same prinicples, whether anyone likes to admit so openly or not.

And for those who might argue the analogy; pimps, whores, pushers, and organized crime are all words that can be used to adequately, and accurately, describe any aspect of what has just transpired in the markets, the people who caused it, and the people who purportedly 'addressed' this issue by obligating the taxpayer to pay for someone else's bad bets. The comparison, I think, is appropos. But I digress.

The second reason is that collective, effective (key word), action is mostly impossible because of a dazzling array of personal and political factors in play (like Barney Frank and Chris Dodd trying to avoid jail time, and the Congressional Republicans trying to score points with the so-called Freemarketeers). These often-petty turf, perquisite and ideological battles conspire to ensure that no one side of the poltical-ecenomic debate is dominated by any one view which might further prejudice the system. It also ensures that when Congress does take up collective action, it's eventual scope is, hopefully, constrained.

Americans are about to learn that the government couldn't organize a gang-bang in a whorehouse, let alone run the American economy. And run the economy it shall attempt to do: it now owns (or will soon assume responsibility for) major stakes in banks, mortgage markets, insurance and brokerage firms, and it's tentacles will sink deeper into the economic soil as that $700 billion begins to get disbursed. We're about to find out that we were probably better off, in the long run, letting AIG and Morgan-Stanley, and the rest fail on their own (de-)merits than have the Federal Government throw good money after bad and then take control of many institutions in the process.

Whichever idiot takes the White House next January has to consider this, and has to make it a centerpiece of his administration: that bailout package has to be reworked, and it has to be done in such a way as to:

a) Ensure that $700 billion gets paid back, with interest
b) Ensure that $700 billion gets paid back as quickly as possible so that the institutions rescued can get the government out of it's offices ASAP.
c) Scrutiny of corporate activities must be intensified. Particularly executive compensation and the practice of tying compensation to stock prices -- this not only invites fraud, it actively encourages it, not to mention having a corporation use common-sense accounting and reporting tools, and the demand for transparency to the public and shareholders.
d) True and effective reform of Social Security and Medicare, because $1 trillion dollars of retirement wealth just got wiped out. This means taking a peek at every item int he Fed'ral budget, top to bottom, and taking both the hatchet and the scalpel to it.