comment review 03-20-09

good stuff from wretchard & others

14. wretchard:

I used to think I was being a bit on the paranoid side back when I concluded this whole bail-out program was a gigantic looting of the public treasury.

The press talks about “toxic assets” as if they just happened. But they just didn’t materialize one day out the clear blue. They were created by faulty systems and toxic people. After Pearl Harbor was bombed and 9/11 happened, Commissions were formed to inquire into how such a thing could have happened. What’s striking about the response to this crisis is the curious disinterest in unearthing its causes, apart from throwaway generalities. I believe that’s because there are enough people, on both sides of the political aisle, as well as considerable numbers of eminent financiers, who will be looking at a stretch in jail or ruin, perhaps both, if we ever started turning over some rocks.

So the bailout package is not just an occasion to loot the public treasury. It’s also hush money. Because the guys who have the goods on the regulators need to be kept in business — which in the nature of things may be rackets — by bailout money. Notice that the market, left to itself, would have taken care of the financiers. They’d be ruined; forced to live on macaroni and cheese or whatever they consider equivalent to it, unless rescued by their silent partners.

The real fiction is to think that they had no silent partners, either by commission or ommission; that all we need to do now is empower these very bureaucrats who must of necessity have had to be part of the problem; to give them more power and the keys to the treasury. The public, if it isn’t careful, will wind up keeping the old system in place by funding a lease on its life at the expense of life savings. Of course they’ll go through it too. Scams are like that. But that’s tomorrow. Today we eat, drink and be merry.

The AIG incident has proved inconvenient because it forces to the surface the entanglement between our Nemesis (the greedy executives at AIG) and our saviors (Barney Frank, Dodd, et al) “Oh did you know each other? Fancy that?” As I wrote several times before, it’s no use rebooting the database and getting transactions rolling again, just for the sake of it, if the processes which corrupted the data to begin with are alive and executing. It will run for a while, maybe till the close of business and then the whole nightmare will begin again. What happened to cause the meltdown? Is it a victimless crime? Should we just move on? Or are the very same agents of our difficulty even now pointing their fingers at each other?

Mar 16, 2009 - 5:50 pm