If banks had to hold the paper they would be less likely
to act like used car salesmen and hand off bad loans.
They would not make the loan if it were going into their
accounts receivable. None of this is political except in
the sense that the banks and the investment bankers need to
be protected from themselves. As the great philosopher
Homer Simpson once noted “It takes two people to lie; one
to talk and another one to listen.” There are no innocents
here. The motto of American business in the first part of
the Twenty First century is taken from an old W. C. Fields
film “Never Give a Sucker an Even Break”.

There is some part of me that is an anarchist that says let
it all go, let it all collapse and we will rebuild. The problem with that is that the same bozos will have sway.
No answers here my friend.
Wris

Not sure what to call this mess that we have created in the US. We certainly have been creative in fleecing the Asians who sooner or later are going to be left holding a very big bag of extremely nasty “assets.” Hayden, you are spot on regarding “rules.” This is what is most amazing of what the US government is doing now. Firing blindly and without logic in every direction. Cronyism and insider trading absolutely destroy markets.

In the next six months we will see that many people’s pension funds, particularly in the public sector, have been totally drained. The creativity and financial innovations on Wall Street and in the real estate and mortgage markets are marvels of human ingenuity.

Michael,

These are times when “nationalism” and odd brands of “socialism” can come together in very ugly ways. The recent Austrian elections may be harbinger of the future. One thing I am noticing is that people in the US are very, very angry. This is why the Democrats appear to be doing everything possible to get the Republicans onboard with the Bush-Pelosi-Frank plan to provide succor to the Wall Street banks.

In a previous post, I used the metaphor of the ocean ecosystem. This new life support for Wall Street plan MUST ultimately fail. The ecosystem is collapsing because the plankton, the societal producers, are dying a painful death. If we don’t move to save them, then the peak predators will also inevitably die. Already we are seeing them turn on each other. Unfortunately, we are only in the opening throes of this tragedy.

Eventually, as this current arrangement exposes its inability to address the disaster, new ideas will appear. If Rich is right that there is a “creative class” and that it has a leadership role for all social groups, then it will begin to express itself.

Will Obama express this or is he a part of the past. So far, I am pessimistic, but some human beings are able to rise to the occasion and grow.

Rather than booty socialism, I think it is better to think of this as crony capitalism (I believe the term came from the Marcos regime in the Philippines where you only got ahead if you were a friend of the dictator). The two decades by any standard have been neither economic or political socialism.

Thanks for the comments.

Martin

No less a personage than Nobel-winning economist Joe Stiglitz, certainly not a conservative, is quoted in the Times saying “If this isn’t socialism, then I don’t know what is.” Maybe what we’re seeing is booty socialism?

During the last 15 or so years on Wall Street, the inmates have run the asylum. There have been no referees to throw flags and call back the touchdowns earned on plays where the rules have been blatantly broken. At some point, the scoreboard shows a scam, much like the home run totals piled-up during baseball during the steroid years. That’s where we are today. Again, sportsmanship is encouraged but it’s not what motivates athletes. Nor does it motivate capitalist strivers. Government needs to learn to be an effective referee without becoming so interventionist that the players no longer want to play. In the current case, the pendulum needs to begin swinging-bak. This is not a matter of things right or wrong, it’s a matter of recognizing inherent interest positions and learning to keep them in check. Some players should be banned. But most of them just need to be flagged for a penalty every now and then.

In airlines, deregulation may have made Southwest possible, but it’s also led to bankruptcy of many carriers (Delta is buying Northwest) canceled flights, cattlecar conditions and no service to many small towns. In electricity the Enron debacle showed the consolidation some, but deregulation hasn’t lowered rates or led to a stronger grid. In telephones, home service repair disappeared — with cell phones and cable this has become less of an issue, but our cell service is still behind Japan’s and northern Europe.