Most People Will Never Understand What Happened to Bear Stearns

I'm catching up on a lot of material from the past week and a half or so, most of which is a little stale by now. But Deborah Solomon's NYT interview with former Treasury secretary Paul O'Neill is still very interesting - and not for what O'Neill says, either. Here's a sequence of Solomon questions, with the answers snipped out:

Do you think it was appropriate for the Federal Reserve to lend a helping hand to Bear Stearns and save a private investment company from its own bad decisions? ...
No it wasn't. It was purchased by JPMorgan, which will keep it alive. ...
It's so hard to understand how the subprime mortgage crisis has triggered a financial crisis of global proportions. ...
Instead of helping Bear Stearns, why doesn't the Fed help out homeowners? ...
What do you think of James Cayne, the former Bear Stearns C.E.O., who was off playing bridge as the company was collapsing? ...
But as the former C.E.O. of Alcoa and a current adviser to the Blackstone Group, what do you make of the general decline in corporate leadership, which seems less invested these days in the old paternal model of social responsibility than in personal greed?

Now I'm aware that the interview was "condensed and edited" by Solomon, but even so she's perfectly happy painting herself as someone who is happy to flatly contradict O'Neill in one question, and then admit that she's actually pretty clueless in the next.

The interview reminds me of nothing so much as the Onion story headlined "JPMorgan Chase Acquires Bear Stearns In Tedious-To-Read News Article", which would seem to encapsulate the popular grasp of goings-on in the financial world:

Successfully adding yet another infuriating block of text to an already indecipherable paragraph, some investors said they hoped to stave off bankruptcy for Bear Stearns, which, during last year's impossible-to-write-about mortgage crisis, saw its value depreciate almost as quickly as readers' interest in this story.

Jimmy Cayne playing bridge? That we can understand. Ach, this is all a case of greedy billionaires being bailed out by the taxpayer while ordinary homeowners suffer. Must be.

I don't think either would really appreciate the comparison, but Deborah Solomon seems to have an attitude not all that far removed from that of Mo Tkacik. I think it's grounded in zero-sum thinking: if ordinary people are hurting, then the rich people must be somehow stealing the masses' rightful money, so let's just blame the bridge-playing rich for whatever happens to ail us.

And in point of fact I have a fair amount of sympathy with that point of view. I don't like it when it gets trumpeted in the NYT from a position of ignorance, but it's probably a good idea for those of us knee-deep in financial minutiae every day to be reminded just how little most people understand of what's going on.