The collection of ne'er do wells, clueless dolts, political hacks, and oh, let's just be blunt and call them what they are -- total Idiots -- expands into an ever larger circle.
While the Republic burns due to the unsavory combination of incompetence, ideological rigidity, and crony capitalism, the fools and assclowns seem ever more determined to avoid any personal responsibility for the damages they have wrought. Instead, they flail about blindly, blaming everything and everyone -- except their own horrific negligence.
This is financial incompetence writ on a scale far grander than anything seen for centuries.
As a nation, our institutions have failed us: Under Alan Greenspan, the Federal Reserve slept through the most reckless and irresponsible expansion of bank lending in history for reasons of ideological purity. His opposition to the Fed’s regulatory role reached the point of malfeasance long ago. History is unlikely to be kind to the Maestro.
There is a choice to be made: Either we regulate the Banks, or leave it to the vagaries of the free markets to punish those who trade with, or place their assets in the wrong institutions. But for God's sake, do not give us the worst of both worlds -- do not allow banks the freedom to make horrific but preventable mistakes (i.e., only lending money to those who can pay it back), but then expect the taxpayers to foot the trillion dollar bill.
That's not capitalism, it's not socialism, it's not regulation, and it's sure as hell isn't what free markets are. Our language is insufficient to describe this hodge-podge system, other than to call it a random patchwork of quasi-capitalism, quadrennial-socialism, and politics as usual. Ideological idiocy is the only phrase I can muster that has any resonance with the daily insanity.
We have entered into a fit of Orwellian madness: The American Capitalists, long the globe's leading advocates for free markets, have become near Socialists. Halfway around the world, the Chinese Communists have picked up the baton, and are moving rapidly towards a form of Capitalism. Ironically, it is the once largest communist nations -- the Chinese and the Russians -- who hold much of Fannie and Freddie's paper.
Hey comrades, who's selling the rope to whom?
Perhaps the rescue of "Phony and Fraudy" are not so much a bail out of American homeowners as it is a desperate attempt to stay in the good graces of our friendly global bankers. We are the world's largest debtor nation, and as such, we depend upon the kindness of strangers -- be they Japanese or Europeans or Abu Dhabians -- or even former communists.
Back in the States, something beyond cognitive dissonance is occurring -- this is full blown case of dementia unfolding in the public sphere. When this era of excess and absurdity is treated by historians in the future, the question I expect to be asked most is not why many of these people weren't jailed for their financial felonies. Rather, I expect them to wonder why so many of these folk weren't placed in protective custody, and heavily medicated, for the only rational explanation for their statements and behaviors is that they have gone so far beyond the bend as to be completely and totally insane.
Massively over-leveraged companies? Blame short sellers.
Wildly under-capitalized financial firms? Blame rumors.
Heinously poor corporate management? Blame a Senator.
It is as if someone is running around Washington D.C. with a ball-peen hammer, smacking senior government officials on their skulls. If you find the standard finger pointing hard to fathom, perhaps blunt head trauma is a better explanations for the absurdities proferred.
Books will be written about this period of time, and our descendants will wonder in awe as to how this was allowed to happen. Tulips got nothing on us! Its not just the total dollar value of the losses that have exceeded all other global fits of financial madness combined, but rather, how so many warning signs were so blithely ignored by so many and for so long. What was wrong with these people, the authors and historians will wonder. Did the antibiotics in the food supply drive them mad? Did the High Fructose Corn Syrup compromise their ability to think? Some form of viral plague? Roid rage? What else could have created such a mass delusion amongst not just the populace, but their leadership and institutions?
Indy Mac goes belly up, having lost $900 million this year alone. Its shares fell 87% in 2007 and then its value dropped (on top of last year's collapse) another 95% this year-to-date. The stock fell to 28 cents yesterday. Some estimates of the total bad loans made by this somewhere in the neighborhood of $30 billion dollars -- and the Office of Thrift Supervision blames a senator who is investigating how much of the FDIC's $53 Billion this is going to eat up, with Wall Street estimates ranging from 15% to 30%. The towering incompetence of OTS is incomprehensible, but it is their colossal gall that is truly stupefying.
From beyond the grave, Adam Smith does not know whether to weep or retch.
About Those Companies Brought Down by Rumors . . . (July 11, 2008)
5 Stages of Market Grief (January 2008)
Book Review: The Bush Boom (April 2008)
SEC Moves to Curb Short-Selling
KARA SCANNELL and JENNY STRASBURG
July 16, 2008; Page A1
SEC Enhances Investor Protections Against Naked Short Selling
July 15, 2008
SEC's new red herring
Spreading false info is against the law, but is chasing down rumors the best use of an already overwhelmed SEC?
Fortune, JULY 14, 2008: 2:22 PM EDT
IndyMac Seized by U.S. Regulators; Schumer Blamed for Failure
Ari Levy and David Mildenberg
Bloomberg, July 12 2008
How Chuck Schumer Caused the Second Largest Bank Failure in US History
CNBC.com, 12 Jul 2008