Tuesday, September 23, 2008

Welcome to Interesting Times

Remember the Great Depression? The stock market crash of 1929? Ticker tape machines? Men jumping out of windows? Bathtub Gin? Giggle water? Al Capone? Neither do I; I wasn't even born. But I don't feel too bad and you shouldn't either. Because though we missed out on the Great Depression, thanks to the greedy, stupid people who run our financial empires you and I are soon to be treated to the New, Improved, Even Greater Depression.

As the Chinese curse puts it: may you live in interesting times.

Today Federal Reserve Chairmen Ben Bernanke pleaded his case before Congress, asking them (us) to front them—run that figure by me again?—$700 billion (I don't even know how many zeroes that is) dollars to loan to those poor nice people on Wall Street: that's right, to the very people who got us into this mess.

An analogy comes to mind. You and I are passengers in an airplane known as the US Economy (really the global economy, but let's not quibble). The pilots in charge of that economy are, or have been, the financial wizards of Wall Street. Thanks to their bumbling, the plane is in a free fall and about to crash. There are a dozen parachutes on hand., locked in a safe. Question: who should get them? The pilots who doomed the plane, or the innocent passengers who trusted them with their lives?

For parachutes read: 700 billion dollars of our taxpayer money. Going to Wall Street. To bail them out. And (excuse me) what do we get in return for this loan? Besides a lump of coal in the Christmas stocking?

Already the powers—meaning the Wall Street institutional and banking lobbies—have balked at having any "strings" attached to this loan (like being forced to cut the salaries and bonuses of executives of firms on the receiving end). You might rightly ask just how is it that they are in any position to balk at anything? Is it not said that beggars can't be choosers? And does not desperately needing $700 billion dollars qualify one as a beggar? And yet they want no strings. In fact one institution had the nerve to say, in few words, "If you force any such restrictions on us, we'll refuse the loan." To which I can think of only one appropriate response—unutterable here. Heaven forbid they should have to cut down on their fleets of BMWs and Mercedes and wear watches worth less than our cars.

Imagine you or I strutting into one of their banks and asking for a loan with nothing more to offer as collateral but a bunch of worthless mortgages on properties impossible to sell. They'd laugh—or call security.

But they don't just want our money; they want it no strings attached.

And they'll likely get it. Remember, this is Congress we're talking about, Congress that's being solicited, and by institutions represented by powerful lobbies: by the very people who fund the campaigns of Congressmen. The fix is in: the strings are attached and the beggars are pulling them.

What will make this depression greater than the Great Depression? Aside from the very real possibility that it will be deeper, longer, and spread across the entire globe? That it was so predictable, and so preventable. Anyone with eyes to see who had been looking could have seen it coming long ago. Those who were saying, less than three weeks ago, "The situation is contained; the worst is over," knew better; they had to know better. I'm talking President Bush; I'm talking Bernanke; I'm talking all the talking heads of Wall Street. A moron could have told them otherwise, that when you build a financial empire on bad mortgages, and then sell those bad mortgages to other banks and institutions, and they sell them to portfolio managers, and so on, you are building your empire on sand and it will collapse. Once the first wave hit, they had to know it was the end, that the whole house of cards would tumble down. They knew it, and said and did nothing. Because they figured in the end only those at the very bottom would lose theirs. It's called a Pyramid Scheme. Or, on Wall Street, business as usual.

If this $700 billion loan goes through, every taxpayer in America will have entered into that pyramid scheme at the very bottom. We will be left holding the bag for all the greedy dumb sons of bitches who filled the bag with bad debt. The French are laughing at us; so are the Germans. They say they told us so. They 're right; they did.

I am reminded of a passage in a book by a favorite author of mine. His name is Nelson Algren, and the book is called A Walk on the Wild Side. In it Algren writes of that other depression, one that we may soon look back upon with wistful eyes (like trains and movie stars, depressions were so much better back then!). Here's Algren on that Depression:

The Ladder of Success had been inverted; the top was the bottom, and the bottom was the top. Leaders of men still sporting gold watches were lugging baby photographs door to door with their soles flapping. Physicians were out selling skin lighteners and ship captains queued in hope of a cabin boy's mop and pail.

Offices of great fire insurance companies went up in smoke, which seemed no more than just. When the fire department—long unpaid—cleared off, little remained but scorched files, swivel-chairs on which no one would ever swivel again, lovely heaps of frosted glass, and all that mahogany.

All that mahogany that hadn't helped anybody but brokers after all. Then the brokers began jumping off rooftops with no greater consideration for those passing below than they'd had when their luck was running. Emperors of industry snatched all the loose cash on which they could lay hand and made on fast last run. Lawyers sued one another just to keep in practice.

The more things change . . .

Back then, at least, the brokers and bankers had the decency to jump. Now they run screaming to Uncle Sam for $$$. Instead of snatching loose cash they snatch the taxpayer's purse.

Welcome to Interesting Times.

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