I was in DC when the financial crisis began to play it out. Every evening I'd turn on CNN and listen to some new horror: Lehman Brothers gone, the Treasury refusing to bail out AIG at twenty billion and then deciding to bail them out once the price had risen to eighty-five billion; Morgan Stanley and Goldman Sachs on the ropes; and now a seven hundred billion dollar bailout covering every single bad money market decision that anyone has made in the last half-dozen years.
If your bank goes belly-up, you're only insured for the first $100,000. But if you've got billions in bad mortgages, the government will totally cover your ass.
The worst of it is that even if this plan goes into effect, the crisis isn't necessarily over. This could only be the beginning.
One can get a certain sardonic amusement at watching our stalwart free-marketeers turning into a bunch of whining socialists. A few years ago they were saying, "Deregulate the markets! We demand that you let us take on more debt! Everyone in America has the right to own a house! The markets decide what is right! If the markets decide you made a bad investment, you should suck it up and take it like a man! No bailouts, no government interference in the marketplace, never! Let the markets rule!"
Now the story's a little different. Now it's, "Oh jeez, the markets say we suck! We've got billions in losses! Please please pleeeeeeeeease bail us out! We demand that you nationalize us immediately!"
Personally I don't think we should bail out a single business until their entire board of directors comes before the public, waves red flags, and sings "The Internationale." "Arise, ye prisoners of starvation . . . " Then they can bow, kiss a copy of Das Kapital, and be sent into the countryside for re-education.
Bruce Sterling's blog pointed me at this excellent article from Time: How We Became the United States of France. The opening section is so delicious I have to quote it here.
This is the state of our great republic: We've nationalized the financial system, taking control from Wall Street bankers we no longer trust. We're about to quasi-nationalize the Detroit auto companies via massive loans because they're a source of American pride, and too many jobs — and votes — are at stake. Our Social Security system is going broke as we head for a future where too many retirees will be supported by too few workers. How long before we have national healthcare? Put it all together, and the America that emerges is a cartoonish version of the country most despised by red-meat red-state patriots: France. Only with worse food.
Admit it, mes amis, the rugged individualism and cutthroat capitalism that made America the land of unlimited opportunity has been shrink-wrapped by a half dozen short sellers in Greenwich, Conn. and FedExed to Washington D.C. to be spoon-fed back to life by Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson. We're now no different from any of those Western European semi-socialist welfare states that we love to deride . . .
Tant pis, y'all.