Tuesday, September 30, 2008

Heads Have Not Yet Rolled

Well, as I'm sure everybody knows, it's been an interesting week, as we teeter on the verge (or maybe, continue to slide down the slope) of an epic financial crisis. As I write this, yesterday Congress failed in its initial attempt to pass the bailout package, and the Dow dropped over 700 points, putting it lower in the waning days of the Bush administration than it was when he took office. Predictably, stocks have bounced back a bit today, but still.

Note: Lord knows I could maunder on about politics at great length but I didn't really want to make this a political blog---so many other people do that, and, my experience on internet forums has shown me that it is basically impossible to have a calm, polite conversation when politics or religion enter into the discussion, and I didn't start this to get into arguments with people. But it's all around us now---it would be just about impossible to write about what's going in in my life right now without touching on some political issues, between the Presidential campaign and the financial crisis.

But anyway. I was not surprised to see the bailout fail. I think what is happening is that people who lived by the sword are now dying by it, metaphorically. The financial crisis was able to get as far as it did because so few people really understood what was going on, and even when they tried to raise an alarm, nobody really paid attention---because nobody really understood what they were talking about. This happens all over the place in the modern, complex world: regular folks tune out complicated things they don't understand, allowing shysters and rapscallions to engage in all manner of perfidy.

But now, when it's all gone to hell in a handbasket, the administration et al. are trying to sell a bailout package, and what I suspect has happened is, all those people who didn't understand how we got here also don't understand how this bailout proposal is going to get us out, and since it's being pushed by the people who were supposed to be watching out for stuff like this but nevertheless let it happen, there is a very understandable hesitation to invest tons of money in an inscrutable process that doesn't really make sense. I read in a blog somewhere that calls to legislators were going something like 200 to 1 against the bailout.

Now, let's say the bailout went through. Or, eventually some sort of bailout will inevitably be hammered out---when it DOES go through. It's not going to turn things around in any kind of visible way overnight, and it is quite likely that things will still be bad and probably get worse before they get better. So in evaluating what happened, the best that proponents of the bailout will be able to claim is that things would have been even worse without it, which will of course be impossible to substantiate or quantify. One thing that's certain is that five weeks from now nobody will be able to point to anything that the bailout has achieved, but seven hundred billion dollars---everybody understands that that is a lot of money that was spent to no apparent effect. (We're talking public perception here; it doesn't matter if the money is actually all spent yet, or ever. The perception will be that when the bailout was passed, $700B in taxpayer funds went down the rat hole.) So in that circumstance, it is easy to see how it would take an exceptionally brave (or exceptionally safe, or even exceptionally patriotic, but I'm not holding my breath for that one) legislator to vote in favor of the bailout. I am not surprised at all that so many voted against it.

What I think needs to happen to get public opinion behind the bailout is, there needs to be a public purge. I haven't followed everything with extreme diligence, but I've kept up on this stuff probably more than a lot of people, and I have not heard that anyone has been fired, much less jailed, for what happened. I can't believe it never occurred to anyone calling the shots on this stuff that people will not want to pump more money into the system if it's being run by the same people. And again, maybe it's not, but to get the country behind a bailout, people everywhere need to SEE that THOSE BUMS ARE OUT. It's about perception. Heads have not rolled, and if the economy is going down the shitter because of games played by a bunch of Wall Street hotshots, by God, heads need to roll. The heads of the Wall Street investment banks. The big guys at the Fed. The big guys at the SEC. The big guys at Fannie Mae and Freddie Mac. They all need to be publicly fired and castigated. And maybe they're not all to blame, but it is too late to worry about that now. The innocent bystanders in that group (if there are such) need to take one for the team.

I'm under no delusion that that's actually going to happen, but my point is, as a consequence whatever bailout ends up being put into place will be unpopular. Moreover, Americans are going to be far less tolerant of hardship than they would be if they knew that somebody had been punished for what happened. As it is, it's impossible to believe that any reform efforts are entirely sincere and diligent.