Like pretty much everybody here, even those with whom I periodically disagree, I think of myself as a smart enough fellow, with the caveat that despite counsel from my then-girlfriend the bond trader, I thought the Dow was overvalued at 2000.
But I need somebody to explain this last week to me, the economic part. The political part seems fairly obvious.
See, I spent most of the week in a music industry bubble, my last trip through what the Japanese call the water trade (the hostess/bar scene which contributes nothing tangible to the economy, to rudely paraphrase a book I read 20 years ago and can no longer footnote with ease). Things were bad when I left home, we taxpayers were busy bailing out some big insurance company.
But I came home -- back to reality, such as it may be -- to discover that the federal government, the one the Republicans still run with the connivance of a spineless Congress, is now going to...if I've understood correctly...buy all the bad mortgages out there so as to prop up the entire financial infrastructure of the industrialized world.
Something like that.
Please jump the fold, if not the shark, to follow my confusion. And maybe explain it all to me in a way we can all understand.
See, when we bought our house here in this small town in Appalachia, we had the advantage of my wife having once babysat the children of the bank president. And we had the advantage of owning almost all of the house we were selling back in Nashville, and the expectation that the bridge loan we were asking for would, when completed, leave us without a mortgage altogether.
So it was a pretty simple process. We filled out some rudimentary paperwork, paid what seemed a comparatively modest fee to borrow a large sum of money for a short period of time, and chatted. The bank knew who we were, knew the depository history of my in-laws' two businesses without having to violate anybody's confidence and actually look them up. And best I can tell, the loan didn't get bundled upstream.
Now...if I understand the housing crisis -- and I don't, else I'd not be writing this -- the problem isn't simply that HGTV (and all those late-night infomercials) caused an entire generation of Americans to void common sense and believe that they, too, could flip houses with impunity, that real estate was a finite resource that would always rise in value. (Kinda like oil.)
And the problem isn't simply that a bunch of idiot yuppies got house-stupid and now have mortgages they can't hope to pay on houses they should never have bought and still can't furnish.
The problem is that all the loaning authorities figured out that the really smart thing to do would be to bundle all the mortgages they sold together and sell them to somebody else. Who sold them and sold them and sold them until they quickly became not mortgages but traded financial instruments.
Which meant that there was no incentive for the loaning authorities, be they banks or whatever, to qualify those poor suffering fools filling out the paperwork.
And now we're stuck.
And we're stuck so badly that the only right thing the government can figure out to do is to make us all foot the bill for these bad investments.
So...we're bailing out the investment banks, who would no sooner take my phone call and give me money than they would...well, fill in the blank, I'm too mad to be clever today.
We have to do this?
Really?
Somebody explain to me why we have to do this. Because the markets will collapse if we don't? And that would be different from what's going on now in exactly what way? It would be worse...
...or are we simply delaying the pain, and putting more money in the pockets of the rich?
Let me try to be clear. I fear this reads as snark. It's not. I am genuinely confused. I have a very 19th century understanding of economics, at best, which is basically either you have money or you don't, either you have credit to borrow money or you don't. And in all circumstances you look your economic partners in the eyes (metaphorically) with the expectation that you're building a long-term relationship.
It seems, from my spot on the sidelines that financial institutions have spent so much effort developing what I believe are called derivatives, and what I fear to be financial instruments that have little or nothing to do with anything beyond spreading risk and legalizing gambling. It looks to me as if the financial markets have so removed themselves from the tangible, physical actual...stuff...the money they're playing with busy and sells that they no longer understand the foundation of the business they're in.
(The sidelines, hah!...having just put money into the markets two months ago, though they're phasing the buys in over six months, so maybe it makes sense...frankly, I wrote the checks and kissed the money goodbye, and if it ever comes back, so much the better.)
Past that, here's the real question: How in the hell is the next president -- either one of them -- going to have enough room in what we laughingly call the federal budget to do ANYTHING when this is all done? And, uh, what about the auto industry. And whatever other dominoes are yet to fall...
If I were a conspiracy theorist, I would posit the notion that this is Bush's final gift to his cronies, that the Republicans have decided they're about to lose and it's time for a public looting.
But I'm not.
What I am is a guy looking for a sensible and progressive response to this, for I seriously mistrust the kinds of decisions which seem now to be being made on our behalf in a time of real or manufactured crisis.
And I'm right tired of subsidizing the rich.