The last few months have been immensely confusing and terrifying for all of us. When all this crap began, my biggest worries were avoiding layoffs and wondering how much equity I'd lose in my home.
I've moved beyond that in recent days.
These days, I've begun trying to figure out get my hands on some Kruggerands. (Not the 1-oz. standard variety, mind you, but the little 1/10 oz. ones. I figure smaller units will be easier to barter with for food once we move into Weimar-style territory.)
And the really, really amazing thing? We're talking Hoover-style economic incompetence here... and there are those (40-45%, by most estimates) who still believe a Republican is better suited to deal with this problem!
This befuddled me greatly... until I began studying the issue from a true believer Republican perspective. And now, it makes all the sense in the world.
So friends, let me walk you through a quick review of the Panic of 2008 -- and why only The Original Maverick (TM) can save us all from darkness.
We begin with the miracle of deregulation. This is built on a simple theory -- that free markets are the most perfect economic system known to man, and that an economy can never truly flourish until every last shred of government regulation is lifted away.
Free markets are good. Always. And government is incompetent. Always. Got that?
First to embrace this theory in earnest was Republican President Ronald Reagan (also known as the Best President Since Abraham Lincoln(TM).) But his acolytes carried forth the torch of deregulation long after his presidency ended, including Sen. John McCain, Chairman of the Senate Committee on Commerce, Science and Transportation.
Republican President George W. Bush takes office in 2001. And he just loves deregulation and laissez-faire capitalism.
Bye, bye, regulatory oversight. Now the free market will shower us all with blessings and goodness!
Rich financiers celebrate their newfound freedom by creating complex financial instruments that no one really understands. But Wall Street is making a lot of money, so who cares?
Occasionally the market starts to slow a bit. Our government-hating friends on Wall Street respond by throwing a tantrum until Fed Chairman Alan Greenspan cuts interest rates. Eventually interest rates go below the rate of inflation, and cheap money floods Wall Street, providing more fuel for more exotic financial manipulations than ever before.
Rich people get really rich.
Middle-class people see their incomes stagnate. But those low interest rates have touched off an enormous bubble in residential real estate -- and Wall Street's more than happy to let middle-class consumers borrow against that growing pile of equity. Why do you need to earn more money when you can simply borrow it?
Poor people continue to get screwed, but no one cares about them.
Fast forward to 2007.
People suddenly realize that it's a bit illogical to pay a million dollars for a suburban tract house. Residential real estate collapses.
Millions of middle-class people are suddenly stuck with mortgages they can't afford and can't escape. They plead with bankers to cut them some slack.
"I didn't really understand how this mortgage worked," they plead. "Can't we work something out?"
"What, are you stupid?" comes the response. "This is how capitalism works. No one bails you out! You signed the mortgage, you're responsible for it, and now you must pay the price."
"But everyone said this was a good deal! Even Alan Greenspan said that home prices weren't in a bubble... and suggested that taking out an adjustable-rate mortgage was a smart financial decision!"
"Cry me a river, buddy. We aren't socialists here. No one bails you out from your mistakes. Vacate in 30 days."
Millions in the middle class lose their homes. Politicians and reporters make some concerned noises. But Wall Street's still making a lot of money, so life is good.
But remember all of those complex financial instruments that no one understood? Well, their value ultimately rests on continued rapid appreciation in residential real estate. And now that the real estate bubble is deflating, it turns out that those instruments are worth exactly... nothing!
Oopsie!
Wall Street firms teeter on the brink of collapse. THAT, people care about.
The Fed frantically writes one check after another to bail out one firm after another, all paid for by the American taxpayer. Uncle Sam gains three shiny new assets -- AIG, Fannie Mae and Freddie Mac. Cost to the taxpayer: $900 billion.
Everyone hopes that some day these new nationalized assets will actually be worth something.
"I thought you said that only socialists did bailouts!" comes an indignant scream from a cardboard box outside of a deteriorating row of foreclosed houses somewhere in America.
Politicians and reporters shake their heads sagely.
"This is a pragmatic response to ensure the vitality of our free market way of life," they respond. "These firms are too big to fail. Nothing less than the future of capitalism is at stake. What, do you hate capitalism or something?"
The stock market keeps melting down. What to do?
No more screwing around, says the Fed. Work begins on the creation of a "repository" for all of that debt that no one understands, and no one really wants now.
Translation: Uncle Sam will be more than happy to clean up that mess you made, Wall Street. Stop worrying your poor little heads about that.
The Dow skyrockets more than 400 points, as rich people see the possibility of making lots of money again, once all of that nasty debt that no one understands or wants is offloaded onto the American taxpayer.
Those rich people who made the mess? Still really rich. And now, soon to be freed of the debt hanging 'round their necks, they sharpen their pencils and prepare to come up with the next financial innovation that no one understands, but that will make them even richer.
The middle-class people who got hosed? Still screwed... and their grandkids will now deal with another couple of trillion added on to the national debt.
The poor people? Still screwed... but as we noted earlier, no one really cares about them. (Some dude from North Carolina did once, but turns out he was a philanderer who lied about screwing around, and as we all know, that's an impeachment-level offense. So no one listens to him anymore.)
And what about one of the guys who started this whole mess -- that acolyte of deregulation, Sen. John McCain?
Well, it turns out that he's the only guy who's qualified to clean up this mess and crack down on Wall Street. He doesn't really say how, really, other than he's a maverick. Oh, and that he'd fire the head of the SEC.
(Never mind, of course, that the president doesn't have that power. The point here is that John McCain is a maverick, and what the economy really need right now is maverickyness.)
The Democratic response? Sen. Barack Obama calls for increased regulation and oversight of the financial system.
McCain immediately responds that comments like these are making things worse, as Obama is creating bad vibes by talking so much about the economy. And in any case, we're simply wasting time trying to figure out who's to blame for who got us here.
Sen. Joe Biden then suggests the unthinkable -- that rich people look at it as their patriotic duty to help pay for cleaning up the mess created by the activities that made them really rich.
Oh. My. God.
"What, are you Communists?" comes the enraged response. "Raising taxes is un-American! Everyone knows that tax hikes always choke economic growth!"
(Of course, taxes were raised on the rich just before the economic boom of the 1990s. But ignore that. The point here is that Barack Obama and Joe Biden are Communists.)
Which brings me (finally!) to the ultimate lesson of the Panic of 2008, courtesy of the Republican Party and their noisemakers in the media:
Only little people should have to pay for their mistakes.
Rich people get Uncle Sam to bail them out, then throw a tantrum until they get another tax cut.
That is laissez-faire capitalism, the way Adam Smith intended it.
And what about the party whose theories and actions led us to this state of affairs? What have they learned from all this?
Lie like hell, and hope to God enough people believe you to let you stay in office.
God bless America.