Bubble-Gum on Bush's Shoe

"It's your money. You paid for it." - George W. Bush

The headline must be a joke, right?: Markets Surge on News of $1 Trillion Loan.

Because what would make the supposedly non-interventionist financiers happier than the Feds writing a check the size of South Korea's gross national product? Government intervention on a scale beyond the imagination of FDR¹, and these Wall Street champions of small government² celebrate? No wonder they call it the "free market": they're free to plunder us for record profits, and they get out of jail free whenever they lose. Who doesn't bet on a sure thing? They're probably all out celebrating with "free beer."

The bursting of the bubble might pass enough gas to clear the haze, to reveal indisputably to anyone who will look: non-regulation doesn't work. Two-time Nobel winning economist Joseph Stiglitz, long treated like a village idiot by the conservative media, this week sounded more like the prophet Isaiah:

The fall of Wall Street is for market fundamentalism what the fall of the Berlin Wall was for communism—it tells the world that this way of economic organization turns out not to be sustainable. In the end, everyone³ says, that model doesn't work. This moment is a marker that the claims of financial market liberalization were bogus.

But don't hate the player; hate the game. That's the (expensive) moral to this too-late-breaking story: if the bankers suddenly look like cats who ate the $1 trillion canary, well, we shouldn't have left the cage door open, now, should we?

Why is it never fun to say, "I told you so"?

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1. Unimaginable by FDR partly because he favored long-term sustainable projects instead of record-breaking cash payouts of what is essentially imaginary money, most likely financed by China.

2. It evokes memories of the bailout during California's energy crisis in 2001, when the state forked over a then-record payment to Enron (who was still posting record profits in other sectors). One proposal before the state legislature would have had California give money to Enron in exchange for state ownership of power lines and other hard assets. But this went against the principles of "free market capitalism," and in the end, California gave the money away without asking for anything in return. Cf. "free beer" (ibid).

3. Stiglitz may be overstating "everyone."