Counting down on America’s self destruct sequence

The only nation that can destroy America is America, and never let it be said Americans don't have a can-do attitude.

I read this article by my old co-blogger Barry Ritholz and I laughed, and laughed and damn near cried:

There is a choice to be made: Either we regulate the Banks, or leave it to the vagaries of the free markets to punish those who trade with, or place their assets in the wrong institutions. But for God's sake, do not give us the worst of both worlds -- do not allow banks the freedom to make horrific but preventable mistakes (i.e., only lending money to those who can pay it back), but then expect the taxpayers to foot the trillion dollar bill.

That's not capitalism, its not socialism, its not regulation, and its sure as hell isn't what free markets are. Our language is insufficient to describe this hodge-podge system, other than to call it a random patchwork of quasi-capitalism, quadrennial-socialism, and politics as usual. Ideological idiocy is the only phrase I can muster that has any resonance with the daily insanity.

We have entered into a fit of Orwellian madness: The American Capitalists, long the globe's leading advocates for free markets, have become near Socialists.

I don't think it's too hard to explain. Ideology is part of it, but the folks from the Chicago school were always the useful idiots of the movement, so caught up in the beauty of their pretty models and meaningless numbers that they never noticed that the models didn't correspond to the real world in any meaningful way. Rather what happened was simple enough—there was a lot of money to be made by getting rid of regulation of financial institutions, privatizing government operations, offshoring production and engaging in various highly leveraged financial games with no oversight.


So the money spigots were turned on, the politicians were bought, and the rules were changed. This was possible simply because the people who lived through the Great Depression were mostly gone, so the folks who knew why the rules were there and understood that they were meant to stop a repeat, couldn't stop their repeal. Since almost no one learns from anything other than swift kick to the nads, and since politicians are required to be greedy in order to be successful in the US, gravity took its course. Crony capitalism, where profits are privatized, losses are socialized and rules are made to go away if they interfere with the bottom line and are created if they help it, took over the US.

What was hilarious about it was all the lecturing of every other country about transparency when even back in the 90s it was widely known by those who cared to know that corporations were cooking the books on a large scale (about 10% more profits were reported in the 80s than the economy could support, about 20% more in the 90s). And that's before we get to the government cooking the books on statistics like inflation.