The Meltdown Continues, Subtly (Sept. 14, 2009)
We mark 9/15 tomorrow as the day Lehman Bros. failed. By then, America had failed. Senator McCain had proclaimed the fundamentals of the economy to be sound, although they were fundamentally unsound. A “red-letter day” marks the day when America did something to stay “in the black,” albeit a small step, by not doing something. Lehman failed and was allowed to go the way of all flesh in a capitalist system; Lehman was allowed to die and file a petition in bankruptcy. One wonders if Lehman received this “special treatment” because of a personality dispute between its then president Fuld and then Secretary of Treasury Paulson. America would have been better off with more such personality disputes.
Bribing the perpetrators of other failed financial institutions was not the appropriate strategy to purge the poison in the financial system. Bush, Paulson and Bernanke should have done nothing prior to and after Lehman. Only the market could flush the filth out of a broken financial system.
Doing nothing would have had immediate and negative economic and thus political consequences. Doing something will have much greater and much graver economic consequences for a generation or more.
The appropriate decision is part economic and part moral. Future (and present, subtly) generations were jettisoned to keep a failed financial system limping along today and to delay the day of reckoning until someone else’s watch.
The Economic Terrorists own Congress and control O’Bama lock, stock and sinker. There is not much hope of change.
Bumper sticker of the week:
America: California Writ Large