America's Personality Disorder

One must gaze in wonder at a country which works for a couple of weeks on a plan to save the nation's economy and passes into law something which the vast majority of authentic economists claim cannot solve the problem it supposedly addresses.  The most obvious deficiency is one I have seen described as its inverted methodology: the plan will buy up "troubled assets" from purchasers who hold mortgage-backed securities, on a worldwide basis, in order to establish a floor for the price of such esoteric obligations, and also to take them off the beleagured books of the banks and other holders.  The solvency of the banks will thus improve, since their asset-to-liability ratios will improve, and that will allow and encourage them to start lending again.

As the numbers people point out, however, this relief applies to a snapshot in time.  TARP throws a blanket over the problem as it exists today; however, the underlying problem, the sinking housing market, will produce more "troubled assets" tomorrow.  It is as if an economic tide is ebbing slowly away from shore and revealing in its wake more toxic crud: old tires, beer cans, lawn chairs, coolers, plastic bottles, Jimmy Hoffa.  All that flotsam & jetsam are the American houses losing equity, shedding loan to value ratio, moving toward foreclosure.  In a few months billions more in mortgage-backed securities will begin to deteriorate as housing prices drop another few fathoms.  Subprime was first revealed, then alt-A, then jumbo prime, then prime.  With a 40% drop in housing prices to take us back to 2000 prices, we're going to be looking at a lot of dead starfish.

So the sensible and humane thing to do is to work from the other end.  Bail out the homeowners. Restructure their loans, reduce their principal, alter their interest rates, and reimburse the mortgage holders for that modification.  The government could arrest the erosion of home prices by keeping people in their houses.  The market would not be flooded with abandoned houses. Prices would begin to stabilize and the regular payment of mortgages would resume.

The problem, of course, is ideological.  That looks too much like what FDR did in the 1930s because that's more or less exactly what the New Deal provided.  George W. Bush would then buy into a "socialist" program of government-subsidized housing.  It doesn't matter if it would work; indeed, the problem for Bush & Paulson is that it would work.  It is exactly the same problem as the gargantuan military budget.  Of course we can't afford such a huge outlay and these unnecessary wars; but once we begin to slash military spending we will have to admit to ourselves that the American Imperium is at an end.

So it is a kind of national narcissistic disorder which makes us incapable of enacting real solutions to the actual problem.  The wound to our self-esteem is too great; we're not "Exceptional" anymore if we can't be a big military power with capitalist-only institutions.  There are, as they say, 545 people who run the country.  Congress (535), the President (1) and the Supreme Court (9).  With the exception of a few ethical practitioners like the wondrous Bernie Sanders, the pugnacious Pete Stark, the steadfast Mark Feingold and Patrick Leahy, you simply never hear anyone among those 545 (and I sadly must include Barack Obama and Joe Biden) talk any sense about what really needs to be done. They can't; it's considered bad politics in America to tell the truth about where we are. So we're trapped.  Even when pressed for solutions on an act-or-fail basis, we choose failure because we have worked our way to a psychological impasse which forecloses an honest assessment.  

Our failure to adapt, which has doomed so many species who could not adjust to a changing environment, is about to exact its Darwinian price.

Oh Captain My Captain

So, when you read the fine print of El Bailouto, you discover its underlying themes, which have also been discovered by other Congress members uncooperative enough to actually read the damn thing.  To wit,

“The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20 that it can't be sold to the Treasury. Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure it can happen." Representative Brad Sherman (D, CA).

This approach, of course, is perfectly consistent with the overall Bush strategy of avoiding, wherever possible, anything straightforward and unabashedly patriotic.  Just not the way the Cowboy-in-Drag-in-Chief rides his pony.  We know from one or two bailouts ago that the Fannie/Freddie rescue, that earlier episode of the Perils of Paul(ine)son, was not so much about its putative rationale, the rescue of America's big mortgage guarantor and MBS Trash Compactor of Last Resort, as it was about calming down a sovereign wealth fund riot erupting far from America's shores.  Namely, banks in China, Japan, Riyadh, et alia were very hacked off about having bought this collateralized dogshit at full value on the implied promise of the bunko-artist head honchos at Fan/Fred that Uncle Sam was fully behind it; only to learn that "government sponsored" was not really the same as "government backed."  To which the Asians from the Mid- to the Far- East replied: oh really?  Well, how would you like to find out what happens if your government is not backed by ours?

At this point Henry Paulson, in the strangled squeal that was the only voice he had left, yelled for help and put Bernanke in a hammer lock, forcing him to bail out Fan/Fred so at least the junk they had sold could be made good for Ali, Wang & Yoshi, that most feared of all international collection agencies (their corporate slogan: Pay On Time Or Die).  The ship righted itself for a few minutes but then sprang another leak, this one amidships below the water line. All these foreign banks also hold a ton of this non-GSE MBS (it's the initials that are eventually going to do us in - bankruptcy by acronym), sold to them by the croupiers of the Big Wall Street Investment Banks.  You remember them - they existed as late as a couple of months ago.

Henry, working with the panicked frenzy of a one-armed paper hanger on a tipping step ladder, then rushed to Bush and sounded General Quarters again.  The foreigners, they're just so much less forgiving than the dumb American taxpayers who cheerfully accept being buried beneath mountains of toxic financial sludge, the sovereign dudes just refuse to make fine distinctions between being owed by America and being owed by an American investment bank.  They're unreasonable that way.  And we owe them so much damn money, over two trillion dollars at this point.  And we're about to ask them to buy in with another $700 billion in order to...I don't know, this whole thing's getting circular, George!  I guess we need it to service the vig on what we already owe them so we can...

Well, you add the half trillion deficit we were already running for the year and you dump another point 7 trillion on top of that and you're talking about 1.2 trillion for the year, and then we've got those damn wars we need to win! dammit, and the one trillion we spend every year on "defense," and then the 800 billion yearly trade deficit and and and

Aiiiiiiiiyyeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!  Paulson blacked out at this point.  Please stop asking him hard questions about what he's going to do with the money.  Yes, he's going to give it to the foreign banks who finance us so we can maintain our bloated military because we're just not going to cut that back whether we can afford it or not.  There!  I said it!  Satisfied?

Look Up in the Air! It's a Bird! It's a Plane! It's an Investment Banker!

It is the utter incompetence of George W. Bush which has led to sentiments such as this.  It is axiomatic in the practice of legal negotiations, for example, that the side which controls the drafting of the first proposal has a tremendous advantage in the ultimate outcome of the deal.  It's simply the way the human mind works: the opening offer sets the template or frame for what is possible.  Yet when Bush, out of the blue, announced that America, unlike the economically thriving place he had described just weeks earlier, was on the verge of complete collapse, he filled the panic-stricken void with the stupidest proposal feasible.  His Treasury Secretary, Henry Paulson, until recent years the Chairman of Goldman Sachs, one of the most likely beneficiaries of the huge bailout, rolled out a program which gave the Treasury Department absolutely unfettered discretion to dispense the largesse in any fashion he deemed appropriate to save the economy.  The terse, skeletal, three-page "legislation" denied all other branches or agencies of the government, including the courts, any right to review any action taken by Paulson.  It also empowered Paulson to hire any private outfit he wanted to help him with his unsupervised work.

Yet another stunning example of Bush's grotesquely inappropriate temperament for the job he pretends to do.  The huge problem, which he helped more than most to create with his absentee-landlord government, does need intervention to save us from the worst of the inevitable decline the U.S. economy is headed for.  But Bush, in his utterly bottomless arrogance, nevertheless proposed that only he and his cronies in the Treasury Department would have any input into the process of solving the problem.  I suppose, when psycho-historians look back on this strange interlude in American history, the one recurring theme they will delineate is the reality distortion so obviously inhabiting the mind of the president.  He simply cannot see what's going on here.  He thinks that his 70% disapproval rating, almost unprecedented in U.S. history, reflects only the misunderstanding of his subjects.  If they could see the world through his wondrous eyes, they would realize that the crazy and useless war in Iraq, the cratering economy, the shredded Constitution, the diminished place of America in the world, were not actually any of these things. Our view, like seeing the nonexistent bend in a pencil placed in a glass of water, is the result of inaccurate reporting and a biased media.  We should continue to trust him, to allow him and an investment banker to figure out the entire economic problem, because his gut instincts, informed by daily chats with the deity, always lead him to the right decide-making.

Bush will never understand that we're not missing anything.  The picture up above, with its hilarious echoes of 1929, when men who created disasters did the noble act of self-defenestration instead of begging the government for a handout, reflects an honest reaction to Bush's first proposal.  The American people don't want to give a trillion dollars to Goldman Sachs and JP Morgan Chase or whoever is left standing on Wall Street as a reward for their perfidy.  The three-page ransom note Bush initially handed to Congress implied that possibility, and it was his fault that the entire initial bailout debate degenerated into a "Wall Street versus Main Street" slugfest.  As a result, precious time was lost and the problems of liquidity have gotten worse. Bush caused the impasse by framing the debate in exactly those terms.

The bill that was voted down was much different from Paulson's sketch, yet even the House bill suffered from the effects of the original template.  Many economists have weighed in with much more sensible and direct approaches for recapitalizing cash-strapped banks, ones that do not carry with them the stigma of bailouts for billionaires. Such proposals start from scratch, without reference to Paulson's prescriptions.  Maybe for that very reason Bush was never very interested in such real solutions to real problems.

The Senate takes up the task now, I'm sure with the able assistance of the senior senator from Arizona, who will murmur his own diktats to help the process along.  Something will happen soon, no doubt.  The Congressional Clown Troupe can't strike the tents and go home until they finish this, and the one motivation that energizes them more than any other is the chance to stop working.

Levitating a Lead Balloon

I don't think the defeat of the $700 billion bailout signals a watershed event in American history, economic or otherwise.  The House vote was political theater, of course; the Republicans in the House are staring at the abyss of losing another 30 seats or so to the Democrats, and they're desperate to create daylight between themselves and one of the most unpopular Presidents in history.  So, with no avenue of corruption looking any better, they actually listened to their outraged constituents and voted down the bill.  Will they hold to the "principled" position? It depends on the reaction of the stock market.  Today it's up, and there is no news currently of another major financial institution going down.  I half suspected yesterday that the Plunge Protection Team, that shadowy cabal of financial players who manipulate the market at the behest of the Treasury Department and operate out of some bunker in the Executive Branch, might have thrown their machinations into reverse yesterday to make the blood redder than it might otherwise have been.  I haven't read that anywhere; just a suspicion of my own, since I don't trust this government any farther than I can throw it, and as bloated as it is, that's not very far.

My own perception is that the bailout might operate for a while to levitate the lead balloon of the American economy, but the long-term prospects would be unchanged.  America is "deleveraging" as the price of overinflated assets sinks to a natural level sustainable by actual American earnings and productivity.  These are actually early days as far as the deflation of the real estate bubble is concerned.  Very cheap credit made possible the delusion that millions of people could afford houses costing half a million dollars, simply because the cheap introductory rates created a misunderstanding that an unrealistically low rental value at the front end translated into long-term viability.  It doesn't.  Add to that bitter realization that housing prices do not, in fact, go forever upward and you understand all you need to know about how America's "prosperity," financed entirely on debt, vanished in a twinkling.  Thus, the effort to add another trillion or so to the national debt in a futile effort to get back what we've lost, to bring the good times home again, is not sensible, although that's probably exactly what Congress will do anyway, because they don't really work for you and me.  They con us into voting for either the Center Right or the Right Wing Party representing Big Finance and Big Business in general through various insincere gestures in the direction of "Main Street," but they don't mean it.

Yet it doesn't matter, in the long run, whether they mean it or not.  

By: emptywheel Monday September 29, 2008 1:09 pm

21 diggs  digg it

January 19, 2001: 10,587.59
September 29, 2008: 10,365.45

NASDAQ Jan 19, 2001 = 2770.38
NASDAQ September 29, 2008 = 1983.73

CPI, January 19, 2001: 175
CPI, September 29, 2008: 219

Dollar exchange with Euro, January 19, 2001: 1.068
Dollar exchange with Euro, September 29, 2008: .695

Thanks to Marcy Wheeler at emptywheel, you can see the entire trajectory of the Bush Boom, from inauguration through yesterday. The Dow is lower than when Bush started; NASDAQ, our technical sector, has been hammered; the cost of living has increased dramatically; and we've lost heavy-duty ground against foreign currencies, i.e., the dollar is weak.  That is the trajectory of a bubble inflated by cheap credit from abroad, created when America indulged its final halcyon period as a consumer society and massively bought imports, and foreign sovereign wealth funds reliably recycled dollars to America at rates, after factoring in currency fluctuations, that were less than zero.  That's not going to happen again.  It is pointless to attempt to "restore" American prosperity based on the same principles when the necessary preconditions are gone.

That much maligned body politic, the American people (hell, I malign them myself) seemed to know instinctively that the "pitchfork moment" had arrived when Henry Paulson, who used to sell mortgage-backed securities when he was chairman of Goldman Sachs, proposed bailing out his friends, colleagues, and future partners from the consequences of their own systematic fraud, in which "Hank" himself was so deeply immersed his sclera turned brown.  That rebellion or "uprising" by the gentle folk of these here United States won't last, of course.  No one is interested enough in the long-term welfare of the United States to sustain their attention for the period sufficient to bring about real change.  The corrupt federal government counts on that desultory, half-assed engagement to use the Treasury for what they see as its real purpose, personal aggrandizement and enrichment of themselves and close business benefactors.  

So the system is so utterly broken that the reasonable, rational working-out of America's economic future won't happen as we might idealize it.  It will gradually settle back to a level consistent with year 2000 house valuations and employment earnings, but with 2008 consumer prices and inflation.  That is to say, in a significantly diminished state.  There will be paroxysms and discontinuities in the glide path toward poverty, and many of these will be caused by useless attempts at intervention by the federal government.  The net effect of "bailouts" will be to increase the stress of interest payments on debts to Treasury bill holders, foreign and domestic.

I saw a CNBC analyst this morning prognosticate that the Dow might fall to the 9,600 level. That is not so far from my prediction, long ago, that the Dow would fall to 9,100, which seemed fantastic at the time.  I would consider the 9,100 level the "essential floor," and then the market's value would go up or down from there depending on our ability to adjust to our new penurious state.  The USA needs to face one essential fact: the easy dominance we have enjoyed since the end of World War II is over.  Cyclical predictions of boom and bust were based on this anomalous period.  There is nothing automatic about future prosperity.  It will require adaptation and retooling, and the current political structure is simply in the way of this. Thus, it will be necessary for this particular regime to fall apart entirely, Democrats and Republicans alike.  That is what the pitchfork-wielding American commoner dimly perceived in his rebellion.  If the fat cats in Congress lose their paymasters, they are one step removed from extinction, and their extinction is what we need more than anything.

No Bailout for Bozo

(to the tune of "What Now My Love?")

What now my Prez,

Now that they've spurned you,

How can you lead

for another day?

What now my Prez,

Now that they've burned you,

Are you toast

In the USA?

George Walker Bush adds yet another distinctive PR (Presidential Record) to his astonishing list: the single largest single-day drop in the history of the Dow Jones Average - over 777 points. Sure, before he had already been the first president ever to institutionalize torture of human beings as official U.S. policy; the first to launch an all-out invasion on information that was one hundred percent wrong in every particular (that's the one I still think of as his Sistine Chapel ceiling); the first to forgive one of his own operatives for blowing the cover of one of our spies, even after the aide had been convicted of several felonies; the first to let an American city drown; the first to arrest, detain and deprive of all Constitutional rights American citizens apprehended right here on American soil; the first to run a concentration camp offshore so that foreign combatants could be tried unfairly; the first to knowingly and intentionally, even proudly, violate the Foreign Intelligence Surveillance Act and the Fourth Amendment against his own citizenry; the first to suspend habeas corpus other than in a time of war; and so very much more.

Yet some wondered if maybe Bush had lost his touch.  There was Robert Gates, who seemed kind of reasonable; the tentative deal with North Korea, even though it's now sort of eroded; a better job with Gustav and Ike than with Katrina.  Rumors circulated that maybe he was inching his way up toward mediocrity.

My own faith in W never wavered.  I knew he still had it in him, that innate capacity to fail, not only spectacularly, but in ways previously unimagined.  It's what makes him special.  He can screw the pooch even when the pooch doesn't seem like a pooch at all, but some other kind of weird species, screwing up even when his technique doesn't look much like screwing. That's how unique Bush is. This time around he lost his bail-out because the Republican Party in the House took a position diametrically opposed to his.  By a two-to-one margin.

Stunning.  Awesome.  Unforgettable.  Of course, one sad thought that occurs to me as I watch the Republican dissidents carried to victory on the shoulders of the Common Men and Women of the American hinterland.  What if the Democratic Party, at some point in the last two years, had ever found the inner strength, the personal resources, to tell Bush what to do with his Iraq War? They could have had their moment in the sun, and one that didn't run the risk of ushering us into Great Depression II.  Then I reflect, how probable was that under the anemic leadership of La Diva & Mr. Mumbles?  Not very, I guess.

But as for Bush: I still think he can do it.  Bankrupt the country and lead us into an economic abyss.  He doesn't have much time, but he's got something more important.  Talent.  A God-given gift.  I feel it, I guess, in my gut.

Friday Night's Lame-A-Thon

It wasn't just the dumb formatting of the thing, such as Jim Lehrer's cute "Say it to him!" direction reminiscent of marriage counseling.  That made your skin crawl, but Lehrer is just that sort of folksy presence; he wants people to like each other.  It was simply that the debate was fundamentally stupid, much as the coverage of American politics is increasingly irrelevant and dumb, ossified within jingoistic parameters that never permit an actual airing out of what we used to call Reality.  And when you don't talk about reality, but simply measure who's better at arranging the stock answers as zingers! or sound-bites, you know we are actively in the process of joining our one foot in the grave with the other one.

As an example?  Okay, take our departure date from Iraq.  McCain says that if we don't leave with an honorable victory, "we'll have to go back."  Obama says that we will be as "careful about leaving Iraq as we were careless about going in."  Great, evocative lines.  There's only one problem.  Both of these guys need to read the news more so they'll realize that Nouri al-Maliki has been playing us for fools, using our money and our military to consolidate his own power base while he temporizes about the Status of Forces Agreement he has no intention of giving us.  So when the UN Mandate expires on December 31, 2008, a little over three months from now, what is our cover story for remaining in Iraq?  Even if things go to hell when we're kicked out, under what new Neocon theory of international relations would we "go back" to do as we damn well please?  It would appear that Commander McQueeg's reasoning is based on the unilateralist thinking that supported the invasions of Vietnam, Cambodia, Afghanistan and Iraq '03.  How could it apply to a "sovereign democracy," our bulwark of Freedom in the Middle East?

And if Obama wants to oversee an orderly withdrawal from Iraq ending in 2011 or so, what does he do about Maliki's desire to get us out much sooner for the sake of Iraqi domestic politics?  It's a popular cause in Iraq now, to make the Yankees go home.  The clever Maliki is already aware that Bush is trying to lengthen the occupation past the point of strict necessity in order to make American "policy" more congruent with McCain's stick-it-out campaign slogan.  I suspect Maliki would like nothing better than to pull the Persian rug out from under this ploy and turn to his natural supporters, the regime in Tehran and its benefactors, Russia and China.

McCain hammered Obama on his reluctance to cut "government programs," and Lehrer, of course (like all Mainstream thinkers) never thinks to include the defense budget as one of those government programs.  It is absolutely telling, in considering how empty the national discourse has become, that the single largest item of discretionary spending has achieved this sacrosanct category of The Untouchable.  Listen to my former prof and current favorite voice-of-reason on the insanity of America's obsession with "security spending," Chalmers Johnson, as he notes that last week Congress passed the defense appropriation bill of about the same size as the 'bailout" without so much as a public comment:

"This is pure waste. Our annual spending on "national security" -- meaning the defense budget plus all military expenditures hidden in the budgets for the departments of Energy, State, Treasury, Veterans Affairs, the CIA, and numerous other places in the executive branch -- already exceeds a trillion dollars, an amount larger than that of all other national defense budgets combined. Not only was there no significant media coverage of this latest appropriation, there have been no signs of even the slightest urge to inquire into the relationship between our bloated military, our staggering weapons expenditures, our extravagantly expensive failed wars abroad, and the financial catastrophe on Wall Street."

Obama, of course, couldn't touch it.  McCain bragged about his war on "cost-plus" contracting for the military, or how he canceled a redundant bomber program.  That's as good as it's going to get.  Lehrer is even afraid to ask the question.  That's how much of a third rail the issue of defense spending is in this country.  War and preparations for war have become the raison d'etre of the United States, which is the only reason a bellicose loose cannon like McCain is even taken seriously as a candidate.  The national Zeitgeist allows him to sound echoes of the Cold War without being challenged; when he looks into the eyes of Putin he sees "three letters: KGB."  (McCain's stock zingers are really cornball stuff.)  And what three letters do the Russians see when they look into the close-set eyes of the current American President, the son of the former head of the Central Intelligence Agency?  What's the point of such saber rattling, other than to hope, as McCain does, that constant provocations of Russia, such as meddling in Georgia, placing radar in "Czechoslovakia," or missiles in Poland can bring us back to those joyous days when we spent every waking minute on the edge of nuclear annihilation?

As we watch America's financial institutions take turns circling the drain and disappearing, it's worth thinking about the priorities we have set for American spending.  We are a modern Sparta and it has become so ingrained, so pervasive and natural to our thinking, that it's a bit like asking fish to comment on the necessity of the ocean.  Although it's bankrupting us and preventing us from spending money on anything else with a human future, we just can't stop ourselves. We can't even ask questions about it.  We have to sit quietly in the living room, coffee cups poised, listening to Jim Lehrer admonish his unruly interlocutors about "relating to each other," and ignoring the ten thousand pound fire-breathing monster, covered with scales, with razor blades for eyes and machetes for claws, sitting indecorously next to us on the couch.

Convergence at the Bottom, Or There Are No Ideologues in Foxholes

George Stephwhatever interviewed the surly John McCain for a few minutes on his show Sunday morning.  McCain seemed to have undergone a beige makeup job which made him look less cadaverous than in recent TV appearances, which is good, but he spoke in that soft, furry monotone the whole time, which is not so good.  I did pick up on McCain's basic trick, now that I know what to look for: it isn't difficult to find inconsistencies in any position Johnny Mac takes; his life is so full of inherent contradictions that they're hard to miss.  He's the anti-special interest crusader, for example, whose campaign is wholly owned by lobbyists on the payroll of those very same corrupting influences.  When George S. asked about Rick Davis, the lobbyist for Freddie Mac who runs McCain's campaign and whose lobbying firm, Davis Manafort, remained on the payroll of Freddie Mac until last month, McCain simply persisted in the obvious lie that Davis has not been connected to Freddie Mac "for years." That's how he handles criticism; anyone who points out that he's simply lying is playing the "politics game" and anyone can do that, after all.  It doesn't "mean anything."  McCain's work is too important and he's too much of a maverick to engage in politics as usual and play the back-and-forth game of modern elections, such as responding honestly to accusations he's lying through his clenched teeth. Since all criticism is politically motivated, it's equally meaningless in McCain's view - just part of the "process," so that even when he's accurately portrayed as a liar and con man it doesn't mean anything.  People are only accurately describing him as a charlatan and hypocrite because he's running for office, so why pay it any mind? In that sense, McCain probably represents the final evolutionary stage of American media politics: a human being who underwent a soul-ectomy so long ago that there's no conscience left to bother.

Still, it was the second half of the show that was the most interesting.  George S. led a roundtable discussion featuring Newt Gingrich, George Will, Robert Reich and Steven Pearlstein, an economics writer for the Washington Post.  The bailout and the country's financial crisis were the topics of discussion.  It was an uncommonly serious conversation for one of George's gabfests. I got the general feeling that everyone around the table was genuinely scared.  And the most remarkable aspect of the discussion was this: although it might be hard to find two personalities in American politics more historically dissimilar in ideology than Robert Reich and Newt Gingrich, they essentially agreed on everything.  Gingrich contended that America can't compete because our educational system has gone to the dogs, our infrastructure is shot, and we're broke. Pearlstein said that America had lived beyond its means for so long that the time had come to pay the piper; the foreign creditors were through financing our extravagant lifestyle.  George Will opined that the candidates were probably going to have to admit the truth about the "sainted American electorate;" in general, they're a bunch of self-indulgent, childish and unrealistic people who financed their lives with heavy debt.  Reich said that Newt was turning into a "liberal Democrat" before his very eyes, and Gingrich only smiled.  Indeed, the only person I thought sounded completely unrealistic was Robert Reich, who gamely tossed out the usual New Deal bromides about the need for increased government spending and larger deficits to stimulate the economy and "get it moving again."  What money, Bob?  What economy?

So what we're seeing here is the consensus that develops when all options are essentially gone. If four people of disparate political leanings are sitting in the middle of the trackless Sahara next to a Landcruiser that has run out of gas, they might argue about how, exactly, they came to their desperate pass.  But they could all probably concur that they were shit out of luck no matter how they got there.  That's what it sounded like.  Congress can appropriate $700 billion (a number which Henry Paulson admits was plucked out of the air because it sounded "big") by authorizing some more borrowing from those same oversubscribed foreign lenders, but it doesn't mean the U.S. economy is going anywhere.  Commercial banks are currently borrowing phenomenal amounts from the Federal Reserve through all of its new open "windows" in order to give the appearance of solvency, as much as $188 billion per week (and how long does it take to reach $700 billion at that rate?), but it's sort of like experimenting with a dead frog in a lab tray.  You can run electric current through the frog's legs and make them move, but the frog is still dead.

This huge "bailout" is designed solely to reimburse close personal friends of Administration bigwigs for the consequences of their own cupidity, and to levitate the general economy for a few months or weeks or whatever so that the incumbent scoundrels can get out of Washington, D.C.  The Democrats, of course, went along with it, but if you've watched the riveting, incisive commentary by the electrifying Harry Reid during his press ops, you'll have little problem understanding how he got rolled by Bush yet again.  

The Big Four around George S.'s table seemed to have little trouble understanding where we are, even if it's impolitic to admit just how bad things really are.  Money is what made all those policy differences go, after all; Newt liked seeing the Federal largesse siphoned off to private enterprise and away from entitlements (or public schools, for that matter).  Robert Reich liked government "programs," that bete noire of Conservative regard.  Now it doesn't matter what they used to think.  The money's gone.  The sun is rising along with the temperature, the sand dunes are shimmering in the heat, and they don't see any camel-riding rescuers on the horizon.