The Street on Welfare

Never do I want to hear again from my conservative friends about how brilliant capitalists are, how much they deserve their seven-figure salaries and how government should keep its hands off the private economy.

The Wall Street titans have turned into a bunch of welfare clients. They are desperate to be bailed out by government from their own incompetence, and from the deregulatory regime for which they lobbied so hard. They have lost "confidence" in each other, you see, because none of these oh-so-wise captains of the universe have any idea what kinds of devalued securities sit in one another's portfolios.

So they have stopped investing. The biggest, most respected investment firms threaten to come crashing down. You can't have that. It's just fine to make it harder for the average Joe to file for bankruptcy, as did that wretched bankruptcy bill passed by Congress in 2005 at the request of the credit card industry. But the big guys are "too big to fail," because they could bring us all down with them.

Rescuing them is, sadly, probably necessary, but can we please ensure that:

(i) it doesn't happen again (ie reregulate their asses off);
(ii) those to blame are wiped out (grab in public hands most of the equity of all the entities bailed out, forbid the top management of any of them from ever working in banking again, with as few exceptions as possible, kill all golden parachutes);
(iii) both the discourse and the practice of deregulation are blamed for the mess

In the long run, we're all dead. John Maynard Keynes