The Bush Who Cried Wolf

[smoogatz]

THIS is what happens when an administration squanders its credibility on fake wars of choice, fake terrorism scares, bogus Social Security crises, and a relentless chorus of calls to be afraid, very VERY afraid. People stop buying their bullshit, even if that bullshit ultimately turns out, for once, to be true.

Now, I'm not saying that the current financial crisis is anything but corporate blackmail and/or a final naked attempt by Bushco to loot the treasury while the Democrats stand by, holding the keys. And I'm not saying that a big chunk of the Democratic party wasn't in on it from the get-go. AND I'm not saying that handing Paulson $750 billion, or $900 billion, or $1.2 trillion, or whatever the final number would be, might not be sufficient ransom to momentarily avert said crisis, which by Bushco accounts is largely "psychological" in nature. But I don't think anyone's arguing that even a trillion bucks or two would actually fix the fundamental problem--which is that the entire global financial system is built on a foundation of pure, unadulterated shit: perhaps as much as $40 trillion in worthless (or nearly worthless) mortgage-backed securities, a pyramid scheme that would have left Mr. Ponzi himself breathless with envy.

I don't actually think this is the harbinger of a new Great(er) Depression, because I think the shadow banking system that's being eviscerated (rightly) at the moment is largely a closed loop--that's a big part of its current problems. Sure, a number of banks who've used fancy mortgage-backed derivatives to pump up their books will fail, as they should have failed years ago. Sure, the stock market will take a beating, and some investors--those who went all-in on the wrong stocks--will be wiped out: that's the risk we take when we invest, especially in times of high market volatility. But we're only headed for a Weimar-style inflationary depression if the government panics and starts passing out gold bars to every mook on the planet with a Wharton MBA. Cool heads must prevail, and the Bush administration is fresh out of them (unless you think the whole thing is, as I say, a cynical and criminal attempt at the biggest heist of all time).