Tuesday, November 25, 2008

Economic Katrina

I’ve been watching the “bailout” of the financial industry with amazement and growing alarm. Generally speaking I favor helping the important institutions and businesses that keep our economy strong and growing, and I thought the bailout was necessary. With the financial houses and the auto industry, I supported help, so long as taxpayers had a stake in the success, reforms were required, and the idiot management ended.

This is not what I see happening. First it was Secretary Paulson yelling “Fire, fire!” and scaring the hell out of everyone that really tipped our economy into crisis. When the Treasury Secretary says the economy is in crisis, it scares people and they react by hunkering down. He said we need to buy toxic assets, then he said we need to inject capital, now he’s back to buying toxic assets.

He promised to have management reforms, including compensation limits, but has not followed through with that. He is refusing to release information about who got how much money. He “forced” financial institutions that were not in trouble to take money so as not to stigmatize the ones that needed the money – that was his announced rationale – but now he won’t tell us who got what.

It’s clear that Paulson has never had a clue about what to do to really get things moving.

This just looks to me like a last gasp feeding of hogs at the trough, and Paulson is busily shoveling out the money to his friends on Wall Street. They’ve only got a couple of months to enrich themselves before an accountable administration takes power and puts and end to the plunder.

Of course the financial firms aren’t lending money and getting things going; that would stop their ability to get government money. As long as Paulson is throwing money at them, why would they do anything different?

Paulson in this crisis in just like “heck-of-a-job-Browine” in the Katrina crisis; completely ineffective. And in the mean time, the President stands idly by, looking out of the window.

I’ve heard a story, probably myth but illustrative, that Napoleon described 4 types of general, by 2 attributes. Smart/dumb, and lazy/energetic. A smart energetic general is good, but a smart lazy one is better, because the lazy general will figure out the most efficient and easy way of getting thing done. If you have a dumb general, at least get a lazy one, to minimize the damage. The worst of all is a dumb energetic one, who will actively run around ruining things.

Right now we’ve got a lazy dumb general running the country, and an energetic dumb general setting fire to our economy.

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