I'm old enough to remember a long defunct brokerage called E.F. Hutton. As a kid, I was pummeled with the television ads built around the line, "When E.F. Hutton talks, people listen." Of course, Mr. Hutton himself was long dead when those ads ran, and the firm was swallowed so many mergers ago that it seems like ancient history. What got me thinking about that bit of advertising is that it hearkens back to an era when people believed -- rightly or wrongly -- that there were experts working the financial markets who actually knew what they were doing within a sensibly structured economic framework.
If there's anyone who still believes that we live in such an era, then I'd strongly suggest that you refrain from whatever you're drinking, smoking or swallowing. It's important not to be imbibing the proverbial Kool-Aid when digesting the three biggest fallacies that have led to the edge of The Great Depression, Part II.
The first idea is that the free market does everything better than the government. It doesn't. Blackwater is not better than the military. Oil companies will not confront global warming. Private health care doesn't translate into a generally healthier population. And people who have already made a fortune lining their pockets trading securities that they they didn't understand aren't the best guardians of a nation's economy. Quite simply, there is no libertarian capitalist nirvana; it's a fantasy of the same magnitude as the workers of the world uniting in a communist paradise. And while we've all been raised that government is incompetent, it seems that companies left to their own devices are capable of creating an even greater gaffes. The only difference is that when governments go broke, companies don't bail them out.
The second is that people who are good at winning elections must be competent at governing. Surely, our current Commander In Chief -- Comrade Bush, the great nationalizer -- has proven that this is the height of lunacy. But our esteemed Senators and House Members have almost all used the occasion of our current crisis to prove the value of term limits. I've never seen so many people running around in the hopes of proving that they were unaware that all of this might be a problem. Senator McCain, you can't favor deregulation in March and regulation in September, and then hope to duck the reversal by refusing to debate. As to you Democrats who have controlled key committees for two years, it's one thing to claim that you can't override a veto; it's another thing to do so little with the the power that you have. If you want to act like a deer in the headlights, retire.
The third bit of insanity is that is that the same people who spilled the milk, let the horse out of the barn and fell asleep at the wheel can now fix the mess that they caused. Paulson made a literal fortune at Goldman Sachs taking advantage of the very same economic environment that he's most currently presiding over. Bernake was hand-picked by Greenspan, as his heir. These are the high priests of deregulation, the kinds of men who told us that we didn't need no stinking Glass-Steagall Act! So for the life of me, I cannot imagine why any sane person would expect that these people are capable of fixing the problem. It's like trusting your health to a surgeon guilty of malpractice on the logic that he already he won't make the same mistake twice. That maybe true, but it also doesn't mean that he won't make new, potentially lethal mistakes.
If trusting such men really is smart thinking, let's bring back Brownie: he must have learned something making a mess of New Orleans. And while we're at, let's give Paulson, Bernake and the head of every investment bank a Medals of Freedom. We can't do that for Alan Greenspan: he got his 2005.