Elizabeth Warren made an appearance on Morning Joe this morning and woke me up at 5 AM PDT with the force of a revelation: those toxic assets are still on the books of the banks. The banks, which have taken so much of our children's futures in the form of TARP money and similar bailouts, have won -- not by asking for money, taking it, and using it to fix things, but by taking money and doing nothing.
Remember the good old days, before we got sidetracked by euthanasia, pulling the plug on granny, and letting illegal immigrations hijack our health benefits and take them back to their home countries? (Yes, I heard that all being discussed in the Town Halls I watched yesterday.) Well, we were talking about boring stuff like mark-to-market, an obscure little accounting rule that says you have to call your pig a pig when you take it to market and you can't call it a Ferrari.
The banks are still accounting for their piles of pigs (or maybe pig droppings) as Ferraris, because Congress now allows them to do so. And they will not sell those assets, even to the government, because to do so would mean they'd have to acknowledge them on the books as pigs, throw away those glamorous photos of Ferraris that adorn their annual reports, and quietly slink away with their pig tails between their legs, giving the field over to newer, smarter banks.
I was with the conservatives on this issue. I didn't want us to bail out the banks. But we did, because we thought the system would collapse if we didn't. Okay. So we put off the collapse for two years, but -- my fellow Americans -- while you are all worrying about death panels and tax-supported abortions, don't take your eye off the world around you. Multi-task if you can.
Because 30% of the homeowners in the country are now under water. Job losses, while not accelerating at such a rapid rate, are still happening, and more and more people can't pay their mortgages. The gigantic economic re-set is not over, as the next wave of adjustable mortgages come due in 2010.
This means more foreclosures, along with the imminent collapse of the commercial real estate market as well. Who needs office space when you are laying off workers and can't get a credit line to keep your business alive?
What will happen? Bank failures at long last. I've got my bets on who goes down first as Congress, now threatened by its constituents with full scale revolt, fiddles with health care while the financial underpinnings burn. One set of lobbyists has replaced another.
At least when we spend money overhauling the health care system the money will reach individuals. Following Elizabeth Warren on Morning Joe was Joe Califano, who was around when Medicare was passed. What did he say? No one could have predicted 40 years ago the revolution in medicine that led to the explosion in life expectancy. We can't predict what will happen when the next wave of innovation in neurology and cancer research makes life even longer. So the only way to control costs is to keep people out of the sick care system.
So let's put our eye back on the ball. Focus on ourselves. Let the banks fail, but the people succeed. Survive the re-set in the economy, which I believe is permanent, by getting in shape. I will see you at the gym.