Rogue Columnist

Not like Ike

The nut baggers are right. Socialism has come to America. It is here, now. The government owns the "commanding heights" of this economy, as is the case in classic socialist doctrine. Citizens of this American socialism get free medical care, housing, food, clothing, even travel. They have abundant educational opportunities, including college. It promises and actually delivers both diversity and social mobility. It also has elements of fascism, just as the nut baggers have warned in their rallies attended by hundreds: The socialism has a heavy corporate component, with giant companies moving in lockstep with the regime's demands yet also holding strong political sway within the regime. In exchange for its benefits, members of the society give up certain freedoms -- yet they keep joining enthusiastically.

I'm writing about the military, of course, and not just to show the absurdity of the nut baggers' claims. In a nation where six people are chasing every job, where college is increasingly out of reach, the only advanced nation in the world where people go without health insurance -- in today's America, the military is often the only option open. It made news last month when a man who couldn't get insurance joined the Army so his cancer-stricken wife could get help. (When I Googled "joined Army to get health care," the second and third hits out of 53 million were Army recruiting sites). Military recruiters have more than met their targets -- ones raised for the Army -- since the economic meltdown. Even with the danger of war, many Americans just don't see another way.

Elements of this have long happened. There's the classic case of the directionless kid from high school who joins the military -- sometimes under a parent or even judge's threat -- and becomes an adult. I went to high school with young men who joined up, served honorably and succeeded as civilians -- I doubt most of them ever would have chosen the military as a first option. And we honor their service. But the Great Disruption's first act -- the crash and its resulting unemployment, combined with two wars seemingly without end -- is creating something new. New and unsettling.

Citizens and 'shareholders'

What does Goldman Sachs do, exactly? How does it make its money?

You can and should read Matt Taibbi's take on the investment bank, but let me simplify. These days, Goldman Sachs makes money by moving money from Spot A to Spot B to Spot C, all across the securities world, and at every point skimming something off the top. It creates and trades securities so complex that they are incomprehensible to the leading minds on Wall Street; these derivatives are ultimately worth no more than Confederate money and pose continuing systemic risk to the economy. But while the band plays on, Goldman makes its fees. With the general economy still deeply wounded, the firm made $12 billion in revenue in the most recent quarter for a profit of $3 billion. Goldman has so far set aside $16 billion -- that's with a B -- for executive bonuses. Of course all this has been made possible by the massive taxpayer rescue of a financial system whose collapse Goldman helped create, along with the Fed's zero interest rates and opaque lending "facilities" that have been a gift to Wall Street.

Something is so sick in America. The "healthy" sector of the economy makes nothing at all. Gone are the days when the capital markets were primarily concerned with marshaling capital to fund productive work. They now make money off of money in a colossal Ponzi scheme that cannot have a good ending. Take the case of Simmons Bedding, being forced into bankruptcy after being flipped seven times by private equity hucksters. Each deal was done with borrowed money. Each new owner would try to squeeze more out of the company. The long-term health of the company was sacrificed for short-term profits that went to a few. Top executives were lavishly compensated while average worker wages stagnated. Now a thousand Simmons workers and counting have lost their jobs. This has been happened at thousands of companies across the economy for years. And the cause was not merely private equity or neo-Michael Milkens -- it is the way the markets work now.

The doomsday machine

Two new books and an article in Wired are making more people aware of the doomsday system constructed by the Soviets during the 1980s, when they feared an American nuclear attack. Perimeter, nicknamed "the Dead Hand," went operational in 1986 and guaranteed that even if the leadership was killed and all command-and-control systems disrupted, the Soviets would still launch an all-out nuclear counter-attack. Like Skynet of the Terminator movies -- Linda Hamilton, call your office. And "the dead hand" is still operational, although Moscow officially won't discuss it. It's a good thing nothing ever goes wrong with complex systems.

As we observe a one-year anniversary nearly every day of some calamity from last year's Great Panic, I can't stop that feeling of grating ambivalence. Yes, Messers Bernanke, Paulson and Geithner averted a collapse of "the global financial system" and perhaps averted another Great Depression. That's the story line and even I buy it most of the time. But now the too-big-to-fail banks have gotten even bigger. The derivative boys are back at work. Promised re-regulation is being gutted. The pain has fallen on average Americans and the American taxpayer.

It's almost as if "the global financial system" built its own Dead Hand doomsday machine. So the question becomes: Did we avert apocalypse last fall and winter, fortunately shutting down this fearsome device. Or did we actually arm it by our actions. In other words, should we have called the bastards' bluffs in late 2008?

They welcome our hatred

Events forced me to fly across the country. Because the old bereavement fares have gone the way of free (and tasty) meals, in-flight movies, free baggage check and an airport experience not out of Lockup Raw, USAirways got quite the bite out of my wallet. The flight was late and several restrooms on the 757 were not working. Of course the entire process -- from getting out of the taxi under the din of recorded commands to reaching the gate area which never has enough seats for waiting passengers -- was a joy.

The airlines don't care. We're stuck. Where in 1936, Franklin Roosevelt announced that never before in American history had the forces of money and privilege been arrayed against one candidate, and "I welcome their hatred," now the situation is reversed. More and more, highly concentrated industries and the moneyed elites welcome our hatred, then keep on tightening the screws. Americans sheepishly accept the hatred and queue right up for more.

Other sectors come to mind beyond airlines, health insurance and "financial services" at the top of the list. President Obama seems determined to get insurance industry "buy in" on health care reform, so we know how that song will end. It's appropriate to remember our friends the bankers on the anniversary of the failure of Lehman Brothers. A year later, the TARP money is unaccounted for, the industry is more concentrated and thus dangerous than ever, and real regulatory reform appears DOA. And for these privileges, Americans will get ever more gouged on banking fees and insurance premiums -- if they can even keep the latter. Meanwhile, executive salaries and profits keep rising.

The debates we're not having

As masterful as President Obama's health care speech was, he operates in a nation that is increasingly losing the capacity to govern itself. The blurt of the loutish South Carolina Republican congressman, calling the president a liar, something I have never heard in listening to presidential addresses before that body since JFK...well, that's the least of the problem.

Health care reform foundered on the vicious lies of a well-organized minority and, apparently, the simple-mindedness of the American people (all manipulated by the health industries' hundreds of millions of lobbying dollars). The side dish was the ongoing hyperventilation over the president's citizenship or lack thereof. Then came the hysteria over his "indoctrination" of schoolchildren from a harmless speech (two other presidents have done this, with no controversy). All this from a minority of nuts -- and their reactionary masters -- who nonetheless dominated the television from which most Americans get their "news." This is how we spent our summer. One would never know who won the election last fall.

Think of all we're not discussing. Not even thinking about as a nation.

Economic musical chairs

Who are the winners and losers in the "recovery"? Check out my assessment on Britannica Blog.

Learning from the Lone Star State

If anyone thought the Sun Belt was in danger from the Great Disruption, they can find swaggering solace in The Economist's panting, sheet-clawing passion over Texas, in an article headlined Lone Star Rising. The teaser says, "Thanks to low taxes and light regulation, Texas is booming. But demography will bring profound changes."

The Economist's journalism is often some of the best around, and even its editorials can challenge the psychotic screamathon that has become American "conservatism." But it can't completely escape its Tory establishment roots, or its intellectual grounding in the conventional wisdom, BGD -- Before the Great Disruption. I don't doubt that America, and probably Britain, will exhaust themselves trying to resuscitate the old order. That will render it no less dead than the ubiquitous armadillos decorating the highways of Texas.

American right-wingers are no doubt sending the article to the faithful -- and using it to further cow the Democrats, if such a thing is possible. But a close reading of even this article -- and a better understanding of Texas -- shows that the Lone Star State's success has relatively little to do with "low taxes and light regulation." I speak as one who covered organized crime and the oil industry there, and whose family roots go back to the bloody pre-Civil War Texas frontier.

On the edge of Waterloo

Republican South Carolina Sen. Jim DeMint says if Obama fails on healthcare, it will "break him"; it will be "his Waterloo." DeMint is right.

Those of a certain age remember the Jeff MacNelly cartoons during the Carter administration. As each day seemingly brought fresh setbacks, MacNelly's cartoon president shrank until he was a mini-me struggling amid the vast space of the presidential chair. Although he lacks Carter's tut-tut lecturing and, so far, foreign policy disasters, although Americans are proud of themselves for electing an African-American president, I sense Obama shrinking every day.

Many of the failures are not his. Obama inherited a nation in greater trouble than at any time since 1933, perhaps 1861. Not for nothing did the Onion have the headline: "Black Man Given Nation's Worst Job." In addition to the financial panic, Obama got two wars, foreign policy in disarray, a huge budget deficit, a government that had attacked civil liberties and enshrined torture as policy. He took over a nation that is in hock to China and the petro-states, that has been deindustrialized and seen its middle class devastated by policies to serve the corporate elite. And a nation ill-prepared for climate change or peak oil -- indeed, one digging itself ever deeper in the hole.

He and his party, however, continue to make critical missteps.

Signed, sealed, delivered

Remember the Sarah Palin turkey moment? She had gone to "pardon" one bird ahead of Thanksgiving, and then, cluelessly or not, gave an on-camera interview while a slaughterhouse employee fed less fortunate beasts into a machine. Their heads were stuck into a funnel, their throats cut, and their blood drained.

The world is more complex than ever. Economic, social, geopolitical and military situations are full of nuance, contradiction and layers of gray. Still, I don't about you, but I am feeling more and more like one of those turkeys. Most of our necks are in that funnel, and the blood being drained out is the wealth of a whole society.

Where is it going? To ever-higher profit margins demanded by Wall Street. Profit margins that translate into greater wealth for an elite that makes its living off investments rather than wages. To the gamed market that is the world of politically powerful, highly concentrated industries, especially finance. And to tax cuts, the opiate of the duhs and ignos, that have become so deeply ingrained in our local, state and national polities that our society as we knew it is starting to collapse. Who, for example, would have thought 30 years ago that we would reach the point where we couldn't afford to keep Interstate rest areas open? Never mind that "we can't afford" the rail network found in other advanced nations, etc.

America becalmed

For all the vigor projected by our appealing president, America sits strangely stuck. Healthcare reform seems all but dead. Even the whateverthehellitmeans "public option" is struggling. Tom Daschle, who proved such a formidable leader for the Democrats during the onset of the Bush calamity, is urging President Obama to drop it. There just aren't the votes in the Senate. Indeed, the Democrats seem in a dead run to lose the next election, which would be a certainty if a credible opposition party existed.

It's easy for the senators to be complacent. They are deep in the pockets of the healthcare and insurance industries. The wife of Sen. Chris Dodd earned hundreds of thousands of dollars and stock grants serving on the boards of Javelin Pharmaceuticals Inc., Cardiome Pharma Corp., Brookdale Senior Living, and Pear Tree Pharmaceuticals. And Dodd is one of the good guys? Daschle has his own conflicts. The for-profit medical and insurance industries, along with the U.S. Chamber and assorted business lobbyists can bring hundreds of millions of dollars to bear to maintain the status quo. The only people who think this is a good idea are the diminishing ranks of Americans who have good insurance. The suffering and fear of everyone else has no political power. Meanwhile, the media hype the costs of single-payer (ignoring that America pays twice as much for its system as any advanced nation) and the alleged horror stories of rationing abroad. Can you believe this trick is working?

The same Democrats who won a historic election are struggling to enact the mildest of measures to limit greenhouse gases, even as the government issues a historic assessment of the consequences we are already seeing and will see from climate change. The Southwest can kiss its ass goodbye. So can the Southeast, including the exurban office "park" where the rat bastards at NCR are moving, stabbing Dayton, Ohio, in the back.

Peak oil — nevermind

One way to remain popular as a hip, iconoclastic media brand in America is to reinforce the conventional wisdom -- in a hip, iconoclastic way, of course. I've learned this from Freakonomics. Take the recent blog post entitled, "Has 'Peak Oil' Peaked?" Author Stephen Dubner asserts that with oil prices way down from their 2008 highs, the media "frenzy" over peak oil has faded away -- but without the media doing a reality check on this hysteria they were peddling to a gullible public.

Huh?

My memory of that time is quite a bit different. The mainstream media did little on peak oil and Freakonomics' partner, The New York Times, was nearly silent on the issue. All the air in the media bubble was being taken up by shrill blaming of the major oil companies (even though they were delivering a commodity prized by the world to American gas pumps with no lines or interruptions). Or it concerned sinister futures traders somehow gaming the market. Most of the discussion on peak oil was confined to sites such as The Oil Drum, the "doomer blogs" -- and inside the oil industry itself.

Losing altitude in America

Two pilots and two crews. Two aircraft in mortal danger. Fate is not always the hunter.

As almost everyone knows, Capt. Chesley "Sully" Sullenberger was the pilot of US Airways flight 1549, which last January suffered a bird strike just after leaving LaGuardia Airport that rendered both engines inoperable. Sullenberger performed the remarkable water landing on the Hudson, in the heart of New York, saving all 150 passengers.

Less remembered is a commuter flight from New York City that crashed near its destination of Buffalo the next month, killing 49 aboard and one on the ground. And herein lies yet another tragic, disturbing story about two Americas.

Two roads to the future?

With the exception of LBJ, Democratic presidents since 1960 have fared badly in their legislative agendas, even when Congress was controlled by their party. President Obama, for all his gifts, may be on track to fare little better. Health care. Cap-and-trade. Financial reform. Big-time tax evasion. Even for this cool-handed moderate, it's a tough sell.

Meanwhile, the media and the salesmen on Wall Street are in a constant search for "green shoots" -- signs this historic recession is over. Nobody is thinking through what these shoots will turn into, exactly what the road ahead looks like. But for many, including policymakers, we find a desperate assumption that the economy will pick right up where it left off in 2006.

Two schools of thought are at work here. One says the fundamentals are sound, as President Hoover put it, and the future will look much like the recent past. The other, found more among the outliers, argues we have hit a historic pivot point -- but will we realize it and save ourselves?

How Detroit committed suicide

In the garage of my condo tower, someone parks a 1965 Buick Electra 225 convertible. It is sleek and big and powerful. This was Detroit, and in many ways America, at the zenith of its power.

Buick, like all GM divisions, still enjoyed great autonomy, including having its own design bureau. This car is a work of art. It is the successor to the legendary Roadmaster, and in those days Buick fans were fiercely loyal (my mother being one). GM cars were tiered so people could move up to a new GM brand as they became more affluent, as millions did in the 1950s and 1960s -- Chevy to Pontiac to Oldsmobile and even Cadillac. Ah, but the Buick was special: glamorous, racy, classy and exclusive. Built union.

I think of all this, of course, as Chrysler is pushed into bankruptcy and General Motors may well face the same fate. What went wrong, and what does it say about America's future?

The bigger hostage drama

The rescue of the American captain from pirates -- handled with cool competence from President Obama to the SEAL snipers -- gives the nation a much-needed boost. This comes after eight years of "bring 'em on" grandstanding by the Bush administration. And now, as the company that once stood for American success and the rising middle class, General Motors, faces bankruptcy. At least we can still do something right.

This should not distract us from piracy that has been happening on Wall Street, and that the Obama administration seems committed to, at best, merely applying a nip-and-tuck. It emerges that Obama chief economic adviser Larry Summers not only received $5.2 million from a hedge fund and $2.7 million in speaking fees from big financial institutions after he left Harvard. He also was working for a hedge fund while he was president of Harvard. Frank Rich asks, "Can he be a fair broker of the bailout when he so recently received lavish compensation from some of its present and, no doubt, future players?" Ben Stein answers, "I know people and I know money, at least the basics. If anyone thinks that a man who has had a taste of honey from Wall Street on that scale will ever really crack the whip on Wall Street, he’s dreaming."

Larry Summers, the man leading Obama's reckless push into socialism; sorry, SOCIALISM!! (or is it fascism? -- the right-wingers can't figure it out). What's really happening is that the pirates are winning, and there's no SEAL team out of D.C. to protect taxpayers -- or the future of this republic.

Dead-on-arrival solutions

Nassim Taleb, who wrote The Black Swan, proved to be one of the most prescient observers of our current unpleasantness. On Global Guerrillas, he offers ten rules for a more resilient financial system. Very worth reading. Among them:

What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

And

No socialization of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

Also, be sure to check out Kevin Phillips on Talking Points Memo, explaining the vast expansion of financial services as part of the overall economy, and how it poses a bigger risk than the Great Depression. Why is Obama sleep-walking into trouble with Geithner and Summers?

This is not hard

We're being played for fools again. The Financial Accounting Standards Board just relaxed its "mark to market" rule. Instead of forcing banks to value assets what they would really bring on the open market, the bankers get to set the value -- i.e., at bubble levels. At the least, this will bollix up the Geithner bailout plan, giving banks no incentive to part with "toxic" assets that are suddenly Chanel again. At the worst, it will create another bubble. It's already produced a sucker's rally on Wall Street.

As for that bank plan, Treasury Secretary Tim Geithner has produced something that sticks the taxpayers with most of the risk and does nothing to deal with the underlying problem. In many cases, these "assets" aren't. At any price. The bankers made bad decisions and we're still bailing them out. Not mad enough? Now that you own Fannie Mae and Freddie Mac, you'll be glad to know that you'll be helping to pay $159 million in retention bonuses. And we want to retain these idiots...why? Let them take their "talent" into a job market with millions looking for work. Could an AIG or Fannie executive even count change correctly at McDonald's? ("Sorry, sir, that quarter I missed is now a derivative.")

Yet even the reformers can't get their acts together. "Populist rage" dissipated quickly -- that especially happens when people are faced with problems that seem impossibly complex. These are complex problems, but some solutions with proven records could be implemented quickly.

Breaking the greed compact

We had to struggle with the old enemies of peace: business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Sound familiar? Those were Franklin Roosevelt's famous speech in 1936, where he also said, "Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me, and I welcome their hatred." In reality, FDR always had to backtrack to keep from antagonizing capital too much. On the other hand, he led a nation in the 1930s that was on the verge of repudiating capitalism for what then seemed viable alternatives of fascism or communism.

Early 21st century America is reveling in easy populist anger over bonuses paid out to the very AIG executives who did so much to collapse the economy. But I wonder if they have Roosevelt's understanding of these "old enemies of peace"? And what will they do about it? If things really change, it will be because Wall Street did something far worse than break the social compact. It broke the greed compact.

Will AIG be Obama's Bay of Pigs?

The scandal over $165 million in retention bonuses paid to AIG executives goes beyond the rhetoric of cheap populism -- including among Republicans who steadfastly deregulated the financial sector, defended outrageous executive compensation and thought the Greenspan-driven housing-derivatives bubble was just dandy. I know this much: It is the biggest test yet for President Obama. Will it be his Bay of Pigs?

The bonuses are being paid out to "retain" executives at the Financial Products Unit at AIG that nearly brought the world economy to collapse -- leading the U.S. government to pump in so much taxpayer money to rescue AIG that we own 80 percent of it. These executives who created the house of cards of credit-default swaps are now government employees, for all intents and purposes. If only our teachers were paid so well. And "retain"? The teenagers working in the AIG mail room would be more prudent than these Masters of the Universe. But the government claims it has little ability to stop the payments. Contracts must be honored, don't you know.

At the interchange

In the arresting prologue to his book, The Crisis of the Old Order, Arthur Schlesinger Jr. describes America on the day of the inauguration of Franklin Roosevelt -- an economy nearly shut down, people starving, machine-gun nests around Washington, opinion-makers taking of the need for dictatorship, capitalism given up as dead, even the March sky dark and foreboding. Pace today's revisionists such as Amity Shlaes, FDR indeed restored confidence and began an economic recovery that was only tripped up when he reverted to his instinctive desire to balance the budget and back away from stimulus. If it makes them feel better, many of the New Deal's successes built off the programs first established by Herbert Hoover, the often unfairly maligned onetime progressive. Yet those policies had not been pushed with the energy or scale demanded by FDR.

Many liberals and progressives want to see the current economic phase of the Great Disruption as a Depression-like opportunity. Meanwhile, conservatives such as Ms. Shlaes -- and the reactionary thugs who consider even Social Security, as they would phrase it, SOCIALISM!! -- use the Depression and New Deal as a foil. The reactionaries back then wanted to raise taxes to balance the budget. Otherwise, today's right is little changed intellectually from its predecessors.

And yet as I watch us move along the leading edge of history every day, I doubt many of the Depression analogies. We are not yet, most of us, on our backs. We have lost a huge amount of wealth -- more than we realize, when one factors in the 25 years of destructive mergers, deindustrialization, deunionization and unwise trade deals. The floodwaters intrude on our peripheral vision -- a friend laid off, a "depressing" news story. Otherwise, life goes on. American Idol goes on. A new release of Grand Theft Auto. Watchmen brings to the screen "the greatest graphic novel of all time" (was Sad Sack a graphic novel?). Talk radio continues to stir up the faithful. We are entertained, distracted, agitated, yet sleepwalking. Hoping for the next bubble. The next "Flip this House" casino economy moment. We don't realize how gone it all is, gone with the wind.

What you do with zombies

The time for good options to deal with the banks was in, oh, 1999. That was when the Gramm-Leach-Bliley Act passed, repealing the last of the Depression-era regulations that had kept the American banking system sound for more than six decades. (Yes, the same Gramm who got rich once he left the Senate and joined a big bank, and called us a "nation of whiners.") Now some of our largest financial institutions are Zombie Banks -- but we have no Mila Jovovich armed with miniskirt and full arsenal to take them down. They are left with only the most primal instinct: To feed on the Treasury. Resident Evil, indeed.

Paul Krugman makes the case for nationalization today. Socialists Lindsey Graham and Alan Greenspan have also signed on. Economist Nouriel Roubini, who called the crash, says a takeover would avoid throwing good money after bad. Indeed, some of this is not too complicated: Think back to the wreck of the Penn Central railroad, when the government stepped in and created Conrail. Later it was relaunched as a successful public company. Receivership is a better way to think of this than the charged word "nationalize."

Who loses? The shareholders. And as much as one might get a populist shiver up the leg from the idea of some big hedge funds getting sucker punched, remember that average Americans were lured into the market, too. They've lost about half their nest eggs already. Those in bank stocks -- and Bank of America and Citi are widely held -- will lose more. But, as Jovovich's Alice teaches us, you can't mow down a bunch of zombies without collateral damage.

Say you want a revolution?

One of the greatest dangers to peace lies in the economic pressure to which people find themselves subjected.

--Calvin Coolidge

You can't handle the truth!

-- Jack Nicholson

The honorary Page One Editor of Rogue Columnist and I have been in a friendly argument of late over when, or whether, the riots will begin. He sees sooner than later, as people are faced with the worst economic crisis in 80 years -- perhaps in the history of the nation. Things will not turn around soon, and may well get much worse. And having worked around the world in some miserable and boiling hot-spots, he offers observations that should be discounted at one's peril. Former National Security Adviser Zbigniew Brzezinski echoed this on MSNBC's Morning Joe, saying, "Hell, there could be even riots" as the unemployed take aim at the rich bastards that caused the calamity and are still doing fine.

I've tended to say later or never -- the nation is too narcoticized by American Idol, Grand Theft Auto, endless driving, limitless digital distractions, the deadening civic isolation of suburbia. Human nature is unchanging but Americans have changed. They have become easily led. Short-changed of an education in history, civics and the humanities, too many Americans are just plugged into the matrix, sucking Wal-Mart subsistence, waiting for their next cog assignment.

Now, I'm not so sure.

GM and Chrysler: Hasta la vista, baby

In earlier posts, I've urged federal help for the automakers. It would be a calamity to lose this manufacturing backbone, which especially props up what's left of the middle class in places like Michigan and Ohio. There was a large "if," however -- if the automakers fundamentally changed their business models to focus on green technology and building transportation for the 21st century beyond automobiles, particularly transit and rail.

Not surprisingly, none of that is coming true despite GM already receiving $13.4 billion in federal loans and Chrysler getting $4 billion. About the best GM can do is phase out the evil Hummer. Otherwise, it's business as usual and worse: cut 47,000 jobs worldwide, shut five more U.S. factories and phase out Saturn, the brand launched in the late 1980s as the reinvention of General Motors.

There comes a time to let go. It will be painful, but it's time. We need to let GM and Chrysler fail.

The biggest issue no one wants to discuss

Financial Times pronounced the recent Davos conference the gloomiest in its history. The "global agenda" of world leaders has crumbled. With the Doha round of trade liberalization in shambles, "protectionism" is seen on the rise. This is one thing that happens during historic economic collapses: old arrangements, particularly unsustainable ones, crash down. This is what happens when an old order enters an pivot point of discontinuity, where the future will be profoundly different from the recent past.

Dangerous destabilization is headed our way. This is why Dennis Blair, the national intelligence director, said this week that the global economic collapse is the biggest threat to the United States, bigger than al Qaeda. The more we try to deny the current reality, or return to the bubbles of the past decade, the worse the reckoning. This is also true of trade. The "free trade" regime that has coalesced since 2000 has hugely benefited the swells and oligarchs that attend Davos, especially by increasing their personal wealth thanks to cheap labor in developing countries.

But the millions of Americans who have lost well-paid manufacturing jobs as a result, with nothing to replace them but a collapsed housing bubble, don't do Davos. They are not all blameless, to be sure. Like all Americans, they are blissfully unaware of the consequences of their consumer decisions. So they happily shopped at Wal-Mart as their jobs went away. No matter. Beware the meme that facing this, as in an abortive House attempt to put a "buy American" provision in the stim package, is "protectionism." Going forward, a new world trade arrangement is essential. It is the biggest issue facing the country that no one in power wants to discuss.

Why tax cuts won't stim this time

At the moment, tax cuts make up 42 percent of the so-called stimulus bill. This dooms it to be ineffectual, if not actually making things worse. The latter will happen because this is all borrowed money. Public investments provide the means to repay it by improving commerce and productivity. Tax cuts just piss it away. Where are the fighting liberals who are going to filibuster this mess and make the president realize his bipartisanship dance has only reinvigorated the Republicans, the party that wrecked America?

In 2003, Nobel laureate economist Paul Krugman laid out the exhaustive case against the cult of tax cuts, in a must-read, must-keep article in the New York Times Magazine. Yet this remains the only idea of the GOP, the party that wrecked America. And it has been given center stage by a naive president and weak Democrats who don't know how to act as winners. As a consequence, public investments in infrastructure, the best way to generate jobs and a return for the future, have been pared back. The perfect should not be the enemy of the good. But this is a rotten bill, and it is the enemy of the good, whether the punked good has realized yet or not.

So much for the honeymoon

I keep telling myself that the woozy feeling that the Obama administration is already failing is mainly due to the 24-hour news cycle. We get to see the sausage-making in real time. And the sudden ubiquity of Republicans all over the corporate media, despite the public's rejection of their failed ideas. I keep telling myself all this.

Still, some worries. If Rahm Emmanuel is so incredibly effective as Obama's right-hand, he has yet to show it. The so-called stimulus is bogged down and deeply flawed. One cabinet nominee after another is tripped by tax or conflict-of-interest problems. It's nice that Obama admitted a mistake, but he has yet to focus, in simple, Reaganesque language what he wants and use it to go over the head of an obstructionist Congress.

Why am I not comforted that a group of "moderate" senators is trying to cut $100 billion of "fat" -- the media's term -- from the stimulus? In this supposed lard is mass transit funding desperately needed for systems that are already cutting back -- hurting the working poor the hardest. Transit and rail are my markers for real change, and given stable funding they would provide jobs paying family wages that couldn't be sent overseas. Fat? How about South Carolina's unremarked interstate to nowhere?

The Daschle scandal

As much as rendition, the Iraq scam and the looting of the Treasury for bank bonuses, Tom Daschle makes me wonder if the coup has already happened and America is under the control of a shadow government, whatever the outcome of elections. As you know, President Obama's choice to be the Secretary of Health and Human Services -- and point man on health care reform -- has a tax problem. He failed to pay $140,000 in taxes, as the New York Times genteelly puts it, "related to income for consulting work and the use of a car made available to him by a close friend who is also a generous donor to Democratic causes."

We have a task of civic rebuilding after 25 years of more-or-less "conservative" misgovernance -- chief on the list restoration of a fair and adequate revenue base for government, and teaching people there's no free lunch. Tax cuts are not a magic elixir. Taxes are the cost of a modern society. Daschle, like Treasury Secretary Timothy Geithner before him, is no better than a fat Republican tax cheat -- with the added hypocrisy of wanting (rightly) to raise taxes. These are the Ted Haggards of tax policy.

Yet more troubling is the window Daschle's "embarrassing" slip gives us into the permanent power elite.

The real risks of the stimulus

Renegade -- the president's secret service code name -- is pushing hard for "his" stimulus bill as it reaches the House floor today. What's in is? That's difficult to tell as the horse-trading continues, and as Obama tries to rope in at least some Republican support. FDR and the Democratic Congress in 1933 simply steamrolled the Republicans who demanded balanced budgets and reactionary policies -- but never mind. In the end, this will be a package crafted not only by 535 lawmakers, but countless lobbyists and staff. My biggest fear is that it will not be a renegade stimulus -- transformative and focused on the future.

Let me count the ways:

1. Tax cuts in the current environment won't provide help. U.S. tax rates and dodges are already generally at lows not seen since the Coolidge years. Obama promised a working-class tax cut. Fine. He's bowed to Grassley to provide more alternative-minimum tax relief. OK. But these should be different bills. They're not stimulative. Individuals will squirrel away their checks or use them to pay down credit-card debt. Corporations are already paying nothing in many cases. As for "investors and risk-takers" -- the Bush years demonstrated that tax cuts on investments merely fuel speculation while encouraging job-killing mergers and offshoring. Not for nothing did wages stagnate during those halcyon years. Perhaps worst of all, it continues the destructive "tax cut" entitlement mindset that Americans can get something for nothing.

That experience thing...

It's worth noting, from a story in today's Wall Street Journal, that the three flight attendants on the USAirways flight forced to ditch into the Hudson, with all aboard surviving, brought 90 years of collective experience in their jobs. Doreen Welsh, Sheila Dail and Donna Dent each had at least 26 years of flying. These kind of employees, along with pilot Capt. Sully Sullenberger, are the very ones targeted for layoff -- and hiring discrimination -- by an increasing number of American employers. Where's that Baby Boomer revolt?

This is going to hurt

The $750 billion financial bailout is turning into a scam rivaled only by the practices of the financial sector that precipitated this signal disaster. The geniuses overseeing this "rescue" thought it would be dandy to save Bear, Sterns -- but then let Lehman Brothers collapse. They pumped $45 billion into Citigroup -- which went out and bought a $50 million corporate jet. Merrill's "savior" CEO was redecorating his office to the tune of more than $1 million while headed into a shotgun marriage with Bank of America -- which is now begging for more bailout billions because of Merrill's disastrous bets. AIG and the rest of the gang handed out billions in bonuses while their hands were out for the taxpayers money. And the system is still sick, reeling afresh with any day's new shock.

Maybe $300 billion of the TARP money has been committed -- maybe more. Then there are perhaps trillions in dollars printed out and essentially given to the big banks through Federal Reserve "lending facilities" -- which the Fed is keeping secret. Behind the scenes, the big banks continue to lobby and squeeze members of Congress. In exchange for the taxpayer money, it's unclear what the taxpayers get in return, whether any of the bailout money will ever be paid back. These guys make Bernie Madoff look like the Better Business Bureau.

Now the cognoscenti are talking about nationalization as the answer -- whatever "nationalization" means. As the New York Times reports,

That has already happened; taxpayers are now the biggest shareholders in Bank of America, with about 6 percent of the stock, and in Citigroup, with 7.8 percent. But the government’s influence is far larger than those numbers suggest, because it has guaranteed to absorb the losses of some of the two banks’ most toxic assets, a figure that could run into the hundreds of billions of dollars.

As one of many who were punked by Paulson in the original panicked rush to pass the bailout, I say let's take a deep breath, stop, look and consider:

A simple primer on the banking crisis

The more I learn about the $750 billion bailout of derivatives, tranches and collateralized debt obligations, the more I think about drunks. The true drunk will do anything to keep drinking. Cheat. Steal. Betray. No one is above his treachery. He will destroy his family to get the next drink. On a binge, he will spend the wealth it took his family generations to accumulate, right down to the treasured mementos. He can be clever, fun, charismatic. Behind this mask he is a monster. At his most destructive, he wraps his addiction in layers of complexity and opacity, which non-drunks would simply call lies.

Substitute "banker" for "drunk" and I think we have a better understanding of the mess we're in. Consider State Street Bank. Its shares plunged 59 percent Tuesday as it revealed previously "unrealized losses." That's the drunk telling his wife he's wiped out the family savings. Citigroup and Bank of America shares are cheaper than value meals at McDonald's -- territory we saw with the late Washington Mutual on the way to failure. That's the drunk in the gutter. The difference is they don't know they've hit bottom and must fundamentally change. They just want another drink.

They call it capital, and the last bar open is the federal Treasury.

The Citi gang gets away

The financial implosion that wrecked America was largely cooked up by Citigroup, not only in its kitchens of "innovation" but especially in its wide influence over the industry. Now what was once touted as the largest "financial services" company in the world is being dismantled. Among other things, it will sell its Smith Barney unit, credit-card business and consumer finance units. The Wall Street Journal observes that the final result will look much like the old Citicorp before Sandy Weill got his hands on it in 1998. Only without the integrity, market value and perhaps safety and soundness.

Unfortunately, the American taxpayers own a 7.8 percent stake in this dog (the Treasury alone gave a $45 billion infusion -- 45 times the annual Amtrak budget). Maybe -- who the hell knows what we're on the hook for, considering the secrecy with which the bailout has been handled. Who knows how many hundreds of billions of dollars have been thrown down the Citi-rathole by TARP and the Federal Reserve. And all for what? Did we also pay for the cheap undercoating and worthless extended warranty?

This institution that was deemed too big to fail has failed to unfreeze credit markets. Citigroup has succeeded in lavishly compensating its top executives and big-time traders, who jet away from the calamity with no consequences. In 2007, as the crisis became undeniable, then CEO Charles Prince, who had performed abysmally for shareholders, nevertheless made some $25 million. Robert Rubin, the Democrat brain trust on economics, was paid $17 million. This year, aided by "rescue" money from the taxpayers, Citi reportedly set aside $3 billion in bonuses.

Obviously the Citi never slept.

Dead town walking

Do even the most sober-minded Phoenicians realize how deep a hole they're in? The depression caused by the housing collapse is undeniable. So the answer is merely to reinflate the housing bubble and happy days are here again, right? More "master planned communities." More paving over Pinal and Yavapai counties and rolling over Wickenburg with lookalike tract houses. More boobs from the Midwest who will put up with anything as long as they don't have to shovel snow.

Indeed, a major effort will be made to craft the Obama stimulus to do just this. Sustainability has no powerful political base. Sprawl does. Even the nominally progressive radio talker Ed Schultz is pushing for a bailout of the house builders -- and no wonder: he also owns a small construction company and drives 50 miles each way to work from his suburban home. With progressives like these, who can understand that the old sprawl model is hopelessly broken? Trying to revive it will only increase and lengthen the pain of transition -- or leave the country too bankrupt to even get there. Reviving it in Arizona will only hasten the inevitable water emergency.

But Phoenix faces crises beyond the housing depression. As one of America's least literate and most poorly educated big cities -- if it can even be called a city -- it's not surprising that no one is talking about them. And even the "smart people" assume the growth machine will revive, simply because it always has. Call them the road kill of the Great Disruption, the new era of discontinuity.

The kids are not alright

I keep waiting for the great Baby Boomer revolt.

It's not just that my generation is taking the brunt of the massive layoffs, replaced, if at all, by "lower cost" employees in their twenties. Or just that, even without a recession, we would face a hostile, age-biased job market at a time when many of us should be in our peak earning years. It's not just that we're the ones who lost the pension protection enjoyed by our parents, to be replaced by now decimated 401(k)s just as retirement nears. Or that we've spent a lifetime paying for the Social Security and Medicare of others to find that the nation sees our turn for this social compact a "looming danger" to be curtailed or stopped altogether. It's not just that the experience and skills many of us spent decades amassing are arbitrarily deemed worthless in "the marketplace."

It's all this, but more.

Throughout time people have awakened in a foreign country, whether they traveled anywhere: it's called old age. For many Boomers, this discontinuity has arrived much sooner compared with previous generations. And all the electronic distractions can't compensate for a simple fact: What happened to our country?

The Big Lie about unions

Somewhere over the past few decades, Americans became something new: followers. They became, as an earlier generation put it with disdain, "easily led." Keeping them that way requires a successful propaganda offensive in the case of the Big Three automakers. You see, it's all the union's fault. It's all the workers' faults. Just keep repeating that, over and over. Who knows what might happen if you failed to believe. Belief in the god "free markets" has been shaken by the incompetence of the Bush administration -- and by the inevitable consequence of law-of-the-jungle capitalism: the worst economic calamity since the Great Depression. Who knows what might happen if working Americans were suddenly not so easily led.

They might follow the example of 240 workers at Republic Windows and Doors in Chicago, who staged a sit-in after Bank of America cut off credit to the company -- and the company, in the way of today's America, laid off the workers without even a severance. They occupied the factory until the bosses and the bank capitulated. The action was hailed as a new sign of backbone, but there was a critical difference between these workers and most average Americans. A difference between them and the 35,000 employees that BofA itself is cutting. They were members of a union.

The Madoff scandal: More than a Ponzi scheme

Were the damage not so great, it would be amusing to see SEC Chairman Chris Cox running around shocked, shocked, that Bernard Madoff had allegedly pulled off the biggest financial fraud in history -- and the watchdog was again caught napping. Or worse. The agency ignored years of warnings about Madoff's activities, and Barron's did an article questioning his returns a decade ago. Madoff reportedly bragged about his influence in D.C., including having an in-law who worked for the SEC.

As the victims of the alleged scheme, including many charities, see their investments wiped out, Madoff is out on bond, having to wear an ankle bracelet and stay home. Had he been a minority/poor kid who stole $100 from a cash register drawer, he'd be in county lockup with hardened criminals. Meanwhile, Attorney General Michael Mukasey has recused himself from the investigation, without giving a reason. This is America in the new gilded age, where government has been essentially handed over to the wealthy and connected -- and we're surprised they went wilding?

An older America learned from the frauds and follies of the 1920s, including the legendary collapse of the Samuel Insull monopoly. Regulation of securities and banks was put in place, helping to ensure the success of American business for decades through transparency, competition and fairness. That all began to unravel with the Reagan Revolution -- but especially in the 1990s with deregulation pushed by Sen. Phil Gramm (R-UBS) and Clinton Treasury Secretary Robert Rubin, a kingpin from Goldman Sachs.

This is Wall Street

As Republican nihilists carry out their war on working Americans, it's important to understand just how rotten is the industry they rushed to deregulate and bail out. And yes, there were Robert Rubin, Chuck Schumer and some Clintonistias among the deregulators -- but let's be real. With the exception of Lincoln and TR, the GOP has always been Wall Street's party. And now we're getting a sense of just how corrupt the Street has become.

Bernard Madoff is one of the most prominent and influential financiers in America. Now we know he allegedly engineered the biggest Ponzi scheme in history, a fraud worth at least $50 billion. The fraud has snared many big names and forced at least one charity to close. Of course, regulators ignored years of red flags.

As we obsess over Blago and his pretty wife Patti, awaiting some connection to the president-elect, I hope we also pay close attention to Madoff and all he represents. He is Wall Street, not some outlier bad apple. The Wall Street that gave us years of job killing and community ravaging mergers; financial weapons of mass destructions called derivatives -- that have now exploded, and the worst collapse since the Depression. Their financial plays helped hollow out America's real economy and leave Red China holding $2 trillion in dollars.

And all that came from the "legitimate" activities that made billions for the financial elite as Americans saw their pay stagnate and now see their jobs cut, 401(k)s gutted and houses foreclosed. Yet all those billions weren't enough. The elite apparently also had to run real Ponzi schemes, so unquenchable is its venality. And yet Washington has given it as much as $2 trillion in assorted bailouts, no questions asked. So tell me why American auto workers, making an average $28-an-hour but enjoying some help from a union, are somehow greedy bastards who should be thrown out of work?

Rebalancing our national portfolio

The rich are finally afraid. You can see it in their eyes. They're laying off their nannies. The smart ones are fleeing into Treasury notes, even though the yield is zero. According to the New York Times,

While this will lower the cost of borrowing for the United States government, economists worry that a widespread hunkering-down could have broader implications that could slow an economic recovery. If investors remain reluctant to put money into stocks and corporate bonds, that could choke off funds that businesses need to keep financing their day-to-day operations.

Perhaps. But it might, just might, jolt Americans back to reality. That means an economy based on producing things of real value. And a re-valuation of business, which in this country means a re-evaluation of our very lives. It won't be easy, perhaps not even likely, because the dead hand of the past rests oh-so-heavy on everything we do. If it happened, however, it might just save us.

Worse than the Great Depression?

It's widely acknowledged by economists, and supported by mounting evidence, that we're in for the worst economic contraction since the Great Depression. This is not "negative news" the media are inventing, dear positive-thinkers. It is simply reality. Yet it won't be as bad as the Depression, right?

For months, I have been giving a qualified "no" to that question. First, because the safety nets of the New Deal and Great Society, although badly frayed by Republican misgovernance, are still in place. Second, Americans are more affluent -- we don't have a third of the nation "ill clad, ill-fed and ill-housed" and millions lacking even electricity. My "no" was qualified because expert opinion got us into this mess and will continue to hold sway -- watch as the proteges of Robert Rubin steer the Obama economic plan. Experts were flummoxed by the Great Depression and in many cases carried out policies that made it worse. Expertise is only useful when it grows, as when a man demanded to know why Keynes had changed his view on an issue. Keynes responded: "When the facts change, I change my mind. What do you do, sir?"

Now, however, I am starting to wonder about my reassurances. Friday's report that 533,000 jobs were lost in November alone, signaling that the pace of unemployment is accelerating fast, was a kick in the teeth. Could this recession turn into a depression to rival, or surpass, the 1930s?

It is possible.

Sunday musts

Frank Rich raises important questions about the Obama economic team in Sunday's New York Times:

Summers and Geithner are both protégés of another master of the universe, Robert Rubin. His appearance in the photo op for Obama-transition economic advisers three days after the election was, to put it mildly, disconcerting. Ever since his acclaimed service as Treasury secretary in the Clinton administration, Rubin has labored as a senior adviser and director at Citigroup, now being bailed out by taxpayers to the potential tune of some $300 billion. Somehow the all-seeing Rubin didn’t notice the toxic mortgage-derivatives on Citi’s books until it was too late. The Citi may never sleep, but he snored.

And be sure to check out Timothy Egan's fabulous "Typing Without a Clue" tirade about "Joe the Plumber" and Sarah Palin getting book contracts:

Most of the writers I know work every day, in obscurity and close to poverty, trying to say one thing well and true. Day in, day out, they labor to find their voice, to learn their trade, to understand nuance and pace. And then, facing a sea of rejections, they hear about something like Barbara Bush’s dog getting a book deal.

Writing is hard, even for the best wordsmiths. Ernest Hemingway said the most frightening thing he ever encountered was “a blank sheet of paper.” And Winston Churchill called the act of writing a book “a horrible, exhaustive struggle, like a long bout of painful illness.”

Death of a salesman nation

Whatever its complicated and ambivalent historical roots, the ideal of Thanksgiving is offering gratitude for the grace of our creator, if you swing that way, or at the very least to others who came together to create even a moment of common purpose and bounty. It's about looking outside ourselves.

The problem of American holidays being ever more commercialized is old. But over the past decade, maybe longer, something else has overtaken us. We've gone from a nation with hucksters to being a nation of hucksters. Suffice it to say that this was not the great commercial republic that Hamilton had in mind. In God We Trust? No. Always Be Selling.

I thought of this as I read a Washington Post piece on how banking regulators were not actually regulating the industry, but rather acting as an advocate for it. Yes, ideology and its handmaiden deregulation are to blame for the financial catastrophe. But so is the perverse mutation of American optimism just as the economy became driven more and more by financial swindles.

Change? You can't be serious

Let the excuses begin.

The New York Times leads off:

Just as the world seemed poised to combat global warming more aggressively, the economic slump and plunging prices of coal and oil are upending plans to wean businesses and consumers from fossil fuel.

The Washington Post weighs in:

Many members of Congress believe they know what the car company of the future should look like. "A business model based on gas -- a gas-guzzling past -- is unacceptable," Sen. Charles E. Schumer (D-N.Y.) said last week. "We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car."

But the car company Schumer and other lawmakers envision for the future could turn out to be a money-losing operation, not part of a "sustainable U.S. auto industry" that President-elect Barack Obama and most members of Congress say they want to create.

That's because car manufacturers still haven't figured out how to produce hybrid and plug-in vehicles cheaply enough to make money on them.

Expect to hear more in the coming days and months. We will see a potentially debilitating alignment of old thinking and old, yet still politically powerful, economic interests. If it succeeds, the country will face much worse pain in the years ahead.

President Hoover and Depression thinking

I feel the need to come to the defense of Herbert Hoover, if for no other reason than this fundamental misreading of history will only set us up for costly mistakes in the future. The left long has labeled George W. Bush "President Hoover" for presiding over a historic economic crisis. Now the meme has been picked up by the right, as well.

Yet to paraphrase Lloyd Bentsen, President Bush, you're no Herbert Hoover. Among the differences: Hoover (1874-1964) was a self-made man, who worked his way through the new Stanford University, made a fortune as a brilliant engineer, then gained international acclaim for coordinating relief for refugees in World War I. Although a Republican, Hoover came from the party's Theodore Roosevelt progressive wing. He was mistrusted by Calvin Coolidge, and for good reason. Hoover wanted to move away from the rapacious capitalism of the 1920s to an ethic that embraced the common good and the obligations of business to society. He was a product of his time of scientific and engineering wonders: The Great Engineer, who could bring pragmatic, fact-based solutions to governing.

Unfortunately, Hoover was elected in 1929, not 1912 -- the era in which his worldview had been shaped. After the great crash and with the gathering depression, Hoover was overwhelmed. His administration launched the greatest expansion of government intervention in the economy up to that point, including programs and ideas that would live on in the New Deal. Yet it did little good as unemployment reached a staggering 25 percent and Americans were forced into shantytowns they called Hoovervilles.

Weekend myth busters

Heard the one about the $70-an-hour autoworker bringing down the Big Three? Read the truth in Jonathan Cohn's New Republic article. Another Big Lie from talk radio -- and I've been getting the robot emails -- is that the subprime debacle was caused by the Clinton administration forcing banks to lend to minorities and the poor. Not true, according to the Bush administration's regulator. Tell your right-wing friends and relatives.

Missing the point on a Detroit rescue

An industry that has been poorly managed, with executives looting it for huge bonuses and protected employees compensated far beyond the average American, making products that have caused untold damage to the planet, comes to Washington seeking a bailout. Without it, the executives say, the entire economy could be severely damaged. Of course lawmakers should say "hell no."

But they didn't. When the so-called financial services industry asked for a "rescue," lawmakers couldn't move fast enough.

American automakers are a different matter. Asking a fraction of what has been plowed into Wall Street -- with not much to show for it -- they are getting the brush off from the Bush administration and much of Congress. Myths proliferate about union compensation, this from the same people who hail obscene executive compensation and bonuses for the top swindlers on the Street. In fact, the union has been giving back for 20 years.

It's striking that the same people who celebrate the bootstrapping entrepreneur and the sanctity of contract are contemptuous of blue-collar workers who have created most of the wealth in a given business and painstakingly negotiated labor agreements that allowed their families to reach the middle class. And there's much carping about how the top executives failed to build cars for an expensive-energy future or to protect the environment. Yet policymakers consistently refused to insist on even modest improvements. Now it's so easy to say to Detroit: Drop dead.

The Paulson scheme

If you've ever wondered why these CEOs make hundreds of millions of dollars even if their companies are laying off thousands, their remaining employees have largely seen their paychecks stagnate and their stocks are circling the drain... If you've ever wondered whether you, or even the office boy, could have done a better job...consider the case of Henry M. Paulson Jr., the Secretary of the Treasury and former chief executive of Goldman Sachs. As is now becoming clear, Paulson has little more clue than the office boy about addressing the financial crisis.

After more than a year of denying the gathering storm, he suddenly rushed to Congress demanding an open-ended bailout of Wall Street, "to save the financial system." First the plan was to buy the "toxic debt" that had brought down much of the system. He was urged to inject capital directly into banks but rejected this advice. When the credit system seized up he changed the bailout to...inject capital directly into the banks. Yet the banks still refuse to do much lending, even as they use the taxpayers' money to buy competitors and pay fat compensation to their executives. Now the bailout has been changed yet again, to help "consumers." Well, not exactly: money would be given to companies dealing in credit cards, car loans and student loans. Don't expect any help personally.

Meanwhile, the real economy keeps spiraling downward as 401(k)s are vaporized, a million people have lost their jobs this year, the retail sector is moving into bankruptcy court and Detroit is facing collapse. This is one last gift of the Bush administration. Paulson's actions aren't incompetence on the level of Brownie -- a political hack put in a critical position he for which he was completely unprepared. They may be worse.

Steering the right course on the auto bailout

General Motors is running out of cash. Think about that. What was once the company that embodied American strength is running out of cash. Little wonder that Detroit is angling to get its own "rescue package" from Washington. We should do it -- with serious strings attached.

Anyone who has lived in the Midwest can attest to the foundational nature of the auto industry to American manufacturing. It's not just the Big Three themselves, but the vast supply chain they have spawned, from steelmakers to precision machine tool companies to providers of all manner of parts. As we bail out a "financial services industry" that increasingly made little more than frauds and swindles, the auto industry, even heavily diminished from its former greatness, makes real products and is an essential prop of the middle class, particularly in the heartland. A hollowed-out economy can stand no more losses.

Yet the American industry is the author of many of its own problems. The decline of GM and its sisters began decades ago in an unholy alliance of complacency, greed and contempt for customers between management and labor leaders. Despite 20 years of plant closings and pledges of new days, the carmakers never really reformed. There's one exception: hundreds of thousands of union workers in the Big Three and parts makers lost their jobs -- and communities their livelihood. Contrary to a persistent mythology, the decline since the early 1990s has been almost entirely the fault of management, not the United Auto Workers.

Across America

The past two weeks were a bad time for a financial columnist to be gone -- or maybe they were a fine time. I've been warning about this collapse for years, not as a wish but as a concern. That our practices of deregulation, consolidation, hollowing out of the economy and building a vast Ponzi-scheme economy in its place would inevitably come crashing down.

Gone was a train trip from Seattle to Baltimore, where the Bouchercon mystery writers' convention was honoring my editor, Barbara Peters, and publisher, Robert Rosenwald. Susan and I wanted to take Amtrak across this big land before Republican John Sidney McCain III was elected and followed through on his longtime obsession to shut down the national passenger rail system. In fact, Amtrak does a fine job, especially considering the years of underfunding it must fight against, and the fact that it is a mere tenant on the railroads it travels (outside of the Northeast Corridor). It's interesting, and heartbreaking, to consider what we might have if we had been investing in high-speed train networks instead of financial swindles over the past 20 years. Even now, the trains are packed and popular.

The train forces one out of the crazy rhythms of flying and driving. You see how vast and varied this nation remains, especially in the places left behind by the Interstate highway system. Barely a golden arch profanes the route of the Empire Builder across the northern tier. There are the rotting, bell-towered schoolhouses sitting forlornly on the depopulated Great Plains, the little farm towns, down on their luck for decades but hanging on, the mountaintops our forebears conquered with blood and tears to lay steel rails from coast-to-coast. Anxieties about stolen elections and falling Dow give way to the gentle swaying of the train.

The house of cards falls down

When experts and commentators talk about the "crisis of confidence" or "crisis of trust" in the markets, it can be read in different ways. One: it's a nice way of saying, a la Phil Gramm, the recession is in our heads and if we just had some confidence happy days could return. Two, confidence and trust in the system have collapsed for reasons, including bankers not lending because they know companies will fail, and people in general no longer trusting the economic "House that Ronald Reagan (and Phil Gramm) Built."

It is most decidedly the latter. If nothing else, the Great Disruption we are now experiencing should discredit the "free market" theories that led us to this pass. We shall see. When the Depression hit, the world was awash with alternatives to capitalism, most of them bad, but also with an engaged electorate and a middle class that read. Now we have video games and social networking sites. The igno-geeks must be truly baffled as their future vanishes, even though they kill at Grand Theft Auto version whatever.

Where's Cheney? As I write, George W. Bush is preparing to make another pitiful "statement" as markets plummet around the world. The veep is nowhere to be seen, running things as he did in Iraq. Perhaps he is preparing his defense fund, or place in a country with no extradition agreement. Meanwhile, Paulson and Bernanke are in change. Yet they represent the wisdom of the old order that is in crisis. They can't fully comprehend what is happening, for it so goes against all their learned learning, all their orthodoxies. The Age of Greenspan is over.

To bail or not to bail?

Let's set aside the demands of the extremists on the right, calling for more deregulation and tax cuts to address the financial crisis. It's like trying to discuss the finer points of Plato with a small, yapping dog. Otherwise, I can understand the desire on the left and right to "punish Wall Street" by defeating the bailout plan. Unfortunately, the markets are so intertwined and inherently fragile, the first casualties are going to be on "Main Street" (a bittersweet anachronism for a nation that has mostly abandoned its main streets).

Wall Street -- and increasingly overseas investors -- owns Main Street.

The plan voted down yesterday was flawed but better than the original Czar Paulson contraption, which would have given the former head of Goldman Sachs unlimited access to use American treasure trying to extinguish the wildfire he and his greedy buddies started. Well, not quite -- and here we get back to the unworkability of "punish Wall Street" argument. Deregulation, a casino-like attitude on Wall Street and a bubble-blowing Fed were the biggest culprits in the mess. But, so, too were the American people.

We voted in the deregulators and stood cow-like as it happened, the jobs disappearing, wages stagnating. Worse, too many of us thought we could get rich quick off real estate, like day trading before it. We bought overside houses and ran up credit-card debt we couldn't afford. We bought SUVs to drive ever-longer distances as oil was peaking. We wanted tax cuts that gutted our schools and infrastructure. We wanted all that stuff at Wal-Mart. The casino became our ruling totem. It's quite a remove from the generation of the Boomers' parents that saved and waited to make purchases until it could afford them. It's their passed-along wealth that is helping cloak the "banana republic with nukes" that we're becoming.

So here we are. Were it not for the legacy of Franklin Roosevelt, we would already be seeing bread lines. And how many better ways could we use $700 billion...