Bailout on Wall Street Has Left the Door Open for Other Industries

Thank God for the government. It came to the rescue with a package of $700 billion...expected to swell to over a trillion once the chiselers and bamboozlers figure out how to tap into it.

Economist Ken Rogoff says the bail out operation on Wall Street has left the door open for other industries. And there they are! The automakers are already on the front steps!

Don’t worry, dear reader, everything is happening just as it should. The world’s financial system is being de-leveraged, just as it should be. The most highly leveraged – that is to say, the world’s biggest speculators – are taking the biggest hits. The rest of us are – mostly – just enjoying the show.

Meanwhile, the meddlers, busy-bodies, and world improvers are having a jolly time too. Take our favorite newspaper columnist, Thomas L. Friedman – please!

In yesterday’s International Herald Tribune, Friedman mocks Ronald Reagan’s famous laugh line: “I’m from the government and I’m here to help.”

But “if it weren’ t for the government bailing out Fannie Mae, Freddie Mac and AIG, and rescuing people from Hurricane Ike and pumping tons of liquidity into the banking system, our economy would be a shambles.”

How does he know what would happen if assets were marked to market? He doesn’t explain. Instead, he blithely suggests a mind-boggling absurdity...that John McCain should announce that he is raising taxes “because the most important thing for our country today is to get the government’s balance sheet in order...” Didn’t he just praise the biggest budget-busting bail out of all time...just a few paragraphs before?

But there’s no point in arguing with Friedman; even if you could win the argument, you’d be wasting your time. The man mistakes wishes for thoughts.

*** This, by Eric Hovde, appeared in the Washington Post, explaining why Congress leapt to suicide in order to bail out Wall Street:

“The Wall Street investment banking firms, their executives, their families and their political action committees contribute more to U.S. Senate and House campaigns than any other industry in America. By sprinkling some of its massive gains into the pockets of our elected officials, Wall Street bought itself protection from any tough government enforcement.

“This is no doubt the same reason why so many members of Congress were consistently blocking attempts to reform and downsize Fannie Mae and Freddie Mac, which are essentially giant, undercapitalized hedge funds. These two entities have been huge money machines for Democrats in both the House and the Senate, many of whom recently had the gall to ask why these companies hadn’t been reformed in the past. Nor should several Republican congressmen and Senators who likewise contributed to watering down legislation aimed at reforming these institutions be let off the hook.”

Until tomorrow,

Bill Bonner
The Daily Reckoning Australia

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Related Articles:

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• The Battle Against a Bailout is a Lost Cause
• Fannie and Freddie Bailout Didn’t Have Quite the Healing Power