Credit Where Credit Is Due

Fannie and Freddy rebounded a bit today after remarks by Henry Paulson, promising to prop up the teetering giants with Treasury and Fed (read: your) money.

When will they learn? It's about fundamentals, not reassuring remarks, and the fundamentals stink. It's eerily similar to how USSR apparatchiks issued glowing statements about bumper crops and glorious worker gains even as people cruised through stores with barren shelves. The shelves aren't bare (yet) in American stores, but how many people do you, personally, know who are feeling financially secure these days?

What seems to be eluding most of the people I talk to is the reason so many of us are feeling pinched. Rising prices, declining (in real terms) wages, sagging investment portfolios, job uncertainty -- all of these are happening for a reason, and the reason is greed drenched in short-sightedness and topped with a generous dollup of civic irresponsibility; in short, blame Reagan.

No, I'm not kidding. Saint Ronnie ushered in the era and got the snowball rolling down the mountain. Prior to Reagan, we had unions that kept wages and benefits decent; we had a military budget that didn't threaten to bankrupt us; we had an energy policy focussed on efficiency and development of renewables (which, had it continued, would have made us a much cleaner, safer, more prosperous nation today); the rich paid high taxes (but were still rich) and the deficit was manageable. Ah, those truly were the days.

Then Reagan came on the scene and made greed good. He turned the expenditure of insane sums on nifty military gizmos of questionable utility into every American's sacred duty. He made prisons cool again, and began to fill oodles of shiny new jails with druggies. He tore the solar panels off the White House roof and made it easier to burn up all the oil. He sold "personal responsibility" so thoroughly that social responsibility became akin to filthy communism in most Americans' minds. He began the long, arduous processes of deregulation and privatization that have transformed our once-excellent infrastructure into the pity of the world. The rich became disgustingly rich, the middle class grew puny, and the poor became the homeless (hard to imagine now, but we had very few homeless people in pre-Reagan America).

Reagan and his ideological descendants turned us into a Banana Republic with nukes and satellites. OK, OK, maybe we're not quite there yet, but by the time the ongoing meltdown of our financial system and currency completes itself, that is where we will find ourselves.

Paulson's futile attempt to will Fannie and Freddy back into solvency indicates that at least it wasn't intentional. Or maybe not. Maybe he's just trying to give it a little bump so that the smart money still has a little time to get out. Who knows with these guys.

You see, here's the thing: Even if the Treasury and Fed "save" Fanny and Freddy by shoveling dollars at them, the fundamental equation of insolvency changes not a whit. Now you're just robbing Peter (taxpayers and consumers who will see higher prices) to pay Paul (investors who will jump ship before the thing goes down anyway, leaving taxpayers holding the bag).

All I know is that the whole Van Damn thing is their (by which I mean the Reaganbots') fault. If they meant to sink the ship and skate away with the insurance money, let's give them some credit for their strategic prowess. Let's not let them get away with the loot, though.

When all this shakes out completely, remember who and what caused it.