• Election 2008
• National RCP Average
• Electoral Maps
• Battleground States
• Latest Polls

December 17, 2008

Bankrupt?

By Maggie Gallagher

Advent, in spite of all that twinkly tinsel and lights, is a penitential season. Perhaps that explains why, watching the once-substantial economy vanish into thin air, I feel such a foreboding sense of guilt. Is there a Chapter 11 for the soul?

Or maybe it's just that, regardless of who is at fault, I know we are all going to pay the piper for the sins of Wall Street, of Detroit and (as always) of Washington.

"The Gods of the Copybook Headings," as Rudyard Kipling put it 100 years ago, promise that much.

Bankrupt. Some $50 billion vanishes because one man decides, inexplicably, to steal rather than to invest. And why in the world did he do it? Bernard Madoff was a wealthy man, the former head of the Nasdaq exchange. Why engage in a Ponzi scheme when the one thing you know about Ponzi schemes is that they must come tumbling down?

"They denied that Wishes were Horses; they denied that a Pig had Wings. So we worshipped the gods of the Market Who promised these beautiful things."

Yes, we've all been caught up in the perpetual promise of "the Fuller Life," which as the poet says, "started by loving our neighbour and ended by loving his wife."

We are still being promised "abundance for all, By robbing selected Peter to pay for collective Paul."

The new car czar, according to Nancy Pelosi, should have the power to force General Motors into bankruptcy if the company does not come up with an allegedly "viable" recovery plan.

"So," says my son -- who, granted, is no financial genius but has an acute eye for the obvious -- "the people who are trillions of dollars in debt are going to tell the people who are billions of dollars in debt how to pay it back?"

Bankrupt. The latest news from Bloomberg is that Jefferson County, Ala., may be on the brink of the biggest municipal bankruptcy in U.S. history, in part because the expert firm hired to advise the city on how to structure its bonds may have benefited from a sweetheart deal with the recently arrested mayor of Birmingham. Only the mayor, who previously served on the Jefferson County Commission, stands accused of any illegalities so far. But the same firm was hired by New Mexico Gov. Bill Richardson -- Obama's new secretary of commerce -- after donating $100,000 to Richardson's political interests.

No one is alleging Richardson did anything illegal, either. But isn't that the problem? When government controls the market, corporate cronies buy access into taxpayer cash flows in exchange for the paltriest sums of campaign cash. Beats the heck out of making a real profit by producing valuable goods and services doesn't it? Just ask General Motors.

Or for that matter the United Auto Workers, which is counting on Team Obama to protect its interests, including creating "job banks" to pay workers to remain idle.

"And the Gods of the Copybook Heading said: 'If you don't work you die.'"

Bankrupt. The magnificent American economy is visibly grinding to a halt because people do not know whom to trust with their money. Hoarding Treasury notes at close to 0 percent interest is the contemporary equivalent of sticking gold under the mattress: It cannot produce the economic growth we need.

"Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew ..."

Lured into the idea that risk could be eliminated by sophisticated investment strategies (Split-strike, anyone? Bond insurance perhaps?), even the biggest players in the market neglected the simplest of the copybook headings: Trust but verify. Markets do not work when players who make up the markets begin to fantasize that thought: Work -- is not necessary.

And so, here we are:

"When all men are paid for existing and no man must pay for his sins, As surely as Water will wet us, as surely as Fire will burn, The Gods of the Copybook Headings with terror and slaughter return!"

About Us | RSS | Contact | Advertise | Privacy Policy         © RealClearPolitics 2008