Viva La Revolución!

I have no talent for admitting I'm wrong. Not because of any surfeit of pride. But rather because it is a skill I have never had occasion to practice.

Until now.

Recently, I wrote about the coming liberal dictatorship. I foresaw a world in which the instruments of power, sharpened by our current leadership to compel absolute submission, would be wielded by a liberal administration for ends every bit as extreme as intended, but far less palatable to people who live in Texas.

That could still happen. But it's like a television program preempted by breaking news: it may be in the can, but it's not what anyone will be watching.

Our constitutional crisis has been supplanted by an economic crisis. We paused momentarily to put our head between our knees and breathe into a paper bag, and when we looked up, we discovered we're having a socialist revolution--engineered by neo-conservatives!

Holy. Fucking. Shit. I'd like to think this is a simple matter of a spectacularly misguided policy coming to a head like an angry, puss-filled carbuncle. But we've been fleeced so many times by the carnies who run this country that we can hardly be faulted for suspecting this catastrophe is just another Republican sleight-of-hand designed to reclaim an initiative that seemed hopelessly lost. Are they once again stealing a march on their political opponents by doing something so unexpected, so out-of-left field, so bat-shit crazy that those who would resist are simply paralyzed with shock?

If so, admiration overwhelms my disgust. I mean... it's just... diabolical! And it's so freakin' BIG that even I never conjured such a thing in my wildest dreams--and I am not in the habit of constraining my imaginings. If you only knew the sick things I am picturing right now...

Just think! In the course of a few days, the people who have for a decade belittled their detractors with the epithet of socialism, who made a sacred mission of kneecapping the mere patina of a welfare state created in the 1930's, who have attempted to demonize Russia in a barely-disguised ploy to reanimate the politically convenient bete noir of world communism--these same people have swarmed to a one trillion dollar takeover of the entire American financial system like sailors on the decks of the battleship Potemkin!

Look! There's Henry Paulson driving the kulak financiers of lower Manhattan into the overcrowded bar cars of the MetroNorth railway. Soon they will disappear into the cavernous conservatories of their Greenwich homes, where they will forevermore consume canapes and cognac in miserable obscurity.

And there! There's Ben Bernake storming the New York stock exchange in a tricolor cockade! It impossible to tell what's happening amidst the cigar smoke and the roar of the press corps, but rumors fly that Goldman Sachs has declared a commune of lower Trinity Place. And who can calculate the human cost? The dry cleaning bill alone will run to six figures!

And now a hush falls on the nation. For returned from his long march to Crawford Texas is Chairman Bush, the Great Leader! For love of him, children expose their parents for shorting T-bills. With a glance and gesture he makes spareribs tender and biscuits moist.

Viva La Revolución! To the barricades! All power to the soviets! Liberté, Egalité, Fraternité!

Uh...

Something feels oh so wrong here. Aren't socialist revolutions supposed to come from below?

That the cries of "Power to the people!" are coming not from the downtrodden peasantry, but from the Tsar and his minions is testimony to the fact that what the people are going to get here is anything but power. It is a whole boatload of grief.

How bad is it? It is all the way bad. The bad, to borrow the idiom of Spinal Tap, will go to 11.

Envision the worthless paper of 10 million home loans that America is buying as the sorriest looking Ford Pinto in the used car lot. It's a colossal lemon. And the problem with lemons is not a philosophical one to be debated by earnest sophomores in bong-hit fueled bull sessions. The problem with lemons is that they break down right on the entrance ramp to the freeway in rush hour while your wife howls in labor on the passenger side and the air conditioning doesn't work and it's 105 degrees and the rest of your little monsters are trying to disembowel each other in the back seat and you feel you have no choice but to do the job for them yourself and that's going to take some explaining if and when the highway patrol ever arrives.

That's the problem with lemons.

For our economy, catastrophe is every bit as imminent as it was before our dear President signed us taxpayers up to bail out his rich friends. More so, perhaps, because those Wall St. wizards--major asshats though they be--actually do know a fair amount about navigating difficult financial straits. But they no longer give a damn what happens. They're off the hook and our fates are now in the hands of a completely different but much less skilled collection of asshats called Congress.

Why do you think there were so many smiling faces on the floor of the stock exchange when the bailout plan was announced and the Dow surged? Because we've been rescued? Of course not. The traders were smiling because they've been rescued.

We'll be sure to write frequently to those former Wall Streeters at their spas in Hawaii and let them know how it's going as the housing market goes from slide to plummet. As credit becomes impossible and business contracts. As pain cascades through the population in the form of sweeping layoffs. As inflation soars because that will make paying back the massive debt we've taken on cheaper.

We've chained ourselves to this falling anvil with the same rash ignorance with which we bought that 10,000 sq.ft. McMansion last year. And now we're living in one of those 1970 conspiracy movies where the hero is killed just before he can save the world, the bad guys get off scot free, and everything is most assuredly not going to be alright.

Looking for a bright spot in all this is like looking for the bright spot in the Triangle Shirtwaist fire. The only brightness comes from the roaring flames, which serve to silhouette the doomed figures in the window frames just before they leap.

But let's indulge in a brief bit of Panglossian self-delusion anyhoo, yes?

One upside is that the crackers of middle America, stunned by sudden crisis, will probably not come to their senses until just after they've elected a colored fella President. Boy, will they be grumpy once they realize.

And this: It's true that America will be vomiting and watching our hair fall out for years as a result of the radioactive fallout from this disaster. But can you imagine how this would have been packaged if the Fannie Mae / Freddie Mac / Lehman brothers / AIG mushroom cloud had come even one hour after Barack Obama locked down the election in the predawn of November 5th?

Our present storyline sure wouldn't be about the apocalyptic comeuppance of mindless deregulation. Or the destruction of the myth that the mindless Darwinian churning of free markets is somehow tempered by an inherent goodness. Or about the essential hollowness of a society built on the corrosive notion that wealth is the same thing as virtue.

No sir. If this atomic blast had been delayed, there would be only one storyline trumpeted by the tools of conservatism and a p-whipped (c-whipped?) media: Barack Obama as pilot of the Enola Gay. That's right. We'd be told that an otherwise vibrant economy had collapsed at the mere thought of the prosperity-hating policies he would inevitably implement.

So we can breathe a big sigh of relief that the world is ending sooner rather than later.

This economic convulsion also alters the landscape of political possibility in intriguing ways. Free marketers talk reverently of creative destruction--the rise of new mercantile opportunity from the decaying matter of endeavors that have failed and fallen. But they never considered what might grow from the steaming corpse of their entire beloved system.

For example, though the words "universal health insurance" were spoken in the campaign, only a fool could have believed the idea more than a political pipe dream. But the shattering mental impact of seeing the establishment dissolve, combined with the soon-to-be-palpable effects of unemployment and the credit crunch on our already tenuous access to the proctologist we desperately need may yet give unexpected substance to that dream.

Not all political pigs will fly. But don't be surprised if some sprout wings and, like turkeys, make a whole lot of unforeseen commotion.

And finally this: Conservatives are ever fulminating that Obama---contrary to his voting record or his public statements--harbors secret intentions of outfitting America in Mao jackets and handing out Little Red Books. But now they've been compelled by the deformed product of their own extremism to lurch leftward in advance of his arrival. Will they therefore restrain their urge to tag his administration as the enemy of all that is American? As the undoer of freedom? Will they exhibit that most minimal degree of decency that shames us from accusing others of our own failures?

Don't be ridiculous. Of course they won't. And their misrepresentations will be swallowed hook, line and sinker by a culture whose worldview is shaped and reshaped by no experiences more distant than those of the previous two weeks. By February, Barack Obama will be solely responsible for our metasticizing economy, the plight of Katrina victims, the terrorist attacks of 2001, and the burning of the capital by British regulars in the War of 1812.

Yet some small weight has undeniably been lifted from Obama's shoulders. Centering economic governance will no longer require a massive heave to the left certain to provoke opposition from formidable conservative constituencies. And in the continuing chaos to come he'll find more freedom of action than he could have hoped for six months ago. It's a lot easier to be a builder when the demolition's already done.

And let's be fair (even if it isn't much fun), the real villain here isn't conservatism, any more than the savior is liberalism. The villain is absolutism. It's extremism. It's the absurd idea that if less regulation is good, no regulation is even better. Would any rational person argue that commerce is possible without the regulation of contract law, accounting rules, and the like? And if that's true, shouldn't we just scotch all the scorched-earth, anti-regulatory ranting and start a measured discussion on how to do it right?

So here's to hoping we can get back on track for balance and moderation. That we can enact the kind of regulation that let's us maximize the benefits of the free market while minimizing the risks. That we can stop chasing the chimera of perfecting our system, and settle in to the hard, never-ending, and unavoidably messy task of optimizing it.

Until then, Viva La Revolución, baby!

No Rules Means No Cheaters

This week, the Supreme Court dismissed a lawsuit that sought to hold Wall Street bankers liable for losses stemming from the collapse of Enron.

The plaintiff's contended that said bankers conspired to conceal Enron's vulnerabilities from investors. But the court ruled in this instance, as in several others recently, that responsibility should rest exclusively with the liars at companies like Enron, not with the nice people in the financial services industry (is there any other industry left? Oh, right--I always forget about pharmaceuticals and pornography...) who so cheerfully delivered those lies to you and I.

And isn't that only fair? Don't investment bankers put on the pants of their $5,000 Armani suits one leg at a time like the rest of us? Or have their valets do it one leg at a time for them? Aren't they struggling to put food on the table for their families, just like any feedlot salesman in rural Texas. Except with different food. On a nicer table. In a bigger house. And with a staff to handle the dishes. What I'm trying to say is, aren't we all the same mortal clay, trying to make ends meet? And isn't that all the harder when one end is at a beach house in Maui and the other is with the children at their prep school in Connecticut?

After the case was dismissed, Antonin Scalia was emotionally overcome with sympathy for the heroes of high finance. Later, that most soft-hearted of Supreme Court Justices sought to blot out the tormenting images of suffering bankers by making himself a cup of hot cocoa and flicking lit matches at orphans soaked in gasoline.

So the financial services industry will emerge unscathed from the Enron disaster. And after a weekend of celebratory high-fiving, meth binges and raucous circle jerks, they will buckle down on Monday morning and find new pyramid schemes to misrepresent.

Yes, they are abhorrent. Yes, they should be ashamed, and probably would be if they hadn't had their sense of honor surgically extracted to create for themselves the same sort of career advantage possessed by prostitutes with removable dentures. But does the ultimate responsibility lie with the bankers or with the regulations under which they operate? If the rules of boxing awarded extra points for blows to the kidneys and testicles, who would be a dirty fighter?

I'm sure this notion will offend the mechanical flag-wavers, were it possible for opposing viewpoints to pierce the Fox News-hardened protective bubble of their obliviousness. This is America, they'll shout, the land of fair play! Regulation is the great enemy of prosperity! If you knee-cap our entrepreneurial enthusiasm with your schoolmarmish delicacy regarding con games and loansharking, how will we be able to afford the Hard Rock Cafe t-shirts we need to look our best when Jesus returns?

Fair play? America may believe in a level playing field, but fair is anything you can get away with. And if you can get away with tilting the playing field, that's OK too.

Law has always been more important in this country than in the old world. In Romania they have thousands of years of custom--most of which relates to proper ways for killing Jews--to serve in law's stead. But America is basically one giant trailer park. The only customs dictate quiet time after 10 pm on weeknights and who has dibs on the sceptic hookups. Without rules and regulation, we'd be living in... well, exactly the kind of chaos we have today.

So make no mistake, we have both a people problem and a rule problem. The people problem is profoundly intractable. People are just awful, and if God made them, he has a crappy sense of humor.

But the rules problem is correctable. If we can get the people to make the necessary corrections. Wherein it is possible that even a small degree of optimism is misplaced.

For today, "regulation" is as dirty a word as it has been at any time in our brief and tawdry history. The perceived causal relationship between the scuttling of so many structural constraints over the last 25 years and the false sense of general prosperity over that same time frame has reinforced the negative image of regulation in any form. There is no question that each President since Carter has wiped his ass with the pages torn from our country's regulatory rulebook, and that G.W. Bush is a man that uses a lot of toilet paper. The authenticity of the affluence generated in that interval is debatable, however. First, like all compulsive gamblers, we tend to retain clearer impressions of our wins than our losses. Second, much of the residue of success that persists after the bursting of the technology and real estate bubbles reflects money borrowed from countries that build their wealth by producing actual things of value, rather than simply delivering pizzas to each other. Payback will be a bitch, as our children will discover soon enough.

But the perception of regulation as an evil persists. And if a free market is good, than isn't a free-er market even better? Shouldn't we make the market so fucking free that the Chicago commodities exchange will grow wings and soar away westward over Minnesota? The answer of course, is no. And not just because of the dangers that an aviating financial center would pose to the good people of Rotchester and St. Paul.

You see, balance is good. Every empirical faculty we possess tells us this is so. In an engine we need just so much fuel and so much air. Creatures in the ocean need just so much salinity and no more. And our financial system needs just the right mix of constraints and flexibility.

The problem is that our culture holds nothing but contempt for moderation and balance. We are the land of 80-hour work weeks, of obesity and anorexia, of multitasking so frenetic that we are developing a new generation of personal music devices designed to respond to contractions of the sphincter, so that we won't have to stop text messaging when we want to skip to the next song. We demand that everyone give 110%, though it leads not only to insurmountable paradox, but pulled hamstrings as well.

Admittedly, our unfettered aversion to fetters has spurred our tremendous material advancement over the years. There are eastern cultures, Hindu and Buddhist, that in contrast to us aspire to optimal balance in all things. And in case you hadn't noticed, an inordinate number of those people are at this moment covered with flies and sitting in a pool of raw sewage. Yet our pedal-to-the-metal economy delivers plenty of volatility and uneven distribution of wealth as it lurches from bubble to bust. And the ratio of good times to bad is likely to deteriorate as we hurl ourselves kamikaze-style against the business end of a hockey-stick curve of debt, energy costs, and a living standard unsustainably out of level with the rest of the planet.

Don't look for any populist groundswell in support of regulation, however. Ironically, no constituency is more protective of our wild west marketplace than those who suffer most egregiously from its fallout: the poor. While the wealthy may welcome the security reasonable regulation provides for gains already accrued, those without are terrified to think that the paths to quick riches might be closed before they get their own millions. It is the simplest of propaganda parlor tricks to convince them that affluence is just around the corner, and to provoke a feral response with the canard that regulators want to take it away. Advocates of preserving and extending the most brutally Darwinian and unalloyed form of free enterprise can feel confident that the unwashed masses are behind them. And hopefully downwind as well.

The Enron fiasco is only one of the smaller calamities precipitated by a lack of regulation in recent years. Remember when all those savings and loan institutions went belly up? That was the result of a regulation failure. And the current mortgage credit crisis is entirely the result of fabulously ill-conceived lending instruments, deceptive selling practices and dishonest risk representation of just the sort that regulation could have prevented. Dr. Moreau himself would only genuflect to the mad financial wizards who created these taxonomy-defying devices. It's no surprise that average home buyers didn't know what they were getting into, but Fed Chairman Bernard Bernanke, a certified genius who is keenly aware that any display of uncertainty on his part can have devastating consequences confessed that he did not have a clue as to how these financial instruments worked. Perhaps it was all a practical joke gone awry. If so, somebody needs to get canned.

There is a moment in a tragedy-bound joyride when the car teeters on the verge of control, and the riders are still shouting with glee, even as their overtaxed synapses begin to furiously fire messages of doom. That's where we are right now. Sadly though, no lesson will be learned unless we hit a tree.

Until then--Wheeeeee!!!!