In case you were wondering how we got here:
A Memo Found in the Street
By BARRY L. RITHOLTZ
Uncle Sam the enabler.
To: Washington, D.C.
From: Wall Street
Re: Credit Crisis
WOW, WE'VE MADE QUITE A MESS OF THINGS here on Wall Street: Fannie and Freddie in conservatorship, investment banks in the tank, AIG nationalized. Thanks for sending us your new trillion-dollar bailout.
We on Wall Street feel somewhat compelled to take at least some responsibility. We used excessive leverage, failed to maintain adequate capital, engaged in reckless speculation, created new complex derivatives. We focused on short-term profits at the expense of sustainability. We not only undermined our own firms, we destabilized the financial sector and roiled the global economy, to boot. And we got huge bonuses.
But here's a news flash for you, D.C.: We could not have done it without you. We may be drunks, but you were our enablers: Your legislative, executive, and administrative decisions made possible all that we did. Our recklessness would not have reached its soaring heights but for your governmental incompetence.
THIS MEMO PROVIDES A BRIEF HISTORY OF your actions that helped create this crisis.We on Wall Street do not deny our part. We created these securities, we rated them triple-A, we traded them without understanding them. Now that they have gone bad, we are real close to getting the rest of the country to take them off our hands.
Thanks, D.C. None of this would have been possible without you.
Very truly yours,
That's funny. But scary. My question is what is going to be done about this once this fabulous deal is done (if it gets done.) The Republicans have already set themselves up as the scourges of Wall Street and Washington perfidy, (as if they haven't been furiously servicing their Big Money bosses for the past decade like cheap, two dollar whores.) They will get some gold plated pitchforks and immediately begin running against the big spending liberals and their rich friends.
And after this week, it's going to be much easier for them to make that case. Even if it passes, it's clear that it will happen with at least a fairly large number of Republicans voting against it. (It still remains to be seen if McCain will find a way to vote against it. He's a gambler, and he may just go all in... )
The argument over this bailout is going to be with us for a long time to come and unless Democrats play this right, they are going to wind up holding the bag. The "populist Republican" meme is alredy out there and starting to take hold. They've bet on this economy getting very bad and being able to blame the hated Bush and Clinton for causing it and then blame the Democrats for throwing money at the problem and failing to solve it.
Why would the Democrats let them do that?
Right now I'm watching Pelosi and Reid, Frank and Dodd stand there all by themselves taking "credit" for this bill. They are handing out plaudits to all the others who "helped" them get it done like members of "the Hills" at the MTV awards.
The optics are all wrong. If they really feel they have to do this thing each one of them should have a Republican under each arm every time they make an announcement.
"Nobody wants to have to support this bill," said Rep. John A. Boehner, R-Ohio, the minority leader. But, he added, "I'm encouraging every member whose conscience will allow them to support this."That's quite an endorsement. Golly, I wonder how many Republicans aren't going to be able to support this extremely unpopular bill because their consciences won't let them? you can't blame them. they are all men and women of principle, you know, who put the taxpayers first.
Gosh, I sure hope Mitch McConnell can persuade St John of Sedona to abandon his crusade against the great malefactors of wealth to back the extremely unpopular plan or he might end up voting against it and using it as a weapon in his presidential campaign. (His campaign manager suggests he's actually responsible for knocking heads together to get a deal, so maybe not.) I'm actually less concerned about him these days. He's so unhinged that I'm not sure it makes a difference. But it could impact the congressional elections in a big way.