ECONOMIC COLLAPSE-->TAXPAYER BAILOUT

From the New York Times, the latest column from Princeton economist Paul Krugman:

The B Word

Nobody expects an investment bank to be a charitable institution, but Bear has a particularly nasty reputation. As Gretchen Morgenson of The New York Times reminds us, Bear “has often operated in the gray areas of Wall Street and with an aggressive, brass-knuckles approach.”

Bear was a major promoter of the most questionable subprime lenders. It lured customers into two of its own hedge funds that were among the first to go bust in the current crisis. And it’s a bad financial citizen: the last time the Fed tried to contain a financial crisis, after the collapse of Long-Term Capital Management in 1998, Bear refused to participate in the rescue operation.

Bear, in other words, deserved to be allowed to fail — both on the merits and to teach Wall Street not to expect someone else to clean up its messes.

But the Fed rode to Bear’s rescue anyway, fearing that the collapse of a major investment bank would cause panic in the markets and wreak havoc with the wider economy. Fed officials knew that they were doing a bad thing, but believed that the alternative would be even worse.

As Bear goes, so will go the rest of the financial system. And if history is any guide, the coming taxpayer-financed bailout will end up costing a lot of money.

Click here for the rest.

So the collapse of the credit and lending market continues seemingly unabated, strongly threatening, as Krugman observes, the rest of the economy. As each week has gone by these past couple of months, with credit crisis after credit crisis, with each drop in the prime rate, with each federal baby step, my anger has done nothing but grow. We're in this fine mess because of decades of right-wing mythology, embraced by both Democrats and Republicans, that tells us government interference in the economy is always a bad thing, that only the harsh discipline of the market will work in the long run, that it'll all work out for the best: now we're seeing these same ideological gurus desperately calling for that which is always a bad thing, government interference in the economy.

These free market cheerleaders will not learn their lesson, that government interference in the economy is an utter necessity, that such interference would have kept the subprime mortgages, sliced up into bogus and now-failed securities for investors, which catalyzed this crisis, off the table. Instead, ten years from now, when it's well over and done with, these same people will have long been back to their favorite position, insisting regulation is just awful for the economy.

Motherfuckers.

Their gross irresponsibility, their lies, their greed, their willingness to destroy everything in order to maximize profits, is ultimately going to be paid for by you and me. As if paying for the war wasn't enough. We're talking trillions of dollars here. All because the ruling class finds the truth inconvenient for their pocketbooks.

The truth: capitalism, as an ideology, is as deeply flawed as communism. Capitalism, like communism, simply doesn't work in the real world. What works is a mixed model, which attempts to keep the market relatively free, but with government enforced safeguards, protecting investors and businessmen from their own dark impulses, and everybody else from investors and businessmen.

What really pisses me off is that our grandfathers understood this as fact. It took several decades of intense propaganda to make us forget, but forget we did. And now we're fucked.

The economy, whatever that means, won't be getting better anytime soon.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$