We are now witnessing the opening innings of an economic disaster unparalleled in human history in its size and scope; it extends into every corner of American life. We will simply not be able to carry on as we have. Already – this early in the game – we taxpayers are being forced to bail out insurance companies and reckless mortgage pimps. It’s criminal and it represents a massive socialization of risk unheard of in American history. As the saying goes, if you are not outraged, you are not paying attention.
Top lawmakers were “petrified” by the briefing they got Tuesday night by Fed chair Bernanke and Treasury Secretary Paulson, and what disgusts me is the underlying implication that any responsible leader could rightfully and credibly claim this comes as some kind of big surprise. I’m not going to play politics in this post; let’s just say there’s plenty of blame to go around (including the public.)
You’ve heard the bullshit that AIG, Fannie, and Freddie were “too big to fail.” And you’ll keep hearing that for a while, because there are more bailouts to come, and more itty-bitty-fingers in the big-groaning-dam. But, the total assets of the FDIC and the FRB couldn’t even spit-polish the shoes of the derivative tsunami now breaking over the US economy, so here’s the question we ought to be asking: is the US Dollar “too big to fail”?