Wednesday, November 12, 2008

Crazy Train Going Off the Rails



P.J. O'Rourke:

The left has no idea what's going on in the financial crisis. And I honor their confusion. Jim Jerk down the road from me, with all the cars up on blocks in his front yard, falls behind in his mortgage payments, and the economy of Iceland implodes. I'm missing a few pieces of this puzzle myself.

Under constant political pressure, which went almost unresisted by conservatives, a lot of lousy mortgages that would never be repaid were handed out to Jim Jerk and his drinking buddies and all the ex-wives and single mothers with whom Jim and his pals have littered the nation.

Wall Street looked at the worthless paper and thought, "How can we make a buck off this?" The answer was to wrap it in a bow. Take a wide enough variety of lousy mortgages--some from the East, some from the West, some from the cities, some from the suburbs, some from shacks, some from McMansions--bundle them together and put pressure on the bond rating agencies to do fancy risk management math, and you get a "collateralized debt obligation" with a triple-A rating. Good as cash. Until it wasn't.

Or, put another way, Wall Street was pulling the "room full of horse s--" trick. Brokerages were saying, "We're going to sell you a room full of horse s--. And with that much horse s--, you just know there's a pony in there somewhere."

Anyway, it's no use blaming Wall Street. Blaming Wall Street for being greedy is like scolding defensive linemen for being big and aggressive. The people on Wall Street never claimed to be public servants. They took no oath of office. They're in it for the money. We pay them to be in it for the money. We don't want our retirement accounts to get a 2 percent return. (Although that sounds pretty good at the moment.)

What will destroy our country and us is not the financial crisis but the fact that liberals think the free market is some kind of sect or cult, which conservatives have asked Americans to take on faith. That's not what the free market is. The free market is just a measurement, a device to tell us what people are willing to pay for any given thing at any given moment. The free market is a bathroom scale. You may hate what you see when you step on the scale. "Jeeze, 230 pounds!" But you can't pass a law making yourself weigh 185. Liberals think you can. And voters--all the voters, right up to the tippy-top corner office of Goldman Sachs--think so too.

That was taken from PJ's "look back in remorse on the conservative opportunity that was squandered." I've been avoiding that look back, and I only bring it up in order to chastise those of you who looked at McCain's faults and decided you wouldn't vote at all. Sure, he had his liberal leanings, but look at the alternative. Look at what the stock market has done since it saw the Obama Crazy Train pulling into the station.

Hey, the guy promised you you'd have to make sacrifices. At least he's keeping that promise. Now sit back and watch as he solves this problem by raising taxes on businesses that already pay the second highest tax rates in the world.

His other great idea is to eliminate secret ballots, and make it easier for unions to intimidate workers into certifying unions. And anyone who thinks that won't happen hasn't had enough experience with union organizing. Hey, if intimidation doesn't figure into it, why get rid of secret ballot certification? Think workers would forget whether they wanted a union or not on the way to the ballot box?

OK, last depressing topic of the day, speaking of unions. We need let the US Auto Industry fail. What killed it is unions, not a lack of bailouts. Remember already bailing them out once? Well if we do it now, we'll just be doing it again down the road. Detroit can't compete, because union contracts mandate extravagant, unsustainable, benefits. That's one of the only checks we have on parasitic unions: if they get too greedy, they kill the host. If we pump more blood into GM, UAW will suck it right back out. Sorry, that's cold. But if the UAW won't accept drastic cuts in benefits, I say let them live with the situation they've created.

***Update:
From Carpe Diem: Should We Really Bail Out $73.20 Per Hour Labor?



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