If Wall Street’s broken legs aren’t enough this time to permanently cripple our ideological lockstep about free markets and bad old government interference—or at least jostle it a tad—then I won’t live long enough to ever see it.
The Dow Jones off 500, two of the smug, old-line brokerage houses head down in a poophouse, Washington scrambling to hold back the deluge and a prominent economist suggesting that clever sorts will be putting their cash under the mattress—maybe I should run downtown to watch the first ruined financiers leap off tall buildings a la 1929.
So much for the Invisible Hand of Adam Smith regulating markets the best of all possible ways in the best of all possible worlds. More like the All-Too-Tangible Knuckle Sandwich getting wedged somewhere the sun does not tend to shine.
Will someone please pull out the underappreciated Robert Kuttner from the academic obscurity in which the punditocracy has allowed him to estivate and have him repeat what I heard him say on C-SPAN a year ago: that the financial system was cruising for a mighty fall?
Kuttner explained that all the fancy derivative instruments had jacked up financial flows into the trillions of unreal dollars, setting the stage for just what we are seeing. He didn’t insist it was going to happen, but he said the conditions were ripe for it and in plain view for all to see.
Seeing, however, is not believing as the past eight years have taught us. People will persist in believing what suits their worldview, long past its consume-by date.
Or as Pierre Tristan put it brilliantly: McCain-Palin are America’s Bridge to Nowhere, pointing the way toward the mirage of what it wants to see. However, mirages are dangerous when teetering over a precipice.