Flying Blind

The insight of George Will:

In 1945, Britain's Labour Party explained its nationalization policies by saying that socialism should include government "control of the commanding heights of the economy."

In 1945 Britain, this meant the stuff of industrialism -- iron, steel, coal, railroads, etc. In 1945, Aneurin Bevan, a leading Labour politician, said: "Britain is an island bedded on coal and surrounded by fish; only an organizing genius could produce a coal shortage and a fish shortage simultaneously." Socialism soon produced that.

Today, the commanding heights of America's economy are financial services, and regarding them, the line between the public and private sectors is being blurred to indistinctness. What is the American equivalent of coal and fish? We might find out.

Indeed we will. I'm on pins and needles over here. Here we have a transfer of assets, valued somewhere between $0 and $2.5T, into the anxious hands of executive branch bureaucrats, of whom, I surmise, have little more than an elementary understanding of mortgage-credit-risk evaluation*, have little to no real public accountability, and are certain make lots of new friends on K Street.

*I base my conclusion on this article by Arnold Kling wherein he states:

I am wearing two hats in opposition to the bailout idea. One hat is my libertarian hat, which does not like the power grab. The other hat is the applied financial economics hat, which was my career in the late 1980's and early 1990's. Speaking from the latter point of view, I have to warn that nobody involved in the bailout proposal has sufficient knowledge of mortgage credit risk. They are like Dick Syron--in over their heads without realizing it. The last thing we need in the mortgage market is another large, inexperienced player.

That's my biggest problem with the bailout plans. I don't think anyone, particularly in Congress, or even the Fed, really understands the big-picture situation. Each supposed solution has only led to another problem (beginning with Bear Sterns in March), which leads me to believe that either nobody has really taken the time to fully analyze the trail of liabilities, or in the alternative, we are witnessing the implementation of one masterful massive wealth transfer conspiracy under the guise of economic-fear-mongering. Being a libertarian kook, I fully realize that our government is far too incompetent to pull off the latter and, unfortunately, far too capable of forging ahead despite the former. So, here we are. One more bailout. And you, me and the next 8 or so generations of American taxpayers just purchased a whole-lot-of of snakeoil from one set of shysters and are handing over control of the same to some other well-connected technocrats to hold in our trust, while we are left hoping that this latter group somehow attain the superhuman ability to process copious amounts of macro-level information while simultaneously staving off the wishful favor of the corporate welfare whores and their lackeys in the legislature. I'm less than optimistic.