Why We Need to Think Twice About How We Respond to the Credit Crises

This seems about right:

There is a choice to be made: Either regulate the Banks, or leave it to the vagaries of the free markets to punish those who trade with, or place their assets in the wrong institutions. But for God's sake, do not give us the worst of both worlds -- do not allow banks the freedom to make horrific but preventable mistakes (i.e., only lending money to those who can pay it back), but then expect the taxpayers to foot the trillion dollar bill.

That's not capitalism, its not socialism, its not regulation, and its sure as hell isn't what free markets are. Our language is insufficient to describe this hodge-podge system, other than to call it a random patchwork of quasi-capitalism, quadrennial-socialism, and politics as usual. Ideological idiocy is the only phrase I can muster that has any resonance with the daily insanity.

As others have pointed out, it took the Fed until this week -- nearly a year after the first mortgage meltdown, last August -- to draft new, tighter mortgage lending standards for banks.

Much of this can be seen as the result of eight years of an administration that has never, frankly, been interested in actually governing, and actively hostile to enforcing any regulation that came between a corporation and its profits.

But the Maestro Greenspan , let's not forget, was equally embraced by Clinton, and the rush of some Democrats to double the federal deficit to bail out Fannie and Freddie's shareholders is nauseating.

Why? Because the other choice facing this nation so near (if not already in) bankruptcy is this: bail out the banks, or provide universal health care? Fix the potholes on and the bridges to Main Street, or lay some fresh grease on Wall Street? We cannot do it all, and those on the left who clamor for a federal bailout for housing are going to be in for a heap of disappointment when they realize that we busted the dollar and the federal treasury to prop up a declining bubble, and the real work that needs to be done -- saving this planet (vis a vis stopping global warming, if such a thing is even possible any more) and the people who live on it (via health care) -- cannot be done by an insolvent superpower.

Ideological consistency isn't very valuable in a rapidly changing world. The right is morally and ideologically bankrupt; but the left needs to remind itself that it is "the reality based community." Reality dictates that the government can't step in with cash to head off every calamity now coming our way.

The politics of the next decade is going to be a politics of triage. Progressives are making the mistake of arguing that we use all the limited penicillin and morphine on the first patient through the door -- the credit crisis. But there's a stream of patients right behind this one -- global warming, energy, health care, jobs, and a dozen other issues have all been grievously wounded in this car-wreck of the Bush economy.

Which one or two or three matters to you most? Which ones can really be saved with the resources we have? These are the questions we need to be asking ourselves, before we start venturing answers.

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