Wall Street Blues

...and Sgt. Phil Esterhaus cautions us "Let's be careful out there." What are we going to do in the future when Bank of America catches a cold? One source of the problem was pointed out years ago: the institutions being created were just too big, ensuring that banking problems would be enormous. With banking institutions of such a gargantuan size, look what we have created:

moral hazard roulette

(1) the banks themselves seem to operate with the idea of a government safety net to catch them when they attempt something too dangerous, (2) the government has to make a fall guy out of Lehman Bros. to let people know it means business. Furthermore, what has been abundantly demonstrated is the fact that Free Market Economics has no skills to handle such a situation short of severe collapse. Socialist Economics is now delineated as the only philosophy able to handle this type of event. People are smart. If you push them too far, they will demand the Socialist answer for their lives which you have rendered unsustainable. Only, you know that American Socialism will be some sort of jerry-rigged sham, and the whole process will shamble on its weary track.