I made you an economy but I broked it.

If any of you are regular readers you may be wondering why these last two weeks have gone without a posting on the economy. There are several reasons. First, our senior economic analyst, TheRedKap is still stuck behind the Great Firewall. Second, my political rage peaked about a year ago. After seven years of rising outrage at this administration I finally reached my limits and fizzled out somewhat.

I haven't been able to listen to Marketplace in almost a year so I have had to try and make sense of this stuff myself. Which is difficult for even economists to understand. If the voodoo priests of the dollar can't explain on whats going on, what hope does an average American have? Here is one thought I had yesterday which I hope is not so obvious that I appear foolish for taking the time to lay it out.

One economist yesterday likened the current $700 B...B...B...Billion Bailout to that scene from Blazing Saddles when Bart, played by Cleavon Little, holds a gun to his own head to keep the town from lynching him. Wall Street, here played by Henry Paulson, is holding the gun to its own head and saying they will pull the trigger if we don't save them from their own mistakes. That's pretty obvious but it's the first step. So, what caused this situation? Housing and real property values have risen astronomically bolstered by unfettered access to credit. People were given loans that they could never pay back and the sleaze bags that sold them these loans bunched them together to hide that they were bad investments and then gave them to ratings agency sleaze bags that told the whole world that this was some good shit. Then the poor people who were lied to about how much house they could afford in George Bush's "ownership society"start defaulting on their mortgages. Banks sit up and take notice and start forecasting falling profits and eventually losses and then admit that they don't know how many of these toxic mortgages are going to explode, but they have lots of em'. Opportunist investment bankers then short sell the stock of these banks. (Short selling is either complicated, or simple and commonplace depending on which economist you are talking to and their politics, but the basic explanation is investment bankers try to drive down the value of a stock in order to make a quick buck. They do this because they don't actually have jobs and don't contribute anything of value to society and can only destroy. Like little economic vampires in suspenders.)

So, you get to our current situation with overinflated housing values putting pressure on the markets because banks are so heavily invested in these things that aren't worth what they paid. Now they want the government, meaning the taxpayers, meaning you and me, to buy these worthless bundles of mortgages. They say this will set a bottom level price that they can always be sold to the government for, so that investors can never loose all the money they put into these mortgages, eliminating the mystery of whether the one they just bought will explode in their hands, thusly bolstering confidence in the market and loosening up credit so you and I can go back to buying 72" LCD TVs and leveraging our house to put a pool in our back yards. Thusly fueling the rampant over consumption that has fueled the economy.

Except maybe some of these banks should fail. Maybe an economy based on credit is inherently unstable. Maybe we shouldn't just go back to buying cheaply made garbage from overseas? Maybe these same people that have been pushing for deregulation and chanting the mantra of the free market, when suddenly faced with the terrifying face of the monster that is the free market, they let up a cry for socialism such that has not been heard since Lenin. These people who have played games with our retirement and destroyed the value of our employers and our homes want it both ways just as long as they don't have to feel the pinch. Analysts point out that CEO's of these failed banks are getting fired but mention golden parachutes to them and they begin to dissemble. It doesn't take an economics degree or an MBA to understand that if someone who made over a million dollars in income last year looses their job, they aren't going to loose their house or go hungry like the guy working down at the Ford plant in Cleveland, or the GM factory in Janesville. These guys on Wall Street are more out of touch with what middle class is then McCain. When was the last time an investment banker welded the bumper onto a car or pulled a ton of coal out of the Earth with only their sweat and muscle?

OK, I got distracted by class warfare there. Where does this $700 Bubble Burst Bailout Billion come from? It doesn't just come out of the ass of Johnny Taxpayer, it gets squeezed out of the value of the Dollar. What the markets and Paulson are asking congress to do is to transfer the overinflated value of housing and real property indirectly to the value of the dollar. Inflation. I am talking about inflation with a capital "I." The value of the dollar has been falling against other currencies over the course of this whole subprime crash and since commodities are pegged to the dollar it has fueled the rise in costs of oil and food and other basic essentials. So basically after destroying the value of our homes and companies, the Wall Street voodoo machine is going to destroy the value of our labor and the dollar. I think they are doing this because they know that their "labor" doesn't have any value.