Joseph Keckeissen offers an alternative universe in which the bailouts didn’t happen and TARP was thrown back; in which the money supply wasn’t bloated up with “quantitative easing,”and the budget wasn’t inflated with stimulunacy inanities. No more rescues. No more trillions -- “those who have received any bit of largesse promptly return their ill-gotten loot to the Treasury,” and the bankruptcy courts were authorized to get on with their jobs without fear or favour.
This is an alternative universe in which we would have seen recovery in February.
There would be no more impatient dilly-dallying on the part of investors, waiting for the government to decide who are going to be the recipients of the new trillions in handouts, and causing daily upsurges and downfalls in the unsettled Dow.
Assets would have fallen to their normal worth, the present discounted value of their future returns. No need to wrestle with mark-to-market account. . .
Mr. Geithner wouldn't be stressed to invent new ways to cajole folks to contribute to the buyout of overvalued securitized junk. Nor would there be the least excuse for more G20s to be needled into bastardizing their overbloated monetary systems. Mr. Bernanke would have stopped acting the role of Santa Claus, distributing the government-invented moonshine to the denuded former greats of Wall Street.
The corpses of the erstwhile automobile empires would have breathed their last, their good assets now transferred to the hands of newer more responsible entrepreneurs. The prior executives would be moving over to Cheapside and brushing off their overalls, perhaps in line to join a new remodeled UAW, in search for some job where they couldn't mess things up any more.
The bankruptcy courts would be finishing up their exequies for the deceased former titans of the packaged debentures. The tombstones of the new economic cemetery would display the once great names of Fannie and Freddie, of Citi, of AIG, of Merrill Lynch, along with the hapless Lehman Brothers, interred several months before. And so many more financial cadavers would have been laid to rest, their memory duly to be forgotten, as perpetrators of a fake capitalism now buried and forgotten. . .
Washington would finally be silenced, even if the Fed were not yet duly junked in the process, and the Treasury's overbearance would be bridled as the rest of the uneconomic trash was being flushed out of the system.
The Case Shiller indices would have completed their downfall to a level that future homeowners could devote the traditional 30 percent of their money incomes towards purchasing their long-wanted love nests. New families would be rushing in to fill the vacant home sites.
True capitalism would be alive again; employment would be rising up to normal. The waiting lines would no longer be for unemployment checks, but rather to be first to enroll in the new jobs daily being created. The new savings of the American people, shocked by the catastrophe, would now offset the strangling of the market rate of interest on the part of the monetary gymnasts, and would reflect the new flow of healthy capital ready to be invested in solid new ventures. The Dow would be healthily aglow with daily increments. All the bubbles would have burst away.
Happy days would be here again! We'd once again be rolling in prosperity!
But why hasn't this happened?
Why is the world still in acute misery, even expecting the worst yet to come?
Because in this universe, none of this happened. Washington wasn’t silenced. Ben Bernanke wasn’t strangled. Instead of following the lessons of the Great Depression of 1920-21 (you know, the one that no one remembers because of the so-swift recovery), political functionaries instead made sure we got to enjoy a rerun of the Great Depression that everyone does remember. Faced with the choice of short, sharp pain or a long-drawn-out blood-letting, “the authorities” ensured we have to endure the latter.
The Visible Dead Hand has returned to strangle our future, at the expense of the “invisible hand” which could have transformed it.
It makes one almost wish for an alternative universe in which the roles were reversed.
UPDATE: Sadly, in this universe, the pain continues: