Mass transportation in the U.S. began with railroads, and you may recall the history lesson about rail travel in the late 19th century: it was controlled by wealthy malefactors who didn't give a flip about making the trains run safely and on time for a humble public.
That situation apparently gave birth to the phrase, "That's a helluva way to run a railroad!" Over time, this sentiment evolved into the more familiar, mocking rhetorical question: "Is this any way to run a railroad?"
The mocking part of the question presupposes that rail travel doesn't have to be chaotic and hazardous, and that there actually is a better way...
...Which brings us to an adaptation of this noble phrase for November 2008:
Is This Any Way to Run a Bailout?
Alas, the mocking part of the rhetorical question doesn't work in this case. The only answer is "Yes." This bailout cannot be anything but chaotic and hazardous. Government cannot create wealth, only the illusion of wealth -- the "money" it doles out today is debt amortized into a future which will exceed the number of years most of us have left to live.
Let me be clear: You underestimate the government's control of the financial system at your own peril.
In two short months, the Federal Reserve and Treasury have intervened in the economy with loans to banks and other institutions to the tune of $2 trillion: now the government refuses to disclose details about their activities, as was widely reported this morning. The so-called collateral for these loans include stock shares and subprime loans, the value of which falls by the day.
Starting in late September on this page, I said the Federal Reserve appeared to be on the hook for $138 billion in the Lehman bankruptcy, at the very time Fed officials were saying "no bailout for Lehman." My numerous telephone calls for more information went unanswered.
Throughout October, news organizations and other sources obtained publicly available documents from the Treasury Department regarding the bailout, including bids and contracts for administrative and legal services with the pay schedules, labor rates, position titles and job descriptions blacked out or redacted. Meanwhile, in public statements and testimony given under oath, officials at the highest level agreed to remain transparent in what they did.
After the 2000-2003 bear market, one the country's top five accounting firms (Arthur Anderson) was literally forced out of business for accounting irregularities. Congress passed Sarbanes-Oxley, which placed extraordinary burdens of disclosure on U.S. companies -- with the threat of prison for CEOs who signed erroneous financial statements, even if the CEO was unaware of the errors.
Now, on a far grander scale, government is accountable only to itself for its financial actions. Like an absolute monarch, it alone elects to disclose what it does -- it can also refuse to disclose anything, with impunity. This kind of power the Robber Barons of the 19th century imagined only in their wildest dreams...