I'm Waiting Impatiently for My Bailout
by Robert Higgs
by Robert Higgs
Last time I checked, the total commitment for the government's assorted bailouts stood at $7.76 trillion. By now, of course, it's probably bigger. Ordinary people have trouble keeping up with it, given its tendency to increase every Monday morning, when many of us are pretty hung over. But who cares? At this point it's all funny money anyhow, too humongous for the human mind to grasp. To be honest, I'm beginning to lose interest in it, more or less in the same way that my fellow Americans have lost interest in the U.S. wars in Afghanistan and Iraq. It's so yesterday. I want to know what's hot now.
To be more specific, I want to know when MY bailout will be announced. I check the news every Monday morning with an eagle eye, but for months now I've experienced nothing but repeated disappointments. Bailouts have gone to big commercial banks, investment banks, broker dealers, Fannie and Freddie, AIG, middle-size banks, money market mutual funds, commercial paper sellers, credit card financers, student loan issuers, auto manufacturers, and, for all I know, to massage parlors and tattoo salons, too. But, alas, not one dime has been allocated to failed professors. And I demand to know what's going on!
I spent twenty-six years in the trenches of academia; I paid my dues. I must have corrupted the minds of almost as many young people as Bear Stearns bought worthless mortgage-backed securities. I proved as disruptive and hard to get along with in as many faculty meetings as AIG issued worthless credit default swaps. I wrote scores of papers published in obscure journals nobody ever reads―if you don't believe me, I'll give you a list, and you can dig them out of the dust in a major university library. So, I wasn't just taking up space in academia: I was doing my best to undermine everything the honest, workaday world stands for, and now, when I'm in a jam, I want the federal government to give me some credit for the harm I've caused.
Actually, I want a bit more than recognition: I want an immediate cash infusion and a line of credit at the Fed. A few billion ought to turn the trick; I'm not greedy.
But I am financially irresponsible. If you don't believe me, I can show you my balance sheet. I'm running dangerously close to empty. And it's not as if I were in a position simply to declare bankruptcy and let the creditors swoop down like a swarm of vultures to feast on the pathetic assets I still possess―ramshackle residence (with dwindling equity), odds and ends of chattels, and about a hundred chickens, ducks, and geese, in addition to the cats, dogs, and exotic animals living inside the house. I admit, it ain't much, and that's the point I'm trying to get across: I am in a lot worse shape than the currently unemployed CEO of a giant bank who earned maybe $300 million or $400 million a year between 2002 and 2006 as the real-estate-and-credit bubble was being inflated and he was selling those crappy derivatives to hoodwinked investors who trusted him to protect their interest as if his own mother were the buyer.
You see, I wasn't making squat during the upswing, either, so I'm only that much more behind the eight ball now that the air is coming out of the bubble from one end of Wall Street to the other. I tell you it's a mighty ugly sight in Lower Manhattan when you survey the smashed corpses of all those MIT Ph.D.s who formerly specialized in risk modeling and assured the financial bigwigs that piling derivatives on top of derivatives, actual market valuation be damned, could not possibly go wrong. Plunging from the 57th floor is serious business. But I'm not qualified for that kind of high-wire acrobatics. I'm simply a garden-variety failed academic whose post-academy days were not so hot, either.
I might have dissipated less of my wealth had I not gone and married that string of lovely ladies. But I don't think anyone can blame me for that. Marriage is the very foundation of a solid society, and in every case I intended only to do my part in shoring up the tottering social structure. I discovered, though, that the financial downside of serial matrimony can be fairly similar to what happened to Citigroup's share price during the past month. Futures contracts on your marriage may be pricey one day, and the next day you're watching half of your accumulated wealth flying south quicker than Arctic ducks in September. The experience might well have served as a lesson to me, but I always had a good excuse for being a slow learner.
I'm not the only slow learner, though. Just look at all those real-estate investors. Millions of them bought property at prices justly described as insane because they believed that real estate prices can only rise. Somehow they had failed to learn anything from the past two centuries of real-estate boom and bust. So if President Obama and members of Congress can shed crocodile tears for the poor devils poised to lose "their" homes (in which they never had much more than zero equity and now have less), then they can damn well shed a few for me, too, because I've learned just as slowly as those deserving deadbeats.
It's not that I didn't have chances to recoup my wealth in the wake of my divorces and my expulsion from academia. As a consultant, I discovered that I could earn a pretty penny. If you visit the federal courthouse in Boise, Idaho, you'll see the bloodstains on the witness stand that prove I did not back down when assaulted by those jackals who work as attorneys for the government. I'm not complaining. My clients paid me top dollar. One time, as I endured a nonstop dawn-to-dusk deposition for five days in a row, subjected to the tender mercies of a tag team of attorneys assigned to the EPA, I kept hearing in the back of my head the sound of "ching-ching, ching-ching" as I answered the repeated questions intended solely to trip me up on the record under oath. So, yes, I could survive in the nonacademic jungle. It's just that I didn't relish such hard work; it disturbed my serenity when I wanted to think Big Thoughts, but the jackals wanted me to think excruciatingly tiny thoughts whose misstatement on my part might cost my client a great deal of money. That kind of job has a lot of stress, pretty much like the stress felt by the Wall Street guys peddling worthless collateralized debt obligations to unsuspecting buyers. So, if they deserve a bailout for their trouble, I deserve one, too.
I suspect that by now you've pretty much got the picture. All God's chillun got trouble and need a bailout. High-flying megabank CFOs, unscrupulous Wall Street toxic-bond peddlers, financial gurus too smart to bother with due diligence, failed academics gone over to economic consulting―we've all endured a lot, and if anybody deserves a hand up (notice I didn't say a hand out, I said a hand up), we're the ones.
But even if your heart has become hardened in a world where so many financial firms and fellows are yelping bloody murder for taxpayer-funded salvation, I want you to consider the matter in purely practical, self-interested terms. In truth, bailing me out is not only a question of simple justice (and social justice, too, if you're one of the breast beaters who fancies that this term has a meaning); it's also a matter of saving civilization as we know it. You heard me: everything we hold dear hinges on bailing me out. Why? Well, let me tell you, my dear untutored layperson. The problem we face in the event that I am not bailed out is, in technical terminology, known as systemic risk.
I don't expect you will be able to do the math, which is pretty advanced. A simple analogy will convey the gist of the idea. Imagine that you and I and everybody else on earth are walking along a narrow, rocky pathway carved into the side of sheer cliff, 5,000 feet above the valley floor below. We are all roped together. But rather than making each of us more secure, that linkage only guarantees that if I trip and fall over the side, then you will go over, too, and then the person behind you, and so forth; indeed, each and every one on the ledge will quickly be dragged along with me, and everybody―yes, I mean EVERYBODY ON EARTH, EVERYBODY WHO'S EVER BEEN BORN OR EVER WILL BE BORN―will be destroyed. So you can see that systemic risk is a fairly serious matter. That's why the feds had to give more than $100 billion to AIG, and all those trillions to the other financial miscreants. Hank Paulson and Ben Bernanke weren't just throwing money to their pals on Wall Street. They were saving us all from utter destruction.
The only problem I can see is that they didn't finish the job. Think back. Remember when the president was asked, When will the troops come home from Iraq and Afghanistan? His no-nonsense reply was loud and clear: when they've finished the job. Well, my fellow Americans, a bailout is much like a war. Both involve a lot of foolish government decisions, a lot of lies and propaganda, and a lot of wasted money and sanity. And, like a war, a bailout cannot be described as a "mission accomplished" until our brave boys at the Treasury and the Fed have finished the job.
That's where I come in, because, as I never tire of reminding you, I have not yet received my bailout. It's not as if it will cost the taxpayers much, either. At this point, a few billion for me doesn't even amount to rounding error. So, to bring my doleful tale to an end, I emphasize that I am waiting, but my patience is wearing thin. The crooks at Wells Fargo, Morgan Stanley, B of A, Fannie, Freddie, and the rest of those outfits got theirs at the head of the line. Okay, fine, systemic risk had to be warded off. But Citigroup and the other banker-pirates are not the only ones who raise this fearful prospect. My own systemic risk is crying out for some attention, too. In fact, if I don't get help soon, I may miss my next mortgage payment.
December 1, 2008
Crisis and Liberty: The Expansion of Government Power in American History (MP3 CD)
Robert Higgs [send him mail] is senior fellow in political economy at the Independent Institute and editor of The Independent Review. He is also a columnist for LewRockwell.com. His most recent book is Neither Liberty Nor Safety: Fear, Ideology, and the Growth of Government. He is also the author of Depression, War, and Cold War: Studies in Political Economy, Resurgence of the Warfare State: The Crisis Since 9/11 and Against Leviathan: Government Power and a Free Society.
Copyright © 2008 Robert Higgs