Monday, March 16, 2009

Company of the Living Dead

Critics blast AIG as flap escalates over bonuses -
AIG isn't alone, but it's a good symbol for the financial house of cards which is collapsing in ruins around us. Surely the government, banks, investors, and insurers were not powerless to see that a collapse was likely if not inevitable.

Yet government policy encouraged and rewarded an unsustainable orgy of risky lending and unrealistic valuation of debt.

Now AIG has already collapsed, although the mountain of freshly printed cash shoveled into the abyss is supposed to fool us into thinking AIG has been "rescued". The entity moves, walks, talks, and spends as though the orgy were still in full swing, but the soul has already left the body. The federal government, with its 79.9% ownership of this corporate corpse, is the animating principle, the Doctor Frankenstein behind the pathetic creature. But the creature proves to be a hideous embarrassment, refusing to play politely its assigned role as subservient ward of the state.

Frankenstein's monster ran amok, but at least Frankenstein created only one. Governments are rarely satisfied to produce only one hideous, overreaching disaster. As the "rescue" of AIG will prove to be somewhat less successful than was hoped, the meddlers surely will not repent of their dreams, but will redouble their efforts to realize them, meddling more and more with whatever remains of the economy. They'll create more and bigger monsters, uglier and more destructive: impotent, and doomed to wander the economy as insatiable zombies, tethered to their capricious and increasingly useless rulers, leaving a pestilence of poverty and servitude behind them.

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