Ok, as y’all know, your Œcumenical Volgi is one Skeptical Volgi when it comes to government bailouts of enterprises. Ghettoputer is not happy with the fact that foreign-based banks operating in the U.S. might be bailed out of their junk-mortgage liabilities as well. Your Volgi, however, sees not a hell of a lot of a difference. If these banks are operating in the U.S. and we’re “protecting” or “saving” the U.S. economy here, why wouldn’t we bail them out? And why not the car companies? And the airlines? And my friend Dana’s coffee shop which lost a lot of money when they did a ton of road construction nearby.

Grab the reins, President Bush.

The Volgi suspects what we have here is an implicit, semi-collusive bargain between the Fed, the Treasury, and the finance industry—the last of which perhaps not coincidentally provides many of the high-level staffers of the former two. Because it looks an awful like the Fed and Treasury are announcing, “Moral hazard doesn’t apply to large financial institutions.” Which would be a profoundly awful precedent.

Stabilize the currency, keep taxes low, keep bankruptcy laws liberal, and make it easy for failed companies to be liquidated, and new companies to be started. And if we have to worry about companies’ being “too big to fail,” then restrict their size, analogous to anti-trust rules. If a company becomes “too big to fail,” and the government feels like it would have to bail it out in case of a failure, then that company should be forced to sell or forfeit assets until it’s small enough to fail. I hate the idea, but if we’re playing this game of “oh, these companies are sooo important,” then we gotta put a barrier to their getting to that status in the eyes of the government. If GM is too big to fail, break it up. If AIG’s portfolio is too critical to fail, spread it around to other companies or new companies. But for God’s sake, the more important these sectors of the economy are, the more imperative it is to keep them from being under political control. Unless you like lobbyists and congressmen (with bricks of cash in their freezers) controlling everyone’s damn well-being.

Confucius, Œc. Vol.

Don’t ask impertinent questions like that jackass Adept Lu.