As of about 10:30 pm thursday, it looks like a deal is dead. Suddenly, there is a new consensus that we are not in trouble and that there are better ways to get bad loans off the books. Suddenly, we have competing plans and professors who tell us not to hurry.
Suddenly, we are back on the complacency bandwagon. Suddenly, Eric Cantor from the great state of New Jersey has a plan that's "better" than Paulson's plan.
Suddenly, we are in even more trouble than I thought.
Tonight Washington Mutual (WM) failed. It failed. It went bust. We are using the FDIC as the de facto Resolution Mortgage Trust, and in one fell swoop, it is broke. Let JPMorgan Chase (JPM) buy all the deposits in bankruptcy. That will take care of the problem, right? Maybe there isn't even a problem, or one worth concentrating on.
These politicians don't care. Nor do the group of esteemed professors who said the plan is wrong.
Now it is beginning to dawn on me. When we were all growing up we learned about what caused the Great Depression and how it seemed so easy to stop, but they wouldn't do the right thing. They didn't understand the way things could go badly so quickly. They didn't understand the psychology of the moment and how it was undermining the whole nation.
Now I see how it happened. Possibly well-meaning, but AT BEST extremely short-sighted people urging us to take our time as the largest thrift goes under, the largest insurance company goes under, the largest broker succumbs to a takeover and the largest industrial company explains why it can still have a good credit rating while missing estimates and stopping the buyback.
I have been saying sell the rallies in case something screws up.
Something is screwing up big time. Just when we need the deal, now more than ever. Unless we have decided to heck with the deal, we are just going to let it all happen at once and see if anyone really gets hurt. Hope everyone out there has a fat savings account.....
So, so reckless. All disguised as prudence of course. Yes. Prudence.