Officially Bitter

One of my favorite books is Henderson The Rain King by Saul Bellow. It tells the tale of a lustful and ham fisted scion of privilege who screws up his own world so badly that he decides to head to Africa to see what he can screw up there. He bungles into a position of significance, all the while his ego being tremendously sated by the good he believes himself to be doing when he is really sowing the seeds of tremendous destruction. I wish I had sent my copy to Alan Greenspan about 12 years ago.

So the housing bailout bills are all out there amid much promise of helping homeowners and really turning this whole thing around. It's about as fouled up a situation as anyone could have hoped for, and I think it's been pretty profoundly mismanaged and misrepresented from the start.

To begin with, when President Obama made his initial overtures to the public about the program, he proclaimed that it wouldn't offer help for those who made bad decisions and acted irresponsibly and bit off more than they could chew. There's no way he could have believed this, and to my mind he missed an opportunity to make a huge point and gain huge points. If I'd been on his communications team, I would have insisted that he say that there will be many people who acted irresponsibly and in any fair sense of the word don't deserve help who will be helped by the plan. In order for the whole barrel to be salvaged, very many bad apples will be given undue help. Despite the pound of flesh that those of us who had nothing to do with the inflation of this balloon want to extract from these idiots, the rebuilding of the system requires offering a helping hand to people who deserve a boot in the nuts.

There's an asshat featured in the NY Times this morning. Look guy, you bought a HUGE house at the height of a bubble. Don't you know you have to be the head of a major financial firm before any consequences of your idiotic decisions are automatically foisted onto the American public? I feel your pain, but you fucked up. You bought into the mania, we stayed in our shitty condo. So sorry for your situation. Best of luck. Bite me. I'm really not in the business of signing $1,000,000 checks for overly entitled fuckwits.

Dishonesty or obfuscation rarely works out. Similarly, I believe that Geithner thinks that if the scope and scale of the whole problem were to be made plain, the markets would head toward zero and panic would envelop the land, so I understand what his hesitation to lay the whole story out, but I don't excuse it. This incrementalism on the way down is just punishing, putting artificial and temporary floors on things.

You're also starting to see a bunch of claims that stocks are starting to look like a value again. Even the President said so, although his endorsement was so watered down it made no sense to me at all to give it. The reasoning now being that P/E ratios are at historical norms or lower. The problem with that is that everyone is awfully concerned about the downside to the E. If your E gets cut in half and your P stays the same, your P/E doubles. As long as there is this much potential downside to earnings - and except for Wal-Mart everyone's earnings reports have been disappointing in extremis - a historically moderate P/E means little.

There's really little doubt now that we are in for a poo storm of nearly biblical proportions. The worst has not yet passed, no way no how. Life will go on. I'm not headed to the corner with my "The End Is Near" sandwich board, but let's not kid ourselves that times are going to be anything less than profoundly less fabulous in the days ahead.