Dave: A couple of things. First, you are approaching this as a banker, and I’d like to approach this an accountant. A cornerstone of the financial system is trust, from both a banking and an accounting perspective. The Enron/Arthur Andersen debacle showed what happens when a company (Andersen) ostensibly there to protect the public trust, abuses it for personal and company gain. We’ve seen the parallels on the banking side this year and it’s led to the demise or acquisition of some the largest players in the market. You made the point some time ago that this situation wasn’t driven by anything other than crappy assets and it was an easter egg hunt to find out who had what crappy assets that they were hiding off book. Similar to LTCM in 1998, it isn’t the size of the company in question, it’s how big their obligations are, and how difficult it is to unwind them. Until we have some level of better transparency, this problem is going to persist and the markets will remain frozen. No trust, no lending.
Second, there is not a politician at any level of American government that is willing to “bell the cat” when it comes to telling the American people the true state of wages, income and standard of living. Things have been going downhill since the 1970s and we’ve papered it over at every level with debt financing. Our manufacturing capability is a shadow of what it once was and we’ve gone from the world’s largest creditor to the world’s debtor. I don’t see Obama, or anyone else for that matter, having a truly honest dialogue with the American people on this subject, because it would be political suicide. Many of the efforts of Paulson, Bernanke, Pelosi, et al, are nothing other than a means of extending the status quo ante and thus avoiding having to have that conversation at all.
