Wall Street's "Uncontained Failure"

Qantas' Pilots vs. Wall Street's

Here's a thought, apropos of (almost) nothing:

The cure to our economic woes has nothing to do with finding exactly the right monetary policy, or getting the Chinese to price the Yuan "fairly," or bridging today's yawning political chasms to reach necessary compromises.

The first step is to seriously and completely address the mess (still) left over from the Crash of '08.

(Sorry, I'm not going for "The Great Recession" sobriquet. Recessions happen, like the weather; crashes have man-made causes.)

Which men? (and almost all of them were).

There's really not much mystery at this point.

"Uncontained Failure"

For those not up to speed, here's the basic narrative to date:

Wall Street's largest firms created an esoteric, unaccountable financial monster -- the likes exceeding even the excesses of the 1920's -- that made their executives (if not their shareholders) rich beyond belief.

It grew and grew and grew . . . and then it exploded.

Unfortunately, just like the A380 Qantas jet whose engine blew apart on departure from Singapore, the economy's "financial engine" explosion was an uncontained failure.

And still is.

Which means the explosion fragments and debris escaped the engine casing and compromised the rest of the structure (economy).

Wall Street Accountability

Like the exceptional Qantas pilots, this country's economic pilots now face a three-fold task:

Step 1: Assess the damage

Which instruments are still working?

Which electrical and hydraulic lines have been severed?

Does the landing gear still work?

Etc., etc.

Only once a proper inventory of the damage has been done, however hastily, can efforts turn towards devising an appropriate response.

In the case of the banks -- "stress test(s)" or not -- step #1 has yet to be tackled seriously and honestly.

Step 2: Isolate the damage

The Qantas pilots quickly shut down the exploded engine and transferred (as best they could) precious power and fuel to the remaining, viable ones.

So far, this country's leaders have done the exact opposite: focused all their attention on the doomed engine, and diverted crucial resources from the functioning engines towards the destroyed one.

Even after the travails of the last few years, the U.S. banking system numbers something like 7,000-plus banks.

The idea that there is no banking system without the Too Big To Fail Behemoths is arrogant, insulting, and blatantly wrong.

Step 3: (Re)gain control of the craft

Fortunately, the Qantas flight had two additional senior pilots on board.

We have access (still) to old hands like Paul Volcker, plus an entire, new generation of financial experts, academics, and civil servants -- just as talented and public-spirited as Volcker was when he was appointed.

Who don't work for Wall Street, and don't want to.

Put them in charge. Then listen to them. (Here's my list of luminaries, for starters: "Nine Better Choices to Investigate Wall Street").

Where the Qantas-Wall Street parallel . . . um . . . breaks down is that Wall Street's "pilots" also owned and (shoddily) ran the airline; designed the jet's defective engines (and the rest of the craft as well); and, just for insurance, paid off the safety inspectors and government regulators who oversaw them.

That nothing has happened to them -- that they remain at liberty, rich, and -- incredibly -- still in charge, suggests not just that our financial and political systems are broken, but that our legal system may be as well.