I present this week’s article with two goals in mind. The first one is to notify all of you faithful readers of a looming problem that could make the recent Wall Street financial bailout seem relatively minor.

 

The second one is to clarify some of the stuff I’ve written about the bailout and to redistribute my delegation of blame in a more even-handed manner.

 

Boy, did I get e-mail over last week’s column! Most of it was positive in terms of its reasoning but highly critical in terms of the way I distributed the blame for this mess.

 

The “Lefties” seemed a tad angry but not as angry as the “Righties.” For some reason, it appears as though I incensed the “Righties” because I didn’t delegate enough blame to the Left. Some of them got downright snotty over it, too.

 

Although I thought I treated the matter even-handedly (See my criticisms here), perhaps I didn’t. Mea culpa, mea culpa, mea maxima culpa!

 

First, the looming problem…

 

Do you use lemons? You know… those little yellow things people cut up to make lemonade; put into iced tea; or squeeze onto fish in order to mask the disgusting taste. If so, prepare to be shocked.

 

There’s a worldwide shortage of lemons! How do I know about it? Because it’s my job to find out about such news and make sure it does not swoop in from your blind sides, delivering a devastating hit that may well put you out of action for months, even YEARS.

 

Had it not been for me going into my local grocery store here in New Castle County, Delaware (Superfresh—formerly known as A&P), I’d have remained just as unaware as many of you may be.

 

Large notices loomed at each of the checkout stations and in the produce section, informing customers of the shortage and that they were limiting the number of lemons each customer could buy.

 

It stymied me. I couldn’t move. The news had a paralyzing affect, like that of a deer staring into an oncoming set of automobile headlights.

 

My first thought was; “How much MORE of this do they think we can take?” First, we have to come up with $700-billion to keep the nation’s banks from going to hell in a hand basket; now this: no freaking lemons!

 

What happened to all of the lemons? Bush! My God, is there anything this man cannot screw up? Moreover, has either McCain/Palin or Obama/Biden mentioned anything about a worldwide lemon shortage?

 

No, they haven’t. They’re going to wait until after the election and broadside us with it. And, as usual, we have to deal with it just before Christmas.

 

I don’t know what they’ve done with all the lemons. But, they’ve certainly not put any of them in those powdered ice-tea and lemonade mixes. There’s not a drop of lemon in any of them, only lemon flavor. And, even IT is artificial.

 

If you want real lemons, you have to go to the furniture polish aisle. That’s right! Furniture polish contains REAL lemons.

 

Yes, I checked it out. While I noticed a slight whiff of lemony aroma when I opened one of the polish containers, it tasted terrible, not even a hint of lemony taste. I certainly won’t drink any more of THAT stuff!

 

Now, about those clarifications and redistribution of BLAME…

 

A large number of emails came from both sides of the political aisle accusing me of being too easy on the other side of this financial crapshoot. So, let me SAY THIS ABOUT THAT.

 

I wrote, a couple of weeks ago, that, due to the dismantling of virtually all of the Great Depression Era oversight regulations, we’ve ended up with a credit derivatives market about 5-times the size of our Stock Market. Click here if you’d like to read it.

 

We’ve embraced derivatives for decades. There is, when undertaken with the proper motivation, a positive side to them. All things equal, they usually work out to the benefit of all participants. And, even when they fail to work out, the consequences are rarely catastrophic on a national scale.

 

Financial derivatives, however, have been a different animal altogether, especially as they’ve applied to home mortgages and other related credit matters.

 

The risk assumptions were unique, not the least of which was that the direction of home prices would continue indefinitely upwards. The real experts knew this was not likely to happen and it didn’t.

 

So, the mission was to create ways to make the investments look less risky than reality dictated. A challenge? Yes! But, it was a virtual cakewalk for the gurus of creative finance on Wall Street.

 

The genius of it all was in dividing thousands of individual mortgages into smaller pieces. Voila! Suddenly the risks seemed minor and investors joined the cause in droves.

 

Of course, by the time it all came apart, investment bankers and mortgage brokers had already made millions on associated upfront fees and insanely large finder-commissions.

 

And, let’s not forget the humongous—80% on average—insurance premium commissions they gained by selling the insurance policies aimed at covering “potential” losses from bad loans. Thank God for AIG!

 

Who gets the blame for all of it? We all do. The greed barons on Wall Street deserve their share of it for putting profit above the financial welfare of this country. Perhaps we’ll even see a few indictments. But don’t hold your breath.

 

The Legislative and Executive branches of our government get their share of it for putting political self-interests and the financial self-interests of their highly supportive lobbyist friends above the financial welfare of this country. Business as usual!

 

And, we the voters, many of whom have lived in a “la la” land of financial make-believe for decades, deserve a lion’s share of the blame. Have we learned that credit speculation based on “confidence” instead of any genuine means of repaying debts is a bad idea?

 

Perhaps, but, again, don’t bet on it. If the bailout fails to unfreeze credit availability at reasonable interest rates, the economy will disintegrate into an all-out depression.

 

If it makes people happy, let’s divide the political blame into three parts: the Fair Credit Reporting Act/Fanny Mae/Freddie Mac part, the Financial Services Modernization Act (aka Gramm-Leach-Bliley Act) part, and the WE-DEMAND-ONLY-GOOD-NEWS-FROM-OUR-POLITICIANS part.

 

The Democrats clearly own the first part, particularly Barney Frank, Chris Dodd, Chuck Schumer, and Charles Rangel. They should ALL be proud of themselves. Con artists should take note of how real pros do things.

 

The Republicans tried—but not TOO hard—to block this stuff. I’m amazed that they failed, considering the Republicans have been in the majority of both houses of Congress for sixteen of the last eighteen-years. It fails the “smell” test big time!

 

The Republicans own the second part. Former Senator Phil Gramm (R) Texas managed to push through the Financial Services Modernization Act (known as Gramm-Leach-Bliley Act) which explicitly exempted financial derivatives from federal regulation.

 

The United States Congress saw the doom clouds on the financial horizon, too. In the late 1990s, the Democrats tried—but not TOO hard—to bring this stuff under federal oversight. They failed. Another “smell” test failure!

 

I’m not making this stuff up in order to make either side look bad. It’s all right there in the Congressional record, readily available for anyone with the search know-how to find it.

 

We voters own the third part because we’re too much in love with our pre-conceived notions, which is why too many of us get our political truths from the likes of Fox News, MSNBC, CNN, Rush Limbaugh, and Air America Radio.

 

Liberal, Conservative, or whatever, we all need to understand that we have surrendered our control of the Congress. We no longer control that body. It NOW controls us.

 

Whatever interests these folks display relative to our welfare are mere allusions aimed at assuaging our feelings. And, why not; we continually reelect the same ones every election cycle.

 

Bi-partisanship only enters the picture whenever it’s politically expedient or there is a real or perceived threat to their positions of power, money, and incumbencies. These things have come to trump the business and welfare of this nation.

 

These people are experts at scratching each other’s backs, party affiliations notwithstanding. It has become our modern U. S. Congress’s version of “honorable and prudent” political compromise.

 

Finally, I was surprised at the number of emails (about 20-percent) that concerned former presidential nominee candidate, Ron Paul. The consensus regarding him was that he’d end all the shenanigans if we’d only elect him as our next president. So, let me SAY THIS ABOUT THAT.

 

I don’t think so. I have nothing against Ron Paul. He’s a highly skilled medical doctor. I have no reason to question his sincerity in wanting to be our president; nor do I have any reason to question his level of intellectual curiosity.

 

Nevertheless, I fear that he’d end none of the current shenanigans and I doubt, even more, that he’d accomplish anything meaningful at all.

 

His solutions could be among the most workable in all of humanity. Despite this possibility, the Congress would most likely ignore him.

 

First, you need a big ego to run for national political office. To run for the office of President of the United States, however, the ego has to be more along the lines of gargantuan, not just big. Ron Paul fits this bill fine. But, here’s the rub.

 

We voters like our politicians to come out of the box pre-lacquered with several coats of humility and affability that make them appear, at least on the surface, to possess a veneer of genuine-appearing pleasantness.

 

Observing him in action as he campaigned for the presidential nomination for 2008 convinced me that the paint store was closed the day Dr. Paul was born.

 

He seems is too radical, appearing at times rather condescending and lacking any ability or willingness to build governing coalitions, without which NOTHING gets through the United States Congress.

 

Until we change Congress and the way it conducts the business of the country, we’ll continue to circle the drain of self-destruction. The longer we put it off, the faster we’ll circle that drain.

 

And, make no mistake about it. The laws of physics ensure that there is, indeed, a point of NO RETURN.

 

Joe Walther is a freelance writer and publisher of The True Facts. You may comment on his column by clicking here.