Socialism for the Rich

As a perfect follow-up to my below grousing about the robber barons who never got nuttin' from the government, check out Richard Adams' "Socialism for the rich."

To rewind: last weekend Lehman Brothers asked the US government - the Fed and the US Treasury - for the sort of bailout that was granted six months ago to Bear Stearns, the US investment bank that went belly-up and taken over by JP Morgan after the US authorities agreed to pick up the tab. But the Feds said no this time - and were instantly applauded for this get tough policy, that after bailing out Bear Stearns, Fannie Mae and Freddie Mac and pumping further unprecedented billions - $70bn on Monday alone - into the financial system, the government was saying that the there was no more "too big too fail". The Washington Post's editorial writers cheered loudly: "We think they made the right call. The long list of bailout candidates, headed at the moment by AIG, confirms that policymakers were going to have to send this message sooner than later." The Wall Street Journal's red-in-tooth-and-claw editorial board agreed, saying "We're happy to report that the world didn't end yesterday," and continuing:

The Treasury and the Fed have signalled that they can say no. While Lehman's failure has spooked markets, the lesson that a storied investment house can fail without a federal rescue is its own crash course in risk management.

Not so fast. Only a few hours later and the Federal Reserve rode into town to rescue AIG, an institution that it doesn't even regulate. As congressman Barney Frank put it: "We had a one-day experiment in free enterprise."

Read the whole thing here.