CRASH 2: Why Bernanke has no ace in the Hole.

The Lone Ranger….helping Tonto Banks

Somehow, three years on we’re still in 2008

At the upper end of Tweeting today, Ben Bernanke is going like a train. This is partly due to the fact that new GOP Flavour of the Hour Rick Perry called Ben’s Fed strategy ‘treasonous’ yesterday afternoon EDS. But at the serious business end – as opposed to the ‘trash each other’ Mad Republican sector – all eyes are on the Fed Chairman. He is once again being positioned as The Man Expected to Save the World.

He can’t of course, but the very grovelling panic of the markets in asking him to is a relearning of the salutary lesson from 2008: devil-take-the-hindmost-keep-government-small globalist capitalism never wavers from the rules of unlimited personal responsibility….until that person or institution is a major player in, um, devil-take-the-hindmost-keep-government-small globalist capitalism. At which point, the preferred option is unlimited Big Government Socialism.

The weak must die….if they aren’t called GM. The rash must fall….if they aren’t called BankofAmerica. Wall Street must clear up its own mess….except when Hank Paulson runs the Fed. Banks must never again be too big to fail….except when they really are still too big to fail. Those buying up their own kind in fire sales must find the money in the markets….unless it’s Barclays taking over Lehman. Members of a Bourse must take the personal consequences…unless they’re Lloyds Names.

Everyone from Lloyd Bankfine to Rob Diamonds has to be fitted ex-factory with a brass neck: not only does this allow their point of view to swivel 275 degrees on its axis, it also makes it impossible to hang the buggers. But the hypocrisy, double standards and 100% shame deficiency of these hobgoblins is exceeded only by the inability of those in government to tell them where to shove it….or Heaven forfend, reform them until they work for society as a whole, as opposed to 3% of it.

This time, of course, Bernanke really is in an especially deep Jackson Hole, because (1) taxpayers are once bitten, twice shy, and (b) he’s actually drinking in Jackson Hole’s Last Chance Saloon. Any minute now, the Beijing Gang are gonna ride into town and shoot the place up bigtime. And suddenly, nobody wants to play Deputy to Ben’s Sheriff.

So here we are again: it’s three years on, and the guys who took our money (and then impolitely and immediately told us to butt out last time) are back wanting the Federal Government to buy all the junk they ‘invested’ in when nothing was ever going to go wrong again, ever.

This is effectively what QE is – and BB is now hinting more broadly along the lines of QE3. And in turn, another nom de plume for QE3 is That Which Saves Too Big to Fail…especially when it is accompanied by a cast-iron promise to leave Zirp (0% rates) in place for a further two whole years.

I am a 100% supporter of free-market capitalism – but with two key caveats. First, it must operate within the law, or face ruinous fines. And second, all professions and sectors must pay mutual insurance to ensure that when a member goes down the plughole, the other players clean up the mess. Not you and me, the citizens.

But in the intervening 100 years or so until then, we need somebody in authority to wise up at the double to the following:

1. The banks need to be hugely deleveraged – forcibly if necessary.

2. Their globalist-domino structure needs to be broken up.

3. Friedmanite capitalism thinks the citizen works for business. It’s the other war round.

4. Without widespread global debt forgiveness, the West’s sovereigns are doomed anyway.

5. Christine Lagarde is a clueless lawyer.

6. Geli Merkel is a dumpy Osti Housewife with a not very secret agenda.

7. It’s 1933 time again, and the US faces a choice between Warren Harding and Woodrow Wilson. There is no FDR option.

8. If you want to make government smaller, mutualise its services and make them self-liquidating not-for-profit entities.