Sometimes you just don’t know what to think.

On the one hand, there’s Michael Moore’s new movie, Capitalism: A Love Story, which takes an outraged look at the havoc that the financial crisis has caused on your basic, working (or now non-working) American citizen. Yeah, I know, a lot of you folks would drop Mr. Moore off a mountain made of his own money if you had the chance. But the guy can make a case.

His point is that our economic system is controlled by idiots, con-men and selfish, greedy SOBs who don’t give a damn about us and run the system for their own benefit. I don’t think you have to be a flag-waving leftie like Mr. Moore to agree with that one. I think a lot of Glenn Beck people would sign on to that premise.

The fat man in the hat is also righteously peeved that the Government bailed out all those big banks and insurance companies that nearly brought us all down. And again, there’s a fair chunk of right-thinking America that’s hopping mad about that, too. So maybe Moore’s anti-capitalist screed is actually an interesting nexus at the point where right and left converge in hatred of the system that rewards failure and lets the bad guys run the next iteration of the machine. Nobody ever lost money at this point underestimating the anger of the American people.

And of course we all have plenty to be angry about. We could spend the next decade yelling at, prosecuting and punishing the moral morons and stupid geniuses who gave us our recession.

But then there’s James B. Stewart’s exhaustive, exhausting look at the “Eight Days” that shook the world back in September of 2008, in the September 21st, 2009, issue of The New Yorker. It’s a tick-tock about the week that the guys who run global capitalism bumbled their way toward the decision to go socialist for a while and bail out the system that pays for their limos.  

What you see is how close we all came to losing pretty much everything — our collective life savings, our homes, the insurance that protects us from disaster (subject to acts of God and any other consideration they can think of to avoid paying you).  We get a worm’s-eye view of familiar figures like Paulson, Bernanke, Geithner, Bank of America’s Ken Lewis, Lehman’s clueless Dick Fuld, pre-bonus John Thain of Merrill, the gang from AIG, thrashing around trying to figure out how to prevent the entire mess from going down the drain it was circling.

If you haven’t looked it up, you should. If it shows nothing else, it demonstrates how in a crisis the false divisions that separate one global behemoth from another, and private enterprise from Government, dissolve, leaving a management team all working for the same big corporation. You know it. You work for it too.

So that’s where I’m stuck, another year older and deeper in debt, as the old song goes. On the one hand, you’ve got to hate the fact that the miscreants wriggled off the hook, and that in many ways — just like after the fall of Communism in eastern Europe — the same creeps who screwed things up are back running the store, the new boss same as the old boss. All those big bailouts make a lot of people want to scream, and truly, there are so many things to despise about Wall Street. On the other hand, where would we be if the so-called free-marketplace had been allowed to go down, to be righteously allowed to fail? Every single person now reading this, and even those losers who aren’t, would be up the creek.

I don’t know where I come out. I’m confused. So I guess I’ll just handle that like everybody else these days. I’ll get mad! Ah, that feels better!

A little quiz to brighten your Monday morning. Since we all have the attention span of insects at this point, I’ll make it just one question.

Q: It’s one year after Wall Street teetered on the brink and just about fell off into the abyss. At the time, it was recognized that there were significant, systemic problems in the banking business that had led to the collapse.

Today Nobel Prize-winning economist Joseph Stiglitz says that the U.S. has failed to fix these underlying problems. “In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” he told Bloomberg. “The problems are worse than they were in 2007 before the crisis.” President Obama is making a speech calling for new rules to prevent another meltdown in the economy. Will he prevail, with new regulations and rules that limit the size of banks and the exposure of our economy to another, perhaps worse, catastrophic failure? Select one:

a. Of course. We’ve learned a lot and many responsible people in the financial sector will put self-interest behind the welfare of our nation. Ha ha ha.

b. It’s all a bunch of hooey. Free markets that benefit those in charge of them are the way to go.

c. Leave me alone. I’m too busy reading reports from security analysts on how I’m going to invest my money for the next six minutes.

d. I think they should take all gloomy economists and make them go to Pittsburgh. No, wait! They’re doing that already!

e. Badges? We don’t want no stinking badges.

f. All of the above.

There are no right answers. Just tell me what you think. Hurry. And make it inspiring, willya? I tend to believe the last thing I read.

The sky is blue. The trees are green. The birdies is on the wing. And the majority of our banks have flunked their stress tests. Does that make them sad? Nope. Are we worried? Not at all. Because while they are stressed, they are not stressed as badly as we might have feared. Two facts leap out. First, while 10 of 19 of our fiduciary institutions require some form of additional cash to keep from fainting, all they need, in aggregate, is a measly $75 billion.

Compared to the numbers we’ve been seeing lately in bailouts and fearful predictionary bloviage, why, that’s a mere bag of shells! And it turns out they don’t even want the money! “No thank you, Uncle Tim,” they are saying. “We’re gonna be okay after all.” Can you imagine?  

Best of all, it turns out that even if you take the very worst-case scenario, potential losses in this formerly fetid corner of our financial sector would reach only $599 billion. Not a T? Only a B? Ha! We sneeze at such numbers. 

Speaking of sneezing, it also turns out that we’re all probably not going to die of swine flu, at least this week. 

The fact is, there’s just so much darned good news around that I think we should all open our hermetically sealed windows right now, lean out over whatever avenue we work on, and no, not jump, just breathe in that nice spring air, which appears to be not quite as badly loaded with toxic hydrocarbons as we had feared. 

Who knows? We may have a panic gap here all of a sudden. What should we freak out about next, do you think? Should we look back once again to ascertain which was the worst in our lifetime, so that we can use that knowledge of the past, as economists do, to prognosticate the future? 

To examine this issue scientifically, I visited a cool new website that helps those trying to determine hierarchies of just about anything, scientifically, you know. My assessment of the worst panic of our collective time can be found here.  See if you agree.

Okay, I hear you. You’re sick of the bad vibes. You want to get your collective head out of the community toilet. Stuff you’re tired of hearing about: bailouts, stinky hedge fund shenanigans, executive compensation, retention bonuses for guys who weren’t retained, criminal excesses by shady Wall Street buttheads, economic prognostications offered by those who didn’t prognosticate anything when it needed to be prognosticated.

You’re ready to move on. The innate optimism of the American spirit is beginning to bubble bigtime within your breast. Enough of this gloom and doom! It’s time to have a burger, down a couple of brewskies, hit the new ground running.

You’re not stupid, of course. You see the unemployment rate. You see the sales figures for the first quarter. You know that if you look, there is dismal swamp as far as the eye can see. But maybe not. Not for those who see just beyond that grim horizon. Over that rim, there is dawn, the kind of light that only those who look can perceive.

Proof of this fact comes in a new poll from CBS News and the New York Times. The Times reports that:

“… the number of people who said they thought the country was headed in the right direction jumped from 15 percent in mid-January, just before Mr. Obama took office, to 39 percent today, while the number who said it was headed in the wrong direction dropped to 53 percent from 79 percent. That is the highest percentage of Americans who said the country was headed in the right direction since 42 percent said so in February 2005…”

This tiny new embryo of optimism is fragile. A vast majority of people are still worried about their jobs and are cutting expenses back as much as possible. That’s just common sense.

But you know how it is. One of our national characteristics is a certain kind of creative Attention Deficit Disorder. We can’t stay any one way for very long. And we’ve been in the dumps for quite some time now.

Disregarding stupidity and evil for a moment, a huge element of what got us here is pure psychology and decay in attitude. Repair that, ladies and gentleman, and the rest will surely follow. And you know. Even if it doesn’t, getting there just might be a whole lot more fun.

1970: Chevy Corvair owned by my friend Stillman finally gives out with about 250,000 miles on it. With tremendous respect, we take it to the parking lot of Shea Stadium, take off the wheels and put it up on blocks, saying farewell to what was, in truth, the Galapagos tortoise of automobiles.  It did very little, but what it did it did incomparably.

1978: Pontiac V8. Bench seats. Very comfortable. Solid body, sounded like a tank when you closed the doors. More room than a suite at the Holiday Inn. Went from 0 to 60 in about seven seconds in spite of the fact that it weighed a ton. Got about 12 miles per gallon, 16 on the highway. Never gave me a moment’s trouble. Sold it for exactly what I paid for it brand new: $2400. No car like it has ever been made anywhere but in Detroit.

1982: I find myself in Los Angeles for a few days and decide to rent a Cadillac Eldorado. Big mother of a car. Drives like an big old boat; you can feel the body floating along on the chassis like a fat man in a swimming pool.  After a decade of Toyotas, it feels like I’ve come home from a pup tent to an enormous, comfortable house that anticipates my every need. When I am forced to give the car back, I almost weep.  

2000: I am looking for a car that expresses my inner child. After a few test drives in assorted BMWs, Lexi and such, I am passed on the highway by a T-top Camaro doing about 110. I check it out. 345 horses. Goes from 0 to 60 in only about a half a second less than a Porsche. The interior is a bit cheesy, true, but hugely capacious compared to the itsy-bitsy Mustang, which makes me feel claustrophobic, and there’s Schwarzeneggerian muscle under the hood. Comes in at about $30,000, about fifty grand less than its closest competitor in terms of power and comfort. In the end, I find the T-top a little wearing and wish I’d gotten a convertible. But what a car! I miss it even now.

Everybody’s mad at General Motors (GM).  And of course it’s obvious they’ve messed things up entirely. Stupid GM! So many mistakes. Perhaps a quick Chapter 11 is the only way to go here, I don’t know. I do know one thing, however. GM makes good cars. Have you seen the new 2010 Camaro?

I could lose 1000 banks as long as mine doesn’t fail.  Every hedge fund in the world could go under as far as I’m concerned. But we’d better be pretty careful about our good old American car business. I mean, if they go, can the cheeseburger be far behind?

Let me ask you a question: If you were a passenger on the Titanic, and somehow managed to wangle your way ahead of the women and children onto a life boat, would you demand to take your luggage?

I don’t think that’s a far-fetched comparison. Here we have a massive company that hit a huge iceberg – this one of its own devising – and just as it’s about to sink under the water it receives a timely and enormous rescue… and the guys who ran it into trouble in the first place are now leaving the boat with their silverware, furs and jewelry intact.

Of course, these are insurance guys. I don’t know what we all expect of them. In my experience, insurance guys are trained to justify just about anything.  Last month my health insurance company told me that a 5 a.m., six-hour visit I made last summer to the Emergency Room of my local hospital was not covered because it was not an emergency. It’s not that hard for people trained in that kind of reasoning to tell themselves that they’re entitled to their legally-promised bonuses.

The thing that’s interesting in this case is how many AIG executives seem to have mandatory boni in their contracts. In my experience, perhaps the top five guys in any corporation usually have that kind of protection. Here we seem to have an entire executive class that has the clause in their deals. I guess wish I had their attorney or worked in an industry that while it is so rigorous with others is so generous with itself.

There are, I suppose, only two solutions to this problem going forward. The first is for Congress to immediately pass a law that any firm that receives bailout money will be under certain constraints:

• No bonuses not approved by the taxpayers;
• No boondoggles to which the taxpayers are not invited;
• All executive expense accounts to be reviewed by Warren Buffett.

The other solution is more difficult: Trust in the people who run our financial system must be restored… one step at a time.

Wall Street thinks its problems are related to objective measures such as debt, equity, long and short selling, broken models, secular issues afflicting certain key industries. That’s nonsense. The reason why everybody is off of the investment train is a lot more simple. People hate Wall Street and the business people who work in or around it. 

It’s not hard to see why. It’s pretty clear that as things stand the interests of Wall Street are not those of working corporations and the people who are employed there. Americans are enraged and disgusted because they were sold a bill of goods and now they see the light. At the end of the great, decades-long confidence game the Street has run, we are all out of that commodity. No confidence, no investment.

How to restore that trust? I can think of one thing that could be done immediately. It’s not easy. It’s totally counter-intuitive. It will never happen. But it would be an excellent gesture. 

The AIG guys should renounce their bonuses. Their management and the government have no legal standing to do so. They’re going to have to do it for themselves. For all of us.

I say this in full knowledge of how improbable and difficult this would be. I know a whole lot of people, myself included, who depend on their bonus to live. It’s not a frill. It’s part of our compensation that we wait for, plan for, put our kids to school with. We don’t have yachts. We don’t have polo ponies. We have mortgages and child support and elderly cocker spaniels who have kidney trouble. That’s what our bonuses pay for.

But most of us don’t work for companies that have screwed up the entire economic system of the world. Most of us don’t work for corporations that require the People to step in and save their butts.  

The effect of such a renunciation would be immediate and dramatic. “Gee,” people around the world would say. “Maybe American business people aren’t total ethical morons after all.”

It’s a first step. Somebody has to take it. Why not the proud, courageous insurance men and women of AIG, standard-bearers on our collective  march toward a new tomorrow?

This week we passed by a certain milestone for a modest little community like ours. We posted our 10,000th comment. It came from Laurel, of Santa Barbara, California, whose observation on that day was typical of the kind of thing that has made this blogspace such an addictive experience for me. Here is our 10,000th comment, rich with personal anecdote and interesting observation from someplace that is Not Here:

I live in a tourist town, santa barbara, ca. I have been watching the stores close for a few years now and the staff in the remaining ones becoming more harried. I see the workers taking on so much more and thankful to boot, that they still have a job. They are tired though. I also could swear I see new workers in the grocery store and banks, and they appear to be more qualified. Maybe I am imagining this, that employers are merging, hiring and keeping only the best. I don’t know what to think of this but everyone is nicer to each other.

Small business owners have usually sunk all that they have in their business and watching them lose everything, their hopes and dreams, everything, is reason enough to spend whatever it takes. So, if people are saving just in case, think again and spend a little, tip more, and drop the “were doomed” attitude and see what Bing sees; we can, we will, and we are going to make it.

on a personal note, i lost my job in epidemiology, but found out i could make the same teaching high school science and demand is high for females teaching math, statistics and physics. i recently had a legal matter, so i had to refinance for cash. The refinancing rate actually saved me more money then I lost. (I thought of Bing’s article when i calculated the new mortgage rate and realized my luck.)

Thanks Bing, you made my life a little better by pointing out to look for the cracks of light!

Thank you, Laurel. And thanks to all of you, first time commenters, long-time bloviators, story-tellers, complainers, philosophers, cranks and wisenheimers, for making this space what it is, whatever it is. You’ve given me your thoughts on airline travel, recession, depression, incessant solicitations from Chase, the triumphs of Apple and, sometimes, Microsoft, Bernanke, Paulson, Madoff and other great symbols of high finance up to and including Mike the Headless Chicken and Alan Greenspan.

Right now it’s pretty unclear what the future holds. I hope, frankly, that it starts surprising us in a completely different way pretty soon. But either way, if it does or if it doesn’t, I’ll keep showing up if you do. And who knows. I may have a few surprises coming soon myself.

And Laurel? Send me an email to bingblog@gmail.com with your info. I’ll send you something nice.

If you take my money, you have to abide by my rules. Isn’t that what your parents always used to say when you were an unruly teenager? You can’t have that girl or boy in your room with the door closed. You can’t smoke in the house. You can’t have any contraband in your desk, even if you’re just holding it for a friend. And you can’t pay out billions of dollars in bonuses to your pals.

Oops, that last part just snuck in there. But the comparison is apt. These bad boys have taken a bunch of dough from the family kitty. This morning it looks like another $30 billion is going to prop up AIG, the guys who are supposed to be so thoughtful and austere that they are qualified to prop up the rest of us. And still the stories of business-as-usual in the largesse arena keep emerging. Recently Maureen Dowd of the New York Times, citing that enterprising source, TMZ, went off on one bank who had recently received a billion-dollar bundle from the Feds, only to turn around and hold its long-scheduled boondoggle in Los Angeles, featuring salmon, steak, and performances by Cheryl Crow and Chicago.

Does anybody really know what time it is? Does anybody really care?

I have a simple idea to make sure they do. I suggest that part of the national plan for recovery should be the creation of a National Handout Controller. In corporate terms, this would be the guy who goes over the expense accounts of every person who works for firms that have received bailout money. I know there are probably offices that purport to do this right now. But the establishment of such a dedicated position would speak to the serious nature of the function.

You don’t have to be told how it works, not if you have an expense account and work for a company that has its head on straight. You go to dinner at a nice restaurant with a client and have a $300 bottle of wine. You get a call. What’s up with the wine? Wasn’t there a $100 bottle that would have impressed your companion just as much? You order Castle Wolfenstein for your cell phone, so you can kill Nazis while you wait for the next plane. You get a call. Sure, it’s only $2.99 a month, but it’s clearly personal. We don’t kill Nazis here. We make plastic hangers. And you take a $50,000,000 plane to Washington to ask for more money, every hour in the air costing thousands and thousands of dollars? Guess what. Next time, fly commercial. And you can pick up the tab for your lack of taste and judgment, too. That will be $50,000, please. The corporation will take a check.

We can sure use it.

The little post begins a series I intend to pursue for a while, on and off, or whenever the spirit moves me, on economic panics throughout history. The subject seems appropriate an interesting at that point in time. I’m not quite sure why.

The nation had indulged in a huge real estate boom involving the western territories of the new United States. When that bubble burst, a number of state banks failed, leading to a collapse in the credit market. People had gotten used to borrowing to meet their personal and business needs, and it proved to be a hard habit to shake. Foreclosures proliferated, followed by a recession, and then a six-year depression.

The president at the time was James Monroe. His constituency had no experience in dealing with the situation, since this was the first in the boom/bust cycles that have since been integral to the character of American capitalism. In 1819, he addressed the nation, stating that, 

” The great reduction of the currency which the banks have been constrained to make in order to continue specie payments, and the vitiated character of it where such reductions have not been attempted, instead of placing within the reach of these establishments the pecuniary aid necessary to avail themselves of the advantages resulting from the reduction in the prices of the raw materials and of labor, have compelled the banks to withdraw from them a portion of the capital heretofore advanced to them. That aid which has been refused by the banks has not been obtained from other sources, owing to the loss of individual confidence from the frequent failures which have recently occurred in some of our principal commercial cities.”

In other words, the banks called in their loans and stopped giving credit. In response, Monroe cut taxes and otherwise floundered around until the end of the cycle.

Let’s see what elements may be found in this iteration of the story:

• Wild speculation in real estate
• Collapse of real estate market
• Excessive borrowing and lending
• Banks fail
• Bigger banks survive but are almost mortally wounded and stop giving credit
• Prices fall because people have no money
• Depression sets in
• New boom is required to break cycle.

I’d like to thank The History Box, an excellent website, for being such a good source on this. I’ll be back whenever I like to look at other examples of mass stupidity and hysteria throughout history, both here and elsewhere.

Two things are remarkable, in the end. First, how all such catastrophes essentially all look the same when you strip away the funny clothes, hats and languages, and second, why, if that is so, no one has demonstrated the ability to predict or avoid them.

Coming soon: Panic in Rome!