Perhaps you guys can help me understand something.

Word comes today from a most credible source that the failure of smaller banks may soon lead to more consolidation and mergers in the banking industry. One analyst told the New York Times that 200 to 300 small banks might fail in the near future, and be forced into mergers, presumably with larger entities.

This is a solution?

Didn’t we just see what happened to Citigroup (C) and Bank of America (BAC)? Aren’t both now being deconstructed due to unsuccessful, if not heedless, acquisitions? Haven’t empires from Rome to ITT fallen into rubble as a result of getting too big, too fast? And haven’t we seen ample evidence of that fact as recently as this morning, as the implied value of AOL ratchets down in the wake of a Google writedown (GOOG)?

This is not to say, as some have contended, that all mergers and acquisitions are bad. When two strong entities come together, it’s a beautiful thing. But ugly monsters made out of dead body parts yield the expected results, usually ending when a group of townspeople with pitchforks chase the poor creature into a barn that is then burned to the ground.

Certainly the merger of these bankettes, which are now suffering from being in the same room with the commercial real estate market, is preferable to their failure.

But is the future truly served if the muscle of capital does its usual thing, providing fees to all the lawyers, MBAs and other financial types as they once again set up great hulking behemoths destined to lurch over the cliff in the next high breeze?

In the huge Bank of America (BAC) fiasco/bailout/tailspin, there are a lot of people at whom it would be tempting to wave a wobbly finger. Ken Lewis is taking a lot of heat, and it’s not hard to see why. His decision to purchase Merrill Lynch back last fall is looking like the ultimate investment in a money pit. 

This morning it was revealed that during the last quarter of 2008, Merrill lost $15 billion. That’s a lot of money. I wonder what their security analysts would have to say about that. They’re still publishing their opinions about other companies, for some reason. Perhaps they would care to run some models and offer their views about their own?

Parenthetically, and apropos of very little, I do think it would be a good idea for executives in bad odor with the media, their shareholders, regulators and the public, to update their headshots when the first scent of smoke begins to waft through their hermetically sealed windows. The beamish one of Mr. Lewis, placed next to articles questioning his perspicacity, does him no favors.  Just a thought.

What does fascinate me, however, is the role of the consultants hired to investigate the wisdom of the deal from the shareholders’ perspective. As FORTUNE Senior Writer Colin Barr points out elsewhere on this site:

… CEO Ken Lewis’ decision to buy Merrill isn’t the only thing that looks questionable now. So does the advice he and the BofA board got on the hastily arranged Merrill deal from the bank’s advisers, Fox-Pitt Kelton and J.C. Flowers & Co.

The financial advisers offered opinions calling the deal fair to Bank of America shareholders… What’s more, the bank’s shareholders paid the advisers $20 million for the opinions – which the firms formulated after investigating Merrill Lynch’s condition over a single, hectic weekend.

$20 million bucks for… how many hours of work do you think that represented? Let’s be generous and say 1000, spread out over a lot of people. That means the firms were being paid $20,000 per hour for their work. That’s fine. Everybody has their price, and that was theirs. But don’t you think somebody should get a rebate? Do consultants ever give those? Perhaps not. Anway, why should they? They did what was required of them, after all, what is always required of such folks.

They told management what it wanted to hear.

When the Founders got together to establish this great Republic of ours, they had certain clear goals in mind. Here they are:

• form a more perfect Union,
• establish Justice,
• insure domestic Tranquility,
• provide for the common defense,
• promote the general Welfare,
• and secure the Blessings of Liberty to ourselves and our Posterity.

Throughout our history, this vision of what government should do has changed, grown and shrunk depending on the level of heart, spleen or brains any given generation of the ruling class has under their wigs, vests or pinstripes.

For instance, back in the 19th Century, “promoting the general welfare” might very well have meant keeping the poor locked up in houses especially designed to keep them off the streets, and to start children working at jobs that stunted their growth by the age of eight.

We don’t do that any more, pretty much. Since the 1930s, it’s been pretty much the common assumption among decent Americans that it’s better to provide a safety net for people, that no matter what philosophical universe you inhabit it’s not good for children to go to bed hungry or to have the poor parts of town burn down every ten years or so.

Same for old people. They tend to need more medical care than others, so Government provided a program to make sure that when they get sick they don’t have to wander around with a tin cup and cane pretending to be blind like they used to do.

Education, too. At some point a while back, it became clear that not everybody could afford to send their kids to private school, so somebody got the idea of creating schools that anybody could go to for free. We all pay for them, of course, some of us more willingly than others, in the form of taxes.

And forget about the whole “provide for the common defense” thing. The Government could probably provide every single one of us with a nice Z3 Roadster if we didn’t have to do that.

As society grows and changes, then, our idea of the proper role of Government — what it needs to do to protect the needy, the weak, the powerless, the downtrodden, the huddled masses and their friends — mutates and shifts along with it.

Today we can add another group to the list of those who require intercession by We the People: Big Banks that have mismanaged the deposits entrusted to them by their customers. Two hundred and fifty billion dollars to once-proud burghers like Citigroup (C), Goldman Sachs (GS), Bank of America (BAC) and JP Morgan Chase (JPM). It seems like a small price to pay to make sure that none of these banks go hungry, or are forced to spend a night on the streets begging for the price of a martini — which can go as high as $20 in many major cities.

Many of us complain about Government and how it’s gotten too big, or intrudes too much on the free markets that we love so much. Now many of those who have complained the loudest are breathing a sigh of relief that Uncle Sam has once again opened his heart and his pockets to them in their time of need.

They’re first right now in the big breadline.  Let’s hope they leave a few crumbs for the rest of those who need a bit of a hand now and then.

I woke up yesterday morning and found myself paralyzed. I lay in bed and couldn’t move. I didn’t even know what I was worried about, I was so worried. Eventually, I got myself up, shaved with trembling hands, and made my way to the office. I got to my desk and read the headlines. Then I really couldn’t move.

 A steely hand wrapped its skeletal fingers around my windpipe and would not let go. “Eek,” I said, since it was the only thing that would emerge from my ratcheted esophagus.

All day yesterday I sat here in a cold sweat. Now I figure, what the hey. I can’t be like this forever. Perhaps if I articulate what’s got me so freaky-deaky, it will pass. Or not. Either way, it’ll be better than this emotional and professional rictus.

Here’s my list:

1. Fannie Mae and Freddie Mac. I never really even knew how important Fannie and Freddie were, but their collapse, or even, like, if they got a cold, would possibly force the Federal Government to lose its credit rating. Think about that for a minute. No, on second thought, don’t.
2. The Bank of America: (BOA) Earnings were down. More losses are being reserved against. Deeply disquieting.
3. Other banks. We all saw what happened to Bear Stearns (BS) in two or three days. Once the whispering campaign got started, their goose was cooked. Now every day I hear from the newspapers and the online writers and the bloggers and the guys getting soup across the street and nobody has a single thing to say except, “What’s up with that billion/trillion/gazillion dollar bailout?!” How long before we all make it happen?
4. Saturated fat: Up until recently, I was pretty much saturated with fat. Now I’m less saturated, but I’m not completely unsaturated yet and I get a sense that if I don’t get there soon I may not have much longer to try. I got some ideas from Michael Pollan’s excellent book, In Defense of Food, which basically says we should “Eat food. Not too much. Mostly plants.” It’s sort of working, except I’m still working out whether vodka can be considered a food. What do you think?
5. Global warming: I don’t worry about it as much as I used to, because I have replaced 20% of my concern in this area with anxiety about Freddie and Fannie. I only have just so much capacity to freak out and then even I run out of resources.
6. Google (GOOG): I feel a little bit better now that their earnings were so impressive. But consider. If Google stops being the outer skin of the balloon, what else do we have to be inflated about? Things that have sort of gone by the wayside as a source of hysteria include: alternative energy sources, recombinant DNA therapy, cloning, robots, nanotech. We all need something to believe in, future-wise. What’s that gonna be?
7. Ben Bernanke: What’s he do for fun? What’s it like to be Ben? When you have a glass of wine at a party and Maria Bartiromo says, “How ya doin’?” do you have to think, “What will the impact be of my statement to Maria here, when all I’m really trying to do is get a smile out of her?”
8. China: Forget all the dubious stuff now under scrutiny from the nation, its army, arms dealers and toothpaste and heparin manufacturers. How about the reaction of the Chinese themselves to people and organizations that express opposition or even mild criticism of their various ventures? Boycotts! Censure! No more business for you! Sure, that’s their right, but a worldwide economic war between China and its allies and everybody else would be something to keep us all up at night.
9. The dollar: I can say no more.
10. Fannie Mae and Freddie Mac again. The article raises the specter of a trillion dollar buyout, which might drive the credit rating of our nation itself down a notch or even two. The pundits in the posting do say that such a thing is unlikely. But if it’s so unlikely, why mention it? Why scare everybody? When one knows the power of even the slightest negative wind to move markets and crash enormous battleships of enterprise? Why bring it up? Why put a headline on it? Why publish it at the top of the page?

You know what? When bad stuff happens, let me know. Until then, I’m going to try to remember some things: It’s spring. We’re alive. And bonds are still doing okay. I think.