Friedman: We need an ethical bailout

December 17, 2008

I generally don’t have much use for Thomas Friedman’s over-generalizing pronouncements in the NYT and elsewhere, but his piece today on the ethical collapse that accompanied – or enabled – the financial collapse is worth a read.

The Madoff affair is the cherry on top of a national breakdown in financial propriety, regulations and common sense. Which is why we don’t just need a financial bailout; we need an ethical bailout. We need to re-establish the core balance between our markets, ethics and regulations. I don’t want to kill the animal spirits that necessarily drive capitalism — but I don’t want to be eaten by them either.

Friedman is referring to Bernard Madoff, former chairman of NASDAQ, who admitted last week that his $50 billion hedge fund really just a Ponzi scheme. Friedman doesn’t have to stretch far to label our entire financial morass, from sub-prime mortgages, to collateralized debt obligations and credit default swaps, to mind-blowing executive bonuses for faked performance – the whole lot – as one gigantic Ponzi scheme.
In the face of daily revelations of the magnitude of the unfolding fraud, it’s easy to give in to the seduction of Neo-Hooverism, the idea that we should just let the market run its course and let the financial house of cards implode. I certainly wouldn’t mind seeing an few of the high flyers who engineered this mess spending Christmas in a homeless shelter. The problem with that sweet justice is that our economic ties are so interwoven that many of we bystanders might end up joining those fallen Titans in the soup line.

I subscribe to the theory that we had to do something to try stimulate the economy and head off a 2nd Great Depression. Whether we’re making the right moves remains to be seen.

I can’t help thinking that years from now we’ll be calling the financial crisis of 2008 “The Greatest Swindle of All Time.”

So maybe the most important question I should be asking myself at this moment is: When am I going to get mad enough to get off my ass and track down the key players in this farce and hold them accountable?

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