Brother, can you spare a dime?

October 27th, 2008 at 06:36pm Annette LaCross

Published Oct. 19:

Sometimes, when you’ve been rich and in charge for too long, you tend to forget the way the rest of the world thinks.

I have known a few people who, in their own little fiefdoms, have become forces of their own making. Just ask them.

They don’t suffer criticism or having their ideas challenged. Hey, they’re rich and in charge.

If anyone raises concerns about the way they’re running things, they tend to brush it off, safe in the knowledge that they are bigger, faster, stronger, richer and more in charge than the other guy.

It happens to the U.S. a lot. When it comes to being rich and in charge, this country wrote the book.

I remember about five years ago, when our leaders made their case against a small, nondescript Middle Eastern country, then immediately drew swords and charged, content in the knowledge that our friends would be charging right behind us. “Once more unto the breach, dear friends!” we cried in stentorian majesty.

We only wheeled when we failed to hear their rousing battle cries behind us.

And instead of beholding a glorious army committed to the cause, we saw a bunch of scowling Europeans, arms folded, feet planted.

We charged in anyway. It takes a while to relearn humility, even if we had been inclined to do so.

Fast forward to 2008, where that singular mindset is manifesting itself again. This time, however, the rich-and-in-charge guys live on Wall Street. And the humility thrust upon them is bitter.

They are lining up at the door of the Treasury Department like the unemployed in a Depression-era soup line.

But despite the billions of dollars the government has promised — don’t for one minute think we’re getting off the hook for the paltry $700 billion bailout passed by Congress this month — the payout is going to be slow in coming.

Here’s the greatest irony of the black comedy playing out these days: Any bank that cashes a check from the feds must put the money back into the market immediately, either in lines of credit or through acquisitions. The idea, of course, is to unclog the flow of credit in the markets and get money moving again.

But no bank wants to do that because the fraternity and backslapping of Wall Street on a good day has given way to suspicion and doubt. With good reason.

Bank A suspects that poisoned loans are eating a hole through its books, but it isn’t opening them to find out — it doesn’t know what those securities are worth, anyway, so it doesn’t make much sense to estimate the danger. Right?

I suppose it makes a twisted kind of sense — more so than actually buying the securities in the first place.

So Bank A officials wait, holding tightly to every dollar. They may need it. If it turns out they don’t, then they’ll start lending again. But for the time being, they figure, safe is better than sorry.

And because they have an idea what’s in their vaults, they figure Investment Bank B or Company C is having the same problem, maybe worse.

But no one knows which companies are the most heavily leveraged. And they have no intention of saddling themselves with more bad debt, which they might be doing if they give some of the money to Bank B. So they wait.

And despite the orders from Congress, they’re only going to lend sparingly.

Kind of makes you wonder who’s in charge anymore, doesn’t it? The more I think about it, no one is — except maybe the poisonous debt holding everyone hostage.

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