Heck of a Job, Bernanke

The new star of the Fiscal Disaster of the Week show is Lehman Brothers. The 158-year-old Wall Street house is teetering on the edge of oblivion.

Lehman has been going down for weeks, despite having the privilege of borrowing money from the Federal Reserve using its junky mortgage bonds as collateral. The next question is whether Henry Paulson, the rough-mannered Secretary of the Treasury, and Ben Bernanke, the milder- mannered Fed Chairman, get into their ambulance and scream off to the rescue once again.

Less than a week has gone by since the disastrous duo hooked up to nationalize Fannie Mae and Freddie Mac, the two gigantic home mortgage companies that supply the money for half or more of the house purchases in America. Be not comforted. Taking them over is one thing; knowing what do about them is another.

The two companies have a combined debt of $5.2 trillion--that's $1.7 trillion in unsecured debt and $3.5 trillion in mortgage guarantees.

Is this sum, so large that only advanced mathematicians can picture it, going to be folded into the our national debt, or what? As of now there is no answer to that question. We do not know how the debt is to be handled, we do not know how the companies are to be run or what their ownership structures may be. We know nothing, except that they belong to the government for the time being in some undefined way.

Oh, yes, we do know one other thing. The American people are going to have to pay for this. It may be by extra taxation or it may be by more inflation or, if God decides he likes the United States after all, by profits generated by Fannie and Freddie, should they ever regain their health.

Although it is the custom of the Bush Administration to keep the public from knowing the public's business, this time there is no secret. We do not know what is going to become of Fannie and Freddie because Paulson and his collaborators do not know either. All that is known for certain is that Paulson has promised the government will put $200 billion in for starters and then see what happens.

Since Paulson had been talking about nationalizing Fannie and Freddie for weeks and weeks, you would think that he and his subordinates would have worked out how the takeover would be accomplished. It seems, however, they were hypnotized by what they feared would happen if the two entities had gone belly up and declared bankruptcy. Panic ruled.

The Bush Administration has dealt with the failing economy with the same effectiveness with which it took care of the Katrina calamity. Bernanke has become the Heck-of-a-job-Brownie of monetary policy, even as Paulson has turned out to be the Donald Rumsfeld of the economy.

The Administration has stumbled from one multibillion-dollar expedient to the next with no plan or even a coherent understanding of what is happening. Every week there is a new crisis, followed by a desperate government intervention, followed by assurances that the worst is over, the bottom has been reached, things are turning around--all of which is followed by the next crisis. As with Iraq, the months pass, the happy-time palaver gets louder and the damage gets worse as the Administration falls farther behind events.

In this ever lengthening train of bankruptcies, nationalizations and emergency subsidies, only one consistent thread can be traced. It is Paulson's making sure his pals are protected. The Bush cohorts are up nights and working on the weekends to save investment banks, hedge funds and stockbrokers. They have opened the doors to the big safe in the Treasury building for them, but nothing for white- and blue-collar people whose distress is more immediate and personal.

There is nothing for them as they lose their jobs, their homes and their hopes for the future. This is the ultimate in trickle-down, sleight-of-hand economics. It goes like this: first we save the stock brokers, the bond traders and the derivative gamblers, and then, if there is anything left and they feel like it, they will save the ordinary people.

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