Bailout Roulette

Connoisseurs of irony may relish this round trip of millions of taxpayer dollars--from the Federal Reserve to AIG to UBS and back to the US Treasury.

Under pressure from Congress and the public, AIG yesterday released names of financial institutions that benefited from the Federal Reserve’s decision last fall to bail out the giant insurer. Among them was the Swiss Bank UBS, which got $5 billion.

Last month, UBS had to pay $780 million to settle federal charges of helping customers defraud the IRS with offshore accounts. As part of the deal, UBS agreed to cooperate with a summons by the Justice Department to turn over names of account holders under the threat that the bank's executives could be indicted if UBS failed to do so.

So here we have bailout money spinning from the US government to a too-big-to-fail financial giant that blew billions to a crooked Swiss bank that help rich Americans cheat on their taxes and now has to give some of it back in fines for doing so.

Amid all this wheeling and dealing among incompetents and thieves, there is a little extra touch that one of the UBS executives who could be hauled into court is John McCain's campaign economic adviser, former Sen. Phil Gramm, a vice chairman of UBS who recently told Wall Street Journal readers that it wasn't the deregulation he sponsored that started the mortgage meltdown.

The money just keeps going round and round and, as croupiers like to say, where it stops nobody knows.

Black Friday of Bushonomics

Things fell apart, the center was barely holding today in the financial markets as oil went past $145 a barrel and the stocks of Freddie Mac and Fannie Mae plunged by over 20 percent followed by late news of what could be the largest bank failure in history, sending most Americans home for a weekend of stiff drinks, pain killers and antacids.

If past experience holds, markets should open Monday sharply down for a while and then start to recover as bargain hunters and steel-nerved investors move to cash in on the panic, followed by a Tuesday aftershock and the beginning of a return to normal later in the week.

But past experience may not hold. What's gripping Americans now may be more than the credit crunch and housing crisis, more than inflation fueled by gas price spikes exacerbated by an endless Mideast war, more than the unchecked greed of speculators and hedge funds.

What may be going on is not what Phil Gramm densely called a "mental recession" but much more than that--a cumulative public breakdown of confidence, a social depression from seven years of Bushonomics trashing of the economy, the environment and the safety nets of all but the richest Americans.

With six months to go, we may be seeing the last spasms of damage to a government controlled by people dedicated to destroying every scrap of security it was designed to provide.

McCain's Hoof-in-Mouth Casualties

The attrition rate of potential VPs is running high, with Phil Gramm yesterday joining Carly Fiorina among the stricken as McCain had to repudiate his contention that America is "a nation of whiners" in a “mental recession.”

Earlier in the week, the candidate found himself flummoxed by Fiorina's frankness about health care. At a Washington political breakfast, the former Hewlitt-Packard chief said, "I've been hearing a lot from women. There are many health insurance plans that will cover Viagra but won't cover birth-control medication. Those women would like a choice."

A sensible enough statement but not the most winning argument for the Conservatives McCain is still wooing. "I certainly do not want to discuss that issue," the candidate huffed when a reporter asked him about it on the "Straight Talk Express."

When it comes to creating embarrassment, McCain doesn't need much help from a running mate. Asked about the increase in US exports of cigarettes to Iran the other day, he answered, "Maybe that's a way of killing them."

Somebody should check out the fumes from the campaign bus.