Pumping Water Into a Dead Fish

Our top priority? It's not terrorism, wars or the banking crisis.  It's stopping global warming. But this damn economic meltdown is going to delay us.  We can't wait to fix the economy first or even to expect the emergent green economy to take us right back to the glory days of the bubble.  It's hangover time for the economy.  We should focus on helping the little guys and let the big guys fall.  There is no saving them and we have other work to do.

"Two things you learn in the banking business, the first is, concentration is bad.  We now have 64 percent of deposits in eight institutions.  The second rule is, your first loss is your best loss. Get it over with.  Don't pump water in a dead fish."  This from C. R. Cloutier, president of MidSouth Bank of Lafayette, LA., who also had a front seat in the savings and loan crisis. Today's Times. 

And this from our separated at birth crisis:

Six years into Japan's economic collapse in the 1990s, instigated by a popped real estate bubble followed by a credit crisis, Heizo Takenaka was brought in to run the government's financial reforms.  He was the first to fully expose the bad loans.  The crisis could not hit bottom until he did so.  He pushed back on bank presidents who thought they could take money and still run their old game.  The previous reforms weren't working, the same ones we are trying here, low interest rates, fiscal stimulus, cash infusions and efforts to use government guarantees to lure private capital to buy bad assets, reminiscent of the Geitner/Summers plan.

Takenaka's reforms, the only ones that actually made a difference, finally got Japan on a path to recovery: "Don't cover up.  Don't distort principles.  Follow the rules."  

Instead, the Sirens (read AIG) keep enchanting our ship of state towards the rocky shoreline and we'll keep heading that way until Summers/Geitner stop listening to the sweet pleadings of CEOs from bankrupt financial institutions.