Saturday, October 04, 2008

Now the Bailout Fun Begins

There's a wonderful line in one of the Nancy Drew mysteries. A group of her girlfriends are hanging out, waiting for Nancy, when she shows up in her convertible. One of them shouts, "Hurrah, girls, now the fun begins! Here comes Nancy Drew!"

A spooky echo of that line has been running through my head: "Hurrah girls (and boys) now the fun begins! Here comes Henry Paulson!"

I have to say this whole financial disaster appeals mightily to my deep-seated capacity for schadenfreude. This is very even-handed of me since it looks like I'm going to have to bend over, along with all of you, and firmly grasp my financial ankles.

The disaster is far from over, and here's why. The foxes got in the hen house, but now it seems that the only creatures that can administer the bailout are the foxes themselves.

The companies, like Legg-Mason, who have the manpower and the expertise to supervise the bailout are really located on both sides of this deal. On the one hand they have an interest in arranging the sale of worthless mortgage securities for the highest possible price; on the other hand it is to our best interest to pay as little as possible. Which interest is going to be most compelling? You betcha!

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