After the bailout sailed through the Senate on Friday, it took a bit of wind out of my sails. Thanks for noticing my absence. But after yesterday’s big drop in the Dow and the announcement today that the Fed is going to buy commercial paper, directly funding businesses, I found my voice again (Psst! You really should read that last link!).

As I write this (2:00 PM CST), the Dow is down 332.29, sitting at 9623.21. That is the lowest number in at least 4 years and it follows Bernanke’s announcement that the Fed will likely cut rates, an announcement that typically makes the market surge. Before I drift off on a tangent (ooh, it is such an important tangent!), I just want to hammer home the point that last Friday’s bailout was sold to the American public on the premise that it was “for Main St., not Wall St.” and that it would also increase liquidity in the credit markets. Why, then, is it necessary for the Fed to start buying short term debt from companies? As the New York Times puts it, credit markets have “all but dried up.” And what, exactly, is the Fed going to be buying from companies? Unsecured commercial paper. What is that? You might ask the Market Oracle and discover that it is the very same construct that got us into this mess in the first place! (Psst! You really should read that link, too!)

Is there any possible way this can be construed as a free market move? I think not. This is kleptocratic socialism of the highest (read worst) order. So, to sum up your situation as a American tax payer, you have bailed out the following organizations in the last six months (incomplete list):

  1. Bear Stearns
  2. IndyMac
  3. Fannie Mae
  4. Freddie Mac
  5. AIG
  6. $700 billion “Paulson” Plan (note: also available to foreign banks)
  7. Federal Reserve CPFF (the Commercial Paper Funding Facility)

I defy anyone to explain this as anything but kleptocratic socialism. See my next post for the tangent I promised earlier in this post.