I may not be right on all this, but the thoughts are more coherent than the facts

Tomorrow will be the last vote on the current bailout package. Either the House will pass it and we will enter a new social conception of the public good, or the bill will be entirely discarded, and they may try to scrap together some kind of new stimulus package, which will include a suspension of the mark-to-market accounting rule and at least another $100 billion in spending. It is possible the latter will never have a shot, because House leaders are keeping tight tabs on their votes this time around, and will not see the embarrassment of another failure.

This whole issue is incredibly complicated. For those who love finding a culprit to blame (stand up, everyone) - well, it is easy to pick from the plethora of available candidates. The mess involves a series of problems acting on each other - no one is to blame, but many are at fault.

The federal housing policies, seeking to increase home ownership, especially among minorities, was a noble thought, and as far as I know did not find significant partisan opposition. It was very conservative, in linking social stability to land ownership, personal responsibility, and people committed to the place in which they live. The subprime lending necessitated by this, it seems, could have been justified since people might become more responsible and neighborhoods more stable, resulting in better credit scores and increasing income, respectively. "People are basically good if you just give them a chance" and "It takes money to make money." A nonessentializing, politically correct way of saying the poor are stuck in a system, which can and must be broken. You get the idea.

Anyway, we all know how this lead to the bloating of Fannie and Freddie as well as some of the subprime loans that helped bring down this economic ship. Further, then, Fannie and Freddie grew beyond their mandates and sold their debt in securities to rich people around the world (which has and will lead to speculation that the government ensurement of the GSEs' debt by takeover was actually pressured by these foreign investors). The companies grew to such a size that their tanking would become the economy's. Here is why we may blame their CEOs. If you haven't been counting, we've already also blamed the Carter and Clinton administrations for housing policy.

There were voices prophesying about the problems, but let's be honest - huge government undertakings won't be fundamentally changed unless there is a crisis or major abuse that can be masqueraded in front of the public for sufficient rage to ensue. Which is why crisis is always an opportunity - it creates a vague public demand that can be shaped into outrage and used by leaders to create the public support necessitating the change. Governmental leaders are too conservative to change the Leviathon because their minds become lost in it once they enter, and then formed by it. They cannot conceive another way, because the alternative will have holes as well, and it is always preferable to keep an imperfect situation than to replace it with an imperfect future. Like I said, the public outrage must arise or be facilitated through an occurring crisis. That demand can force the change, at least by the House of Representatives - the Senate being slightly more removed, of course.

Back to the blame. Turns out the fat cats are really good at making money, and always inventing new ways of doing so. Some folks at JP Morgan decided they needed to find a way to free up some of the capital sitting in their banks to invest elsewhere. The government had mandated they keep a certain amount of cash in case people defaulted on mortgages that the company owned. A fair regulation that has kept investment banks from their own greed - otherwise they would bring themselves to the point of bankruptcy in their mad rush for profit by leaving no cash on hand to pay when it was really demanded of them - when people stopped making mortgage payments and they could longer expect money that they had counted on coming in. So here was JP's trick: spread the risk by rolling a bunch of mortgages together and selling the liability away. Then, you don't really have the mortgage anymore, since the person who bought it from you in that package is insuring it by giving you the value now. You'd keep collecting on the interest, some of which you'd give to the buyer, but you'd have all this future-cash (that you should've had to wait for) on hand PLUS the government would not force you to keep cash in the bank because the mortgage was not really your asset anymore. This is a credit defualt swap, invented in a workable way in 1993, and then pushed into the mainstream around 1997. In 2006, the market for CDS's was $66 trillion, four times the value of the the stock market. We have blame here for JP Morgan's people, the financial industry for falling into this speculative, ballooning, risky mess - and the SEC and other regulators for failing to regulate CDS's.

The housing bubble might be blamed on the Federal Reserve for dropping interest rates below 1% after September 11. Adjusting for inflation, this meant a negative interest rate, and why not make a major purchase, then? Not only that, but lending institutions encouraged people, in this market of rising house prices, to increase their existing loans to the new value of their house. Got a $350,000 loan on a house now worth $400,000? Up your mortgage (this is called a home equity loan) and buy that new Hummer. Or send your kid to college. Either way, when the bubble popped and prices slipped back down, people were caught owing more money (on the principal) than their house was worth. They could not even sell the house and be out of debt. Foreclosure, bankruptcy maybe, you get the idea. We can blame the banks for being deceptive in pushing this, and people for not being financially responsible.

Also, the week dollar, rising fuel prices, rising food prices. It's a mess.

Why the blame? It seems like a human need. It is sad, but our minds operate by using paradigms to facilitate our thinking. What this means is that we can't think thoughts that don't make sense. Religion helps us do this, as do stories, worldviews, etc. I think blame does, too. Complicated cause and effect is difficult to process and probably causes as much tension as it fails to relieve. So there is a kind of catharsis to blaming a something discrete, a kind of relief.

Of course, it is also necessary to identify causes to correct them. Natural. Withholding judgment, however, is not. Typically they are only highly disciplined judges who can live through presuming innocence until guilt is proved. I think the need to make sense of the world causes us to rush to judgments even when they are not warranted, completely, because that makes the best sense of the facts for the time being, and relieves the distress of not knowing. This is why people always complain of Congress not "doing anything." Concrete action, like concrete blame, is soothing to the soul, and takes a psychological role as well as an emotional one. It helps us make sense of things.

The funny thing is that it is not that the person needs to be caught, or the wrong corrected - though this also plays a psychological function. The laying of blame is enough to complete the circle in their minds - to arrange the seemingly haphazard stars into a constellation.