The trillion-dollar, taxpayer-funded handout to criminal and irresponsible corporations in the United States surely puts an end to the nonsense that there is any such thing as a "free" market.
Right-wing ideologues have bullied us for three decades that the only way for growth and prosperity is to have unregulated free markets, guided by some mystical force called the "invisible hand". After the meltdown in the US this week there has been a deafening silence from these sages.
Quite frankly, the free-market theoreticians have been shown to be a bunch of charlatans dressing up old-fashioned greed as a social good.
Earlier in the week we found out that the huge corporates with household names, such as Merrill Lynch and the Lehman Brothers, were all, in fact, under active investigation for fraud before they collapsed. Despite that, the people in charge of these institutions received platinum-plated handshakes with departure payments that would make you cry.
For example, before the Lehman Brothers went into bankruptcy its managers put $2.5 billion into a bonus account for themselves.
The free marketeers' ideology goes something like this: there should be no regulation and the market is always self-correcting. If managers of enterprises make mistakes, their businesses would fold and new ones would take their place.
The problem is that without any rules the law of the jungle applies. The bullies and thugs who lie and cheat are the ones who survive. After they've gobbled up many of their competitors, they become so big and monopolistic that they can do whatever they like without consequence.
When they are found out and fall apart, their size means they will drag down the innocent with the guilty. These cretins cream off as much as they can, then threaten a government that the consequences of them being left to die will result in widespread damage to the little people.
The politicians are conned into believing that it is good and responsible governance to use the people's taxes to cover the huge debts amassed by these people.
These corporate captains argue that it was errors by individual managers and bad luck that have led them to their predicament. It's nothing of the sort. It's simply fraud and these people should be jailed.
Here's how they got themselves into this mess. After the internet bubble burst, the hucksters in these institutions decided that property was the new scam where exorbitant profits could be made.
The new capitalist reward system structures their incomes around the concept of the higher the return for shareholders, the better their bonuses. Recklessness and irresponsibility in the short term made these people millions. They normally exit before they get exposed.
The problem is, it's not just in the US but in most of the Anglo-Saxon world that they're doing it. These financial barons were lending billions and billions of dollars to suspect property deals. When they ran into trouble, they would package them up with other suspect deals and sell them to another bank as an asset.
In the end, all of them were doing it to each other and receiving huge bonuses for making apparent record profits. It seems these packages were fake and weren't worth anything. What brought them down was that they were all doing it to each other.
It seems that, on average, all this paper wealth on Wall St was backed up by only 1/30th of tangible assets. For months, insiders knew what was going on, but everyone was pretending it wasn't. Sounds a bit like how some of our financial institutions were being run in New Zealand, eh?
The Europeans have been screaming that the edifice was collapsing, but the ideologues in Washington refused to listen because their faith in free market ideology was stronger then their common sense.
Before we, in New Zealand, get all sanctimonious, saying it wouldn't happen here, let me remind you that it already has.
Remember, we spent a billion dollars of our taxes bailing out the Bank of New Zealand in the early 1990s. The bank made the same mistakes that the American institutions have made.
You'll remember that our free-market ideologue, Ruth Richardson, was in charge of our economy at the time, but that didn't stop her from taking a billion dollars of our funds to bail them out.
Our politicians and business leaders need to come clean and admit that free market capitalism doesn't work and never has.
When Michael Cullen warned us recently that Merrill Lynch's former employee, John Key, may not have the best credentials to run the country's finances, he was widely derided. But his point was well made.
The skills you learn making millions of dollars by trading between banks aren't quite the skills you need in running a country. Just go and ask the hapless President Bush and his ideological mates.