TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Henry Blodget:

Thanks to our stupidity bailouts, we now own major stakes in these firms–at mind-boggling expense. So it’s not clear why we want to destroy them. But that’s what we seem determined to do.

Believe it or not, hidden inside these companies are thousands of decent, competent people whose households bring in more than $250,000 a year. Many of these folks had NOTHING to do with the gambling addiction that bankrupted their firms. Many of them still have a choice where to work. And now that they’ve learned that their family’s pay will be capped at $250,000 indefinitely, many of them will quickly decide that now is a good time to pursue their careers elsewhere. (That is, unless their firm takes the easy and obvious step of just paying them a fatter salary, which just renders the whole thing a farce.)

…

The real lesson here, unfortunately, is that it’s a disaster for the government to run private companies.  We used to understand that.  But ever since we started telling ourselves that we had to save bankrupt institutions by taking them over and pretending not to ‘nationalize’ them, we have apparently forgotten.

David Moffett, the man hired to run Freddie Mac after it was placed in conservatorship in 2008, already quit because of the politicization of his job. But no one cared.

Let me be clear: this is not about “getting back” at the people who supposedly caused the financial crisis.1 Nationalizing A.I.G. and providing aid to other firms is, at its best, a means of saving firms which were thought to be integral to the financial system. This is about saving these firms to save the system.

I did not support “saving” A.I.G. and other firms for precisely this reason: when government becomes involved in the economy, it inevitably politicizes it and fucks it up. I cannot get more blunt than that. This is what is happening now. President Obama and Congress (both Democrats and Republicans) were embarrassed by the bonuses paid by A.I.G., and so they are creating a magnificently-stupid tax to save themselves from people’s anger. They are not doing this for the country. They are doing it to save their political careers.

This is what happens when governments create messes: they try to shift blame to others. They create scapegoats. This isn’t a joke, this isn’t a game, and this isn’t justice. These are the first steps of the destruction of our economy.

(Via Marginal Revolution.)

1. And let me be even more clear: Although A.I.G. and other firms deserve blame for the crisis, if you want to blame someone, the federal government is your prime candidate. [↩]