Feb. 6 Flashback: House of cards

Here’s what it sounded like to visit this blog when it first began.

From February 6, 2006, “Bad bankers lose money, Part II“:

The bankruptcy legislation signed into law by President Bush last year should have sent a clear signal to shareholders of the banks that lobbied for that bill.

Why would these banks want or need such a law? Only one reason: They know they’ve built a house of cards and they hope against hope that the government will save their butts by somehow keeping the whole thing from toppling.

… Just look at the balance sheets, baby, look at all that glorious debt!

Then somewhere in the back of your mind, or down on the fifth floor, in accounting, some green-visored Jiminy Cricket starts clearing his throat and killing your buzz. All that debt, he points out, is only an asset if we can be sure it will be repaid. And an honest accounting seems to indicate that much of it can’t and won’t ever be repaid.

You look again at those balance sheets and at all that reckless debt. And you realize you’re screwed.

Your only hope — and it’s a long shot — is to get a law passed that says that people who don’t have the money to repay these loans are legally compelled to repay them anyway.

Some part of you knows that such a law won’t work, that all the kings horses and all the kings men can’t collect money that just isn’t there, that Congress cannot magically legislate that people unable to pay you back have to pay you back anyway.

A responsible banker wouldn’t want, or need, or be bothered with, such a ridiculous law. An irresponsible banker will fight for it with the desperation of a drowning man.

We saw this law get passed. We saw which banks were fighting for it. What kind of fool would want to invest in such a bank?

Read the whole post here.

I wrote a lot about that vile bankruptcy bill on this blog. In retrospect, those posts could be viewed as remarkably prescient — predicting the economic collapse of the Great Recession years ahead of time. But on the other hand, in writing about that bankruptcy bill I repeatedly insisted that, because of it, there couldn’t possibly ever be any situation in which I could ever imagine myself voting for Joe Biden. So.