Why a so-called "fiscal responsibility summit," but no Brady Commission?
Within ten days of 1987 stock market crash, President Reagan established what was popularly called the Brady Commission to investigate the causes of the meltdown and recommend remedies. A little more than two months after it was created, the Commission submitted its report.
The 1987 crash was trivial in complexity compared to our current mess. Stocks trade on exchanges, so transaction sized, prices, and execution time are a matter of public record. Even though foreign markets swooned in sympathy with the US downdraft, the crisis was a domestic event.
Contrast the 1987 panic with our credit meltdown. The 1987 crash was a single country event, in transparent markets (equities and equity futures). This crisis revolves around multiple over the counter markets (asset backed securities, including securitized auto, student, residential and commercial real estate loans, CDOs, CLOs, CDS) that were originated and sold around the world. The authorities have an weak to non-existent picture of trading volumes and prices. In addition. they also do not have a good feel for the terms of the instruments themselves (these were privately negotiated agreements; unlike registered securities, the offering documents are not a matter of public record). And the lack of an understanding of the range and mix of types of deals impedes developing sound policy. For instance: it is widely known that many residential mortgage-backed securities contain restrictions on modifying mortgages. Admittedly, some do not prohibit them, but some bar them completely, others limit them to a certain percentage of the pool. But since these deals were all sold OTC with no document registry, no one knows what the distribution among these three types is.
I have complained for some time that it is inexcusable for the authorities to be fumbling in the dark as they are without trying to light a candle. One could argue that in the first two acute phases of the crisis (August-September 2007 and November-December 2007), the authorities. could tell themselves that their remedies would work, this would pass relatively quickly. like the Asian crisis (while the affected countries suffered a long aftermath, the international market disruption resolved itself much faster). But by the Bear failure, with other investment banks known to be in precarious shape, it was clear this crisis was not going to resolve itself quickly. That was when the need to get a better grasp on what was going on was undeniable.
Before readers say it would take too long and be too hard, consider: if you had a mysterious disease, would you rather have your doctor treat by analogy to common ailments or do the needed testing to come up with a diagnosis?
OK, to answer my question:
The Village doesn't hasn't created a Brady Commission to examine the causes of The Big Shitstorm because they know very well that they'd be held accountable for creating it.
However, they do need some cash to keep the scam going long enough to create another bubble to esape the mess. They propose to acquire the cash by looting the public purse.
That, in operational terms, is what "fiscal responsibility" means.