Lending money to dubious risks is hardly something invented in the past 10 or 15 years. Until recently, however, the rule was that high risks paid high interest rates. The payday loan industry operates on that basis, as do the gangsters who lend to people gambling on sporting events. For that class of borrowers failure to pay may also entail knee-capping or finger-smashing.

Knee-capping, however, does not necessarily get a gangster/borrower his money back. Such lenders draw a line at proven deadbeats. They are denied loans.

Thus, in a crude way, the nether regions of the credit system have been self-regulating. It does not take government regulation for some people to figure out that if you cannot afford the interest, don’t borrow the money; or, conversely, if the applicant looks like a really bad risk, regardless of the interest, don’t make the loan. Proper assessment of risk ensures that the guys with the baseball bats, or the slightly more respectable payday lenders, do not suffer fatal financial bubbles.

In our case, the simple set of relationships obtaining in the netherworld of credit has been disrupted over the years. The first disruption, and least important, was setting price controls on money via the usury laws. Controls on the price of money—that is, interest—are easily evaded but they foster a climate of dishonesty, black marketeering and forms of bookkeeping that defeat transparency. It is surprising that Hillary Clinton, with her oft-boasted experience, did not understand what she was advocating when she came out in favor of putting a cap or price controls on mortgage interest rates.

The disruption of self-regulation in borrowing and lending in the upper world of finance begins with the government policy of promoting low interest rates. The rates were not forced down by promulgating price control rules but by making money cheap, by, in effect, printing a lot of it. The connection between high interest rates and high risk was broken. When self-regulation is working, only good risks get low rates; now everybody got them.

Both political parties were content. The business people backing the Republicans were having trouble counting the money, it was coming in so fast. The Democrats were seeing a jump in the standard of living of their lower-income constituents. In the past few years, low-interest, no-down-payment financing had come close to being a substitute for public or subsidized housing. The difference was, as few cared to say out loud, that sooner or later the new homeowners would have to pay for their nice new homes.

The old system of self-regulation roughly worked because of self-interest. Bankers did not want to get stung by making bad loans. The new system of low interest rates might have gone on working—sort of—if the self-regulatory arrangement had been buttressed or replaced by public regulation. But regulating is no fun and nobody wanted to do it, and so it did not get done.

Anyway, thanks to low interest and the Fed printing press, everybody was swimming in cheap money. In short order avarice coupled with idiotic optimism made businesspeople stop doing their job, which is to understand the risks of each and every transaction. Instead, they proceeded apace, believing that higher prices would cover any problems.

The higher prices depended on the Fed keeping the country awash with money so that mortgages could be kept current by refinancing houses adjudged to be worth more by the hour. The moderation that supply and demand normally imposes was vitiated in a gold rush frenzy.

What was happening in real estate was happening in cars and retail sales, thanks to the banks’ credit card divisions. There also interest rates were decoupled from risk and credit was extended to anybody with a pulse. College kids and doddering ancients living on Social Security were offered credit cards. Instead of the banks and the bond packagers who bought the credit card debt doing their job, which consisted of saying no to credit-unworthy applicants, the banks lobbied through Congress new, tough strictures in the borrower bankruptcy law.

You might have thought that Alan Greenspan, who spent his days at the Fed staring at the green numbers on his monitors, would have taken action. He could see how much people were making, how much they were spending and how much they were owing. He could see that they were borrowing more than they could pay back.

Mr. Greenspan and his successor, Ben Bernanke, had to know that sooner or later the Chinese would not or could not continue to supply the money to cover the difference between American incomes and American debt obligations. They had to know an essentially unstable system would have to crash.

To much applause, although not from some of the more cynical Wall Street traders, Mr. Bernanke rushed in with a money hose to pour water into every hole he could find. As he did so, a sluggish Congress and a torpid president bestirred themselves to come forth with financial paddles to regulate the economy’s arrhythmia. This is the “stimulation package.”

The package will put a few hundred bucks into many hands who certainly can use them, but it leaves the question of what happens to the trillion or two of debt unaddressed. The package also offers savings and even some tax rebates to businesses that speed up capital investments. All very nice but hardly decisive.

If the worthies believe that the stimulus package will carry us back to the status quo ante, they are in the fourth or final stage of delirium. We cannot return to spending more than we make to hold onto our prosperity. We have run out of credit.

If the bunch in business, politics and media who run the country don’t get it, we are in for a new world of pain.

What part did members of Congress play? When were these tapes showing C.I.A. agents inflicting pain on their captives destroyed? Who destroyed them? On whose orders? What were the motives for doing so? Or is this yet one more C.I.A. ruse? We are dealing here with an institution of habitual mendacity.

To listen to the politicians talk about the agency when they are in their committee rooms, you might think that the C.I.A. is an organization peopled by a gallant crew of patriots out on the fringes of empire baffling our enemies and advancing our interests. The historical record must lead a person to severely modify that judgment.

The record comes to us in the form of a book by Tim Weiner, Legacy of Ashes: The History of the C.I.A. The title comes from Dwight Eisenhower’s summing up of the accomplishments of the agency in his time. Mr. Weiner takes it from there, giving us the full C.I.A. story based on attributed quotes from those who worked in and with the agency and also from a coal mine full of C.I.A. documents, most of which had been kept secret until recently. It is well to remember the organization’s history when hearing about waterboarding, torture tapes and deceptions practiced on us Americans and on our enemies. This is what the C.I.A. does; this is who they are.

This is who they are in the sense that the organization has a history of having always been more or less out of control, going to excesses and plunging into ill-judged, often imbecilic ventures on its own. From its first beginnings, as Mr. Weiner shows, the organization has been dominated by overly patriotic, morally defective, manic types prone to rev up and roar into action without a practical understanding of what they are getting into or what the consequences might be. Such personality types apparently have been recruiting their own replicas for decades, which throws some light on C.I.A. agents doing their enhanced technique numbers on whomever got caught in the net and were sent to Abu Ghraib, or were “rendered” by sinister night flights to nameless torturariums hidden here and there across the globe.

Running around the world, spinning intrigues, overthrowing governments (or trying to), involving itself in frequently ludicrous adventures has worked out to mean that the Central Intelligence Agency was neither central nor intelligent but has often been an agency of mindless international chaos. No other conclusion is possible when you read the catalog of C.I.A. activities around the world, in Greece, in Indonesia, in Guatemala, Chile, Iran, Laos, Congo, Afghanistan, China … the list goes on. More often than not, the agency failed to advance the cause of democracy, often being at least partially responsible for putting bloody, tyrannically minded men in power. Beyond that, the agency must shoulder the blame for cock-ups that cost the lives of thousands of liberty-loving men and women who were sent to their deaths because the agency had no idea in hell what it was doing.

At the same time as the action wing of the C.I.A. was mucking things up, the intelligence wing of the organization was getting them wrong. Sometimes its intelligence failures, as what happened during the Korean War, cost the lives of many American soldiers. The scale of the C.I.A.’s intelligence failures challenges the imagination. In the 1960’s, its ignorance resulted in the “missile gap” belief that America was behind the Soviet Union. In the 1980’s, the agency was the last to find out that the Soviet Union was a dilapidated Second or almost Third World country about to fall to pieces. In the 2000’s, it did not know that Iraq had no atom bombs. In effect the C.I.A., with its drunks, its madmen, its lazy bums and—also—its good but ultimately ineffectual personnel, left president after president blind as to what was happening in the world.

In the end, the agency is the creature of the executive and legislative branches of our government. But fixing the blame does not throw light on how such an important organ of the state could have been so useless for so long. Part of the difficulty doubtless goes to the general problem of effective government administration and part to the blind spots that empires breed in their citizens. From Rome to America, certain traits inimical to intelligence-gathering and analysis adhere to the citizens of empires, such as the belief in one’s innate superiority, the disinclination to inform one’s self about other people’s cultures or learn to speak their languages and a permanent condition of overheated patriotism.

Penetrating—much less controlling—the C.I.A. has become more difficult in recent years because the organization has fractured. Mr. Weiner writes that, “Corporate clones of the C.I.A. started sprouting all over the suburbs of Washington and beyond. Patriotism for profit became a $50-billion-a-year business. … Great chunks of the clandestine service became wholly dependent on contractors who looked like they were in the C.I.A. chain of command, but who worked for their corporate masters. In effect, the agency had two workforces—and the private one was paid far better. By 2006 something on the order of half the officers at the Baghdad station and the new National Counterterrorism Center were contract employees, and Lockheed Martin, the nation’s biggest military contractor, was posting help-wanted ads for ‘counterterrorism analysts’ to interrogate suspected terrorists at the Guantanamo prison.”

The C.I.A. contractors each have their political sponsors and allies who have their own schemes and ambitions. Thus, when a National Intelligence Estimate is released musing about the likelihood that Iranians are or are not making a nuclear bomb, there is no way of telling if these statements are based on any or no knowledge of what is going on in Tehran or whether it happens to suit some faction in the White House or the State Department to have the public believe one thing or another.

For decades the C.I.A. left our presidents to fly blind. A few of them knew better than to trust the C.I.A. Today we all know better, and if we continue to take these people seriously, the fault will be ours.

That was normal, meaning that the Obama family was experiencing what tens of millions of American families experience: Two jobs and still feeling the financial pressure of not quite bringing in enough to make it. The Obamas got out of their financial bind when, as he says, he made big money on his book and was elected to the Senate. He knows that he is no longer normal. Nevertheless, his normal days are not so long ago that he has forgotten how the end of the month can be a family money crisis.

You may be sure that not a few of his auditors sit in meeting halls and gyms listening to him in near rapture while they count on their fingers how many years it must be since Hillary was normal. It was 32 years ago that her husband was elected governor of Arkansas and the Clinton family left off being normal to begin their crawl higher up on the hog and the social scale. It’s been 20 years or so since her friends were not billionaires or movie stars.

It’s been a long time away from normal for John Edwards. He has made very many millions as a liability lawyer suing very large commercial enterprises on behalf of very small plaintiffs. In a time when there are no unions and most governmental entities are indifferent to our personal plights, Mr. Edwards and his ilk are often our only and last resort, but that does not make his occupation tasty.

Mr. Edwards says he has been battling against the T. rex corporations, but we remember that he got rich at it, and we wonder what his clients got. Then again, the candidate’s parents, South Carolina textile mill hands, appear at his rallies. They are the real McCoy, sitting there with labor-stained faces. The fact that he brings them and talks about their lives of low pay and hard work is an indicator that John Edwards has not, as they say in the South, “got above his raisin’.”

You do not get the impression that the Republican candidates, Mike Huckabee excepted, would have the wildest idea what Mr. Obama is talking about when he is discussing five years away from normal. John McCain, a fine and brave man deserving much respect, is the son of an admiral who was the son of an admiral. The McCains did good, but they are not normal and never were.

Fred Thompson comes from workaday beginnings, but he kissed normal goodbye many years ago. As for Rudy Giuliani, you have the impression that for him, those who live in Normal Land are potential marks, persons waiting to be taken by the clients he serves through the dubious medium of Giuliani Partners LLC, the enterprise through which he has pocketed millions. Mitt Romney is strictly a silver-spoon boy.

Ron Paul and Mike Huckabee would understand what Mr. Obama’s normal means. Mr. Paul grew up on the family dairy farm in Pennsylvania, the son of a man whose schooling stopped at the eighth grade. He worked to put himself through college and medical school, ultimately becoming an OB-GYN, but as a libertarian he has embraced a political philosophy that deifies government impotency, so his sympathies avail us nothing.

Mr. Huckabee’s father was a fireman and a mechanic and his mother was a clerk at the gas company, so he grew up in a two-income family, and you cannot do that without knowing exactly what normal means. If that were not enough, he graduated from Ouachita Baptist University, which fact tells you plenty about where Mr. Huckabee hails from.

But there is a difference between understanding and sympathizing with those who live normal lives, and figuring out what to do about it. Other than decrying the gradual impingement of ever harsher necessities on our families, what do we do?

The Republican answer is to cut taxes, but there comes a point when tax-cutting doesn’t cut it anymore.

A lot of analytical approaches reveal what’s killing middle-class families. They pay too much for shelter, medical care, child care, transportation and education. Another way of expressing the problem is to say that many middle-class parents work too hard and too long, and they do not get paid enough for their efforts.

The minimum wage is supposed to address low compensation but it does not. For less-skilled workers, possibly the best thing we can do is stop illegal immigration. Within a few years, that would force up wages, and with that would come the most gawdawful screams from New York to California as everything from Big Macs to housecleaning shot up in price.

One way around this set of facts would be a significant child allowance, one large enough to enable and even entice one middle-class parent in each household to stay home. That’s normal in France, but it is abnormal here.

Many other abnormal ideas abound for helping the middle classes, but will even an Obamian-like upheaval for change make enacting any of them more likely? Let’s hope so, or we can put our faith in the old remedies—cut taxes, outlaw gay marriage, encourage abortion or don’t, pray in the schools or don’t. Follow this formula and we’ll have a change, all right, but we’ll have a new normal that we are going to like less than the one we already have.

“The fierce urgency of now” is the phrase Mr. Obama uses to plead and demand that changes, long delayed and never made, be done. They never will be by politicians too long in office, and too rich and too comfortable to understand what living normal means.

The television and movie writers strike has not been much of a help either. Though the strikers may have good and sufficient reason to walk out on their jobs, the way they did it came through on television as some kind of celebrity lark being pulled off by overpaid people feeling indignant that their cushy life is not cushy enough. In fact, as just noted, the writers may have a real case, but they did not present it well, and as a result, unionism took it on the chops yet one more time.

As if that were not enough, the generous coverage of the French transportation strike has also reinforced the opinion that unions exist to defend the entrenched privilege of a few lucky workers. The issues in the French strike make it appear, perhaps correctly, that the striking unions are fighting to retain such bennies as full and permanent retirement at age 50. This is coming at a time when all of American automobile workers have just suffered cuts in their compensation of a third or more, and that is with a union.

Americans are bombarded by anti-union messages, explicit and implicit, about as often as we are hit with TV pizza ads. One of our two major political parties is openly dedicated to the destruction of all trade unionism, while the other sells out unions whenever the mob of K Street corruptionists passes out the bribes.

Unions are such public institutions that when they go wrong, which they did often enough in the past, everybody sees it. They are unlike the banks, hedge funds and Wall Street brokerage houses, which get away with murder and are exposed only when something like the subprime disaster threatens to destroy the finances of hundreds of thousands of ordinary working people.

John L. Lewis, who was to the labor movement of the 1930’s what Dr. Martin Luther King Jr, was to the civil rights movement of the 1960’s, is supposed to have said that a bad union is better than no union. For practical purposes, we have been living the past 40 years in a near-no-union society. During these past two generations, each year has seen more employees or workers of whatever stripe and occupation limp on with less and less representation.

One view of how that has worked out for us is provided by Elizabeth Warren, a professor of law at Harvard University. This is how Professor Warren describes the, ahem, progress of the past 40 years:

“In the second half of the 20th century, the single most important economic thing that happened is that millions of mothers poured back into the workforce, and that’s the only thing that kept family income rising. Starting in about 1970, a fully employed male’s wages completely flattened out, and in fact, a fully employed male today, on average, median, earns about $800 less than his dad earned a generation ago. … Wages flatten for men and the family does better only if they can put two people on the workforce, and the norm switches from a one-earner family to a two-earner family, for those who are lucky enough to have it. Now if that were the only thing that’s happened, you’d think we should be richer. We should have more savings; we should have very little debt. But expenses in the same 30-year period far outstripped what the families are spending, and I’m not talking about consumer price index.

“Here’s the division. I want to compare a mom, dad and two kids today with a mom, dad and two kids 30 years ago, when you started a family in 1971, as I did. What happens on spending? Start with the consumption. This is what everyone [supposes], again, in the popular media, why are people in trouble: too many GameBoys, too many iPods, too many $200 sneakers. In fact, families today, adjusted for inflation, spend less on clothing; less on food, including eating out; less on furniture; less on appliances, than they spent a generation ago. Where they spend more is for [a] three-bedroom, one-bath house. The median family is spending 80 percent more on mortgage payments, adjusted for inflation, than they spent a generation ago. They’re spending about 75 percent more for health insurance than they spent a generation ago. … They’re paying for child care, which of course, they didn’t a generation ago.”

Professor Warren also points out that when one paycheck supported a family, there was a built-in safety net in case of illness or unemployment or some other urgent domestic need: The stay-at-home parent could temporarily take a job. Now, if there is a sudden financial jolt, it is a disaster for the family. The changes that she describes occurred simultaneously with the enfeeblement of organized labor. With the near demise of organized labor, it was not as though the great number of employees had exchanged the old representation for something different and better. They exchanged the old representation for precisely nothing.

The churches and “faith-based” organizations that put up a perpetual wall of sound bemoaning the weakening of family life do not address these questions, which have a hell of a lot more to do with fracturing the nuclear family than gay marriage.

There are no end of others lamenting what’s happening to the middle classes, but they offer little beside sympathy. You have amiable news celebs like Lou Dobbs on the case, but he has no program that might be of real help. You also have your Hillary Clintons, and they, too, are good at indignation without purpose, unless it is to get reelected.

If a reversal of direction is to come, it must be started by the affected themselves. The only way to do that is through collective action, which, by any name you wish to call it, means organizing unions.

Brian Williams started the bear-baiting with a question designed both to embarrass Barack Obama and get a rise out of Hillary Clinton. Meanwhile, Tim Russert cast himself as a political Jerry Springer, posing questions that had no other purpose than to get these politicians fighting each other as they do in those daytime television spectacles. Mr. Russert left the viewer with the impression that he believes he should be running for president. His intention was plain. He was to be the superior one, the poised person with the correct answers while the candidates were made to look like a clutch of clumsy, ox-brained tangle-foots.

Mr. Russert has found a safe way to be a bully and to embarrass those who do not have the protection afforded by the role of journalist. This is not a case of media bias. Mr. Russert has no discernible political leaning. What we are looking at is a case of egotism, of self-dramatization, of the hammy display of a prancing public personality.

Here is another example of Tim Russert abandoning the role of debate moderator for that of Crusader Rabbit or Tribune of the People:

“Senator Clinton, I’d like to follow up, because in terms of your experience as first lady, in order to give the American people an opportunity to make a judgment about your experience, would you allow the National Archives to release the documents about your communications with the president, the advice you gave? Because, as you well know, President Clinton has asked the National Archives not to do anything until 2012.”

Mrs. Clinton tried to defend herself against this berserk moderator by saying, “… Now, all of the records, as far as I know, about what we did with health care, those are already available. Others are becoming available. And I think that, you know, the archives will continue to move as rapidly as its circumstances and processes demand.”

But can Mr. Russert drop it? No. He followed up with another question. This conduct might have some place in a press conference where follow-up, combative questions are employed, although usually without eliciting much information. This was not a press conference. It was a debate. By tradition, debate moderators confine themselves to enforcing the rules of the debate and otherwise keep their traps shut.

Under no rules of debate conduct is moderator allowed to mock and make fun of one of the debaters. And other than to make Dennis Kucinich a butt of laughter there could have been no other reason for Mr. Russert asking the following question:

“Congressman Kucinich, I want to move to a different area, because this is a serious question. The godmother of your daughter, Shirley MacLaine, writes in her new book that you sighted a UFO over her home in Washington State, that you found the encounter extremely moving, that it was a ‘triangular craft, silent and hovering,’ that you ‘felt a connection to your heart and heard directions in your mind.’

Now, did you see a UFO?”

To which one can only ask, “And, Mr. Russert, did you feel like the wiseass you are when you posed that question to Mr. Kucinich?” The congressman, mistaken or not in his beliefs, is a thoughtful, passionate, incorruptible and brave man. Well, Mr. Cheap Shot Artist, you got your laugh.

As opposed to Mr. Russert, moderator Brian Williams played the role of village idiot. Get a load of this from Mr. Williams: “A question for Senator Dodd. A question to you alone, Senator, about this intersection of environment and sacrifice. So many people have been saddened by the pictures these past few days from Southern California. There are reports that major cities in the state of Georgia are threatened with running out of drinking water in a matter of days. Are you truly prepared to lead, on a national scale, the kind of sacrifice it would require where it intersects with the environment?”

How is someone running for office to answer that question? Would he or she reply, no, I am not prepared to lead, at least not “on a national scale,” whatever the hell that means?

If there were any doubt that Mr. Williams has naught but three dried seeds between his ears, it is swept away by this question: “Let’s talk about life on earth. Senator Clinton, Lance Armstrong called here today with a question. He made the point, as he often has, [that][ 3,000 people, roughly, killed on 9/11; roughly $1 trillion spent in the years since. About that many people die of cancer every two days. He wanted us to ask any of you: Are you willing to be the president, or are you willing to pledge to be the president, that knocks cancer down from its status as number-one killer of Americans under the age of 85?”

First open the envelope, extract the paper and then read, “No, I am not willing to be the president who knocks cancer down. I am for cancer. People are living too long. Elect me and I promise you a shorter, more painful life.”

Well, now we know where Mr. Williams and Mr. Russert get their questions. They get them from bicycle riders, the best known of which is a man often accused of having cheated to win his races.

Political debates are good and necessary but they should be debates, not performance opportunities for news celebrities, and there should be no questioning by anybody, whether journalists, political scientists or academics. Let there be one topic selected and one only for each debate, and rules agreed on as to how long and how often the debaters talk, with one moderator whose task it is to ensure the debate rules are followed.

The present format is a disservice to the voting public and the candidates. Enough is enough.

Evidently some kind of convergence of the real economy and the other one occurred recently when it was announced that a frightened group of the nation’s largest banks met in Washington to create a $100 billion safety net to be used to keep funds holding subprime mortgage bonds from tanking. The money, it would appear, will be used to buy the bonds at above open-market prices in hopes that by doing so their value will go back to pre-panic levels.

This is a desperate move. Something like it has been successfully used before when a major hedge fund got itself in trouble and threatened to knock over the financial dominoes Wall Street strives to keep upright and profitable. That occasion, the demise of Long Term Capital Management, was, though huge, small potatoes compared to what the world of excessively high finance is grappling with now.

That is why the Washington meeting was convened by the Treasury Department, and why the Brits are urging their banks to join in the effort. If it should fail, and the price of these various subprime bonds and bond funds collapse for good, the money borrowed to buy them will have to be repaid by selling other securities, thus possibly setting off a landslide. Triggering a rout of such proportions could bring the Wall Street economy and the “real” economy together with a sickening thud. What it might do to the value of millions of people’s 401(k)’s is a conjecture best left for another time.

The number and value of the loans is eye-popping. Between 2004 and 2006, the period when the housing market reached the top of its frenzy, financial institutions issued mortgages whose combined value is or was $1.5 trillion. Last year alone high-rate mortgages—as subprimes are sometimes called—comprised almost 30 percent of all mortgages.

In the coming months $650 billion worth of adjustable rate mortgages will see rates reset drastically upward, and what effect that will have on home buyers, developers and financial institutions is unknown.

When subprime mortgages became a topic of conversation, they were presented to the public as yet one more affliction suffered by low-income minority people. A “them not us” kind of thing that would hurt only those living in trashy little developments that, to the naked eye, are scarcely better than trailer parks.

The Wall Street Journal decided to test this premise and found it does not hold water. The Journal discovered that while “the concentration of high-rate loans is higher in poorer communities, the numbers show that high-rate lending also rose sharply in middle-class and wealthier communities.”

As the mess gets messier, everybody is starting to blame everybody else. At the top of the heap is Robert Rubin, who is getting mud pies and ice balls tossed at him for the first time in his public life. The former treasury secretary is being paid in the vicinity of $30 million per year to be the chairman and resident wise man at Citigroup, which is taking losses in the multibillions for its part in the subprime disaster.

Those mortgage brokers who have not yet gone out of business are being savaged for cheating, deceptive practices and high-hogging it at the expense of simple, honest American Dreamers, although some of them are getting it in the neck for being too stupid or too lazy or too greedy to read what they sign.

As foreclosure rates are reported to be doubling in some parts of the country, what some people might call vultures are moving in. The best publicized is investment banker/shrewd operator John Paulson, who has been shorting securities or bonds backed by high-interest, subprime mortgages. Without going into the mechanics of short sales, the crux of it is that the lower the price of such bonds drops, the more money Mr. Paulson will make.

Short sellers of anything from wheat to stocks are generally disliked and looked upon as close to criminals, although what they do is not against the law. But there is something about making money off of falling prices that drives people nuts. They are being driven even nuttier by Mr. Paulson, who is backing a bill in Congress that would give relief to homeowners faced with a jump in their mortgage payments owing to their interest rates going up.

Mr. Paulson’s bill would modify the recently passed bankruptcy act, which all but wiped out any relief for debtors. If passed over the dead bodies of the banking industry, the modification would give judges the power to lower the mortgage payments of despairing homeowners. It would also knock the stuffings out of the value of real-estate-backed bonds, which would be good for Mr. Paulson but highly ungood for Citi and Robert Rubin.

Passing or not passing the bill will give the legislators a choice of which disaster is worse, allowing defaulting homeowners to be evicted, or letting the bonds drop in value, thereby endangering the retirement savings of yet other millions, not to mention the additional real possibility of the stock market taking a major swoon.

The underlying economic system that has brought us to this pretty pass grows crazier by the year. What they call “growth” depends on people spending money they do not have. The mere mention of the possibility of American consumers cutting back on purchasing sends the stock markets around the globe into a tizzy as predictions of recession are heard.

Thus we must buy, buy, buy or the country will slip into a recession. But if we keep on buying, we are headed for bankruptcy. Unless, of course, that evil hour is postponed by a banker coming along to refinance the loans we are unable to pay with a larger loan we cannot pay.

You may well ask, how long can this go on? It has gone on for a long time and—who knows—we have been wiggling and worming out of these crises for years, so with a little adept bookkeeping and a lot of imagination, the end may not yet be near.

The most recent was an offer from the Iranian government to negotiate disarmament, including nuclear weapons, terrorism (including joint operations against Al Qaeda), regional security and economic cooperation. The offer was transmitted to the United States in May 2003 by the Swiss government. The complete text of the Iranian proposal for negotiations is to be found in a just published book titled Treacherous Alliance: The Secret Dealings of Israel, Iran and the U.S. by Trita Parsi.

In the body of his richly documented and sourced book, the author tells us what happened with the Iranian effort:

“For many in the State Department the proposal was a no-brainer,” he wrote. “Iran offered major concessions in return for an end to the sanctions policy sponsored by the pro-Israel American Israel Public Affairs Committee (AIPAC) which probably had cost the United States more diplomatically than it did Iran economically … [Colin] Powell and his deputy, Richard Armitage, favored a positive response to the Iranians … but instead of instigating a lively debate on the details of a potential American response, [Dick] Cheney and [Donald] Rumsfeld quickly put the matter to an end. Their argument was simple but devastating. ‘We don’t speak to evil,’ they said.”

Thus are war and peace and the lives and prosperity of millions decided by our government.

The main contention of the book is that the struggles among the three powers, Israel, Iran and the U.S., have not primarily revolved around religious faith or the clash of civilizations. Indeed, one of the points the author makes is that the Israelis have a far higher regard for the Indo-European Iranians who, Muslims though they may be, have retained the qualities of a civilization older than anything flowing out of the Arabian peninsula. In the same vein Mr. Parsi demonstrates the depth of Iranian fear and antipathy to their Arab co-religionists.

Thus, he contends, the major driving force behind the actions of Israel and Iran have been classic national interest concerns. Mr. Parsi sees some things that many of us who have opposed the Iraq invasion had missed. We had supposed that Israel and its American friends, the neocons, were the driving force behind the decision to invade Iraq and topple its dictator. If Mr. Parsi has his facts straight—and he is a formidable researcher—Israel was dead set against the American invasion.

In the end, after it was clear that the Americans were going to attack Iraq regardless of the evidence, common sense or anything else, the Israelis, always worried that their relationship with the U.S. might be usurped by another Middle Eastern power, went along with the program as did everybody from Nicaragua to Thailand. Of course, unlike nations such as Norway, which sent 150 troops to Iraq, and Portugal, which chipped in 128, Israel was not allowed to contribute military assistance, a situation that increased Israel’s persistent sense of insecurity and concern lest it be cut out of the centers of power and decision. Iran, incidentally, did help the Americans, although not with troops.

We should not conclude from the present Israeli position that they have always had their sights set on Iran. Far from it. Over the past half century the two countries have gone back and forth between friend and foe as the politics of the region and the world has invited them to see their self-interest. This has been so even after the overthrow of the Shah and the establishment of the present mullah-dominated Islamic republic.

Before the crackup of the Soviet empire, Iran was Israel’s source of oil, in return for which the Israelis supplied the Iranians with guns. In that period when Moscow was arming hostile Arab countries on Israeli’s borders, Tel Aviv pursued a policy of friendship with Ethiopia, Turkey and Iran, second-tier non-Arab Muslim countries, as a counterweight to the hostile first-tier Arab nations on Israel’s borders.

Iran, for its part, exhausted by eight years of war against the Iraqi invaders, who did use weapons of mass destruction, and frightened by Arab powers armed by the Soviets, looked to Israel and wherever else for support. In Israel’s case that support had to be concealed to placate faith-maddened Muslims, but nevertheless the mullah-run country put religion aside when the practicalities demanded it.

The disintegration of the Communist empire shuffled the cards in the Middle East, and by the time they were re-dealt the Soviet Union was gone, to be replaced by a grab bag of countries with their own foreign policies. Egypt had moved over to become if not a friend of Israel’s, at least not an enemy, and after the Gulf War a depleted Iraq had come to see Tel Aviv not as a threat but a check on Iran, which was pushing to assume a place as the dominant power in the area.

The diplomatic ins and outs and off-again-on-again relationships over the years, especially between Israel and Iran, demand the book-length narrative Mr. Parsi has given them. Suffice it to say that historical fact does not square with the present depiction of Iran, even the Iran of Mahmoud Ahmadinejad, who, incidentally, has been ordered by the ayatollahs to dial down his anti-Semitic flailings. The historical record, as pieced together by Mr. Parsi, also shows other attempts, beside the May 2002 effort, to negotiate out differences between Iran and the United States.

We are not dealing with a nation of nutball fanatics. We can make a deal with them, but not if we set preconditions to talks that amount to their doing what we want and our doing nothing for them.

The Iranians have demonstrated that, if it comes to sitting down at the table and doing business, they can control their wingnuts. We have yet to demonstrate as much.

The record book indicates that there is no reason on God’s still nearly green earth to attack Iran. We can make the deal, and if we don’t, we are crazier than they are.

This is a fancy-dancy way of saying, “You foolish little persons can get as worked up as you wish about your candidates and their promises, but the power, the decisive power, no longer adheres to the now puny offices they are breaking their butts trying to get elected to.”

What he says, many feel. People are seized by a sense that everything is out of control and nobody can do anything about runaway lives in a runaway society. Some of the anger and the angst about the millions of illegal immigrants must stem from its seeming to be an outrageously obvious case of nothing being done about a hurtful and humiliating indifference to the law. The law is broken a thousand times a day in a thousand ways and the response to those who get mad about it is “get used to it.”

One of the unspoken premises in the debate about illegal immigration is that the phenomenon is too big to be controlled or regulated or suppressed. The globalists have a similar metaphysical premise for their reiterated assertions that there is nothing you can do about economic conditions but suffer them and swim with them if you are able to keep your head above the competitive tides.

The globalists are like the old-time Communists who preached that they would triumph because the laws of history had decreed the victory of the proletariat. Likewise, globalism is given to us as the ineluctable working out of the laws of nature, as though there is anything natural about a complex economic system erected by human beings, not according to the laws of anything but according to their will, their pleasure, their confusions and their lusts.

The automobile workers must be feeling the impotence of having to accept an unwanted change in their lives. When the details of the new UAW-General Motors contract are worked out, many of them will be living on a third to perhaps a half of what they have been paid. It must be all the more galling to know that these pay cuts have nothing to do with how hard or how well they have worked.

Mr. Greenspan did not have American auto workers in mind when he said what he did. They are small potatoes for such as he. He was talking about the big stuff, about banks in Germany holding American mortgages, about the reach and effect of hedge funds, about decisions made halfway around the globe forcing us one way or another.

A few days ago it was announced that the Mubadala Development Company was going to buy a billion-dollar-plus chunk of the Carlyle Group, the private equity outfit that owns large and small pieces of everything, including a building supply house, tuxedo rentals, a truck transmission manufacturer and nursing homes. The California public pension system has a large piece of Carlyle, but Mubadala is more interesting because it is owned by the government of Abu Dhabi, the capital of the United Arab Emirates. Should Aunt Clara in one of Carlyle’s nursing homes develop bed sores from neglect, it may not be so easy to rectify the situation with shareholders half a world away.

Mubadala is classified as a sovereign wealth fund—that is, a fund owned by a government investing in every kind of security you can think of. It is estimated that sovereign wealth funds may have already invested $2.5 trillion around the world. The Chinese version of such a fund has bought itself a piece of the Blackstone Group, another huge private equity fund, and has also invested in Barclays.

When China or an Arab country uses a sovereign wealth fund to invest, occidental eyebrows arch and the worry flag is flown, but it is not only nervous-making nations that have such funds. The State of Alaska has one, as do Norway, Singapore and Australia. The French government has been an investment partner in domestic commerce and industry for centuries. Many other nations are as well.

All of these nations have one thing in common: They earn more foreign money than they spend, either by selling oil or, like China, by having developed a favorable manufacturing trade balance. America, which apparently does not have enough money to pay for medical treatment for its own children, is in no position to start a sovereign wealth fund of its own. It can, however, be affected by them.

It is not known if any of the sovereign funds occasionally make investment decisions for political rather than business reasons. It is possible that one of these funds might fall into the hands of a group of managers who lack the prudence to stay conservative. What if such a fund were a very large fund? What if it were to get into trouble via borrowing so that it had to come up with cash fast, and the only way it could get it would be to dump a vast number of U.S. government bonds on the market, all at once? That could set off a worldwide panic of a sort we have only had glimpses of until now. The financial planet could be blindsided, since sovereign wealth funds operate in their own private darkness. Nobody knows what they may be up to.

Thanks to a thousand treaties, laws, financial ties and a kaleidoscope of ownership forms and arrangements, we are losing control over our own society. Are we reduced to yammering over inconsequentialities such as gay marriage or intelligent design because we cannot touch or even get a grip on the big, important factors dictating how we shall live and what the qualities of our lives will be?

Now caught in not one but two wars that we cannot win and cannot end, we are a people not in control of our own destiny. Whether that is to be our permanent condition depends on our finding the will, energy and urgency to reclaim our independence.

In his book, Mr. Greenspan complains that the Bush administration paid little attention to the conservative idea of fiscal constraint, and the Republicans in Congress were even worse. “They swapped principle for power,” he writes. “They ended up with neither.”

Mr. Greenspan understood that the Bush administration’s treasury secretaries were capons, but why did Mr. Greenspan snip off his own political testicles? As chairman of the Federal Reserve Board, he did not serve at the president’s pleasure. Mr. Bush could not fire him. So there was Greenspan, the one official concerned with economics who was in a position to talk but kept his mouth shut as debt mounted.

Given Mr. Greenspan’s adoring business press and his demigod status with politicians of whatever stripe, there was a solid chance that he could have stopped or at least mitigated the grotesque Bush tax cuts. Now he comes along to blame Mr. Bush and the circle of crackpots Mr. Bush surrounded himself with, but he might also have blamed himself.

His espousal of a balanced budget and pay-as-you-go government was not a questionable theoretical proposition. For the eight years of the Clinton administration he had been a successful collaborator in such a policy. He admired Clinton’s two effective treasury secretaries, Robert Rubin and Lawrence Summers. He knew it could be done, and yet he kept his yap shut when he should have been howling to high heavens.

Mr. Greenspan could have done more than howl. He could have taken corrective action. A central bank, at least to some extent, can counterbalance profligate borrowings by shrinking the money supply and pushing interest rates up. Had he done so, Mr. Greenspan would have heard howls aplenty from the White House and a Congress merrily in the act of cutting the taxes of the rich.

For years Mr. Greenspan confined his public utterances on the worsening housing bubble to polysyllabic imbecilities, never calling it a bubble, though it was he who was blowing the air into it, preferring instead the word “froth.”

On his book publicity tour Mr. Greenspan tells the Financial Times that froth “was a euphemism for a bubble,” explaining, in case we don’t get it, that “all the froth bubbles add up to an aggregate bubble.” His aggregate bubble, which he could have punctured long since, is threatening to become to our domestic scene what the Iraqi war is abroad.

This guy is still a hokum-meister. First he writes in his book, “We were willing to chance that by cutting rates we might foster a bubble, an inflationary boom of some sort, which we would subsequently have to address. … It was a decision done right.” But then The Wall Street Journal writes that “[Greenspan] attributes the housing boom to the end of communism, which he says unleashed hundreds of millions of workers on global markets, putting downward pressure on wages and prices, and thus on long-term interest rates.” This is hardly better than dada economics. Sure, blame the speculation-driven housing debt on the late Boris Yelsin.

After having put the responsibility for the housing mess on the death of communism, Mr. Greenspan next takes on the colors of some sort of liberalism by declaring that “the benefits of broadened home ownership are worth the risk.” In other words, without the bubble lower-income people would not have had a chance to own a home of their own. But did they really have such a chance?

If they “bought” their homes on such disadvantageous terms that they are unable to keep them, that is a fine kind of home ownership. Though the actual number is unknown, hundreds of thousands of lower-income families bought homes on a no-money-down basis through ruinous adjustable rate mortgages. It would be closer to the truth to say they did not buy these houses, but merely rented them at extortionate prices.

None of this seems to bother Mr. Greenspan, who told an interviewer something to the effect that the bubble has been worth it because, “Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.” Someone might want to tell Alan that his critical mass of owners is on the verge of vaporizing faster than the polar ice cap.

Perhaps what will be the most remembered line in his book says that “the Iraq War is largely about oil.” No sooner had the reactions to that started popping off all over the place than Mr. Greenspan began to backtrack.

In an interview with Bob Woodward, Mr. Greenspan said he never heard the president or Vice President Cheney “basically say, ‘We’ve got to protect the oil supplies of the world,’ but that would have been my motive.” Mr. Greenspan said he made his argument to various administration officials, but one of them told him that they couldn’t talk about oil.

To borrow H. L. Mencken’s oft-quoted remark about money, “If they say it isn’t the oil, it’s the oil.”

Perhaps Mr. Greenspan’s most intriguing remark was made to The Wall Street Journal’s Greg Ip. He said, “Now it turns out politics is less important, domestically, than it was, because globalization is taking over an ever increasing part of the decision making process with the exception of national security.”

In other words it does not matter what the pygmies may think of me or whether you have your elections, whether you pick Hillary or Obama or some lefty fruitcake; you don’t get to decide the big stuff. The major decisions are made away from you by the big guys playing the big game sometimes in New York, sometimes in London, sometimes in Tokyo or Dubai, but always where you cannot see it or know what’s done until it is done, and then it doesn’t matter what you do because you cannot do or undo anything.

Exactly what we are to take that to mean is rarely explained. We are to receive it and be bowled over in admiration. One thing is sure—the people in high finance are ever so efficient in rewarding themselves. Whether they are good at anything else is another matter. Judging from recent reviews the world’s most efficient capital market has come a cropper.

Fortune magazine recently scared the hell out of its readers by declaring that a “crisis of confidence that began with subprime mortgage defaults is sweeping the Street, and risk is invisible no more. Banks are wobbling, markets are quaking, and ordinary investors are wondering how badly they’ll be hurt.”

The Economist, a publication not given to extravagant language, declared, “The spreading panic has shown up weaknesses in some of the foundations of modern finance. … Because this crisis taps so deeply into the newly devised structures of finance, anyone who says the worst is definitely over is either a fool or someone with a position to protect.” So much for the happy talk.

The magazine goes on to say that conditions created by the subprime criminal lunacy are so vast and so complicated that it’s impossible to tell the shit from the Shinola. In its more elevated style, The Economist pronounces: “As risk has become bewilderingly dispersed, so too has information. Nobody yet knows who will bear what losses from mortgages—because nobody can be sure what these loans are really worth. … Nobody knows how messy the inevitable bankruptcies will turn out to be.”

Quite a statement about the men and a few women who, when they are not blowing off about the world’s most efficient capital market, are trumpeting the crystalline transparency of American capital markets. They tell us that their “mess” is so murky that they do not know the value of their own securities. With all the computer models and the academic slaves writing foolproof formulas against the vagaries of risk in daunting mathematical hieroglyphs, they are in a dark room groping.

Obviously, they are also rigid with fear. These geniuses of high finance are looking like people crawling over a frayed rope bridge spanning a gorge. For years these people did one foolish, greedy thing after another, heedless of the consequences. Now they are petrified because they have no idea what the consequences may be.

One of the many unknowns is whether the rest of us are crawling behind these leaders of high finance across the rope bridge. The question is, if they go, are we also flung down the recessionary abyss? Will their rashness and cupidity take us with them?

That in itself is a heck of a question. You shouldn’t have to be an investment banker to know whether or not you are on solid ground, but in these circumstances no one can be sure. Some people are worried that even their money market funds may be in danger, and next to government bonds, we have been taught, nothing is more secure than our money market accounts.

We are in the same position as the people who predict how hard the winter will be by studying the fur on woolly bear caterpillars. In finance, the woolly bear equivalent is the length of women’s hemlines. The folk wisdom has it that when hemlines are up, times are good and so is the chance of war. When hemlines fall, times will turn bad but the danger of war recedes. The not-so-great news is that the other day The Wall Street Journal had a headline reading “Extreme Lengths: Why Hemlines Are Plunging,” followed by a lede that read, “The fashion pendulum is swinging to extremes these days. Pants, which were super-skinny just this summer, are flaring out to sail-like widths this fall. Tent-like trapeze dresses are giving way to close-cut pencil skirts. And now—most dramatically—hemlines are dropping.” Take it for what it is worth.

If the claim to be operating the world’s most efficient capital markets is less than precise, it nevertheless presumes a place where deals are easily made. Yet since the subprime debacle began to play out, the investing and/or home-buying public has heard little else beside the term “credit crunch.” We hear that the architects and operators of the world’s most efficient capital market are too terrified of what may lie down the road to lend money or borrow it. It is said that there is such a money shortage they have to hoard what few billions they have.

In the past 25 years our capital markets have come close to laying us out dead three times. First there was the savings-and-loan disaster, next the dot-com debacle and now the subprime mortgage nightmare.

All three disasters were preceded by much talk about the infallibility of the Wall Street money maestros, not to mention their reassuring tut-tuts in response to any outsider suggesting that what they were conducting looked more like a madhouse than a rational business operation. The insiders knew the moneymaking and jolliness was going to go on, if not forever, at least until all bets paid off and everyone playing the game turned up a winner.

But only those who spin the wheel collect the jackpots. A whiff of how big the jackpots can be turned up in a small back-of-the-business-section story in The Times the other day, which noted that “the average pay in investment banking is 10 times that of all private sector jobs.” The paper noted that investment banking accounts for 0.1 percent of all private sector jobs, “but it accounts for 1.3 percent of all wages. …”

A very efficient capital market, indeed. Not for you and me, but for that 0.1 percent of the workforce.