Nobody Could Have Predicted...

And that, as Josh Marshall points out, is the problem.

What continues to surprise me, however, is that even after we've gotten to an apparent consensus that we are in for a recession that is much more severe than anything we've endured in the post-war era, and even after six months in which each successive month looked worse than the last, that with each new number we're still surprised that it's even worse than we'd realized -- still worse than the consensus assumptions.

That's because the consensus assumptions are and continue to be made by the people who got us into this mess, failed to predict the mess, and in fact did everything in their power to cover up the mess. They need to be given the heave-ho, cleaned out, fired, dismissed, reduced in headcount, whatever.

But we stubbornly refuse to do so. In fact, we turn around and keep them in charge of the "recovery efforts"...guys like Timmy Geithner.

If these guys are so motherf'ckin smart, how come they lost trillions of friggin dollars? Over at Obsidian Wings, Hilzoy takes a look at a Financial Times article that explains just how badly these idiots screwed up.

If I'm reading this right, within four years of being issued, two thirds of these CDOs are in default, and their recovery rates are very, very low. That's just staggering. It's actually hard to understand how the banks managed to do this badly: you'd think they could have done better hiring people off the street and paying them to put all those nice little loan documents into piles at random, or tossing mortgages down the stairs and bundling them based on how they landed. They certainly didn't need to hire people with advanced math degrees and pay them seven- or eight-figure salaries to get these kinds of results.

And how about those ratings agencies? They would have done a better job using a Magic 8-Ball to rate the CDOs. ("Signs point to junk!")

I have been hearing for years and years about how the financial services sector pays such exorbitant wages because the people who work there are so immensely talented that they are cheap at $50 million a year. I never particularly bought that line before. But I never imagined that all those Masters of the Universe would do quite this badly. If we had paid them $50 million a year to go far, far away and leave our financial system alone, it would have been a bargain.

And yet for the most part these guys are still in charge of the economy because we're told time and time again that mere mortals like ourselves just aren't intelligent enough to understand the complex intricacies of these mortgage products or the economy that runs on them.

Well, I'm no theoretical economathical projectionist or anything, but even I understand these three things:

1. If people don't know how much to value what you're selling, and
2. What you're selling is the universe's most glorified IOU, and
3. The value of your whole company is based on craploads of those IOUs,

Then you're screwed. Period. Now if your entire financial system is based on the above three principles, then your entire financial system is screwed.

Where's my $50 million? I'm worth that much by comparison, right?

And yet...still...bank CEOs are still there, Treasury and the SEC still have most of the same faces, the financial happy-face talking heads are still there, and nobody's taken any responsibility for any of this mess.

And these same people continue to be surprised at how badly the economy is doing? We don't just need new pundits, new voices, new direction. We need to replace the system. A system that allows this much wealth to be lost, that in fact threatens the stability of the globe, is a system that needs to go.

And the first step is to jettison the people who created it and rode it into the ground. You guys lost. Make way for the new. They need to be gone.

I leave you with The Kroog:

Why is this important? A recurring theme of those who believe that the financial system can be rescued with fancy financial engineering — a group that, sad to say, apparently now includes the Obama administration — is that the losses on toxic assets aren’t really as bad as people say; that lack of liquidity and “irrational despondence” have led to an undervaluation of these assets, and that if we can just calm things down and get cash flowing again all will be well.

Not so much, it seems.

Not gonna happen. It's to the point now where ripping out the plumbing is cheaper than repairing it.