Watching the troubles of the economy, some observers don’t want a bailout for either Wall St. or stressed homeowners who find themselves in over their heads. The phrase “moral hazard” is being tossed around as shorthand for “You took the risk, now take your lumps.” It would seem that the ground is littered with moral hazards. The reckless borrowing by huge investment banks on a margin of 30 to 1 may turn out to be the greatest moral hazard since the Great Depression. Even the massive rise in gas prices with no end in sight is connected with reckless risk-taking by the Bush administration as they plunged into the maelstrom of the Middle East.

On the fifth anniversary of the shock and awe campaign, many politicians in both parties are trying to hide behind the “success” of the surge. But despite a drop in U.S. casualties to 2005 levels, the moral price keeps coming back. The Sunnis and Shia are nowhere near reconciliation and want to keep exacting revenge. The U.S. has seen its influence wane in the Middle East while Hezbollah and Iran rise. The deterioration of the dollar, which is directly connected with the rise of oil prices, has a root cause in lack of confidence in the U.S. and a not-so-secret desire on OPEC’s part to stick it to us.
How ironic that Iraq was originally sold as basically a free war–fast, clean, and cheap. Only 1% of the American population has borne the burden of fighting and dying. Everyone else could turn away and flip real estate as the booming housing market brought unprecedented added value to the average American’s net worth. Pres. Bush continues to act as if the war is a noble cause on the brink of success, the economy basically sound, the world our friend. In other words, he wants a total bailout for the multiple disasters inflicted by ring-wing ideology.
Nobody likes pain, and yet paying for this “free” war — which could take an entire generation — is better than amnesia. The American public clearly wishes that amnesia was possible. Sen. McCain has taken the position that blaming those who took us into an unjust war is crying over spilt milk. The point is to do the best with where we are. But in the end the moral backlash of the war can’t be denied, either by amnesia or wishful thinking. The U.S. no longer controls its destiny, for the first time since WW II. A tiny fraction of the fear felt every day by Iraqis, Palestinians, Kenyans, and Sudanese has crept into American homes, and the greatest Wall St. institutions find themselves at the mercy of foreign lenders.
How do we regain control over our destiny? By standing up to our mistakes and reviving our lost idealism. The success of Sen. Obama shows that the latter is possible, but the former is harder. It won’t be easy to prevent Iraq from collapsing into anarchy, but it’s America’s duty to do so. It won’t be easy to stop squandering national wealth on military buildups and an endless appetite for oil. Citizens who have been passively accepting tax cuts while leaving the bills for war to their children and grandchildren will have to wake up from Bush’s reactionary dreams. This is probably the most distressing post I’ve written in several years, but Iraq turned out to be a subprime war with a massive balloon payment.