My favorite quote today comes from Michigan Congressman Thaddeus McCotter, who, commenting on the fact that Rick Wagoner had been forced out of GM by the Obama administration, said the following.

“Mr. Wagoner has been asked to resign as a political offering despite his having led GM’s painful restructuring to date. Mr. Wagoner has honorably resigned for the sake of his company’s working families.

When will the Wall Street CEOs receiving TARP funds summon the honor to resign? Will this White House ever bother to raise the issue? I doubt it.”

I don’t know that Wagoner deserves a great deal of sympathy, especially as he’s taking home $20 million in retirement benefits, but McCotter’s right to point out the seeming double standard. It certainly seems as though the auto companies, at least when compared to the firms on Wall Street that have taken billions of dollars from U.S. taxpayers, have been held to a different standard. Some think that a similar fate awaits these financial institutions, but, as of right now, it sure looks as though they’re firmly in control, getting everything that they ask for, as other industries have their feet held to the fire.

Personally, I suspect it’s fear. I think that the auto companies are easy to go after, because we all know that they fucked up by fighting against environmental measures and pushing SUVs on the American people when they damn well knew that the model wasn’t sustainable. Their crimes are easy to understand. When it comes to the Wall Street firms, though, it’s too complicated. Somehow, they have us convinced that we need them in order to survive. So, we do what’s easiest, and we direct our anger and frustration toward the Big 3, telling them that they aren’t acting swiftly and bold enough. And, all the while, we keep writing checks to Wall Street.

Anyway, that’s what I was going to write about tonight, until I got sidetracked by MIT professor Simon Johnson’s article in the “Atlantic”. Johnson, who was the chief economist at the International Monetary Fund during 2007 and 2008, believes he recognizes the root cause of our current situation, and what ultimately needs to be done to remedy it. Here’s a clip:

One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.

The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials—from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere—trudging to the fund when circumstances were dire and all else had failed.

Every crisis is different, of course. Ukraine faced hyperinflation in 1994; Russia desperately needed help when its short-term-debt rollover scheme exploded in the summer of 1998; the Indonesian rupiah plunged in 1997, nearly leveling the corporate economy; that same year, South Korea’s 30-year economic miracle ground to a halt when foreign banks suddenly refused to extend new credit.

But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess—exports must be increased, and imports cut—and the goal is to do this without the most horrible of recessions. Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out.

No, the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis.

Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise…

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them…

It’s time, I think, to cut the head off the snake, my friends.