I don’t know about you but I get the feeling that the AIG forest fire (it’s not a bonfire anymore) is consuming a lot more people than just the managers of the company.

As the news leaks out of government knowledge of what the bailout money was being used for all along, of government complicity in enabling the bonuses, as senators throw treasury officials under the bus and as the Obama administration defends and then damns all connected with this fiasco, it feels more and more like a Nixonian drama.

The American public’s patience was already stretched to the breaking point with TARP. The fiscal stimulus plan is viewed with suspicion and there is a sense that vested interests in politics and business are engaged in business as usual, only this time with a table limit that far exceeds the citizens  level of comfort. In some respects there seems to be an “Emperors New Clothes” moment occurring.

Too many false promises that haven’t panned out. Too many assurances that this or that institution was solvent and wouldn’t ever cost the taxpayer money. Too many sweetheart mortgage deals for the elected and too much money looted by supposedly government employees. The presumption that those we sent to Capitol Hill have our interests in mind has suffered some severe blows.

The Obama administration is making a mess of this. The President has failed badly in his choice of lieutenants and not surprisingly, under the pressure they are failing him badly. While he still has time, he needs to move to bring in staff that will reassure and seize the initiative. Too much has been ceded to a Congress of coconspirators. Time to call them out and begin controlling events.

A great place to start would be with a competent Treasury Secretary. Anyone know where Paul Volcker’s office is?