Let’s spell this out plain, the most important principle behind every major bailout initiative has been this: the current leadership of the financial sector must be mostly left in place and must not be punished.  (Caveat: unless Paulson doesn’t personally like them, as with Lehman’s CEO.)

Paulson’s insistence on not putting in real effective executive compensation limits is case one. Case two is the way capital injections are being done. Be clear, the banks are effectively insolvent, they cannot continue to operate without extensive government help. Nonetheless, at the end of the day, governments are not actually taking the final step of nationalization.

Oh, lots of people are screaming about nationalization, but the rule of power is that only control matters. If you have 49.9% of a company, and I have 50.1% of the company, I have control.

These people who are being left in charge are both incompetent and crooks. In order to book the profits they used to justify their 8 digit salaries they engaged in systematic fraud and they knew they were doing it. Leaving them in charge says that governments are not yet actually serious about this crisis.

It also follows rule #1 of modern elites, especially but not exclusively, American elites, though Europeans are somewhat better.

Elites are not to be held responsible for the repercussions of their actions.

The icons of this are George Bush, and Nancy Pelosi, with her refusal to impeach him. Congress in general, and the House in particular, with its repeated unwillingness to use inherent contempt, has continued this game of "pretend oversight", where they call on people to testify then splutter uselessly when they either refuse to do so or blatantly lie on the stand.

This isn’t an accident, this is a philosophy. Ever since Nixon was taken down, the elites have been united around one basic principle: that personal responsibility is only for the little people. If banks screw up, trillions will be found to bail them out and the executives will be protected. If you can’t afford your mortgage, too bad, you’re out on your butt and no, Congress won’t be amending bankruptcy laws. Nor is there 700 billion or 2 trillion for ordinary people, at most it’ll be 150 billion, with a bare outside possibility of 300.

Western elites are a completely insular and almost entirely closed group that lives inside their own bubble. The past 30 years have been great for them, they’re richer than they’ve ever been and everyone who matters to them is doing great. This isn’t quite as true of European elites, but with their disgust that the hoi polloi might vote against their beloved European constitution repeatedly — because ordinary folks "don’t know what’s good for them" — and their continued attempts to create a new constitution without having to put it to a democratic vote, they are far from innocent. Meanwhile American politicians barely even pretend, with Democrats point blank refusing to end the war and hold Bush to account, even though that is what they were elected to do in 2006.

And so, because these venal incompetents, who have mismanaged the world for decades, put themselves and their own class interests before that of the general population, we are going to have to walk this road again. Even if the current "fixes" work, because the people who caused the crisis have not been removed and because the necessary regulatory changes have not been made, the crisis will happen again. And next time, and next time is only a few years away, the crisis will lead to a Great Depression, because when it was still fixable, saving bank executives’ jobs was the main focus instead of fixing the underlying problems.