Nothing happened

And it's not our fault that it did:

(Fortune) -- A lending catastrophe has consumed homeowners, mortgage companies, and the financial system, but Robert Rubin, Citigroup's director and executive committee chair, doesn't seem particularly alarmed.

He told a small crowd at Manhattan's Cooper Union for the Advancement of Science and Art Wednesday that the problems now roiling the markets and forcing the Federal Reserve into a defensive posture are "all part of a cycle of periodic excess leading to periodic disruption," and that we are not in fact on the verge of a financial meltdown.

And the economic problems that he did acknowledge were blamed on just about everyone but the major U.S. financial players.

Robert Rubin is the quintessential insider, a man who moved from the head of the US Treasury to the head of one of the world's biggest banks with ease, and is equally at ease in either role. But Robert Rubin has a problem: he's not up for election.

It may sound rather funny to say that while the company he heads is writing off 20-some billion in bad debt, he has bigger problems, but he does. You see, if Citi goes under, it just gets rolled into another entity by the government*. And should he get fired, well, he could do a lot worse than the last fired CEO of Citi, who took away about $100m in severance. No matter how well or poorly he does his job, he's set financially. But this credit "crunch", successfully contained to parts of two years and six** continents, is already creating the real problem: scared and angry voters.

Recessions do that. Depressions do that. Which is why politicians will go to any length to avoid them even though they are absolutely critical to the long-term health of the economy. Long-term doesn't matter, because politicians are scared about the short term.

So Robert Rubin blames the problems that aren't there on everyone but Wall Street. I'll give you one guess where politicians, the ones who really matter, are going to place that blame. Hint: It's spelled "Wall Street."

When truly bad things happen in the economy, it's not politicians who go to jail; politicians put businessmen behind bars, even guys like Robert Rubin. Show trials*** may have been perfected by the communists, but politicians up for re-election can be pretty fast learners when they need to be.

UPDATE: You may think "show trial" is hyperbole. It's not. I found an interesting quote on Counterpunch describing what happened after the last crash:

To the lords and ladies of America's state religion, upholders of the dogmas of the hard righteousness of the Marketplace, even the threat of a public forum on the causes of the Depression was considered an outrage. And now, the hearings have become a reality bringing fear and paranoia to the Wall Street temples and mansions.

And for good reason. Not only would this be a public show trial but who could predict what kind of reaction the bankers in the dock might trigger?

Not only does the left use the words themselves, they revel in them while lodging the complaint that there were so few white collar crimes laws on the books in 1929 that only the head of the NYSE went to Sing-Sing****.

That situation has certainly been rectified in the past 80 years. We've got a new state religion now.

* This is called "too big to fail," and it's generally a good place to be.

** Antarctica has been so far unaffected, which is very good news for penguins.

*** See "Whitney, Richard," "Boesky, Ivan," and "Milken, Michael."

**** And that on an unrelated charge. But the fact that 6000 people showed up to see him shipped off to prison illustrates how important it was that someone should pay.