Increasingly the US economy is beginning to look like that of the Soviet Empire before its collapse. The authorities there simply wallpapered over the rot of a sclerotic economy and declared all is well. (Helluva job, Leonid).

Imagine filing a claim with your insurance company and they ask you to loan them the money to cover your claim. You loan them the money and they pay the claim. No default here! No siree!

Remember the monoline insurance crisis -way back when. You know the crisis before the Auction Rate crisis, which was before the Bear Stearns crisis. Yeah, it's been a while - days ago. Many municipalities and agencies were only AAA because they had insurance from the monolines. Because of Blue Sky laws, many pension funds and other institutional investors are required to invest only in AAA paper. Had the monolines lost their AAA rating these funds would have been required, by law, to divest themselves of all the paper that would have been downgraded. So the Fed funds the banks who in turn invest in AMBAC. Now, supposedly all is well. Of course, the banks were counterparties to much of the paper insured by AMBAC.

The above scenario reminds me of Leonid Brezhnev's niece at a gymnastics competition. She lumbers onto the floor, awkwardly twirls, falls on her derriere a couple of times, finishes, smiles, and thrusts her arms victoriously into the air. The crowd awaits the judges' score:

Judge 1: ...10.0

Judge 2: ...10.0

Judge 3: ...10.0

Laugh and snicker if you want to, but the judges at least know that with their AAA rating of Tatiana's performance, they are not going to Siberia - and that is all that matters to them. Yes, you can laugh at the monoline bailout, but Wall Street knows that they've avoided a mass forced liquidation - and that is all that matters to them at the moment.

Is this any way to run an economy? Let's face it, socializing Wall Street's losses is just socialism - socialism for the rich. Privatizing profits and socializing losses is the way the Soviet's played the game -with profits being privileges for the nomenklatura class (here the Wall Street crowd) and collective losses for the proles.

Legendary commodity trader Jim Rogers asks "What's so bad about a recession?" Indeed! Had the monolines gone under, insurance would have been available from Warren Buffet's new company.

Soviet Russia collapsed, defaulted, and restructured. Its economy is growing, foreign reserves are accumulating, and the ruble is appreciating. China restructured with similar results. It's time for the US to return to its "from shirt sleeves to shirt sleeves" tradition with all the social mobility that that implies. But social mobility is a two way street and for others to move up, some must move down. The Fed has morphed into a meddling bureaucratic institution whose aim seems to be to simply prop up a decrepit privileged class - in the finest of Soviet traditions.

It's time for perestroika here as well.