That's the Way the Money Flows.

Thomas Friedman is still ruminating over an article on Citigroup's role in the financial meltdown that I also cited the other day:

So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made a fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so.

Notice, except for those unqualified mortgage holders, the other colluders "made fortunes doing so." And now they appear to be the greatest beneficiaries of the bailout so far. The trickle has not traveled very far.

Meanwhile,

All told, the government has assumed at least $7 trillion in direct and indirect financial obligations in the form of Wall Street bailouts, emergency lending and government guarantees on bank deposits, inter-bank loans and home mortgages.

Naomi Klein was talking about the bailout as a multi-trillion-dollar crime scene when she described it 10 days ago.

Klein sees three areas of borderline illegality. The first is that rather than being used to get banks lending again, the bailout money "is instead going to bonuses, is instead going to dividends, going to salaries, going to mergers."

Without close oversight and accountability, that's the way the money flows through most any institution — especially one whose other sources of revenue are under stress. Giving the money to fix the problem to anyone in the lineup Friedman names is like expecting the snowfall in the Rockies to improve water quality in the Sea of Cortez.

The same thing happening at banks slurping up the new funds can happen in nonprofits when they receive a big grant.

The purpose of the money may be to save sea cows, but first, a portion goes to the sea cow program administrator's salary and to the executive director who supervises the administrator, and to the communication person who increases public awareness of sea cow endangerment — plus printing and design for the Save the Sea Cow posters and catering for the Sea Cow Volunteer of the Year Dinner. The office bean counter allocates some time to track the grant expenditures. Office space, phones, light and heat all need a slice of the sea cow bucks, too. Equipment rental for the next expedition to observe the sea cows, dollars to send out more fund raising appeals ...

Meanwhile, the sea cows are still out there getting run over by cigarette boats.

Klein again:

"The money has been given to the people who needed it least, and it’s going to be used to justify austerity measures imposed against those who need it most," Klein concluded. "It’s going to be used to justify cuts to food stamps. It’s going to be used to justify cuts to Social Security, to health care, let alone being used to justify why more ambitious plans for a national health care program, for green energy are not affordable. So people have to be ready for this. You know, the next shock is yet to come."