This week's issue of A-Clue.Com is another one of those policy cum history cum politics ruminations I know some of you don't like.

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They're there to keep you from getting hurt.

What happens when you overload a circuit, when you bypass a circuit breaker, is you can start a fire that burns down your house. Yet many people do bypass their breakers, and sometimes their homes don't burn down. This leads them to believe they can continue to bypass them, or to bypass them to a greater degree, which leads inevitably to tragedy.

Circuit breakers exist in politics as well. The American system, as I've mentioned, is filled with them. The three branches of government check and balance one another. So do the two major parties. So does the press. So do the people.

In every generation these circuit breakers are tested, and circuits are blown in the process. One of my favorite such scenes of blowing circuits occurred in 1895, on January 25 to be precise, a cold winter night when financier J.P. Morgan tramped across the White House grounds and forced President Grover Cleveland to sign a 4% bond, backed by his gold, to keep the U.S. government operating. The circuit he tripped then, a takeover of the government by private interests, would result in Bryan's "Cross of Gold" speech, in the rise of progressivism, and eventually in such things as the Federal Reserve and Income Tax, all aimed at preventing such a thing from happening again.

Power, and the lust for power, routes around political circuit breakers. Usually new circuits are tripped. Sometimes the old breakers are overwhelmed. But eventually, after much pain, the system is broken, the electrician is called out, and a new equillibrium reasserts itself.

While war has tripped our internal circuit breakers twice, in the Vietnam era and the Civil War, just as often it's economic strife that causes change. The Great Depression begat the New Deal, just as the 1895 gold bond begat progressivism.

What will break the Bush Administration's hold on power isn't what he's doing in Iraq, or with the Supreme Court. It won't be the Abramoff affair, or some student movement.

The breaking of Bush, and the Nixon era he's part of, will be done by the economy, by his party's systematic breaking of circuit breakers put in place by the New Deal.

Ironically, the cause of the trouble here is Bill Clinton. The Clinton Administration decision, taken in the 1990s, to let Fannie Mae and Freddie Mac turn all the mortgages banks could write into bonds eliminated the fiduciary checks that had existed in housing for 60 years. It no longer mattered whether you had a down payment, whether you understood the intricate responsibilities of interest-only mortgages, whether you could afford your ARM after interest rates rose. If you could make the monthly next month, they wrote it up, it was turned into a bond, and it traded like Grade A government issue.

The very agencies charged with making housing affordable in the 1930s have, in the 2000s, made it unaffordable. By taking any mortgage, the government has injected trillions of dollars into the economy. The walls around you now are valued like Internet stocks. A fall in values, which has recently begun, will be a slow-motion version of the unraveling that occurred in stocks as this decade began.

While most people look only at the Dow, an artificial creation (they take companies out and put them in based on their success) now priced near its all-time high, the "tech-heavy NASDAQ" is now at roughly 46% of its all-time high, six years on from the peak. That's what happens to over-priced assets when balloons pop. The air goes out and it doesn't come back in, not for a long, long time. The same is true in Japan, where the Nikkei 225, at 16,500, is still at just half its 1987 peak following a five-year rally.

Other economic circuit breakers have been broken. The old walls separating investment banks, merchant banks, and insurance have been breached. The old walls separating the creation of movies and other shows from distribution has been torn down. The old assumptions of antitrust have been ignored, and trusts erected even in the tech industries, which need them less than most.

The impact of this won't become apparent until after the bubble bursts, until after the economic house is on fire. But the fire is invevitable. Any responsible electrician can tell you that.

The purpose of economic circuit breakers is to produce tiny bubbles, to pop them before the whole system is threatened. Once it's obvious the mega-housing bubble has popped, all sorts of other circuits will be seen to have blown. U.S. budget discipline. The banking system. All ready to burn, baby burn.

The adjustment after a bubble pop always leads assets to values below what is considered their true value. Most never regain their footing. How can CMGI be worth $2/share when it was once worth $200? It's the same set of schemes it was then, it didn't change, that's why. How then is Google worth $450? New bubble, based on new bubblistic assumptions. Pop them and we'll find what it's really worth - probably about what Yahoo's worth I'd guess. (That's not bad. Microsoft was once a bubble stock, but what's left after the bubble on it popped isn't a bad play for widows or orphans.)

The subject comes up because some friends are upset over the machinations of Verizon and the new AT&T. They're upset over their control of the broadband market, and their attempt to extract monopoly profits.

Don't worry about it, I say. Those are now underperforming assets. What Wall Street put together it will pull asunder when profits don't emerge. And in the wake of all the other circuits popping, of economic pain unknown for 75 years, of political turmoil unseen in a generation, setting that right will be no problem at all.

Even investment bankers gotta eat.