U.S. Says It Will Bail Out Christmas

Weekly Editorial   —   Posted on December 18, 2008

(by Daniel Henninger, OpinionJournal.com) – With the government on the brink of rescuing the U.S. auto industry, we have learned that the Treasury Department is drawing up plans to bail out Christmas. “We have reason to believe,” said a person close to the matter, “that without an immediate capital injection, Santa Claus will fail before December 24.” Mr. Claus could not be reached for comment.

Government officials are said to be concerned at the risk that the collapse of Santa Claus could pose to the nation’s intricately related system of holiday happiness. Though a failure by Santa Claus poses the largest systemic risk, the government is also prepared to step in to bail out Christmas trees, caroling parties and mistletoe producers.

President-elect Barack Obama has been briefed on the initiative, and through a spokesman was quoted as saying, “I’m OK with bailing out Christmas.”

Inside Treasury, some officials privately worry that such a precedent could result in the nationalization of Santa Claus, leading to similar calls for help next year from the Easter Bunny and even Valentine’s Day. Treasury Secretary Henry Paulson personally concluded, however, that “Santa Claus is too big to fail.”

Indeed, the situation was considered sufficiently dire that Mr. Paulson agreed to travel to the North Pole to speak to Mr. Claus. A Treasury official with knowledge of the situation agreed to provide this reporter with an account of the meeting. “Secretary Paulson,” this person said, “has had a lifetime belief in Santa Claus and firmly supports what he represents.”

Last Saturday morning, Mr. Paulson flew by government plane to meet with Santa, though a spokesman would not disclose the exact location of the famed toymaker’s North Pole workshop. Mr. Paulson’s plane landed on the polar ice cap, and then the Secretary was taken the final 300 miles in a sleigh pulled by Santa’s fleet of reindeer. In deference to Mr. Paulson’s unfamiliarity with sleigh-riding at altitude, Mr. Claus ordered his assistants to bring the Treasury department party overland.

The picture of Christmas painted for Mr. Paulson by his rosy-cheeked host was bleak.

Apparently Santa’s difficulties in “producing product,” as Mr. Paulson described it, originated in a poorly understood aspect of the jolly elf’s current operations known as “Christmas list swaps,” or CLIPS.

Mr. Claus said that going back as far as anyone can remember, Christmas lists had been handled in the traditional manner. Children would draw up lists, which were left out in the evening with a glass of milk for collection by Santa’s elves; other lists would be exchanged with siblings, cousins and loved ones.

Several years ago, according to a participant who requested anonymity, some of Santa’s elves were contacted by representatives from Bear Stearns and Lehman Brothers, who persuaded the elves of the benefits of an elaborate scheme of Christmas-list securitization.

As outlined to the elves, the idea worked like this. Brokers would break each item on the Christmas lists into separate pieces and repackage the requests as securities, using a formula known as a “benevolence diffusion algorithm.” This would guarantee happiness for everybody in the world on Christmas morning. No one would lose.

At first Santa was doubtful of the plan. Mrs. Claus was especially skeptical, pointing out that in her experience with baking Christmas cookies, a seemingly foolproof enterprise, a failure rate of 5% was not uncommon. “There is simply no historical data to suggest the whole world can be long Christmas,” Mrs. Claus said. “No scheme will ever rid the world of bad little girls and boys.”

According to a person with knowledge of the North Pole couple’s affairs, Santa received a call from a Franklin Raines, who identified himself as the president of a “government sponsored enterprise” known as Happie Mac. Santa apparently became convinced that Happie Mac sounded similar to his own business of free giving, and so agreed to the proposed system of Christmas list swaps.

Difficulties emerged when a CLIPS salesman from AIG called a senior elf to say that a large number of the Christmas list swaps had ended up in the hands of Russian billionaires with links to former Russian president Vladimir Putin. “These plutocrats don’t even believe in me,” Santa was heard to say as Mr. Paulson’s sleigh rode out of sight.

On returning to Washington, Mr. Paulson’s plan to bail out Christmas immediately ran into problems. Fed Chairman Ben Bernanke, whose great-great uncle is rumored to have been an elf, pointed out that Santa Claus might not qualify for a TARP loan. According the Fed’s analysis: “Santa Claus belongs to the people. Any bailout must pass through the appropriate committees of the House.”

House Speaker Nancy Pelosi, notwithstanding that she is the mother of five children, has reportedly told Mr. Paulson that Congress will bail out Christmas only in return for a promise from Santa Claus to “go green.” Speaker Pelosi said the Environmental Defense Fund has long complained about Santa’s eight tiny reindeer and that Mr. Claus would be asked to appear this Tuesday before Rep. Barney Frank’s committee with a plan to reduce the sleigh’s carbon footprint.

With only 13 days remaining for a Santa rescue, Mr. Paulson and Speaker Pelosi are said to be discussing the appointment of a Christmas czar. The leading candidate is Oprah Winfrey.

Write to henninger@wsj.com.  (Or better yet, write to Santa who needs the support.)

Copyright ©2008 OpinionJournal.com, December 11, 2008. All Rights Reserved.  Reprinted here December 18, 2008 with permission from Opinion Journal.  Reprinted for educational purposes only. May not be reproduced on other websites without permission from OpinionJournal.com.   Visit the website at OpinionJournal.com.