Franklin Roosevelt understood that the fastest, (and maybe only,) way to revitalize a devastated economy was with gigantic government-funded public works projects. And he was right. FDR's national infrastructure programs not only pulled the US out of the deepest depression in our history, but helped us win a world war and set the foundation for nearly a century of dynamic growth and prosperity.
Today we have another example of FDR's genuis in action -- only it's not happening here, but in Iraq.
Yes, Iraq. While our financial markets plumb new lows with each passing day, the Baghdad stock market booms. Iraq's stock market may be the only one in the world going up these days.
New York Post STOCKS SOAR! (IN BAGHDAD)
October 10, 2008 -- Now it's stock and awe in Baghdad!
As the Dow plummeted nearly 700 points yesterday to fall well below the 9,000 mark, the Iraqi stock exchange - where this broker was merrily keeping up with her booming business - was flourishing, buoyed by four-year lows in violence and hopes of a reconstruction windfall.
Last month, Iraq's general index went up nearly 40 percent, about the same percentage the Dow dropped over the past year. The jovial trading-floor mood is reminiscent of Wall Street's bygone "greed is good" era of the 1980s.
The United States has poured more than $600 billion into the war-torn nation, and some experts believe the total cost could be in the $2 trillion range.
All that US taxpayer money wasn't wasted bailing out Iraq's banks or it's investor class. No, instead huge chunks of that money went into reconstruction projects, creating jobs and, not just rebuilding Iraq's crumbling infrastructure, but modernizing it.
Thanks to FDR Americans got the Golden Gate Bridge, the beginnings of a nationa highway system, Hoover Dam, the Tennessee Valley Authority, the CCC, the WPA, Social Security and so much more.
Thanks to George W. Bush Americans got Bear Sterns, AIG and $700 billion in toxic, worthless or near-worthless Wall Street-created paper. (Derivatives)
And the Bush administration isn't done. They have more plans. Unfortunately those plans do not include building roads, bridges, schools or providing all Americans with health care. And there will be no jobs programs like the WPA either. Instead the administration announced it will start using yet more taxpayer money to become partners -- not with working Americans -- but with bankers. Secretary Paulson announced yesterday that their next move will be to pump fresh liquidity into "troubled banks" becoming co-owners of those banks.
Let's think about that for a second.
Question: How did we get into this mess in the first place?
Answer: A gross lack of federal oversight and regulation.
So, how does the Bush administration plan to respond to the disaster that resulted? Well of course, to make those very regulators co-owners of the banks they failed to properly regulate in the first place. BRILLIANT!
Once in those bank's corporate boardrooms, those regulators will quickly find themselves obsessing over quarterly profit/loss projections and chatting up investors on conference calls, assuring them that the future of "their company" looks bright. They they will go out and do whatever it takes to achieve those promised quarterly benchmarks -- even if they have to "fudge" the numbers to make it happen. Wanna bet?
And finally, has anyone in the Bush administration pondered this question:
Once regulators become bankers, who will regulate the regulators? (Did I just hear the sound of one, one-handed regulator clapping?)
The administration, of course, argues that going into partnership with troubled banks is only way to get liquidity into hundreds of insolvent banks.
Stephen Pizzo has been published everywhere from The New York Times to Mother Jones magazine. His book, Inside Job: The Looting of America's Savings and Loans, was nominated for a Pulitzer.
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