This is the reverse of the way deregulation was supposed to work. It was supposed to be trickle down prosperity, remember? Ronald Reagan and successive cadres of snake oil salesmen repeatedly convinced our bought-out, brain dead representatives in Washington that the way to make everyone better off – to lift all boats, they said - was to shred the regulatory safety net that had functioned so effectively since the Great Depression to protect the economy, the country and the consumer from the insatiable, creative greed of Wall Street. The sole purpose of the decades of deregulating rules and markets, every step of the way, was to make the rich richer at the expense of everyone else. And, boy, did it work! When shredding the rules didn’t make the rich filthy rich fast enough, they cut taxes, too!
On Main Street, millions of jobs were lost as employers were rewarded by the American government for packing up and scurrying overseas or importing cheap foreign labor. The deficit skyrocketed as Americans bought foreign goods that were no longer manufactured at home. As oil prices ballooned thanks to Wall Street speculators, everything became more expensive, and the formerly well paid workforce, many of whom now slaved for minimum wage at McDonalds or Wal-Mart, was barely keeping up. The recession hit Main Street but there was no talk of relief, bail out, re-engineering trade agreements, or in any way helping desperate citizens.
The foreclosure crisis was the latest blow brought to U.S. citizens by the not-so-invisible hand of Wall Street. It didn’t take a rocket scientist to foresee the reckoning that has now settled in. When drive-by mortgages are handed out like candy at Halloween; when documentation is barely needed to prove identity much less an income; when money is thrown at people with an interest-only repayment plan; when loans are given with no down payment and then the unholy mess is passed off to securities firms to butcher and repackage as top grade mortgage backed investments and sold to trusting investors, well, everyone remotely connected to the real estate industry could see it coming. Everyone, that is, with the exception of investors with pension plans and 401Ks who were kept in the dark, and are now being castigated as ‘speculators’ whose losses, Secretary of the Treasury Paulson quaintly observes, they deserve. (“They were in it for the good times; they have to take their medicine when times aren’t good.”) He’s made no such pronouncement about the bail outs for AIG, Bear Stearns, money market mutual funds, Freddie or Fannie.
The pain from Main Street threatened to trickle up to Wall Street, and Paulson is doing his level best to make sure all his Wall Street friends are inoculated against it.
Exactly who is Henry Paulson, this white knight of Wall Street who is now screeching that, for the good of the Whole World, the Street must be protected from the consequences of its own fraud, deception and irresponsibility?
Well, until two years ago he was the head of Goldman Sachs. Since Paulson was at Goldman Sachs as late as 2006, he is directly involved in the current circumstances of a shaky Goldman Sachs and of the Wall Street meltdown. Bringing this fox into the hen house to fix the financial mess is nothing less than a travesty. His conflict of interest is palpable; his complicity, transparent. He shrilly threatens Congress with an instant Armageddon if his bailout demands aren’t met NOW! and appears on every talk show that will have him to do his Chicken Little routine. It’s been a remarkable display of overweening, self righteous, arrogance and narcissism. There is never any voice of reason sharing the stage with him.
What unadulterated hogwash!
The scare tactics that railroad decision makers into instant action with no time for responsible discussion are the way that the Patriot Act was passed and Homeland Security established. It’s the method of a huckster. And just to make sure everyone understands that they’re being taken for a one-way ride to the edge, Paulson insists that his decisions are not to be reviewed by ‘any court or any administrative body.’ Wouldn’t that make him king? Unprecedented.
We have some questions.
First, if Lehman Brothers didn’t need bailing, why did Bear Stearns? Was Bear Stearns just the first of many bad decisions?
Second, the Federal Housing Administration, a stodgy, effective agency of the U.S. government, has been ethically and efficiently helping people buy homes for many years before anyone had ever heard of privatizing profits and socializing losses through the likes of Freddie and Fanny. Why does Paulson want to bail out those corrupt, badly managed, agencies? Let the FHA take over their function and flush away those poorly conceived travesties. No Bail Out!
He also wants to bail out private money market funds, to save the big guys who could have had insured deposits in a bank money market but chose to go for a better return. Are you melting with sympathy yet? Who is next? Starbucks? What utter idiocy. No Bail Out!If Paulson’s next questionable proposition, that AIG needs to be saved to keep the world’s financial system from crumbling, is true, why hasn’t the federal government moved in lock, stock and barrel and tossed the bums out? If AIG is so important, it clearly needs the adult supervision sorely lacking in its private sector management, the type of management provided everyday by the maligned federal bureaucracy. The federal workforce is among the most ethical, intelligent and corruption-free set of workers anywhere. Why? Partially because they work within a set of strict regulations.
Why do taxpayers need the bail out that Paulson is trying to railroad through congress? What is there to gain? What is he saving us from?
Pension plans and 401Ks have already taken their hit. The foreclosure crisis shows little sign of abating. Does he think that he can save American financial hegemony if he just taxes us enough? Too late. No country, no international institution, will trust Wall Street or the American financial system again for a very long time, bail out or no. So No Bail Out!
Our overweening financial hegemony is a thing of the past, and the value of the dollar is quickly following. If Paulson wanted to save Wall Street, he could have made a good start during the decades he spent there by firing his lobbyists. But that was never what he wanted. What he has always wanted is the utter freedom to act recklessly and have the taxpayer pick up the tab. And it’s a last gift that he wants to leave his friends before he leaves office with Bush.
So here is an idea or two on how we might solve the problem of the Wall Street-Washington ‘elite’, as they so nauseatingly like to think of themselves, who have done us so much damage.