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 Be Careful What You Wish ForPosted on Mar 18, 2008By E.J. Dionne WASHINGTON—Never do I want to hear again from my conservative friends about how brilliant capitalists are, how much they deserve their seven-figure salaries, and how government should keep its hands off the private economy. The Wall Street titans have turned into a bunch of welfare clients. They are desperate to be bailed out by government from their own incompetence, and from the deregulatory regime for which they lobbied so hard. They have lost “confidence” in each other, you see, because none of these oh-so-wise captains of the universe has any idea what kinds of devalued securities sit in one another’s portfolios. So they have stopped investing. The biggest, most respected investment firms threaten to come crashing down. You can’t have that. It’s just fine to make it harder for the average Joe to file for bankruptcy, as did that wretched bankruptcy bill passed by Congress in 2005 at the request of the credit card industry. But the big guys are “too big to fail” because they could bring us all down with them. Enter the federal government, the institution to which the wealthy are not supposed to pay capital gains or inheritance taxes. Good God, you don’t expect these people to trade in their BMWs for Saturns, do you? In a deal that The New York Times described as “shocking,” J.P. Morgan Chase agreed over the weekend to pay $2 a share to buy all of Bear Stearns, one of the brand names of finance capitalism. The Federal Reserve approved a $30 billion—that’s with a “b”—line of credit to make the deal work. I don’t fault Ben Bernanke, the Fed chairman, for being so interventionist in trying to save the economy. On the contrary, Bernanke deserves credit for ignoring all the extreme free market bloviation. He doesn’t want the economy to collapse on his watch, so he is willing to violate all the conservatives’ shibboleths about the dangers of government intervention. As a voter once told the legendary political journalist Richard Rovere: “Sometimes you have to forget your principles to do what’s right.” But if this near meltdown of capitalism doesn’t encourage a lot of people to question the principles they have carried in their heads for the last three decades or so, nothing will. We had already learned the hard way—in the crash of 1929 and the Depression that followed—that capitalism is quite capable of running off the rails. Franklin Roosevelt’s New Deal was a response to the failure of the geniuses of finance (and their defenders in the economics profession) to realize what was happening or to fix it in time. As the economist John Kenneth Galbraith noted of the era leading up to the Depression, “The threat to men of great dignity, privilege and pretense is not from the radicals they revile; it is from accepting their own myth. Exposure to reality remains the nemesis of the great—a little understood thing.” But in the enthusiasm for deregulation that took root in the late 1970s, flowered in the Reagan era and reached its apogee in the second Bush years, we forgot the lesson that government needs to keep a careful watch on what capitalists do. Of course, some deregulation can be salutary and the market system is, on balance, a wondrous instrument—when it works. But the free market is just that: an instrument, not a principle. So now the bailouts begin, and Wall Street usefully might feel a bit of gratitude, perhaps by being willing to have the wealthy foot some of the bill or to acknowledge that while its denizens were getting rich, a lot of Americans were losing jobs and health insurance. I’m waiting. At the very least, the die-hard defenders of unregulated capitalism could accept a truth spoken to me back in 1996 by William Cohen, when he was a Republican senator from Maine. He was talking about a plane crash and the public grousing about whether the government’s safety regulators should have kept a more careful eye on the airline in question. But he could have been talking about the financial system right now. “We have been saying for so long that government is the enemy,” Cohen said. “Government is the enemy until you need a friend.” Then he added: “Is the public ready to say: ‘Let the private sector handle everything’? Clearly not.” TAGS:
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Jump to Comments
By rob, March 19, 2008 at 10:43 pm #
(Unregistered commenter)
if the banks want a bailout from the government [ american citizens] then we citizens should become earning share holders of the banks
Report thisBy God?FreeDumb?, March 19, 2008 at 7:54 pm #
Here is your answer:
http://www.audio-bible.com/bible/revelation_18.html
4 And I heard another voice from heaven, saying, Come out of her, my people, that ye be not partakers of her sins, and that ye receive not of her plagues.
you see,, the only nation that will fall is the nation that defends freedumb(freedom).
the rest of the world goes on.
http://www.audio-bible.com/bible/revelation_16.html
12 ¶ And the sixth angel
Then
The Seventh Angel(the Last Angel).
16 And he gathered them together into a place called in the Hebrew tongue Armageddon.
17 ¶ And the seventh angel poured out his vial into the air; and there came a great voice out of the temple of heaven, from the throne, saying, It is done.
Do you Really want to Know(KNOW) the rest of the story?
Report thisBy nrobi, March 19, 2008 at 5:02 pm #
If the past is any indicator of the present situation, then the American and surely the world economies are in danger of total and complete collapse. We, have only to look to the 1890’s, the time when the robber barons of the rail systems and the steel mills, held the power and the money of this country. Stock prices fell, the economy collapsed and the only people that had anything were the so-called ultra-rich. The hard working middle class of Americans lost their shirts and everything they had worked for all their lives. This was a time of unrestrained and laissez-faire capitalism, there was no Federal Reserve, no FDIC, no governmental checks and balances on the system of commerce and no monetary policy to speak of. George W. Bush, and his cronies, the Neo-Cons, think that they know it all, have the most elite and intelligent economists in their think tanks and had the power to institute the policies that made this collapse possible. What to do? Oh, what to do? Now that the economy is collapsing at an alarming and exceedingly faster rate than thought possible, the elite of the Neo-Cons, have no idea how to protect the economy from total collapse. I, submit that, if the Neo-Cons and their tainted economists, go running to the government for the bailout of their banks and systems of control of the money policy, they have not learned the lessons of history. All this is happening because the Legislative and Executive branches of government became complicit in a move to make sweeping changes to the taxation and monetary policies of this country, that would only lead to the failure that is now evident in the economy today. Some of these changes are, doing away with or removing most of the inheritance taxes that were in place, the removing of the capital gains taxes, and doing away with the taxation of the upper 1% of the money earners in the US and leaving the lower 50% to shoulder the burden of 2 wars, an aging and less robust economy and a housing market, that was ripe for failure by having the most creative and unsound mortgages in the world. Now that the economy is falling, and this is not a chicken little story, these so-called “Conservatives” are running to the government, people who have as part of their credo, less government, less spending, less governmental oversight, are now turning in droves to the one source they despise, the government. But these are the same people who have made the laws, made the policies that have been the source of the economic collapse. Should we the American taxpayer, shoulder the burden any further? Should we have to bailout the very people who have caused the problem in the first place? Surely, these men and women, who are earning 6 and 7 figure salaries, can contribute some or all of their earnings to the bailout of the system that they and their bought and paid-for congress have created.
Report thisBy God?FreeDumb?, March 19, 2008 at 2:07 pm #
you, however are on the right track.
Report thiskeep up the good fight for truth.
By shinypeter, March 19, 2008 at 12:56 pm #
(Unregistered commenter)
Please return my text to me. Since it was sent as a ‘reply’ it has not appeared as a post. As a result I have no copy. Thankyou, Peter.
Report thisBy shinypeter, March 19, 2008 at 12:44 pm #
(Unregistered commenter)
The serendipiutous mutation of the West into communism is only bizarre and surprising when one maintains the fictions we have been inculcated with. When one sloughs off the layers of mind control that we have all been raised in the communisation of the West has been the hidden agenda for over a hundred years. Soviet and Nazi social models were rehearsals for what is being rolled out right now, in its digital hi-tech format. We look on, wringing our hands in moral indignation with our feet still encased in the cement of hypnotically installed world views. This economic collapse is orchestrated to a drummer no one hears, or is capable of hearing, given the blind spots incorporated into our subjectivity. Problem-Reaction-Solution. The solution ready to be wheeled out is a privately owned planetry digitilized economy that doubles as the best totalitarian control that fictitious money can buy.
Report thisThe next generation won’t sort it since they have been scientifically deprived the skill of thinking for themselves, taught to think in hierarchical authority that reaches to the heavens of their restricted understanding. They live in the body heat of the herd and crave the warm feeling inside an ideology. Ideas are subversive. Critical thinking an unused muscle. Food is not associated with alimentation; it is fixed on the wrapper by massive, subtle, cradle-to-grave mind control.
By God?FreeDumb?, March 19, 2008 at 10:47 am #
Beyond Capitolism… Is Corporationism
Report thisPurple Girl
Lets not give them the benefit of such an out dated- irrelevant term as Capitolist, and Corportionist. These entities are corruptionist and love their Free market, love Innovation, love our Democracy.
it works for them. Dosn,t necessarily mean it works for the World.
Dosn,t mean It works for God(Or, whomever you choose).
By Purple Girl, March 19, 2008 at 7:28 am #
Let’s not give them the benefit of such an out dated- irrelevant term as Capitolist, they are Corportionist. These entities Hate the Free market, Hate Innovation, Hate Democracy!
Report thisTheir goal is to pocket every assest given to Mankind (by a god and’or Nature) and enslave the masses. The las tGreat frontier of their conquest is US. The fact they have granted themselve (seized) the Rights and Priviledges Proclaimed by Our Founding Fathers for the PEOPLE is evident in every article they mistakenly allow US to read, and those we are able to get out while there still remains some rements of a Free Press (and the blessed Internet, they ae trying so hard to control)
As for the Economy I must ask…Wht th eHell does the US Treasury do?? Our economy and our futures were handed over to Private enterprise about 80 yrs ago to the ‘Front’ called the ‘Federal Reserve’ and their ‘Guido’ Strong Arm the ‘IRS’, granting the Gambling Privieldges to the ‘Stock market’ (pervayors of endentured Slavery- current and FUTURES). We have been Infiltrated, controlled and Betrayed by these entities. It’s time we put them back into their Pandora’s box. Demand the cancellation of our’Contract ’ with the ‘Federal Reserve’, Demand Taxation on be on Items which gain Profits -not even exchange (labor=wages- an even trade) and Demand that essentials for our use be taken off the Stock market- Food, Natural Resouces and Human Labor! this FRAUD, this money laundering this Racketteering will not Follow US into th eNew Millenia!
By cyrena, March 18, 2008 at 10:53 pm #
I agree to all Fadel.
Guess I’m one of the few as well.
I’ve even tried to warn some..not of the impending crises here, (which I knew would happen) but just of their own materialistic values and priorities.
But, for so many Americans, who have seemingly been ‘socialized’ to capitalism and the superficial priorities of materialism and consumerism, it just doesn’t ‘register’ until it slaps them in the face.
Sometimes, even THAT doesn’t work. Even then, they’re still looking around (at anyone other than themselves) for somebody to BLAME.
Such as it is.
Report thisBy Joe, March 18, 2008 at 10:19 pm #
(Unregistered commenter)
re: para 1, Dionne must know that rich capitalists are not necessarily “conservative.” Try the Kennedy clan’s source and continuation of wealth.
para 3, if “titans” refers generally to big corporations, the fact that they have “stopped investing” is a notably worthy fact. Co’s are piling up cash, the better of them reducing debt to zero. Though blooming recession requires lack of capital-spending on new equipment, etc, the solvent status of these companies is a model to be emulated by credit-card-happy consumers and by our Federal government.
para 6, The role of Bernanke and his Federal Reserve is not to prop-up the stock market, it is to keep the country solvent. This involves not borrowing from China and not flooding the country with worthless paper dollars. Bernanke is as worthless at the Fed as Harry Reid is in the Senate. Balls on a heifer, both.
Causes of the Depression..crazy credit-spending by Americans of all classes to buy stocks and get rich like those big guys. The big guys sold big, the rest took a fall. Stupidity trumps greed.
Re: the author’s closing implications (Cohen, etc)that the Fed government should be permitted to regulate/control the “financial system” is absolute insanity. Communist China has been doing this for sixty years. Oh, wait, they’re doing OK. Never mind.
Report thisBy Fadel Abdallah, March 18, 2008 at 10:06 pm #
Before there is hope that things get better, all artificial walls, including Wall Street, must come down. Thats why I am one of the very few who are not disappointed at whats happening to the the U.S. and world economy.
Capitalism as it has been practiced in the last few decades has grown to be a system without a soul; and in my humble opinion, anything devoid of soulfulness is bound to crumble. Unbound greed, materialism, and usurious interest are bound to come to haunt those who take these as the ultimate values; its the classical case of chickens coming home to roost! These are simple facts of life for which one does not need a graduate degree in economics to understand!
I would like to add that to view the current economic crisis in isolation from and unconnected to the six years of disastrous wars by evil Bush and gang, is a short-sighted reading on this issue. Even the Greeks, who introduced democracy to the world believed in NEMESIS: the goddess of retribution, who punishes human transgression of the natural right order of things and the arrogance that causes it.
If you wish to get further insight into this, please read Chalmers Johnsons NEMESIS: THE LAST DAYS OF THE AMERICAN REPUBLIC.
Report thisBy writeon, March 18, 2008 at 4:44 pm #
(Unregistered commenter)
is this current crisis of Capitalism really the Big One? The biggest financial crash since the Great Depression, or even worse, a semi-permanent slump that we may never crawl out out of?
This is very gloomy, but necessary. If we consider the challenges we face; rapid climate change, environmental degredation, the coming energy crisis, booming population, the growing struggle to feed oursleves… and then add a severe economic downturn on top of it all, we could be facing something truly horrible - the end of the world as we know it!
The challenges we face need a lot of money thrown at them, in a depression it’s dog eat dog, Capitalism becomes a monster, red in tooth and claw. It’s true nature becomes apparent.
So whilst it’s tempting to want to see the Capitalist criminal class get what’s coming to them, the consequences for everyone else of an economic collapse are frightening and dire, who knows where it might lead? So we have to hope that the system doesn’t collapse in a totally chaotic fashion, an orderly transformation to a more sustainable system is a better and less bloody alternative. At least that seems true, at least in theory. In reality I don’t believe the Capitalist system is reformable at all. What’s bizarre and ironic is that there is already a great deal of ‘socialism’ in the US system, only it’s mostly applied to the rich, what we’re seeing now is welfare Capitalism in action!
Report thisBy DennisD, March 18, 2008 at 3:54 pm #
(Unregistered commenter)
“Be Careful What You Wish For”
So EJ - wishing to win the lottery to be able to put gas in my car should or shouldn’t count in the not too distant future?
Report thisBy JW, March 18, 2008 at 3:01 pm #
(Unregistered commenter)
“I dont fault Ben Bernanke, the Fed chairman, for being so interventionist in trying to save the economy. On the contrary, Bernanke deserves credit for ignoring all the extreme free market bloviation. He doesnt want the economy to collapse on his watch, so he is willing to violate all the conservatives shibboleths about the dangers of government intervention.”
Oh come-on, you don’t fault Bernanke for using billions of tax-payers’ dollars to bail out a rich company and its rich share-holders? If the continued existence of Bear Stearns is really so important for the economy then there are better ways to keep them alive than giving the Wall Street giants a $30B loan at rates that no private lender would ever give them. That’s pretty much giving money away and the Wall Street types know it; they get rich by borrowing money at a lower rate than they lend it out. This article explains it very well: http://www.truthout.org/docs_2006/031708J.shtml
Report thisBy particle61, March 18, 2008 at 2:55 pm #
(Unregistered commenter)
...and socialize the losses, is the old robber baron credo-
Thanks, Mr. Dionne, you are exactly right. The big-boy-capatilists as well as suburban-small-timers (who do little more than dutifully consume and mouth the doctrinal platitudes of the high priests of commerce) all become instant socialists whenever their rear-ends are exposed. In a psychological sense, doing whatever it takes out of the drive for self-protection is a human trait that even fundamentalist capitalists evince…as with all humans, when blinded by the fear of expiration they often dispense with even the most ingrained and fervantly held belief structures.
And it doesn’t surprise me at all that these same ‘capitalist-only-when-we-are-making-piles-of-money-at -the-expense-of-others’ turned into ‘socialists’ because they felt the cold steel of the economic gun barrel on their collective temples did not have the perspective to see that they were as blinded to their greed as they are incapable of understanding the crass hypocricy of their current appeals to big government to save their arses.
While the MSM focuses on changing the focus, bankrunblog follows the collapse in real time-published by the editors of redstateupdate.net, bankrunblog follows the current economic crisis and its financial and social consequences.
http://www.redstateupdate.net/bankrunblog
Report thisBy Tex, March 18, 2008 at 2:04 pm #
(Unregistered commenter)
nationalize the losses to the taxpayers…
insure the profits for the chosen few…..
make sure the CEO’s get their millions to funnel
Report thisback into political bribes to insure their next foray
into the endless cycle….
By Eric L Prentis, March 18, 2008 at 1:29 pm #
(Unregistered commenter)
Chairman Bernanke and the Federal Reserve have taken the unprecedented, unilateral step of assuming market risk in an effort to assure Wall Street investment banks do not go bankrupt. Unfortunately, Chairman Bernanke has no real world experience and the unintended consequences of his actions could be grave. The moral hazard for Chairman Bernanke is that he will be a hero if he can pull this high wire act off, but if not, Bernanke just resigns and the public is left to pick up the pieces of his ad hoc decisions that are made on the fly.
Report thisBy God?FreeDumb?, March 18, 2008 at 1:26 pm #
http://www.nytimes.com/aponline/world/AP-Vatican-Pa lm-Sunday.html
Pope: Enough With Slaughters in Iraq
The Associated Press
Sunday 16 March 2008
Vatican City - Pope Benedict XVI issued one of his strongest appeals for peace in Iraq on Sunday, days after the body of the kidnapped Chaldean Catholic archbishop was found near the northern city of Mosul.
Report thisBy God?FreeDumb?, March 18, 2008 at 1:21 pm #
I am proud to share with you some exciting news!
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I am proud that POGO has been singled out as one of the organizations that uses its resources—the resources that you choose to provide us—wisely and responsibly.
Report thishttp://www.charitynavigator.org/
http://www.pogo.org/
By KISS, March 18, 2008 at 8:56 am #
Taken to its’ ultimate goal that would be a Monopoly or a Cartel. Where is the Freedom in that? Henry Kaiser once said that He didn’t mind dropping a bundle in the car market, what bothered him was that he did not even make a dent. This was because the Big Three had complete control of the market and banking. Tucker found the same and even had to contend with forces that were illegal, he too was forced out. Steel industries, rubber industries and all giants did the same. Regulation by government is the only way to keep the Free Capitalism system Free. Financial, Pharmas, and Insurance industries are collapsing from the sheer madness of their arrogance and greed. Once the Keynesian theory of banking was looked on with disdain by bankers and financiers but was highly sought of to use leverage of up to 30 times by these same CEO’s and now the Keynesian theory is working in reverse. I thought we were in big trouble 25 years ago…sometimes I get ahead of myself. Is this the crisis that will keep Bush in office till death?
Report thisBy Paul, March 18, 2008 at 8:20 am #
(Unregistered commenter)
I think the article misses one of the more irritating aspects of capitalist true-believers, which is that it’s like Communism. Really! If only the market was left entirely alone to run itself, without so much as a whiff of intervention from the government, the current problems wouldn’t have happened, or would have been much less severe, or would be over much quicker. Just as with Communism, you just need to buy the entire package to get the proper effect; anything less just isn’t enough.
Personally I think capitalism is a good but imperfect system which needs to be counterbalanced by good (but inevitably imperfect) government. My view has the advantage, I feel, of being attainable.
Report this