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 So Much for the ‘Masters of the Universe’Posted on Sep 22, 2008The über-capitalists of Wall Street are all socialists now. Free-market ideology, it turns out, doesn’t pay the mortgage. That appears to be a job for, ahem, Big Government. Let’s be clear about why we’re facing a crisis that could pull down the global financial system. The irresponsibility of individuals who bought houses they couldn’t quite afford pales in comparison to the irresponsibility of the financial wizards who built on those shaky mortgages a towering edifice of irrational faith. Someone in the government should have looked at all those trillions of dollars worth of mortgage-backed securities and collateralized debt obligations and credit default swaps and demanded that Wall Street prove that all, or even most, of this purported money was real. But we’re in the eighth year of the Bush administration; adult supervision left the building long ago. Now that the whole highly leveraged structure is threatening to fall, some kind of government bailout is necessary and inevitable. But Congress shouldn’t approve Treasury Secretary Henry Paulson’s $700-billion rescue plan without insisting on some measure of equity and accountability. See, neglecting such details as equity—in both senses of the word—and accountability is what got us here in the first place. Congress should have learned by now what happens when this administration is given a blank check. Unlike the run-up to the Iraq war, at least this time there’s a genuine emergency—we came within a whisker of a financial meltdown last week, and we’re still way deep in the woods. No one thinks that delay is an option. Not Barack Obama, who introduced legislation in 2006 to address lax mortgage lending practices and in March proposed a new regulatory framework for the financial markets. Not John McCain, who has been all over the map. Within one week, McCain has gone from saying the “fundamentals of the economy are strong” to declaring that “we are in the most serious crisis since World War II.” But first we need to be convinced that Paulson’s proposal—have the government purchase the bad debt—is the best thing to do. Not all economists believe it is, although it’s true that if you put six economists in a room they’ll come up with seven sharply differing, strongly held points of view about the time of day. Assuming that Paulson’s plan is deemed workable, the “details” yet to be worked out involve staggering amounts of money. Hedge funds apparently don’t qualify for relief, but what about insurance companies that branched out into exotic mortgage-backed investments? What about foreign banks with big U.S. operations? Clearly there has to be some definition of just who is covered, and there has to be some oversight. And now that the government has nationalized Fannie Mae and Freddie Mac, who’s going to run those still-crucial institutions? Who’s going to run the giant insurance company AIG, which was effectively nationalized last week? Maybe Congress can insert a provision that broadly insists on the principle of oversight and leaves the particulars to be worked out later. But it would be unconscionable for Congress to absolve a bunch of wealthy financiers from the consequences of their bad decisions and not do the same for homeowners who showed similarly poor judgment. Paulson has indicated his awareness that this is, indeed, an election year—and that members of Congress are not eager to go home to their districts and explain why Wall Street pooh-bahs get to keep their mansions and their yachts while working-class families lose their modest homes. The more contentious issue is the idea, supported thus far mostly by Democrats on Capitol Hill, that there should be salary caps for executives of companies that take advantage of the government bailout. Paulson complains that this would provide a disincentive for companies to participate in the program—whatever the program turns out to be—but it seems to me to be a reasonable idea, and a winner politically. Why shouldn’t the executives who put their companies at risk by making unwise investments pay a price for their lack of prudence?
We can’t just let the system collapse—nobody wins in that event. But I thought one of the fundamental tenets of capitalism was a direct relationship between risk and reward. The Masters of the Universe who created this mess ought to share the pain of cleaning it up.
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Bush the Infallible
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Jump to Comments
By Frank, September 24 at 9:59 am #
Jackpine Savage wrote:
Really? You sure about that?
Prices of existing homes in the U.S. fall by record amount
By Burton Frierson 2 hours, 1 minute ago
NEW YORK (Reuters) - Prices of U.S. existing homes suffered a record drop in August and the rate of sales tumbled, offering little sign of improvement in the source of the financial crisis in the United States…
http://news.yahoo.com/s/nm/20080924/bs_nm/us_usa_econo my_housingbiz
Report thisBy cyrena, September 24 at 12:05 am #
Xntrk wants to know”
“.. Can we at least cut out the BS and call the spade a ‘F**kin’ Shovel”?"…
...Fascism! Fascism… That is the word you are looking for!”
~~~
Yep, we can. It’s Fascism. Put’s Adolf to shame.
I’m with mackTN..
“… Tell AIG to kiss my bl.... ..s.”
Mine too....
Report thisBy jackpine savage, September 23 at 7:18 pm #
All this talk about how bad mortgages got us into the mess is way, way, off base. Many people bought homes that they couldn’t “afford”, but they generally bought those homes when the price of housing was shooting sky high. There was the impression that one could overspend and the value of the home would increase fast enough to take care of that issue (for a while, it was). It was real estate as an “investment” towards making money rather than building wealth over the long term.
The problem is/was that home prices were rising because the very same people who are talking about systemic collapse now were then flooding the market with cheap credit. By manipulating the money supply they were manipulating the market.
Real estate values are not declining; they are returning to their nominal value. The problem is that people bought real estate at an inflated value...egged on by these jackasses with their fancy mortgage instruments and unrealistically low interest rates.
In the crudest way i can say it: they are simply rolling us over to do their best on a new orifice...no kiss, no nothin’.
Report thisBy Margaret Currey, September 23 at 5:25 pm #
(Unregistered commenter)
When my health forced me into early retirement, I thought I could get a job anywhere with my skills, that is until all temporary jobs were outsourced, but going to social security and trying to get disability I was told you can get a part time job, when I replied that my age was against me, I was told that was against the law.
So I live on my income and when I see that these heads or corporations get such a large sum of money I know that they cannot spend it all they pass it on to their children, which is why they want to elimiate the death taxes, all the reasons they give is just a smokescreen.
To give the foxes the chickens in the henhouse is crazy.
Will the last person to leave America leave a copy of THE CONSTITUTION so the people that come after us REMEMBER THE AMERICA THAT WAS.
Report thisBy mackTN, September 23 at 4:53 pm #
(Unregistered commenter)
I guess asking China for the bread is not an option this time, huh?
This bailout is nothing more than a variation of the theory of trickle down economy. Fix the institutions so that they can continue to fleece their clients.
Why not bail out the consumers? Buy out our bad debt, half of which is usurious interest anyway? Then give everyone $30,000 to hang on for a year until our reliable free market rights itself?
The fear you hear from wall street and congress is a taste of what the rest of us have been experiencing for some time now. That’s right lobbyists! Without us to victimize anew, you lose your shirts. No more consumers to buy your overpriced crap that fails as soon as it’s washed.
Tell AIG to kiss my bl.... ..s.
Report thisBy Frank, September 23 at 1:45 pm #
Let me be even more clear about why we are in this mess:
1999 Financial Modernization Act
2000 Commodity Futures Modernization Act
These deregulation bills ensured that neither the SEC or the Commodities Futures and Trading Commission regulated financial swaps between companies. This allowed the behavior that lead to the collapse of Enron and the subprime mortgage debacle.
Who was the sponsor of these bills, you ask?
Phil Gramm, who is John McCain’s chief economic advisor and the architect of McCain’s economic plan for America. Ya know, the guy who recently called the US a ‘nation of whiners’ for complaining about high gas prices and a slumping economy.
This is the man that will be steering America’s economic future under a John McCain is presidency.
Report thisBy Margaret Currey, September 23 at 1:32 pm #
(Unregistered commenter)
This is what happens when there is a smaller government, not that this government is smaller but the foxes guarding the henhouse have done it again.
This time it is much larger than the Savings and Loan bailout that happened about two decades ago.
On another note there was another person who preached the word about samller government that person was R. Ragen and of course the tax break also went to the more afluent of society seems as though nothing changes.
Ragen grew up poor but when he got richer he did what the rich do he became a Republician.
Maybe someone should have been listening to Ralph Nadar.
Report thisBy Xntrk, September 23 at 12:11 pm #
(Unregistered commenter)
Eugene Robinson, and every commentator in the Mainstream Press, and most of those who comment on this board, continue to call this Bail Out of the Wealthy “Socialism”.
Can we at least cut out the BS and call the spade a ‘F**kin’ Shovel”?
Fascism! Fascism… That is the word you are looking for!
If it bothers you to say is, stand in front of the mirror and practice before going out in public
Report thisBy Outraged, September 23 at 11:11 am #
An article @ Alternet, by Alternet staff outlines the reality of the mess. Alternet:
“Already deep in deficit, the administration wants to borrow $700 billion dollars—in addition to the $900 billion already spent this year to prop up troubled lending institutions and deal with the fall-out from the housing crisis—and entrust it to Treasury Secretary Henry Paulson, fresh from a long run on Wall Street himself. He’d then buy up worthless paper from struggling banks.
Who would get the money? Nobody knows. Paulson says he wants to hire Wall Street firms to oversee the process.
Under Bush’s plan, the taxpayer would get little, if anything, in return. The whole thing would happen without Congressional oversight, save for a semi-annual report on the process, and Paulson’s actions would be beyond challenge in the courts.
It is an economic coup d’etat in the making.”
10 Things You Should Know About Bush’s Trillion Dollar Fleecing Plan
1. Shock Doctrine: Profiting from Crisis
2. Has a “Consensus” Really Formed Around the Idea That Something Must Be Done?
3. Is This Even Legal?
4. Some Lawmakers Are Angry
5. Opposition Across the Political Spectrum
6. Do Joe and Jane Tax-Payer Really Have to Foot the Bill?
7. What Would a More Progressive Bailout Look Like?
8. Could the Plan Get Better Through Negotiation?
9. Foreign Banks Can Cash in Too
10. Is This Signaling a Decline in American Power?
http://www.alternet.org/workplace/99876/10_things_you_ should_know_about_bush’s_trillion_dollar_fleecing_pla n/?page=1
Every point includes expanations. Be sure to let your legislators know how you feel, and what you know.
Report thisBy Purple Girl, September 23 at 10:26 am #
How about the Gov’t bail out all of US, before these Brick & Mortars. Tell the Banks they are out of luck- Only those who are living entities will be granted a pass on their Debt. If you are going to hedge your bet on who will inject further spending into the Economy- The masses win hands Down! eliminate my high interest credit card debt which I have been forced into accumulating because pay has not kept up with inflation/cost of living in Decades. then all my Disposable income could go to buying, I’ll Buy Stuff- needed and enjoyed. by doing that I will help pay anothers Wage, and they will do the same.
Report thisWe see what corps do with their profits they pay out astronomical golden parachutes and huge dividends to their upper echelon, and skip increasing the multitudes who work for them’s wages! NOTHING TRICKLES DOWN except shit that rolls down hill
So instead of spending a Trillion bailing out these Con Artists and Snake Oil Dealers ..Bail Out those they Conned and who can and WILL generate more Jobs in the economy. BOTTOMS UP BABY!
By Mainesongwriter, September 23 at 10:17 am #
Here’s a musical antidote to having your head explode in anticipation of the impending Gulf of Wall Street bailout resolution:
“WE"RE GONNA HAVE A SCARY HALLOWEEN!”
Report thishttp://soundclick.com/share?songid=5896354
By Alan, September 23 at 8:16 am #
(Unregistered commenter)
Laura: How’s the packing coming Dub?
Report thisDubYah: Cain’t fin’ ma nucular tie.
Laura: It’ll show up hon.
dubYah: Ya know, it’s a shame ‘bout havin’
ta spend 700 Billion on the banks, I was
plannin ta fund a war in Pakistan before I
leave this house.
Laura: Don’t worry Hon, Dick has a separate
fund for that.
DubYah: There it is my nucular tie, my
favorite tie, a Southwest string-tie with a
glowin’ lump o’ Utah Uranium f’r a
closure. Well we’ll be back at the ranch
soon and all this will be behind us
and we won’t hardly give it a thought.
Gotta find my choppin weeds boots.
By Hammo, September 23 at 8:11 am #
You can now take advantage of this special offer. But you must act now! This offer is available for a limited time only! To find out more, see the article:
Wall Street’s special offer – but you must act now!
Sept. 23, 2008
AmericanChronicle.com
http://americanchronicle.com/articles/75216
Report thisBy G.Anderson, September 23 at 7:35 am #
The mortgage problem is just a symptom of a deeper problem, one which the bailout will not address.
In America we don’t produce much of anything but debt, that debt is sold overseas, to investors to make more money.
This acts as an incentive to create more debt, and secure the debt that is already sold, to make it more attractive to foreign investors.
This country can no longer service any more debt.
American’s simply can’t afford to take on more debt. So even if there is a bailout, it’s really not going to help in the end.
Bailing out everyone in this country, the banks, the mortgage holders, every man woman and child will not bring back manufacturing, or increase wages.
Our revenue stream is still heading outside the country, leaving us poorer but no wiser.
Report thisBy Leefeller, September 23 at 6:33 am #
Love those blank checks, can I have one? You know, this would not have happened now, if we had done what McCain asked and privatized social security. Hell, we may have made it until January 2009, least we would have had a better Xmas.
Report thisBy Novista, September 23 at 6:12 am #
Here’s an analysis of how bad it is:
http://www.marketoracle.co.uk/Article6404.html
Read it and weep. And remember, the gumint never told you this.
Report thisBy RdV, September 23 at 4:14 am #
There really is no comparison between deceived people who bought homes they couldn’t afford because they were preyed upon by those who knew full well they couldn’t afford them- but were scamming the lawless system to make hay while the sun was shinning.
After us the deluge…
Interesting observation out of the Newark Star Ledger:
“The Russians nationalized profit and privatized losses. We privatize profit and nationalize losses. And that’s the worst sort of socialism...”
Report thisBy samosamo, September 22 at 9:36 pm #
You are right about the people going for mortgages that they have no hope of being able to pay. But what would you expect otherwise from the average john q. public that has fallen into the ‘american standard of living’ consisting of no concept of functioning in the maintenance of a democracy for our republic.
Report thisThe invention of tv, a possible source of great educational use, was used to turn such a vast part of the people into a vegged out population that the threat to the national security to them is not getting to watch american idol, the uninterrupted flow of tv coach potato sports all year round or their ‘lets go shopping for something because it is the thought that counts or let’s go for a drive to nowhere in our big fancy cars.
And that is the reality.
The trivial, the useless, the nothing is more important than what is serious everyday attention to what is actually going on and what can one do to prevent, stop or change it. I would venture to say that most people or at least a very big portion of them are thinking $700,000,000,000.00 isn’t much, if they have even heard of it. Through the subversion of the msm and the plots and schemes from the neocon think tanks came a grand plan that appears to be to have the desired effects.