They manipulate fear, reward greed, and give new meaning to the term “Orwellian.”
They’re not bailing out the single mom who works checkout at Wal-Mart, has a diabetic son, and no health insurance.
They’re not bailing out the guy in Michigan whose job on the factory line got shipped to Mexico with the blessing and subsidies of their administration, and who now kicks cans in the afternoons and wonders how to face his wife.
They’re not even really bailing out the homeowners facing foreclosure who were lied to by bankers about the facts of the housing and mortgage markets.
They’re bailing out the liars, and the bosses of the liars, and the bosses of the bosses of the liars. And every one of those guys is rich, and will stay rich. Investment legend Jim Rogers, from his home in Singapore (where he thinks the future lies), said on CNN,
“I think it’s socialism for the rich. It’s welfare for the rich. It’s a sad day . . . The Federal Reserve may have to go out of business before this is all over, and the American taxpayers are the ones that are getting stuck with all this.
“All these guys on Wall St are still walking away with their huge bonuses. You know, Wall St has paid itself tens of billions of dollars of bonuses in the last few years-they’re not giving it back.”
That was last Thursday, before the new bailout was announced. The plan, which the Republicans running the economy admit will cost taxpayers $700 billion, and which independent observers say will cost at least a trillion. It’s the kind of thing that when the French did it, we called them Commies.
Here is how it works. Markets run by greed and fear. The big rich guys have the greed, and the little poor guys have the fear. The big rich guys get what they want by manipulating the fears of the little guys. And their hopes too–like wanting to own one teensy little house their kids can feel proud of.
So you believe what the banker and the real estate agent tell you. You believe your job is going to last. And you believe your child is going to have a home when school lets out and a doctor when she’s sick.
But things are never what they seem. As in Orwell’s Animal Farm, “All animals are equal, but some animals are more equal than others.”
Friday morning, after the announcement, CNBC’s Squawk Box opened with a shot of the Capitol building, and anchor Mark Haines’ voiceover: “The new Financial Capital of the World—Washington, DC.” He also said, “This is more than a bazooka. This is a B-1 bomber. This is an ICBM.” Haines had this exchange with the show’s economist, Steve Liesman:
H: “In the end the taxpayers are gonna get the bill here?”
L: “Y-yes.”
H: “We’re gonna bail out Wall Street?”
L: “Y-yes.”
Also on Friday another investment legend, John Bogle, founder of Vanguard, said, “We’re playing a game of casino capitalism, interfering with the way the market is working. The government seems punch drunk.”
Prez W stood in front of his big white house and explained: “Anyone engaging in illegal financial transactions will be caught and persecuted.” That’s right. Persecuted. This from the guy who gave us Guantanamo Bay; when Prez sez “persecuted,” he durn well means persecuted.
Is he going to persecute them retroactively? Take away the yacht they bought in ‘04? Get back the money they spent on thousand-dollar hookers in ’05? Seize one of their three or seven or thirteen houses and condos, sell it, and use the proceeds to give homes to ten poor slobs who’ve been foreclosed on?
My assistant said to me today, “My brother and my sister-in-law were both kicked out of their homes. So I’m thinking, if McCain has ten or thirteen homes, can’t he give one to them?” Of course he can’t, silly! That would be socialism for the poor! We only believe in socialism for the rich! Can’t give them health care either. They should save up and buy themselves insurance.
On Saturday, manic CNBC host Jim Kramer said, “We didn’t enforce regulations, we adopted a laissez-faire attitude and felt that the market could never be wrong. It was an ideological and ignorance combination that has made it so that we’ve paid out $900 billion so far from whatever, that hasn’t worked, and maybe we’ll spend another $500 billion and get it right.”
And Jesse Jackson intoned: “Wall Street leaders must not profit from this calamity.”
Ha-ha. Ha-ha-ha-ha-ha. Jesse, don’t you get it? THEY ALREADY DID! WE’RE NOT GETTING IT BACK!
Now comes the real fear: the fear of the Secretary of the Treasury, manipulating the fears of the Senators, dealing with the fears of their constituents, who can only think: Yes, they screwed us over, but if we don’t pay them off now, it might get even worse.
It’s a protection racket. Everyone on both sides of the aisle says, “I don’t see any alternative.” Everyone says, “If we don’t do it, it’s ECONOMIC ARMAGEDDON!” Well maybe it is, and maybe things would get a whole lot worse if we didn’t.
But remember the greed that got us here, the huge transfer of wealth from poor to rich that has already happened, the huge transfer ahead as we pay for this trillion-dollar plan. And it’s not the first time. Huge wealth flowed from the little guys to the big guys in the Savings and Loan crisis of the ‘80s. And it went in the same direction during the dot-com boom of the ’90s.
The rich invent a Ponzi scheme to bilk the little people, they take their money and run, and then when the bubble collapses who gets the bill? Hint: Not the rich.
I asked my wife today what her father–a gracious man who presided over a small bank in Charleston–Jimmy Stewart, not Mr. Potter–would have said about this. She answered, “He would have said the people responsible should be under the jail. Not in the jail. Under the jail.”
Will they be? Of course not. They’ll just go scot-free with their goodies and their sybaritic memories. And then they’ll find another way to get and keep their limos and yachts and hookers. It has happened before, it is happening now, and it will happen again.
Don’t fret, though–it’s just the invisible hand of the Free Market, punching the poor in the face again. And what ever you do, don’t call it socialism.
(For Republican Socialism, part one, click here.)
Your anger is understandable. Many of us share it. But don’t forget that “the rich” are not exclusively republicans. John Kerry, Al Gore, Teddy Kennedy, John Edwards are a few of the names that come immediately to mind. The economic divide is more self-serving than partisan. It’s long been my opinion that anyone who yearns for high public office should probably be locked away in a psychiatric ward!
And on government entitlement programs–what makes someone entitled? I’m happy to give my tax money to those who can’t help themselves, but not to those who won’t help themselves. Government, in my opinion, should act as a safety net, not a shopping cart.
Dear Suzi,
I agree with what you say, and I was rather amazed last night that McCain didn’t call Obama to account on his promises. I support Obama, and I support universal health care, but there are just too many promises. The numbers don’t add up, especially now with this bail-out (to paraphrase Sen. Everett Dirksen, a trillion here, a trillion there, and pretty soon you’re talking about real money). And yes, Democratic fat cats should be called to account–they (Obama included) have taken plenty of that ill-gotten Wall Street wealth. But my point here is that it is hugely ironic to see the Republicans, who have opposed every form of regulation or redistribution, now come hat in hand to a Democratic Congress begging for the biggest government takeover of business since the Russian Revolution. And I must say it’s rather delicious to see their own GOP Representatives standing in the way. Those folks are getting mail 20 to 1 against the Bush plan. That’s democracy for ya.
Mel–
I used to laugh when people said a democratic form of government (yes I know, we’re a republic, not a democracy, but those terms have outlived their usefulness through common misuse) could only last about 2 centuries before it collapsed under its own weight. I’m not laughing now. As foreign as finance and economics are to me, even I can see that the republicans want to eat OUR cake and have it too, territory once occupied by the democrats who dealt openly in redistribution. I don’t understand how a giant corporation can go bankrupt and still be worth buying by another, even bigger company. (That’s not true, of course, but it sounded good.)
I think I’d like to move to Tonga. No pretense there. Just a despot on the throne, more sunshine and salt water than you can shake a Wall Street Journal at, and nobody chasing anybody for their money.
Mel,
Thanks for the article. This is essentially about [i]management accountability[/i]. It is mostly applied in economics when someone (company or individual) makes money in an unfair or illegal manner. It is not often applied, though, to cases in which people lose money because it will be difficult to attribute legal responsibility and intention to someone who went bankrupted.
However, this is an interesting case. The companies that went or will go bankrupted will not suffer the fate of small scale companies and individuals who do in fact have to lose everything, including their personal assets. In fact, as you wrote, the top echelons will get away with enormous sums of money and assets whereas the consequences for the failure will be absorbed, one way or another, by people who have no shares in the companies. We are now cast into a prisoners’ dilemma whereas innocent people have to cooperate, and set free, the prisoner even though they themselves were not part of this scheme at all.
There is not an easy way out (not one that I can see) but the most important thing is the future and how new [i]management leveling mechanisms [/i]could be introduced to prevent this from reoccurring. Thanks for stimulating thought.
Doron