The events of the last week are the most momentous events of the Bush era in terms of defining what kind of country we are and how we function — and before this week, the last eight years have been quite momentous, so that is saying a lot. Again, regardless of whether this nationalization/bailout scheme is “necessary” or makes utilitarian sense, it is a crime of the highest order — not a “crime” in the legal sense but in a more meaningful sense.
What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism — where they reap tens of millions of dollars and more every year while their reckless gambles are paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapse? We’ve retroactively created a win-only system where the wealthiest corporations and their shareholders are free to gamble for as long as they win and then force others who have no upside to pay for their losses. Watching Wall St. erupt with an orgy of celebration on Friday after it became clear the Government (i.e., you) would pay for their disaster was literally nauseating, as the very people who wreaked this havoc are now being rewarded.
More amazingly, they’re free to walk away without having to disgorge their gains; at worst, they’re just “forced” to walk away without any further stake in the gamble. How can these bailouts not at least be categorically conditioned on the disgorgement of ill-gotten gains from those who are responsible? The mere fact that shareholders might lose their stake doesn’t resolve that concern; why should those who so fantastically profited from these schemes they couldn’t support walk away with their gains? This is “redistribution of wealth” and “government takeover of industry” on the grandest scale imaginable — the buzzphrases that have been thrown around for decades to represent all that is evil and bad in the world. That’s all this is; it’s not an “investment” by the Government in any real sense but just a magical transfer of losses away from those who are responsible for these losses to those who aren’t.
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Can anyone point to any discussion of what the implications are for having the Federal Government seize control of the largest and most powerful insurance company in the country, as well as virtually the entire mortgage industry and other key swaths of financial services? Haven’t we heard all these years that national health care was an extremely risky and dangerous undertaking because of what happens when the Federal Government gets too involved in an industry? What happened in the last month dwarfs all of that by many magnitudes.
The Treasury Secretary is dictating to these companies how they should be run and who should run them. The Federal Government now controls what were — up until last month — vast private assets. These are extreme — truly radical — changes to how our society functions. Does anyone have any disagreement with any of it or is anyone alarmed by what the consequences are — not the economic consequences but the consequences of so radically changing how things function so fundamentally and so quickly?
We still don’t know what’s happening, do we? How much faith do you have in the people who will make it happen?
And while we’re at it, here’s Paul Krugman, who is not at all sold on the deal as it stands, and Matt Yglesias, who agrees that the last thing Congress should do is give carte blanche to this administration or the financial institutions who got us into this mess.
Finally I urge you to go read this, from tomorrow’s Washington Post:
With truly extraordinary speed, opinion has swung behind the radical idea that the government should commit hundreds of billions in taxpayer money to purchasing dud loans from banks that aren’t actually insolvent. As recently as a week ago, no public official had even mentioned this option. Now the Treasury, the Fed and congressional leaders are promising its enactment within days. The scheme has gone from invisibility to inevitability in the blink of an eye. This is extremely dangerous.
The plan is being marketed under false pretenses….