Socializing Risk, Privatizing Profit

With an economic meltdown already in full swing, there is little question injecting some liquidity into the economy is a fine idea. Even doing so by buying a boatload of bad securities that no one seems to be able to properly value might not be fully idiotic, but doing so without taking an equity position in the firms being bailed out is just morally indefensible. Allowing greedy billionaires to suck down more cash like Schlitz from a frat house beer bong, sends all the wrong messages to Wall Street and the world: The United States has finally socialized risk, but privatized profit. And though that may be the Kleptocratic Bush administration's ultimate wet dream, it will ruin America in the long run.

Our government needs to learn from Sweden, which back in the early 90s put about 4 percent of it's GDP into a similar bailout. The thing is, it took equity positions in the places it saved, requiring banks and other distressed companies to hurt shareholders and rich directors as well. We should go even further. With the FBI already looking into the shenanigans that have driven several major firms out of business and the rest of the market to the brink of collapse, it's high time for the CEOs and profiteers who packaged and traded the mortgage backed securities in what is essentially the biggest conspiracy to defraud in several generations, to start disgorging some of their obscene profits. Why not offer the 25,000 people who made the most in this business an opportunity to receive a blanket amnesty in exchange for disgorging 20% of the money they've made in the past four years? It may sound un-American to make the rich give back their ill-gotten gains, but in the criminal justice system there's a term for it: restitution.

It goes without saying that none of the corporate profiteers will be giving anything back anytime soon (they're too busy whining, and lining up to pocket some of the 700 billion dollar bush giveaway) But make no mistake about it: calls to "just move on" will leave the billionaires safe on their yachts swigging vintage champagne, while the hard working people of middle america mortgage their children's futures to pay for yet another case of Cristal.

Comments

[sposton]

Funny thing, they've told us that we need to privatize Social Security because it was insolvent but instead we socialize the private casinos! Apparently Social Security is not too large to fail but Walls Street greed is. And these morons get away with this? Why? Because the only bigger morons are the American people who elect them. Obama, McCain or Bush, what's the difference? They are all in the pocket - bought and paid for by Wall Street interests that have ruined this country. There is only one senator that stand out - the socialist Bernie Sanders! Perhaps we need more socialists of Sanders variety and fewer socialists of Obama, Clinton, Bush, McCain variety!

[onmyradar]

Thank you for this brief but informative piece. We must learn from history, even the collective history of the world. Sweden modeled their bank rescue after successful elements of FDR'S bank rescue of 1933, so hopefully the reactionary "no socialism on my watch" members of Congress can take the information without feeling violated. It seems taking over Fanny Mae and Freddie Mac has already led us down that path.