The Big Bailout of '08: Hindsight Is Blind
Sometimes you just don't know what to think.
On the one hand, there's Michael Moore's new movie, Capitalism: A Love Story, which takes an outraged look at the havoc that the financial crisis has caused on your basic, working (or now non-working) American citizen. Yeah, I know, a lot of you folks would drop Mr. Moore off a mountain made of his own money if you had the chance. But the guy can make a case.
His point is that our economic system is controlled by idiots, con-men and selfish, greedy SOBs who don't give a damn about us and run the system for their own benefit. I don't think you have to be a flag-waving leftie like Mr. Moore to agree with that one. I think a lot of Glenn Beck people would sign on to that premise.
The fat man in the hat is also righteously peeved that the government bailed out all those big banks and insurance companies that nearly brought us all down. And again, there's a fair chunk of right-thinking America that's hopping mad about that, too. So maybe Moore's anti-capitalist screed is actually an interesting nexus at the point where right and left converge in hatred of the system that rewards failure and lets the bad guys run the next iteration of the machine. Nobody ever lost money at this point underestimating the anger of the American people.
And of course we all have plenty to be angry about. We could spend the next decade yelling at, prosecuting and punishing the moral morons and stupid geniuses who gave us our recession.
But then there's James B. Stewart's exhaustive, exhausting look at the Eight Days that shook the world back in September of 2008, in the September 21st, 2009, issue of The New Yorker. It's a tick-tock about the week that the guys who run global capitalism bumbled their way toward the decision to go socialist for a while and bail out the system that pays for their limos. What you see is how close we all came to losing pretty much everything -- our collective life savings, our homes, the insurance that protects us from disaster (subject to acts of God and any other consideration they can think of to avoid paying you). We get a worm's-eye view of familiar figures like Paulson, Bernanke, Geithner, Bank of America's Ken Lewis, Lehman's clueless Dick Fuld, pre-bonus John Thain of Merrill, the gang from AIG, thrashing around trying to figure out how to prevent the entire mess from going down the drain it was circling.
If you haven't looked it up, you should. If it shows nothing else, it demonstrates how in a crisis the false divisions that separate one global behemoth from another, and private enterprise from government, dissolve, leaving a management team all working for the same big corporation. You know it. You work for it too.
So that's where I'm stuck, another year older and deeper in debt, as the old song goes. On the one hand, you've got to hate the fact that the miscreants wriggled off the hook, and that in many ways -- just like after the fall of Communism in eastern Europe -- the same creeps who screwed things up are back running the store, the new boss same as the old boss. All those big bailouts make a lot of people want to scream, and truly, there are so many things to despise about Wall Street. On the other hand, where would we be if the so-called free-marketplace had been allowed to go down, to be righteously allowed to fail? Every single person now reading this, and even those losers who aren't, would be up the creek.
I don't know where I come out. I'm confused. So I guess I'll just handle that like everybody else these days. I'll get mad! Ah, that feels better!
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"On the other hand, where would we be if the so-called free-marketplace had been allowed to go down, to be righteously allowed to fail?"
Although the Great Depression lasted for many years, it is important to remember that the world eventually recovered. It also is important to remember that a number of "fixes" were instituted afterwards that kept things going relatively well until they were undone by advocates of the "so-called free market" in both political parties.
Had the system been allowed to "go down" in 2008, or perhaps earlier, the vast majority of us would have suffered economically, and likely still would be suffering. However, that would have forced society to address the problems in the "so called free market" and perhaps would have resulted in new "fixes" that might provide another 60+ years of relative economic stability.
In the world of physical activity, there is a commonly known dictum, "no pain, no gain." Based on the failure of Congress and Wall Street to adopt measures to correct the problems that gave rise to the bailout, it appears that this dictum also applies to the world of finance. Perhaps the pain that Mr. Bing is so glad we avoided would have been beneficial in the long term if it forced Congress and Wall Street to adopt meaningful reforms.
Oh, and everyone has a share.
What's good for the Syndicate is good for America -- Milo Minderbender.
I'm glad that someone of Mr Bing's intelligence and -status is as confused as mere me.
I suggest that he goes out for a nice gourmet meal and then goes to hear Wynton at the Met. After tee matoonies he will feel a lot better. Just don't think about the imminent ecological catastrophe looming on the horizon.
Everyone should pay attention to the end of the fiscal year numbers that will be released by the government at the beginning of October. We will probably learn more about what happened in the bailout and how much money was really stolen.
"n the other hand, where would we be if the so-called free-marketplace had been allowed to go down, to be righteously allowed to fail? Every single person now reading this, and even those losers who aren't, would be up the creek."
Sorry, I respectfully disagree with you on this - the system should've been left to fail; how else are we to rid ourselves of this pustule? Yes, it would be painful for a while, but there are plenty of conscientious and honorable people who could've helped to establish a fair and manageable system devoid of the gimmickry and greed; yourself to name one.
I'm, however, amused at great Stanley Bing having to wrestle with the financial conundrum we mere mortals find ourselves in, as so rightfully pointed out by Mr. Moore; Alas - to be or not to be, that is the question?
This economic catastrophe started with a decline in home values caused by the Wall Street Profiteers turning home mortgages into gambling bets.
What absolutely should come out of this mess is that owner occupied home mortgages should be taken out of the hands of the gambling Profiteers. They should all be held by Fannie Mae and Freddie Mac. They have been the only ones buying home mortgages for over a year now anyway. By doing so, they saved the nation. Try to imagine where we'd be now if housing had fallen another 50%. We'd be a third world economy.
Home values need to be reset to their current value and pay the Wall Streeters off. Make it illegal for them to buy, hold, or sell home mortgages or the mortgage derivatives they call Credit Default Swaps.
Our homes are the biggest asset most Americans will ever own. Why, oh why, do we let Wall Street gamble with them?
Because some right winger thought it was a good idea. Everything needs to go on the market as far as they are concerned.
I'm so glad I read this.
"On the other hand, where would we be if the so-called free-marketplace had been allowed to go down, to be righteously allowed to fail?"
Let's run with that question. Say we had taken all that bailout money and bailed out individuals instead of corporations (with a certain burden of proof that one is elligible due to foreclosure through no fault of their own but rather their bank's greed in increasing mortgage rates to unsustainable levels). The money would not pay off mortgages but buy owners lots of time to shop another mortgage or discuss the current one with their financial institutions. What we would have is fewer financial institutions and less human suffering. I'm trying to figure out just exactly what or who was bailed out and why tax dollars were used for the corporations instead of for the people.
Oh that's easy:
A small cabal of central bank shareholders, oligarchs and monarchs, enjoy the right to create money out of nothing. Don't ask me how they got that gig. Then they loan it to the government, and to us, at interest. Wish I could do that. I'd start the First Bank of HPS. Guess I don't have the right bloodline.
Anyway Government borrows money from them and promises our labor in recompense. We are serfs, you see, our parents signed us up for serfdom when we were babies. About 1/3 of the year we work for these money-creating oligarchs and those monarchs overseas, for free. Didn't you know? When you retire they give you a pittance. It's the least they could do, really.
After about 80-100 years neither we (collectively or individually) nor the government can afford even the minimum payments toward our debts. By then the oligarchs not only have most of the money, but they are able to foreclose on anything we have of value. Now they have most of the properties and businesses too. For free! Awesome! For them I mean.
At some point the center cannot hold and it all falls apart. Kind of like the game of Monopoly: At some point one guy ends up with Park Place and you know it's all downhill from there and nobody wants to play anymore. Which brings us to . . . Maybe March of next year, we'll see.
So the short version is: The bailout was another transfer of wealth from us to them, via the banks that do their bidding. The bankers are well compensated for acting as middlemen and buffers between themselves and the plebes. If the people get angry enough the Powers just sacrifice the bankers. No big deal; they'll hire more later.
To answer Bing's question. Had we let the banks fail, we'd be in the middle of spending several trillion dollars on jobs programs, Single Payer health care, and education for all. Instead, we're continuing to carry on bank criminal activities as usual.
You could get drunk. That's my plan. Just saying.
I so wish the people wouldn't conflate free-market capitalism with debt-based monetary systems and crony corporatism (aka fascism, aka socialism for the rich). They're really not the same. Unless, of course, thats the whole point? i.e., deflect our rage from the REAL problem, the power and money-generating system itself?
What's happening to our economy is what ALWAYS happens during the end stages of a dying fractional-reserve styled currency. The dollar is on its deathbed. There is nothing we can do about it: Failure was baked into the cake in 1913.
The oligarchs kept the party going as long as it could, but it's over: The dollar is going down. Deal with it. When a new global currency is presented to "save" us it will be our grandchildren who get baked, and the next time there's a crash there will be noplace for them to hide. Oh well, you didn't like them anyway, right?
Bottom line: Michael Moore's movie is just the oligarchy yelling SKYLAB! and pointing to the sky, and stealing everyone's wallet while the country looks up. Huh. Good luck with that; maybe Boobus Americanus will just stand there all confused. Then again they might just pick up the pitchforks. We shall see.
It's pretty clear who's behind this movie: Just look at where the opening was held.
Republican lawmakers received emails, calls, faxes etc 100 to 1 against TARP I the bailouts.
Republican congresspeople joined with Democrats and voted for it anyway ... in Bushes final days in office. This spawned the Tea Party movement.
In subsequent bills most Republican lawmakers finally listened to their constituents and voted against further bailouts, but they were passed anyway.
Democrats have been cheerleading and leading the charge to send boatloads of money to failed banksters, investment firms, insuranc giants, failed auto makers ...
Just WHO is blind? It certainly isnt the people who could see through all this and opposed it SINCE LAST OCTOBER.
Huffington Post itself was one of the biggest cheerleader for the bailouts.
It's a little late to complain now.
Here's what really happened. The many GOP administrations removed controls that keep the markets honest. Free market capitalists were therefore able to "legally" cheat. Their cheating caused market failure. The market pirahnas were fished out of their ownb stupidity with tax payer dollars. The only way they could think of to hide their direct responsibility for the market collapse is to attempt to blame it on the current administration with a little leger de main. They have little imagination, that's all they could come up with on short notice. Some people are buying the lie, most aren't.
All it took was a little technical tweak to the definition of "person." Once a corporation could claim the same rights of a person real people were doomed. But it was all legal!
"On the other hand, where would we be if the so-called free-marketplace had been allowed to go down, to be righteously allowed to fail?"
It all depends on WHEN you want to begin your "what if" analysis. The bailouts did not begin in 2008. For example, had LTCM been allowed to fail in 1998, it is possible that risk would have been assessed differently and, thus, we might have never had the last crisis.
People in charge routinely underestimate the true cost of the zero tolerance for economic pain. I contend that it is not free. Like the fires not allowed to clear the forest, they merely build up fuel for the next one. In the end, the fire reasserts itself in spite of our tolerance for it.
The next crisis will catch us with several trillions in debt and with little political will for the next round of bailouts. Unless you think this time is different.
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