Monday, September 15, 2008
Wall Street's Troubles Are Yours, Too...
So goes the headline of an article about the Lehman Brothers' bankruptcy (after the firm managed to keep its boat afloat through the financial panic of 1907 and the Great Crash of the 1920's it was sunk by the Bush tidal wave) and about the equally troubled times of Merrill Lynch and AIG. And of course it's true that the troubles of Wall Street are our troubles, too, but not for quite the reason the author of that article intends.
No, we are not equally guilty of greed and short-sighted gambling with the loaded dice of the market-place. No, not all house buyers bought houses they couldn't afford for selfish and greedy reasons. And no, most of us ordinary folk did not benefit from the anything-goes decades in the financial markets, and among those who did benefit the culprits of the current crisis benefited the most of all.
Rather, those troubles are our troubles for two fairly obvious reasons:
First, the powerful in this society still have the power to make the less powerful suffer in their place, and while the trickle-down theory of economics appears not to work that well when times are good, it sure works great when times are bad. What the top layers rain down on top of the ordinary working people I leave to your imagination, but it translates to unemployment, loss of health insurance, retirement savings which are barely enough to buy a stamp and so on. Misery, in short.
And how to avoid that misery? Here is the second reason why we are fucked, my friends: The only way to avoid that wholesale misery is by accepting a slightly smaller (though still very unfair) degree of suffering, and that is by a taxpayer bailout of all the financial firms which fail. Or most of them. We ordinary people are expected to pay the piper either way. We can choose a deeper recession or we can choose to pay more taxes to perhaps avoid one.
But isn't it usually the case that who pays the piper calls the tune? What happened to that idea? For instance, when I read about the financial firms negotiating with the federal government the first image in my mind would not be the government representatives kissing the toenails of the CEOs who have come in for some more money. But that's how these negotiations appear to be going: The firms send in some tough guys who threaten to cut the throat of the market unless money is forthcoming and soon, and then the government gives them the money. Or rather, loans without any good collateral. Toenail clippings, old copies of the New York Times, perhaps even snake scales. All good collateral.
What happened to the idea of demanding concessions from the firms before they are offered any help? I have this crazy idea: Suppose that the federal government told the industry that it would not bail out any firms unless the whole industry agreed to new government regulations which would stop this crisis from happening again in the near future? Now wouldn't that be something? It would take us back to the way things were before the Reagan revolution, back to the times when unregulated markets weren't regarded as the greatest thing since the invention of the zipper. It would let us say in public that wholly unregulated financial markets sometimes look exactly the way the U.S. financial markets look today. Markets Gone Berserk.
Of course today's picture isn't quite right, either, because wholly unregulated markets aren't supposed to get bailed out by the evil, evil government at all.