Wall Streeters Become "Welfare Clients" (Again)
by D. Cupples | The Federal Reserve has offered a $30 billion credit line to help JP Morgan buy Bear Stearns and deal with the consequences, about 10 times more than the $236 million sale price.
I grasp the reasoning, but can you smell the odor of hypocrisy? For decades, Wall Streeters (and the politicians they fund) have trumpeted against welfare (for middle-class folks) and government intervention (to protect middle-class folks) -- as though defending some grand principle.
In reality, Wall Street's "free market" defenders were fighting for practical, self-serving results: they simply did not want to give up a portion of their collective billions to create decent jobs, to help middle-class folks, or to follow regulations that protect us ordinary investors. The Washington Post's E.J. Dionne sums up the hypocrisy quite neatly:
"Never do I want to hear again from my conservative friends about how brilliant capitalists are, how much they deserve their seven-figure salaries and how government should keep its hands off the private economy.
"The Wall Street titans have turned into a bunch of welfare clients. They are desperate to be bailed out by government from their own incompetence, and from the deregulatory regime for which they lobbied so hard. They have lost 'confidence' in each other, you see, because none of these oh-so-wise captains of the universe have any idea what kinds of devalued securities sit in one another's portfolios.
"So they have stopped investing. The biggest, most respected investment firms threaten to come crashing down. You can't have that. It's just fine to make it harder for the average Joe to file for bankruptcy, as did that wretched bankruptcy bill passed by Congress in 2005 at the request of the credit card industry. But the big guys are "too big to fail," because they could bring us all down with them. (Washington Post)
That, right there, is reason enough for to enact reasonable regulations and tighten the reigns a bit on the "free market." A bail out without new regulations would send a bad message: if you're big enough, you can gamble big (and stupidly) without facing the consequences, because Uncle Sam will help you pay for your mistakes.
Can you imagine our federal government guaranteeing ordinary citizens' losses at the Las Vegas roulette tables? Dionne continues:
"Enter the federal government, the institution to which the wealthy are not supposed to pay capital gains or inheritance taxes. Good God, you don't expect these people to trade in their BMWs for Saturns, do you?...
"I don't fault Ben Bernanke, the Fed chairman, for being so interventionist in trying to save the economy. On the contrary, Bernanke deserves credit for ignoring all the extreme free-market bloviation. He doesn't want the economy to collapse on his watch, so he is willing to violate all the conservatives' shibboleths about the dangers of government intervention. As a voter once told the legendary political journalist Richard Rovere: "Sometimes you have to forget your principles to do what's right.
"But if this near meltdown of capitalism doesn't encourage a lot of people to question the principles they have carried in their heads for the past three decades or so, nothing will.
"So now the bailouts begin, and Wall Street usefully might feel a bit of gratitude, perhaps by being willing to have the wealthy foot some of the bill or to acknowledge that while its denizens were getting rich, a lot of Americans were losing jobs and health insurance. I'm waiting." (Washington Post)
Didn't our nation learn from the Savings & Loan scandal some 20 years ago? From the stock market crash of 1929, after which the federal government created the U.S. Securities and Exchange Commission and finally began regulating the securities industry?
Apparently not, but our nation can learn from this latest mess. Let's hope that our taxpayer-funded politicians actually will learn. Memeorandum has commentary.
Recent BN-Politics Posts:
* Judge Pressures Bush Administration re: Missing Emails
.
Comments