Every time I see Treasury Secretary Henry Paulson in a television interview, I notice he's developed some new tic. Facial tics. The poor guy, he has accumulated rapid-fire blinking and flashing eyebrows and twitching lips at the corners, and now, full-blown forehead spasms.
But wouldn't you, had you been straining against the oppressively sluggish weight of the most indifferent, out-to-lunch White House halfwit since James Buchanan?
George Bush, I'm sure, sleeps like the gnarly bump on a log that he is, while everyone around him snaps and collapses into neurasthenic puddles. What, George worry? Our latest meltdown, he and Ms. Palin know, is only part of God's plan, but I doubt even God could have orchestrated this byzantine mess, let alone figure it out from here.
After all, economics doesn't seem to be God's strong suit. Just look at the miserable outcome of the divine guidance provided to all those pious, deregulating supply-siders of God's political party who've been in charge for so long. But then again, with or without heavenly direction, economics isn't really any economist's strong suit, either. A darker or more elusive science there never was.
The oddest aspect of this latest "downturn" is that the layman could see it coming. Pretty much everyone on the street knew that when we place at the helm of the economy people who say they can, for instance, slash taxes and thereby increase government revenue -- well, don't you know, there's something suspiciously off balance about the macro- and even microeconomic intuition of such stewardship.
Yet we put them in charge of the whole shootin' match nevertheless, from the specifics of fiscal policy to the general oversight of high and private finance. The result was what Secretary Paulson now calls "excesses." Others call it blind, untrammeled greed and kleptocratic government by corporate lobbyists.
Peter Peterson, a former commerce secretary and current prophet of doom, took time off this week from his regular nervous breakdown over our skyrocketing deficits to say of this economic catastrophe du jour: "My goodness, I’ve been in the business 35 years, and these are the most extraordinary events I’ve ever seen." And last night, on PBS Newshour, an academic economist who appeared to have actually learned something from his studies told us to rest assured, "there is a light at the end of this tunnel; it's the train wreck we're headed for."
At least he belied the joke -- Q: What do you get when you cross the Godfather with an economist? A: An offered explanation you can't understand.
There is, however, at least one other anti-light, if I may, at the end of this tunnel. And that is, there will be much more privatization of profit and socialization of loss. Translation: you're going to get stuck with this tab. You can bank on it.
The New York Times reported yesterday that "the weekend’s events indicate that top officials at the Federal Reserve and the Treasury are taking a harder line on providing government support of troubled financial institutions…. Both Mr. Paulson and [Fed chairman] Mr. Bernanke worried that they had already gone much further than they had ever wanted, first by underwriting the takeover of Bear Stearns in March and by the far bigger bailout of Fannie Mae and Freddie Mac."
Bailout -- an alternate term for nationalization, which means you are now an involuntary stockholder in what was a grossly mismanaged candy store with trillions in mortgage debt. You may lose your own home, but you'll forever own a piece of the greater rubble.
And quite frankly, what choice did Paulson and Bernanke have? Furthermore, what choice will they have but to take a softer "line on providing government support of financial institutions"? It may have been George W. Bush and his deregulatory ideologues (some less ideological than others, like Paulson) who got us into this mess, but now they're as shackled with executing a 180-degree philosophical loop as you are with the bill.
Still, that's not the most egregious jaw-dropper. No, that still awaits us.
You remember those little guys, those laymen, I mentioned earlier? -- the ones who could see all this coming, because since kindergarten they've been properly taught there ain't no such thing as a free lunch?
Well, just watch. About half of them will turn right around and vote for the lobbyist-adorned likes of John S. McCain, he of Bubba Gramm friendship and that of other corporate socialists who in time would revert to the very same Bushian bullshit that got us where we are.
At least that's what the polls say. Only November will tell if we're as collectively stupid as we appear to be.
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Bailouts
Isn't it interesting that the same people who think "government is the problem, not the solution" start looking to the government for assistance when a financial crisis occurs? And I also find it quite amazing that it's the government that bails out the wreckage of the private corporations and businesses, rather than the other way around.
Wouldn't it be great if large corporations and the obscenely wealthy all got together and decided to bail out the government's monumental debt? It doesn't work that way, does it? Most corporations pay virtually no taxes, the top 1% income bracket always has a way out of contributing their fair share, and they are always looking for ways to reduce even the little bit they do pay.
The "newspeak" and double talk of 1984 has been far surpassed by the lies, manipulations, and greed of the current administration and crop of powermongers.
PM, the economics of this meltdown are actually very EASY....
Back in the 1980s, fat-cat Republicans & insider Democrats pushed for "DEREGULATION" of the Savings & Loan industry.
There were and are of course 1,000 different financial institutions, but the S&Ls were designed (by federal laws as outgrowth of the Depression-fighting financial reforms of 1930s) for one thing: TO HELP Americans BUY HOMES.
THIS would be the engine that drove the Ameican economy, the miracle of affordable home ownership, democratically transferred downwards to millions of Americans EMPOWERED by the New Deal, Great Society, and other dozens of other economic programs that had taken 100 years to enact following the boom-&-bust nightmares of unregulated, predatory capitalism and laissez faire economics that led to the Great Depression.
How many Americans know that John D. Rockefeller had his private security guards MASSACRE miners and their families in the Colorado mining wars;
http://en.wikipedia.org/wiki/Ludlow_Massacre
or that there was a similar battle between mine-owners and miners demanding Union safety standards and pay in West Virginia, the Battle of Blair Mountain?
http://en.wikipedia.org/wiki/Battle_of_Blair_Mountain
or that Henry Ford's hired goons twice tried to assassinate UAW founding president Walter Reuther, and that those goons did succeed in beating Reuther within an inch of his life...twice?
But Fat-Cat Righties and Wall street sharks were NOT SATISIFIED to have that huge national NEST EGG of S&L home-owner deposits "OFF LIMITS!" for SPECULATIVE investments, so they pushed for DEREGULATION.
"SPECULATIVE INVESTMENTS" is what INVESTMENT BANKS are for.
REGULATIONS basically MADE A LINE between ROCK-SOLID HOME-LOAN backed S&L banks, and speculative Investment banks.
Righties wanted to DESTROY that line, so they could used THE NEST EGG, the FINANCIAL BEDROCK of America's middle-class home ownership, to finance the BIG BOYS & big speculators GAMBLILNG on BIG, FAST, EASY RETURNS.
The technical means they did this was called "SECURITIZATION", or "BUNDLING" a hundred or thousand home mortgages together, RESELLING THEM to a bigger, Wall St. bank or investment bank, and telling investors "TA-DA! LOOK - this financial instrument IS NOT SPECULATIVE - it is BACKED BY REAL home values!"
BUT - multiply this "bundelling" and "securitization" by 1,000 times, by 100,000 times, by one-MILLION times, and what you have is BIG WALL St. MONEY POURING IN to the little ol' middle-class home-owner market, the Big Boys looking for QUICK AND EASY RETURNS.
It is a classic PONZI or PYRAMID scheme. Unable to REGULATE the flow of HUGE money into a basically limited market, you get HYPER-INFLATION, home prices DOUBLING in 2 and 4 years in some markets.
Then, to compound the problem, PROPERTY TAXES go up as well. Making once affordable real estate bargains far less affordable - example, a $500 PER MONTH tax payment on a $300,000 home. That's real money.
The worst part of all this, today's mortgage and BANKING CRISIS is an EXACT, VERBATIM REPEAT of the late 1980s S&L crisis.
Here is the book that spells it out: "INSIDE JOB: The LOOTING of America's Savings & Loans" by Muolo, Fricker, and Pizzo.
http://www.amazon.com/Inside-Job-Looting-Americas-Savings/dp/0070502307
ANYONE WHO READ THAT BOOK in early 1990s, KNEW that A NEW BANKING CRISIS would be inevitable in a decade or two, because the "Major Media", DC press corpse, financial press, and even corporate Democrats, would JOIN the Right-Wing PHIL GRAMM/George Bush/Dick Cheney "DEREGULATION!" LUNATICS, in pushing the old S&L crisis out of the news, and PUSHING FOR THE SAME damn crisis causes (DEREGULATION!) all over again!
Even today, Speaker Pelosi and her CORPORATE, neo-con-lite DC Democrats are ABJECTLY UNABLE to INFORM American consumers and taxpayers JUST HOW MUCH taxpayer money is being SHOVED OUT THE DOOR to prop up all these Wall St. fat cats.
THE NUMBER ONE DUTY of Congress is to OVERSEE the US taxpayer treasury. It is a job that Speaker Pelosi has been AS INCOMPETENT as George W. Bush. IF she doesn't want to impeach the president and vice president, SHE should be IMPEACHED, for FAILING TO SAFEGUARD taxpayer billions from PREDATORY Wall St, oil baron, and insider looting and fraud!
Great post...