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Hanging the Little Guy Out to Dry
WHEN YOU are too big to fail, you are bailed out.
When you are too small to save, you are down and out on the street.
Some aspects of the Wall Street crisis are tough to understand. But one economic principle is pretty clear.
When a really big company goes bust, the little guy pays with his home or job. But those CEOs and money managers who boldly march their corporate empires into bankruptcy just get paid millions and millions of dollars more.
From Washington, inconsistency is the policy order of the day.
President Bush lurched briefly into the spotlight, turning from a repressed memory into a poor excuse for a Harvard MBA.
In just the past week, the federal government let Lehman Brothers Holdings Inc. fail; applauded a merger between Merrill Lynch & Co. and Bank of America; then turned around less than 48 hours later to bail out insurance giant American International Group Inc.
Before that, bailouts rescued Bear Stearns, Fannie Mae, and Freddie Mac. Each was deemed too big too fail.
But no one wants to help taxpayers who are losing homes and jobs. In the grand scheme of American capitalism, they are overreaching specks, too stupid, presumptuous, and inconsequential to spare.
In February, Bush signed into law a $170 billion stimulus package that did nothing for those hit hardest by the home mortgage collapse.
And Congress, controlled by Democrats, went along. Even if they didn't have the votes to override a presidential veto, the people's representatives could have spoken up for the people. Instead, they assisted in the charade. House Speaker Nancy Pelosi stood smilingly behind the president as he signed what he called "a booster shot for our economy." Ouch.
Last week's mantra from Washington was to bail out the big financial institutions and then regulate. Let's see if this time the Democrats pay more than lip service to relief for homeowners faced with foreclosure. Until then, this mother of all rescue missions is just another way of saying, "Send them to their room for a time-out with a threat of future punishment."
Republican presidential candidate John McCain is turning into the king of shotgun marriages, from his partnership with Sarah Palin to his sudden embrace of government regulation. After a career in Washington devoted to the pursuit of deregulation, greed is no longer good for McCain's political aspirations. So now, he rails against rapacious Wall Street and tells voters, "We have got to fix it." Given his track record, it's doubtful McCain will.
Meanwhile, in a back to the future moment, Democrat Barack Obama sequestered himself in Florida with the Clinton economic team, minus Bill and Hillary. According to an Obama press release, the presidential candidate discussed plans to stabilize the financial system with a group that included two former Clinton Treasury secretaries - Robert Rubin and Larry Summers; and two former Clinton National Economic advisers - Laura Tyson and Gene Sperling.
It's time for Obama to show some mettle. Stop talking about "regulation," and start backing change people can really believe in - a serious plan to bail out the little guy, as serious as the one offered up for corporate big shots.
The country's conservative moralists shake their finger at low-income home buyers who dared to make a grab for a humble piece of the American dream. When the dream turns nightmarish, the foreclosed-upon are held personally accountable for their bad debt.
But there's no personal accountability for those who actually understood the fine print behind those shaky loans, because they wrote it. No one tells them to hand back their bonuses. If they are eventually forced out, they walk out with huge paychecks.
By week's end, some editorials were calling for executive compensation reform. But who really believes there is an end in sight to golden parachutes for corporate America's golden boys and girls?
The total in taxpayer money that will be pledged to rescue the economy - as much as $1 trillion - is stunning. So is the general philosophy that supports it.
For the most part, those cut loose tried to play by the rules.
Those who were saved broke them.
22 Comments so far
Show AllTAX STRIKE NOW!!!
"Crack open a cynic and you will find an angry idealist!"
And, withdraw your money from the banking system, STOP buying the useless, plastic, chinese/wal-mart CRAP, and ARM yourself to the hilt.
EXACTLY! Well said!
"Crack open a cynic and you will find an angry idealist!"
okay, i'm with you guys! no more of this i say! we all have got to put our foot down now! write letters, petition, strike, withdraw money from your account. anything else? i'm game.
btw, thank god i'm working abroad. they won't get a penny from me if i can help it. AND i don't shop at wal-mart, starbucks, et al... i rarely go to target... now, i'm on the sidelines, mad as hell, thinking that if i had not taken this job abroad, i would be milked dry of more taxes (it's not like we get a damn thing for them anyway...) and would be struggling just to get by..... and probably jobless.
if you can't leave the country and work now, start a revolution.
A real Libertarian would not bail out anyone. Faux "libertarians" and "conservatives" would bail out Wall $treet and say FUCK YOU to Main Street.
If "the taxpayers" knew the numbers, they'd be rioting in the streets.
Every $1 trillion "our" government "spends" to "save" their friends translates to $8000 per taxpayer (rounded up, based on 130 million taxpayers. Ignore the 'per citizen" numbers - non-taxpayers are not relevant.)
So far, just this year, "our" government has promised their friends over $3 trillion of taxpayer money (that we actually know of) in return for, what everyone from the NYT to the WSJ refers to as "toxic assets."
That's $24,000 per taxpayer, whose average income is $32,000/year - leaving the average taxpayer with a net-of-gross of $8000K for 08. Minus taxes at, say, a medium 25% (of $32K=$7000,) and, this year, the average taxpayer will take home an astounding $1000, or about 80 bucks a month. (And a handful of toxic assets!)
How many taxpayers voted to give AIG, Fannie, Fredie, and the rest basically their entire year's earnings as a thank you for robbing us blind?
Of course, add in another $8K for the Pentagon ($1 trillion budget,) another $8K for Iraq/Afghanistan ($1 trillion spent so far,) and another $24K to cover the $3 trillion 08 Fed budget...
And every taxpayer is on the hook - this year only, remember - for at least $64,000 apiece, or twice the average income.
Toss in each taxpayer's share of the National Debt, now approaching $10 trillion, or another $80,000 per tp... for a total of $144,000, or nearly 5 years worth of the average taxpayer's income.
These are the real, raw painful numbers that need to be shouted to every sucker - er, I mean taxpayer - in America RIGHT NOW. Maybe, just maybe, We The People will wake the f**k up and, you know, revolt or something...
"If "the taxpayers" knew the numbers, they'd be rioting in the streets."
I wouldn't bet the farm on that. The normal American is a mindless, gut-stuffing, "American Idol"-watching sheep. Turn off the sporting events and outlaw beer and THEN you might see your riot!
"Crack open a cynic and you will find an angry idealist!"
Nah they can't do the math to begin with, think finances are way to complicated for them to understand, they think the gov't is going to pay (not getting the fact that the gov't =the American taxpayer and only care what is on the TV tonight...i.e. football and American idol.
Those of us who are paying attention are screaming at the top of our lungs on deaf ears.
Or raise gas prices.
ha! Yes, it's time for OBAMA and his innate understanding of economics, to "Save the Free World".
How about in exchange for all the US paper that the Chinese have "bought" to pay for our holy war (in exchange for letting them "fix" the system)... we just allow them to put melamine into our food... again? Yes, some people have been reduced to eating pet food for years now, and most reportedly survived to vote another day.
The market should be good now that agrocorporatists control the entire food chain. The latest test in China didn't actually kill tooooo many babies... and babies can't really vote anyway.
So we contract for a couple trillion of the dollars that we have shoved down their throats and which they then dutifully "loaned" back to us. Give them a four year run at dumping as much melamine as possible onto the US shores and call it even. That should just about prop up "The Party" for the next election cycle... and then we can dance this dance one more time.
I'm learning the steps real good... how 'bout you?
How is it that anyone cannot see that this whole thing has been engineered?? Bush did what he does well...take over the top position, bankrupt the company funneling all of the value to the few at the top and sticking it to the workers...which in this case is us.
The whole thing is a big scam.
The US is ripe for true class warfare. Those who are and have been getting rich at the expense of the rest of us are accountable and should turn their ill gotten gains over to pay for this debacle, not regular folks scraping to get by.
OK partly I am just venting, but it is true that the inequities in this country have been created deliberately, and those reaping unearned rewards from this system should give it back.
Certainly no CEO's or CFO's or other executives of the companies being bailed out should receive any severance packages. They should simply be sent packing. Let's face it, most if not all of them have socked away millions if not billions of dollars which they did not earn. The folks working as janitors in the halls of Wall Street work harder than the execs.
And yes...if we stop buying the crap that is being sold to us, made by exploited people in other parts of the world to mollify the exploited people here, that will also contribute to change.
I remember the old slogan "Eat The Rich."
Of course it was engineered. Depressions always are and I think we are headed towards one.
uh, i hope you're not just venting as you say. it's time to get mad and it's time to say "no more"! it ought to be the start of a true class warfare.
but, you know, we'll still have those just barely getting by who'll go home after busting their ass working to raise lots of tax money for an ungrateful uncle sam, who'll just kick off their shoes, crack open a beer, turn on the t.v. to watch a silly sitcom, or pick up their cell phones to talk for at least an hour to someone about who's in bed with whom or bitching about lack of money.. who has never even heard of nader, mckinney, or wall street shenanigans... or who profess proudly at never having read a book or never wanting to read them... and will vote for whoever the media says they should vote for depending on if they watch fox and friends, cnn, or msnbc.
well i got news for these lazy asses. there are those of us who DO give a damn and pay attention to what is going on. let's throw away our useless TVs, cell phones, credit cards...let's abondon our automobiles so that we don't have to put more money into the hands of greedy insurance companies and contribute to environmental degradation. let's refuse to shop at sams, costco, target, dunkin' donuts, crispy creme, baskin robbins, etc.. (these companies make a killing feeding us garbage so that more people can make fun of fat americans) and don't buy animal agribusiness products. let us not give the latter any more incentive to take public property for private rape and exploitation at the expense of others... let's throw away all the trappings of corporate america and form local communities... let's form dense communities, eco-villages that invest locally and commit to sharing and producing their own things for the most part. we don't have to pay rent, we don't have to have a house note or a car note. think about it..... we can live with the earth instead of striving all the time to destroy and conquer it. we can live without torturing animals or bull-dozing forests to make room for another parking lot, another high-rise building, another steel-wire fence, another office where CEOs go to get paid over 300x more money than you'll ever earn in your life....
but sadly, even the most hardcore of my friends would rather talk the talk than walk the walk. heck most of them will vote democrat......
I agree with you totally.
http://www.opednews.com/articles/Why-Save-Capitalism-by-wagelaborer-080920-685.html
thanks for the link! liked the article a lot. opednews is definitely where one can find great stuff to read unlike things from cnn, msnbc, etc...
Is it enough that the crisis we're talking about was precipitated by a scheme to exploit lower income people (i.e. subprime loans)? Add to that the hubris ala Phil Gramm et. al that regulation isn't needed in our marketplace. Now, we tax payers are asked to bankroll a bail out for the very predators preying upon economically vulnerable people. Then the capper: The federal government is going to manage these companies and attempt "corrections in the market"? Seems to me the government has failed us all in a myriad of ways including, healthcare, infrastructure, disaster relief(Katrina) the debacle in Iraq, and more examples than would fit the CD's prescribed 1,000 word limit.
I read news and blogs hoping that citizens are coming up with solutions and ways to positively influence how our government functions. Thanks. I'm a first time poster and value what I read here.
As a start I'll be getting pictures of some of these WALL STREET hacks, and greedy CEOS. Their pictures will be put on big signs..... with some nice wording such as "THIS IS WHAT A PIECE OF CRAP LOOKS LIKE".
Coffeelover,,,,
When you are too big to fail, it is time to break you into smaller pieces.
This is the grand finale of eight years of capitalist, militarist, imperialist hell. How many tens of millions voted for this TWICE?
"The country's conservative moralists shake their finger at low-income home buyers who dared to make a grab for a humble piece of the American dream. When the dream turns nightmarish, the foreclosed-upon are held personally accountable for their bad debt.
But there's no personal accountability for those who actually understood the fine print behind those shaky loans, because they wrote it. No one tells them to hand back their bonuses. If they are eventually forced out, they walk out with huge paychecks."
What say you, athiest?
Charlie Chaplin unintentionally wrote the perfect summation of this mess at the climax of Monsieur Verdoux, "Numbers justify!"
What if there was a shortage of beef and fatty foods. Maybe we'd have some riots then?