Wall Street Welfare
As it is called by E.J.Dionne in what is likely the last word on corporate America’s newly found use for government and Wall Street’s currently hypocritical stance towards government and its utility:
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.
Of course, plenty of conservatives will make the case that to let the Market be damaged, damages all of us. They may be right, but they’ll be tone deaf to the fact that they are hijacking the position of folks who want to preserve some portion of the social safety net. They’ll keep lobbying not just for bailouts, but for their endless subsidies which conservatives will continue to support, because the American conservative vision of free markets always needs a government handout. And while conservatives continue to argue for the transfer of taxpayer funds to corporations that simply don’t need it, they’ll continue to try to bamboozle the rest of us with the idea that somehow we are all getting paid way too much, have overly costly benefits, will cost too much at retirement (and are, therefore, the real cause for the failure of these businesses).
While I understand what Bernanke was trying to do with this bailout, I don’t think that he went far enough. If the Fed is to provide a safety net to these corporations, they should get something in return — including the removal of the management team that got the firm to needing the bailout AND a restructuring of labor and other obligations that minimizes the overall risk to taxpayers taking on this new business risk.
Tags: Bush's Fubar Economy, Business, Corporate America, The Economy
The lost confidence of our corporate captains in each other is not where we lose big. Where we lost big is that other nations now know they can’t trust us, so investment in our economy and using the dollar as the world standard is gone.
I don’t think that there will ever be an economic superpower of our status in the last half of the the twentieth century. Maybe this is good in terms of spreading risk; in the last eight years we have proper fucked quite a few foreign economies not through design but through greed driven self-serving business practices gone ignored by state and federal oversight.
What Dionne said is an absolutely legitimate argument. The biggest enemy to conservative fiscal policy are greedy, unethical companies and companies that expect to be bailed out for their failures. It shoots the free market analogy in the foot every time.
Unfortunately, while I still believe that government should be small and only do a few things, but do them well, those “few things” have to include regulating businesses to prevent abuses.
The free market only works when its actors have good intentions.
I need a shower now. This sucks.
I think you can count on the directors being sacked. They’ll head for the shadows but it won’t do much good. Sadly, they’ll get picked up elsewhere with similar or even better jobs.
“Saving” these firms is worse than letting them fail. While I feel for people who lose their life savings in these situations we should not be in the business of cleaning up when they fail. Does the government step in to help the guy who owns a corner store and runs it into the ground? No.
Yes the market is in near panic mode but if we don’t correct the errors now, when will we? Next time it might be too big to fix, what then?
how much they deserve their seven-figure salaries
LOL…seven? that is so 90’s.
8 figure bitch! that’s how I roll
8 figures from prostitution? You’d need a 10,000 person man ho’ stable to achieve that!
So JP Morgan gets a fire sale bargain for Bear Stearns, with the US backing them up. Maybe it’s payback for J Pierpont himself bailing out the Treasury from the Panic of 1893? I still don’t like it. And now the market is anticipating another big bonus from the Fed, which they will have to dispense or there’ll be another selloff. Say what you will about Greenspan, at least he kept his mouth shut and made the markets wait for the decision; Bernanke telegraphs his punches from a mile away.
Yes the market is in near panic mode but if we don’t correct the errors now, when will we? Next time it might be too big to fix, what then?
The problem the Market has now is immediately sourced to its worthless mortgage holdings (or Big Shitpile as Atrios calls it). Paul Krugman and others are calling for the Feds to set up something along the lines of the Resolution Trust Company to buy up these crap mortgages, sell whatver assets they can to pay back taxpayers. I’m undecided if this is the right course, but I do agree with Krugman, DeLong and Roubini and others who are looking or a way to bail out the system and not the people who caused this situation.
Does the government step in to help the guy who owns a corner store and runs it into the ground? No.
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Remembering how our congressional delegates stood with the capitalists punative bankruptcy bill that smacked the average Joe to the curb, will they similarly stand against this bailout?
The free market only works when “heavily” regulated. Under George War Hoover all regulations were taken off, letting the greedy, modern day robber barons steal the country blind.
Bear Stearns employees all got huge bonus 6 weeks ago. The Fed is bailing out Bear while pension funds invested with them, is gone.
Disaster capitalism is the problem. Toss the Milton Friedman trickle down economics overboard, and start sending some of these robber barons to jail. Jail is the only remedy for white collar crime.
This is how the government bails out wall street at the expense of the middle and lower class and wipes them out in the process. It is about to get better on wall street, much worse on main street.
Privatize the profits, socialize the losses.
It is the same mechanics one saw at work in the utopian vision of the cultural revolution in China without the overt violence, rather using economic warfare instead. It is a reflection of a difficult and complex policy situation and doctrinal chicago school economics. When there are a lot of homeless old people on fixed incomes we will really start to feel it.