As I have witnessed the financial meltdown on Wall Street over these past 10 days and the subsequent response of the government to this crisis, I have had a number of thoughts and questions, many of which are shared by millions of observers. Will the executives of these failed companies get “golden parachutes” and float away scot free? How significant will the tax increase be to pay for this debacle? How did we get here in the first place? And who has been minding the store? Beyond these obvious questions which pundits far smarter than me can answer, I just have a few observations.
1. John McCain blames the “greedy Wall Street bankers” for the demise of Wall Street. How stupid does McCain think we are? Greed is what Wall Street is about. That’s why we invest in the first place; we want more than we have now. Gerhard Gecko (ala Michael Douglas) in the classic movie, Wall Street, said it best in his speech on greed – Greed is good! At least from his perspective. We may dress greed up and call it “profit” or “return on investment,” but the reason all of us have money in stocks and mutual funds is because we want more. It’s what capitalism is about.
The problem isn’t greed, it’s no boundaries. The practice of selling funky mortgages and getting people locked into high interest rates was well known. This was not a new deal. The practice of “short selling” on stocks was a well established practice. Borrowing money to invest money in hopes of making it back is part of the investment game. These were all dangerous practices (driven by greed) that we all knew about. And if some people were a bit dishonest or manipulative in their interactions, hey all is fair in finance and war. So, we didn’t put a stop to it. We didn’t blow the whistle. We saw greed as the ultimate goal, and if people could get away with it, more power to them.
So why are we surprised? It’s not greed, it’s the game itself that needs correcting. Capitalism is designed for there to be winners and losers. In other words, it is designed for somebody to get bilked. What happened was the big boys got stung by their own game. Interestingly, however, now we have to pay.
2. So who is going to really pay for this bailout? The pundits say the taxpayer, but no politician in his right mind is going to raise taxes, so what will happen is that there will be cuts. Where will the cuts come from? Where else, but from the programs that serve the voiceless and the poor: social service programs, educational programs, student loans, health benefits. We rich and middle class folks can complain all we want, and maybe Congress will throw us a bone, but it’s the poor who will pay….as they always do.
3. Finally, if the government can come up with $700 billion to bail out Wall Street, and $800 billion to conduct a war that should never have been started, why can’t it find a way to provide universal healthcare or equitable school funding or adequate housing for all? Committed capitalists cry “socialism” when such things are mentioned, but today they are quite pleased that the government decided socialism is okay when it works for the well-to-do.
In the end my bank accounts and pension funds are safe, but I wonder at what cost to the most vulnerable in our society. And what do our actions reveal which our mouths are loathe to say. Liberty and justice for all …or just the select few?