Photo source: List of the Day
Last night our Supreme Leader issued a call for the American taxpayer to rescue his cronies from their own greed. It what is the largest cash-grab in our history, Bush proposes giving billions—maybe trillions—of dollars to his drinking buds on Wall Street to keep them from going broke.
Bush does paint a relatively accurate picture of how we got into this mess, but he blames foreign investors and consumers. While these people were culpable to some degree, I believe it was a shameless financial—or as my dad would say, the worshipers of Mammon— industry that got us into this mess.
Since good rhetoric always denies itself (“I come here not to praise Caesar…”), let’s take a look at what he actually said:
- “Financial assets related to home mortgages have lost value during the house decline, and the banks holding these assets have restricted credit. As a result, our entire economy is in danger.”
- The banks and consumers may be overreacting, but what got us there in the first place was deregulation and greed. The housing bubble was driven by an unrealistic expectation that home prices could inflate to infinity. Deregulated financial institutions were able to relax their lending standards to lend money to people with absolutely no chance of ever paying back those loans. They did so in the expectation that when they foreclosed on those mortgages the properties would be worth more than the loan or that the purchasers would be able to flip those houses for a profit.
- In some cases, purchases were not even required to be able to pay the interest on the loans; the amount over a specified minimum payment would be rolled back into the loan. After making payments for several years, the consumers would actually owe more money than they originally borrowed. Even Bush admits, “Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.”
- Then the bubble burst. Again.
- “This rescue effort is not aimed at preserving any individual company or industry. It is aimed at preserving America’s overall economy.”
- Then why does the money all go to Wall Street, the ones whose greed caused the problem? Mr. President, the amount of money you’re talking about equates to almost $300,000 per adult in this country after taxes. If you simply gave that much money to the people, almost all of us could pay off those mortgages on which you blame the problem.
What happens if we don’t save the rich? Bush essentially says we’re screwed.
America could slip into a financial panic and a distressing scenario would unfold.
More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically.
And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.
Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And, ultimately, our country could experience a long and painful recession.
So the option is to save the rich or we all go down together. Is it better to go down together or drown keeping the heads of our betters above water? Isn’t there another option? What about just using that money to pay off those troubled assets and giving working class people a break? That’ll never happen here.
The irony is that under the Republican free-trade regime, the United States is about to become the most heavily socialized country in the world—without doing a thing to promote social justice or take care of those most at risk. But then, as one friend of mine put it, “We socialize losses. We privitize profits.”
Is that what Bush meant when he said, “The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal.” If so, let’s all hope that the government can turn a profit on them—eventually.