The boil out: Boy, could you get mad!

By
Saul Landau                                                                    Read Spanish Version

The
Ultimate Chutzpah (effrontery to the nth degree) Prize goes to
Treasury Secretary Henry Paulson.
Without
even cracking a smile, this flip-flopper demanded Congress trust him
with unimaginable sums of money to save the very system he helped
steer into collapse. If that’s not chutzpah then the Pope is
Jewish.

Paulson’s
Free Market Uber Alles era crashed in mid September. His dramatic
failure as official national financial manager gave Paulson the
cojones to demand Congress trust him with almost $1 trillion of
taxpayers’ money. Now he can transfer the bad loans and junky
assets of his Wall Street buddies’ to the riff raff (taxpayers).
Indeed, he will hire firms receiving bailout fund to manage the
bailout! Imagine giggles among CEOs of Bear Stearns, Lehman Brothers,
AIG and other failed high fliers when they get more taxpayers’
money to pay their inflated salaries, provide their luxurious perks
and then become brokers for the very government they said shouldn’t
regulate them!

Congress
should not punish the failed financial companies or their executives,
insists Paulson. In July, this three decade Wall St. veteran — he
headed Goldman Sachs — assured the world of the soundness of the
U.S. financial system’s underpinnings. In September, it collapsed.
He vowed to stick with the free market as regulator and not bail out
AIG. Within five days, Paulson was equally committed to bailing out
the insurance giant. He remains a missionary, but his cause has
changed from neo liberalism to socialism for the ultra rich.

Most
socialists think that working people sharing wealth is good. My
father taught me to worry about a system that produces widespread
poverty and esteems Wall Street. “Never trust anyone who makes his
fortune gambling with the money of working people,” he instructed
me. Boy, was he right!

Seventy-five
years after the country had suffered a decade of economic hardship,
the virtual grandsons of the scoundrels who played fast and loose
with the economy in the 1920s performed the same hanky panky on the
modern economy.

Beginning
in the summer and moving into September, giant brokerages, mortgage
companies and banks began dropping like proverbial flies. Then, one
of the largest insurance entities failed. AIG had assets larger than
many countries, but even larger liabilities.

The
failures had accumulated bad loans and junk assets. Banks, brokerages
and insurance companies had bought, sold and borrowed on them. By
September 20, according to The
Wall St. Journal’s
headline, Paulson had been “shocked” into reality.

Reality
meant that the traders — polite word for thieves, speculators and
scammers — shrieked with delight. The government would bail out AIG.
Optimism flowed anew among the club of cynics.

The
joyful cynics on “The Street” cared little about a California
Employment Development Department report of a rise in unemployment to
7.7%. In August, 60,000 fewer Californians had jobs. Officially,
almost 1.5 million Californians are unemployed. Unofficially, that
figure is considerably higher. Workers in construction and farm work
often get paid under the table and thus don’t get listed in
official data.

Two
years ago, unemployment was 5.5%. And, said Palo Alto based economist
Stephen Levy (Center for the Continuing State of the California
Economy), the job situation will likely worsen.

Those
with jobs also feel the effects of the Wall Street turmoil. “I’m
confused and worried,” my neighbor told me. “So I closed my
checking and savings accounts at Washington Mutual,” because she
had read that the bank teetered on bankruptcy** and even though she
had far less than the $100,000 ceiling that is insured by the
government, she didn’t trust either the bank or the federal
officials.

“Your
checking and savings accounts will be OK,” I tried to reassure her.

“Easy
for you to say,” she retorted.

I
didn’t tell her that I, too, had my checking account in Washington
Mutual and that I’d also felt anxious when I read about their
impending collapse.

Who
will buy the bank? Will WAMU also get bailed out? And where does the
process stop? Details of the AIG bailout remain
sketchy.
Goldman Sachs restructured because of its fragility. And Paulson
never explained where the government will get $1 trillion to rescue
the irresponsible companies run by his friends, the MBA
multimillionaires who invested people’s pension money in the home
mortgage equivalent of a
Ponzi
scheme.

“How
could Bush have allowed the situation to deteriorate to this point?”
asked the neighbor, a long time social worker.

Bush
wasn’t paying attention. Aside from his inclination to play video
golf and take vacations, Bush has repeatedly declared his faith in
the magical market as the mechanism to regulate the economy. So he
was wrong – once again – although he didn’t admit it, once
again. He wore that “Gosh, what’s happening?” look, similar to
the expression that appeared on his face after he heard the reports
of the 9/11 attacks. Then, he replaced the dufus look with the “I’m
in charge” expression and offered one-line socialist solutions
–meaning having his affluent friends and colleagues share the
wealth of those worth less.

John
McCain, another faith-based economics Republican who reassured us
that the free market cures all economic ills, also ate his words.
Indeed, if words contained calories, McCain would be obese by now,
considering how many times he’s had to disclaim his own remarks!

This
truth-telling maverick, or lying conformist, blamed greed and then
said he would fire Christopher Cox, the Securities and Exchange
Commission chief, a Republican appointee who until recently shared
McCain’s market faith.

In
1931, the banking system failed, two years after the stock market
crashed (1929) and the world experienced a terrible depression. After
FDR won the 1932 election, he introduced measures designed to avoid a
repetition of the financial shenanigans that led to the global
economic collapse.

By
the 1980s, the born-again free market missionaries had risen to
prominence again, having learned nothing from past events. Men like
Greenspan, and the golden twins of Goldman Sachs, Paulson and Robert
Rubin, dismissed even a possibility that analogies to prior history
might have relevance. The market, they chanted, as if in religious
stupor, will self-regulate.

Indeed,
the market will regulate itself when alligators grow wings.
But even after Bush on September 25 demanded a government bailout,
the
Republican
National Committee platform still claims: “We do not support
government bailouts of private institutions. Government interference
in the markets exacerbates problems in the marketplace and causes the
free market to take longer to correct itself. We believe in the free
market as the best tool to sustained prosperity and opportunity for
all. We encourage potential buyers to work in concert with the
lending community to educate themselves about the responsibilities of
purchasing a home, condo, or land.” (Republican Platform,
“Rebuilding homeownership,” pg. 28) Who said consistency
mattered?

Stick
to the neo liberal religion, which demands citizens adopt shopping as
the spiritual core of democracy. During the 1930s depression weak
willed Americans abandoned shopping as a common spiritual value —
just because they couldn’t afford such an expensive religion? They
even voted Democrat.

75
years ago, 13 million Americans out of 130 million (total population)
were unemployed. Millions were homeless. President Herbert Hoover
worried that too much government intervention would lead to socialism
or fascism. So, he limited his initiatives to a few meaningless
programs. Roosevelt reversed Hoover’s inaction, but even after
eight years of government efforts only war production brought
economic recovery — post December 1941.

Those
memories did not enlighten today’s politicians as they finalized
bailout details — rather than ways to house the homeless. They want
to save existing homeowners, but not as much as saving the credit
system, whatever that is. Congress did nothing to alleviate the
conditions in the new Hoovervilles — tent colonies.
Millions of Americans understand that one or two paychecks away lies
the street, their possible future residence; many of the new victims
are children.

No
bail out or sympathy for them from the President. Indeed, many of the
new poor won’t vote and many Members of Congress will also ignore
them. Few of the affluent would echo my parents: “There but for the
grace of God go I.” Think of the $700 billion spent on wars,
weapons and maintaining 761
bases; also,
the six figure salaries of the higher officers and the maintenance of
their Swiss ski lodges!

Wall
Street tycoons and munitions manufacturers share the taxpayers’
wealth. The CEOs can claim exemptions worth millions of dollars for
all kinds of luxuries, but are not exempt from the nasty connotations
of their shared deadly sin. “When is enough enough?

“Never!”
John D. Rockefeller sneered, referring to accumulating wealth.

The
contemporary greedy set accumulated supposed assets inside their
banks, brokerages and insurance companies. Then, inflated to the max
with junky loans, these weasels
went
“pop.”

In
1929, the market crashed. Some high flying investors jumped off
buildings. The malefactors of the current “investment” fraud no
longer consider such solutions. They know Congress will save them –
well, not as much as their greedy souls desired, but a bailout is a
bailout!

Saul
Landau is an IPS Fellow, author of A BUSH AND BOTOX WORLD and
director of forty films, available on DVD from
roundworldproductions.com.

**
Washington Mutual was
seized by the government and then sold to JPMorgan Chase after this
column was written.