This morning (Wed Oct 1 2008) the cable news shows (and C-Span) are discussing the “features” of the Senate version of the financial “bailout” package. Seems to me that this bailout (some prefer to call it a “rescue”) puts enormous power in the hands of the Treasury Secretary, presently Henry Paulson. They actually are seriously considering enacting legislation wherein decisions of the Treasury Secretary cannot be challenged in court or anywhere else.
Not only is this probably unconstitutional, it is putting the fox in charge of the hen-house! Henry Paulson, former head of Goldman-Sachs, is one of the biggest culprits in bringing about this debacle. He left Goldman-Sachs with almost $900 million in the bank. He made colossal profits out of the very excesses of greed that drove this “free market” thievery. The Congress is apparently devoid of morality, principles, or ethics.
There’s more, or course.
Incredibly, so as to get Republican votes for this pernicious legislation, Senate conferees have agreed as part of this package to extend the immoral tax breaks for the super-rich that have so enabled the implementation of these decades of greed. How is it that folks somehow seem to think this is OK? Greed is the operating principle of our culture, our economy, and our ethics (or lack thereof).
What a sad time for the very idea of democracy.
What do the Fat-Cats Have to Say?
A discussion at the Brookings Institution, carried live on C-Span, has just concluded. There was much talk about recapitalization of the banking industry, improving liquidity, problems of transparency, and so on. I think the best solution is to make securitization of mortgages (and probably a lot of other things subject to derivatization) illegal. This whole sort of activity is nothing but a scam. The real money in this business was made by the investment bankers and the super-rich. Now they are losing their shirts, virtually destroying the credit market in the process. Making money the old-fashioned way, in this instance requiring banks to hold on to the mortgages they write instead of selling them (flipping, really) is laughable to the new Masters of the Universe.
Mortgages are flipped (sold), chopped up into hundreds of pieces, bundled into a “security” (hilarious term, under the circumstances) supposedly backed by those mortgages, and sold around the world. Nobody really knows what they are buying. Doing it the old-fashioned way is not even worthy of consideration by these apologists for an immoral, unethical system.
Back to the “Rescue”
This is really cool creative destruction. The plan is intended to straighten out a disaster caused by the practice of buying bad mortgages, packaging them, and then reselling them at a profit. The Senate plan fixes that by allowing the government to buy bad mortgages, and then resell them, perhaps at a profit!! This is dishonest in the extreme, but there is no recourse and no redress.
A sad day for the idea of democracy.
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