The Bailout: it’s About Us

I think that the conversation on the national level is beginning as usual to tear itself away from rational thought, towards the kind of feedback loop of nonsense we’ve come to expect.  Local media, meanwhile, is noticeably absent from the entire conversation, which we’ve also come to expect.  So, allow me to point out a few things that bear mentioning:

Regardless of the circumstances, the rich will never suffer.  The rich never do.  I’m not talking about your cousin Bob who is a stock broker for JP Morgan Chase.  I’m talking about the real movers and shakers.  The Vanderbilt’s, the Rockafellers, the names we don’t know and never will.  The top executives at the top firms who went to the top schools and who’ve lived their entire lives at the top.  This is not their economic crisis.  They’ll be just fine.

It will be all our down-stream friends and family – what is popularly called Main Street, these days – that will suffer the consequences of whatever will come next.  It’s our jobs that are hanging in the balance, our homes, our financial futures.  Hell, it’s our tax money.

So when seen from this lens, how can it be anything other than right and proper that Congress put the brakes on and demand some sort of recompense from those we bail out?  It’s not really about demanding things of other people, it’s about getting the change we want out of an opportunity to demand said change.  It’s not about taking from the rich – they will lose nothing of value; its about securing our own futures.  We can restore the Depression-era oversight and regulation that has kept our banking system on the straight and narrow since then – except in those times when Republicans have chosen to ignore them.

By-the-by: don’t get sucked into the refrain that regulations need to be “updated.”  Even Barack Obama is saying that crap.  “Updating” right and wrong is not needed.  Enforcing it is.

And the answer is simple: in the words of Dean Baker, sell the company assets, and you’re in.


Executive Compensation?

Look, I’m all for reforming the way Wall Street does business, and I agree that this would ultimately include finding some way to bring top executive compensation down to a reasonable level.  But why is this the most important thing in the current crisis?  Is there some subtlety of economics I’m missing (entirely possible)?

Democrats in Congress are pushing for a slower and more deliberate pace to the process of aiding Wall Street out of it’s current crisis.  Bravo.  But why the sudden inclusion of executive compensation?  Are we going to risk forcing issues and looking petty in the face of a crisis?  I don’t get it:

Dems push for cautious approach to bailout – Stocks & economy-

“We want to limit those as a condition for giving them aid,” Frank, D-Mass., told ABC’s “Good Morning America.” “If Secretary Paulson would agree to that, we could move quickly.”

Rep. Christopher Shays, R-Conn., who also serves on the panel, said members “need enough time to debate this” and echoed Frank’s concerns about executive pay. “We don’t have these great golden parachutes and so on. In the end we’re doing it for the taxpayers.”

Oversight is certainly a proper demand.  Reforming banking rules is a good idea – like, for example, erecting the wall separating commodities trading and mortgages that Phil Gramm destroyed in the Ninties would be a good start.  Keeping banks on the hook for the difference between what the government spends in the bailout and what it gets back from selling off assets is an excellent suggestion.

But executive compensation?  Is that really going to change anything?


. . . But Don’t You Dare Call it a Bail Out!

The auto industry is seeking $50bn in additional low-cost loans – beyond what was already approved by Congress last year – to help them out of the mess they’ve made, selling SUVs after peak oil and 911.  Did they really think this wasn’t going to come to an end, soon?  But here they come again, to suck on the teet:

Auto industry officials have argued that the loan program would not represent a bailout, but would be similar to aid lawmakers have given to Wall Street investment banks and struggling mortgage firms. They also note that auto companies face tens of billions of dollars in costs from new fuel economy regulations.

I see.  So, since we’ve bailed out the financial markets without calling it a bail out, we should just go right ahead and bail out the auto industry and not call it a bail out.  Because, you know, it’s really not a bail out.  Let’s not forget that the government issues loans in the form of bonds, and that’s a large part of how our currency remains viable.  Giving out low-interest loans means accepting less of a return on those bonds, which isn’t doing our larger society any good.

In other countries, like Japan, there’s no question that the government helps out industry.  It’s how they operate, with industry and government working hand in hand to make their economy strong.  Of course, there are a number of obligations industry must observe in exchange for consistent help in hard economic times.  In this country, we do the same thing, except that we have false ideological bullshit swirling around in Conservative circles that allows industry leaders to demand tax cuts along with their low-interest loans.

We’d be doing our country a world of good if we dropped the pretense.