I'm 46 years old. Came politically of age in 1980--casting my first presidential vote for Jimmy Carter in that election. He lost to a guy who sold the American people on the notion that government is the problem, that the unbridled ingenuity of American business and the unquestioned wisdom of the free markets is intellectually unassailable. People bought that notion hook, line and sinker, and make no mistake: these notions have continued to hold sway over the American voting public for the last 28 years.
The question is now--do they continue to hold sway? Is it to be expected of all of us that we hold our own destinies in our own hands? That one facing personal adversity has only one's self to rely upon? That it is up to all of us when tough times hit, as they inevitably do, to pick ourselves up by our own bootstraps and set our lives right.
And herein lies the source of my anger.
This morning, I read the banner headline piece in the Washington Post that screams, "Historic Market Bailout Set in Motion." And eventhough I recognize that the downside of a worldwide financial collapse would be catastrophic, I was angry.
It begins with this paragraph:
The Bush administration yesterday proposed a historic $500 billion bailout of financial firms that would let the government rather than the cold judgment of the marketplace decide the winners and losers from the crisis that has shaken the U.S. economy for the past year.
Stop and consider the breathtaking nature of what is written. Good God, I wish I myself had a single dollar for every instance over the last 28 years that I have heard a proponent of the market-knows-all nonsense tell me that that the free market is unerring; that it sorts out the winners and losers, and that the losers deserve what's coming to them; and that the winners is what we should all strive to be. Hell, I'd even take a dime--and be a rather rich man as a result.
This pablum had become the American siren's song. When companies went under, it was simply accepted that they could not compete. Such barely elicited much more than a harumph--although it did elicit more sympathy than was usually received by the workers who were pushed out into unemployment lines. After all, this was the way the system worked. Many compete, and some will lose. There will be, and have always been, winners and losers.
Haruumph.
So what did we learn this week? We learned that this mantra was nothing short of unmitigated bullshit. As Steve Pearlstein succinctly summarized this morning:
The degree of government intervention into the workings of the private marketplace is unprecedented. Three giant financial institutions taken over. Government purchases of vast quantities of hard-to-sell assets from banks, investment banks and anyone else whose demise might threaten the financial system. Trading outlawed in an entire class of securities. A government guarantee extended to a whole new category of investments.
Laws have been stretched until they are barely recognizable -- like the one, from the days of the gold standard, that authorizes the Secretary of the Treasury to buy and sell the precious metal, now used to authorize a wholly new insurance program for money-market funds.
Roles have been expanded well beyond anything that could have been imagined only weeks ago, like the central bank taking control of a giant insurance company.
And tossed aside have been long-standing conventions....
Simply breathtaking. But now to my anger. And it juxtaposes Pearlstein's last line, above ("And tossed aside have been long-standing conventions" with a few paragraphs from the same newspaper in a separate article that made me sit back in my chair and seethe in anger.
In an article entitled A Joint Decision to Act: It Must be Big and Fast we learn some of what transpired behind the scenes as Treasury Secretary Paulson and Federal Reserve Chairman Bernanke met with Congressional leaders to deliver a message that the United States was heading towards the worst financial crisis in its history: Then, this exchange reportedly took place:
Paulson broke the silence and laid out his plan, urging lawmakers to act within the week.
Lawmakers began firing questions: How much would this cost? ("Hundreds of billions of dollars," Paulson said.) Were they sure it would work? And how could they expect lawmakers to sell a deal that appeared to be a bailout for Wall Street but did little for homeowners facing foreclosure?
Democrats said they wanted some concessions. Firms that received government money should restrict executive salaries and give taxpayers a share of their profits. And once the Treasury bought all those mortgage-backed securities, it should work to make sure the people on the other end of the mortgages didn't get thrown out of their homes.
Paulson was cool to those ideas.
Paulson was cool to those ideas? At this historic moment, when he is in the midst of proposing a Federal bailout that will in all likelihood cost more than a trillion dollars? At the exact moment when the financial system is perhaps on the brink of collapse, and he is proposing a putting a floor underneath the Wall Street gamblers who played and lost? When he is proposing that the American people pick up the tab for the outlandish antics and unbridled greed that led to this catastrophic moment? When he is proposing that we bailout of the "losers"? When he is stating as clearly as any liberal out there has stated at any time in this nation's history -- that the lines fed to the American people over the last 28 years was pure and utter bullshit?
At that exact moment, Paulson is "cool" to the notion that maybe some of the homeowners facing foreclosure might receive a little help too?
How. Dare. He.
And can there be any clearer message sent to the American people than the one sent there by Paulson to the members of Congress seated around that table last Thursday? That it has all. been. a. ruse!!!! And that we are. all. suckers. who. fell. for. it.
I am fortunate. I've got a solid job, and I bought my home in affluent Northern Virginia in 1997, and I'm a long way still from finding myself without a job or facing a mortgage foreclosure. This is not about my personal interest.
What it is about takes me back to the final line in Pearlstein's piece: have long-standing conventions really been tossed aside? This bit from Paulson, above, does not leave me hopeful.
But I'll tell you what: the next time I hear some conservative treating me like I'm some sort of gullible moron by feeding me their seemingly limitless box of empty free-market rhetoric, I am going to laugh in their face. And I am going to tell them--"you have got to be kidding me?" And it is going to take every ounce of restraint to refrain from spitting where they stand or, thereafter, treating them with any of the courtesy and decency I have routinely extended to them even as they have spouted this nonsense in the past.
Pearlstein (who I respect--if only because he his reporting and explanations of all that has transpired have been intellectually honest) sums up with this line:
It is an exaggeration and a journalistic cliche to say that after the events of the past two weeks, the U.S. economy will never be the same....
But in terms of the political economy, there is little doubt we are witnessing a once-in-a-generation sea change. It will no longer be an easy applause line for a politician to declare that government is the problem and that markets always know better than regulators and politicians. With Bear Stearns and AIG as their rallying cry, citizens will demand the same kind of financial security and protection as bondholders of big banks and counter-parties of hedge funds. Debates about the competitiveness of U.S. financial markets will focus less on how little regulated they are and more on how much protection and transparency they offer to investors. It will be harder to deny essential government agencies the talent, money and respect they need to do the job right.
An interesting comparison can be made between Hurricane Katrina and the current financial crisis, which symbolically has now stranded a number of rich investors on the roofs of their mansions, crying out to the government to be rescued.
When we look back, we may find that this crisis, like Katrina, was a turning point in public perceptions and expectations of government -- about its competence in dealing with the inevitable crises that occur and its ability to take steps ahead of time to assure that the damage is limited and the most vulnerable are protected.
"With Bear Stearns and AIG as their rallying cry, citizens will demand the same kind of financial security and protection as bondholders of big banks and counter-parties of hedge funds."
We'd damn well better.