|
It is time to speak here, beyond the cliches, concerning the difficulties taking place on Wall Street and the suggested response to those difficulties.
Whose Crisis Is It, Anyway?
There is always the entrenched investment community that wants public rescue when they run into trouble. However, they give minimally TO the public when things are going well. Certainly, they do not give $700 billion dollar gifts to the public. You will also see further on in this article the tie-in of our financial system to the environmental effects on the planet.
This morning I heard, once again, a view that seems not to be fully reaching Congress. Allan Meltzer, Professor of Economics at Carnegie-Mellon University and, let's say, a seasoned hand in economics, supports allowing the markets to manage this crisis. Paul Krugman, also a very well-known economist, Professor of Economics at Princeton University and also a New York Times writer, agrees in this regard with Meltzer.
Allan Meltzer points out the Shearson-Lehman has already been able to sell off almost all its assets, and that AIG shareholders have been looking at buying the company, and that a Japanese bank just purchased a 20% share in Morgan Stanley. This is the free market, at work, without any US tax payer dollars being donated to these giant companies. But it is less comfortable for those institutions than a gift infusion of cash.
You can read the transcript and hear the audio from the three-person panel at the PBS Web site.
Do You Believe in Magic? In a Broker's Heart
Before discussing the "bailout" and alternatives, let me say out loud: I support whole-heartedly, and would like additional Congressional action supporting and widening, the current FBI investigation of and future Federal prosecution of all those who broke laws that resulted in the collapse of so many large institutions. And those who corrupted and destroyed the regulation of the financial industry, while they may not be subject to prosecution, should be publicly shamed for the great, great disservice they have performed to the American people and indirectly to the rest of the world.
Now, you may be wondering how to interpret all these opinions, and here is where I will jump in. It is important to remember that Federal Bank chief Ben Bernanke and Treasury Secretary Henry Paulson not only sleep with the investment community, but both are married to it. The danger is that Congress is also feeling the need for a misplaced and misguided loyalty to the investment community, and that as a result they may simply change the trimmings of the $700 billion dollar gift.
Those Wall Street and other investor folk must have been wonderful citizens all year, making money for the public and for their firms, building our American spirit of mutual support and generosity. Isn't that why we now want to offer them $700 billion? Oh, no? It is because that is the only way to rescue our American, no, the World economic system from catastrophe? Apparently there are a number of experts-without-vested interests who disagree.
The REAL Bottom Line
If the government does not give the money, then the economy may indeed slow down for a while, maybe for a few years. But that is a natural, curative behavior. When a human runs a fever, he or she would normally slow down, probably rest in bed, eat good easy-to-digest food, and sleep a good deal, until the illness ends. Similarly, our banking system needs to recover through re-evaluation of its assets by all the world markets. This will entail slowing down, avoiding high risk activities, and earning some real money not speculative bubble money. Otherwise, they are acting like a sick individual who, instead of allowing normal recovery, gulps down some high-caffeine energy drinks and runs around even faster because God forbid any of the daily activities get skipped or delayed or scaled back.
It is time for skipping, delaying, and scaling back of the financial industy. It is THAT result that Henry Paulson and Ben Bernanke do not want. After all, their friends all work for those firms that would get scaled back. And what kind of friends would put the unknown public ahead of their own friends and their own future incomes. Apparently not these two loyal folks.
Let's hope enough of Congress sees through what Paul Krugman characterizes as a "power grab".
Last point: I heard another expert discussing more just remedies for the current crisis. His recommendation was that bankruptcy laws be revised to allow homeowners to claim bankruptcy protection on their homes, which would allow a judge to re-set the payments and interest the homeowner was paying. This would allow corrective re-evaluation of assets at the level where the mistakes were originally made, that is, at the individual home level. Rather than sweep the entire situation into one lump sum, the healthier approach according to this analysis (and it does seem to make sense) is to unwind it the same way it was created, at the level of the individual property. To make this change requires undoing the restrictive changes to bankruptcy law that were passed under guidance from the financial industry after a long fight.
Impact on the Planet
One side effect of the history of feverish activity and growth in human society has been accumulating damage to the planet. It is the urge for "higher" and more luxurious standards of living, for more variety of disposable products, and for faster and more ubiquitous private transportation, that has led to the gradual collapse of more and more ecosystems, as well as resulting in our INABILITY globally to slow down and reduce the emission of greenhouse gases, even when the warning signs are crying out from all sides.
A Short But Sweet Summary, and a Question for You
All the alternative solutions to our current economic crisis seem to have great value compared to what I will call the "brain-dead solution". That is, unless you believe Paulson and Bernanke that we must immediately hand Paulson the $700 billion or the world will melt down. I know that I am not buying it. Do you?
| 
Fossil Fuel
