Sunday, December 21, 2008

Banking on an Oligarchy

Deacon Scott Dodge cites two recent editorials during the interregnum between Bush and Obama, one from Thomas Friedman, "The Great Unravelling", and the other a poignant reflection from The New Republic, "Important People" (clipped at Paper Clippings). Unravelling is the word for it because the dynasties have been in place and on the take for a long time.

Friedman compares Madoff's actions with Wall Street generally:

I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the 'legal' scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds — which Moody’s or Standard & Poors rate AAA — and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn’t a pyramid scheme, what is?
And Leon Wieseltier is by turns angry and philosophical:

In a society as wounded as our own, there is something repellent about the assertions of elitism. Its most awful expression, of course, is the acquiescence of almost everybody in the dynastic ambitions of the Kennedys. I can almost not imagine a more obvious mutilation of the meritocratic ideal than the appointment of Caroline Kennedy to the United State Senate. A Senate seat is a fucking valuable thing, you just don't give it away for nothing. But of course it will not be given away for nothing: the princess and her family will be delighted to pay for it. Ever since this democratic indignity was broached, the really smart talking point has been that she has the money for her eventual campaigns....

A society may be measured by whom it admires. No class of Americans has done more to damage America than the financial class. A generalization is an ugly thing, but every day's newspaper refreshes my impression that the titans, the insiders, the big players, the boldfacers, the movers and the shakers-the hoshover menschen, as we say where I come from-have been, many of them, fools or thieves....

In these days of dread I prefer to linger over all the people who have never been able to facilitate a favor. The media that used to be fascinated by the pleasures of the rich is now fascinated by the pains of the rich, but the fascination is the same, and it contributed to the bubble that burst in all our faces, and it interferes now with what we really need to know. When I read the papers I skip guiltlessly over the desperate sales of jewels and summer homes and go straight to the accounts of unglamorous desperation, of ordinary people helping each other because otherwise they would be even more powerless than they are.

I add the Deacon's comments as a judgment because the economy is a human endeavor and must be managed as such; the consumeristic credit-heavy model is unreasonable, unjust, unstable and ultimately unsatisfying.

Who besides Bernard Madoff, who turned himself in, has even been indicted? Did nothing untoward or illegal occur in the respective collapses of Lehman Brothers and Bear Stearns? What about that hole in A.I.G. that $125 billion of taxpayer money has not been able to fill? Given that, why not chuck $14 billion, a mere 11.2% of what's been flushed down the A.I.G. toilet, Detroit's way? For that matter, what about Mr. Paulson and his oh so urgent bailout, which appears to be nothing but another brazen executive power-grab by the Bush Administration? Dear Hank, what has your scheme to keep those whom you personally deem to be important people afloat corrected, fixed, or gotten headed in the right direction, how many foreclosures has it forestalled? Why is the only fix I ever hear mentioned more consumer spending? Isn't this ridiculous, given that more and more people do not even have jobs? Besides, isn't out-of-control spending, lending, and borrowing what got us into this mess in the first place? If I understand this idiotic reasoning correctly, we do not need regulatory reform and sounder national economic policies, consumer education, better personal financial discipline, and higher overall savings rate. No, our broken and shattered economy will be fixed by everyone buying new microwaves and iPods on our credit cards; that's like saying our greenhouse gas emission problem will be solved by everyone returning to the use of coal furnances and barbecuing with charcoal brickettes every night, while idling our cars in our driveways. Hey, it's almost Christmas and, as Ricky Bobby might say, "Baby Jesus needs a new pair of shoes!" Let's go for broke! Wait! We're already broke! Well, it was fun while it lasted.

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