The spectacle playing out this week and last regarding the U.S. financial system shows a continued wide gulf between the power brokers in Washington, D.C., and New York City and the rest of us here at home.
It's pretty clear that the big reason why we're here in the first place is that a bunch of Ivy League MBA-types with no values beyond making money have been using borrowed cash in a maniacal chase of the almighty dollar. Too often, that income was just listed on paper, too, and never became real income for anyone, and the house of cards eventually had to collapse. They were enabled by their sycophants on both sides of the aisle in the nation's capital.
That compares with normal people, who go to work every day and draw a paycheck every two weeks. Many of us, after paying for higher gas and food prices and astronomically skyrocketing insurance and medical payments, try to use a little left over to invest in stocks and mutual funds in hopes they'll increase in value faster than passbook savings accounts and remain ahead of inflation.
You also have a big difference in opinion regarding the bailouts. Rasmussen Reports says that just over a quarter of us support the current bailout plan proposed by Treasury Secretary Henry Paulson. That is in line with many previous polls that show support for bailouts in general is very much in the minority. People know that the high-flyers messed up, so make them pay for it instead of the taxpayers is the sentiment.
Yet, politicians, Wall Street and many talking heads are pushing for the bailout. The only criticisms by John McCain or Barack Obama are that too much power is in the hands of one man, Paulson, and that there's not enough independent oversight. That might be the least of my worries, actually. I would rather have one smart guy who can cut through the crap steer us out of this mess than to try to do it by committee. The problem with a mini-tyranny is that Paulson might try to enrich friends or favor firms in which he's familiar, but he's going to be under such a microscope that even if he did have such temptations, I doubt he'd act on them.
On the other hand, I worry a bit about the everyone's push for quick consideration of the plan. It reminds me a lot of McCain's immigration bill a couple of years back. He wanted immediate approval without scrutiny. When it was examined, it turned out to be a bad piece of legislation and was correctly dismissed. Maybe Paulson's plan is a bad one, also.
On bailouts, I find myself in the middle. I don't like them yet sometimes they're necessary. It's kind of like the death penalty -- I hate it but sometimes crimes are so utterly heinous that you need to have it available. If an individual company screws up big-time, like Lehman Brothers, then see ya! However, if you get an AIG, the collapse of which would have worldwide economic repercussions, then a bailout is necessary. Troubling, but necessary.
The big bailout when I was a teenager, of Chrysler by the Carter Administration, was unnecessary and might have prevented Ford and GM executives from taking a harsh look at their companies, which have struggled ever since.
I also, as a free-market capitalist, have no problems with new regulations being placed on financial markets. Our Ivy League-educated dumbshits -- these people are financially privileged but neither smart nor have traditional values -- continually lead us into trouble and need to be reigned in. Unless you've forgotten the Internet bubble or the S&L crisis.
I also have to say the timing of the sudden lack of confidence in our financial institutions is quite suspicious. Just as McCain is getting ready to run Obama out of town in the polls, big money gets yanked out of the financial markets. The Democrats are the party of big money these days. Sure, the companies involved were vulnerable and might have collapsed at some point, anyway, but the timing is questionable.
Obama has and will benefit somewhat by what's taken place in the last 10 days. The party not in power during an economic crisis always gets a boost and the party that appears to favor stronger regulation -- Democrats -- will also be helped. It won't be by much, though, as Obama, running mate Joe Biden and Senate Banking Committee Chairman Christopher Dodd are all up to their ears in Wall Street money. It'll be like Enron again, where pro-business Republicans will take a lot of flak but Democrats will be unable to take substantial advantage because of their deep ties to the affected organizations.
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A nod to Richard Gere and Julia Roberts.
Remember that rather sappy chick flick "Pretty Woman," where Gere plays a corporate raider and Roberts a high-class call girl? Roberts character keeps asking Gere's character what his business makes, and Gere keeps responding that he doesn't make anything, he just makes money.
When that movie first came out, it looked like typical unsophisticated Hollywood anti-business blather. Now it appears that producer Garry Marshall and writer J.F. Lawton were ahead of their time.
