Socialism Brought to you by the GOP...

Lehman's HDQ the day the bomb was dropped -- Picture courtesy of Wikipedia

by blogSpotter

Socialism sans revolution?

As a centrist Democrat, the idea that government might be involved with the business world doesn’t bother me. Uncle Sam may regulate private enterprise, tax it, set bench marks for it, and sometimes even compete with it. Several areas of human endeavor are important enough that we don’t leave it to a pure “profit motive” to see that they get done – national defense, highway system and public education to name three. We should add national health care to that list on some future date. I’m intrigued that last week, Americans became 80% share holders in AIG, an insurance company. Uncle Sam is branching into new things. If plans carry thru for this weekend, Uncle Sam will pick up ½ a trillion dollars in mortgages. We’re quasi-socialistic now, and here’s the rub – extreme right-wing free-market ideologues are what brought us to this point.

Meltdown

On September 14, 2008, several business wires were murmuring that three companies were on the ropes: Lehman Brothers, Merrill Lynch and AIG. How these situations snuck up on us with such quiet ferocity is beyond me. Merrill Lynch eked out a deal to be purchased by Bank of America (at 30% of its 2007 valuation) the following day. Lehman Brothers was forced to declare Chapter 11, and after two days of begging, AIG was given a lifeline of 85 billion dollars from the federal government on September 16th. The financial devastation wrought over these two days was the worst we’ve had since the Great Depression, without any exaggeration or mincing of words.

Uncle Sam already has been expanding his role of “business savior” throughout the year of 2008. Since January, the federal government has bailed out Bear Stearns as well as mortgage giants Fannie Mae and Freddie Mac – all to the tune of $600 billion. And the meter is still running.

Political implications

John McCain lashed out at the titans of wall street – he said they were exhibiting a Casino mentality and gambling away other peoples’ money with little ill consequence to themselves. Columnist Froma Harrop points out a problem with this. McCain (who recently said the economy was “fundamentally sound”) also had Phil Gramm as his chief financial advisor until recently. Gramm is known as a deregulation zealot who personally put through legislation that deregulated “financial derivatives” – the TNT that ignited much of the current meltdown. Gramm’s wife was also on the Enron Board of Directors – why does it seem like these are all the wrong connections? In the space of 3 days, realclearpolitics.com showed McCain going from 6 points ahead to 2 points behind Obama. It’s a well-deserved shift.

Secretary of the Treasury, Henry Paulson, is the man saddled with the most strenuous weight of this magna-bailout. He recently worked in the private sector himself and was a “champion” for free market dynamics. Mr. Paulson said this week, “Pure capitalism is dead”. If pure capitalism is the unbridled, blood-lust greed, hubris and arrogance served in a pita wrap of macho egotism that we’ve seen, he is certainly right. Most Americans are hard-working people that want a square deal and a retirement savings. That the very foundation of our financial well-being would be placed in the hands of jackals and con artists is unbelievable. These men should not be turned loose with our money again – some should probably be serving prison time.

Both Presidential candidates have pledged to bring regulations back to the process – a necessary pledge given that this financial hurricane hit six weeks ahead of Election Day. Laissez-faire Republicans have had their run and one has to pose, “Who let the dogs out?” The perfect storm that hit last week confers an advantage to Obama and that is very much as it should be.

© 2008 blogSpotter