Photo: epicharmus, Creative Commons, Flickr
On July 14, William Greider, a man after my own heart, published astinging commentary on the current financial crisis.
Greider, who is known for shooting from the hip, makes no bones about the causes and consequences of the disaster, including the most recent bailout of Fannie Mae and Freddy Mac. I’m going to quote him verbatim at times, not because I’m a plagiarist at heart but because what he says makes so much sense – when one disengages from the incomprehensible rhetoric of high finance – that it’s hard not to parrot his remarks.
First, Greider agrees, there are “whiners” out there, but they aren’t ordinary Americans. They are the financial gurus who got us here in the first place. Second, the above-mentioned bailout is a typical government (read Bush, the Fed and the Treasury) response to Wall Street’s screams of panic, which always suggest dumping the consequences of their short-sightedness on the rest of us. But, then, don’t the poor always pay for the mistakes of the rich? When have you seen the senator go down and the showgirl survive?
The Democrats would like to sidestep blame, but it was one of their own – House Financial Services Committee Chairman Barney Frank (D-Mass.) – who promised to tack the bailout request onto the pending housing bill that passed the Senate on Friday night (July 12).
Friday night, after the Senate had adjourned? How fair is that?
“No need to confuse citizens by dwelling on the details,” Greider notes savagely. “Save Wall Street first. Maybe lowbrow citizens won’t notice it’s their money.
The federal government protects the most powerful interests from the consequences of their plundering. It prescribes "market justice" for everyone else.” Greider adds, with the sort of pellucid reasoning some misinterpret as cynicism.
As Greider points out, we are witnessing the Great Leveling – a once-in-a-lifetime event that will result in the deflation of Wall Street. We’ve already seen the Dow fall below 11,000. Real economists (not the hucksters of the Street) set its true value at about 10,500 eight years ago. It will probably fall below that, and the crash of IndyMac is just the first instance of this leveling made blatantly apparent to the American public. Expect panic to ensue.
Greider and my son share the point of view that this crash may be a blessing. “If it’s gonna go, let it go with a bang.” Joshua says, agreeing that the consequences, though difficult for many, may result in a renewed America where corporate greed is seen as the real driver of capitalism, and democracy can then emerge from its shadow.
Greider’s proposed solution is truly revolutionary.
“Instead of propping up Fannie Mae or others, the threatened firms should be formally nationalized as nonprofit federal agencies performing valuable services for the housing market. That is the real consequence anyway if the taxpayers have to buy up $300 billion in stock.”
I agree with Greider that the real entities needing protection are the major creditors in countries like China and Japan – nations whose goodwill is essential to economic recovery. Without their help, there is no prospect of a survival worth having. If Americans want to get angry, the real targets for their anger should be the politicians on both sides of the aisle who stood quietly by while the Street doused itself in the gasoline of unregulated greed and then burst into flames. Come November, these citizens need to start electing people who not only know the truth, but know how to tell it.
Disclosure: I don’t own any stock.