The crisis of Wall Street's financial meltdown has demonstrated, once again, that although the Bush Faction thugs are criminals, killers, torturers, and thieves, without even the slightest competence in governing, they remain brilliant political tacticians. They may be willfully ignorant and brutally stupid in almost every other area, but when it comes to advancing their own narrow interests – at the expense of the political opposition – their low cunning cannot be denied.
Just look how they have made the Democratic leadership the face of the Administration's bailout plan – which is perhaps the most virulently unpopular government action in the last 100 years. This unconscionable giveaway to the greedy rich was cooked up in the poison kitchen of the Oval Office, long before the late summer collapses that triggered the public crisis – yet at every turn, before every camera, who do we see fighting hard for the plan? Why, Nancy Pelosi and Barney Frank, front and center, day after day, talking it up, defending the President and his wise counselor, the rapacious Wall Street profiteer Henry Paulson. When the bailout goes through, and ordinary Americans see that their own lives and livelihoods are still collapsing all around them, who are they going to blame? Why, the Democrats, of course.
As usual – as always – the Democrats have handed their ostensible opponents a razor-sharp sword. You can hear it now: "That radical liberal feminist from San Francisco, that stubby little Massachusetts homo – they're the ones who did this to you! Liberals and Jews and homos, they've stabbed you in the back again!"
As always, this message will be sponsored by the very Wall Street wolves which the Democrats are now falling all over themselves to save. The Democratic sell-out will, once again, be used to discredit any notion of ameliorating the most savage effects of unrestricted corporate power: "See what happens when them libruls monkey with the free market?" Just as soon as the biggest fraudsters and grafters behind the meltdown have filled their coffers with enough taxpayer loot to feel safe again, the extremist sect of "free market fundamentalism" will raise its banner over Wall Street – and Washington – once again.
In fact, this has already happened once in the last 20 years: hardly outside the living memory of many if not most of our media mavens and political operators. The Savings and Loan meltdown – which, once again, saw the Bush Family in the thick of the muck – resulted in a gargantuan bailout of, yes, fraudsters and grafters. . . . like Neil Bush, for one. They wrecked vast financial institutions, devoured pensions, destroyed businesses, ruined the lives of millions of people – and got away clean. What's more, the extremist doctrine of unregulated greed that led to the crisis was not only not discredited by this crimeful and shameful episode – it was exalted to new heights a short time later . . . by a young, hip, "progressive" Democratic president elected on a platform of "hope and change," replacing a failed, incompetent, and highly unpopular Republican president named George Bush.
Yes, it was Bill Clinton, "the Man from Hope," who oversaw the accelerated dismantling of nearly all of the remaining checks and balances on rapacious Big Money greed. It was Clinton who helped lay the groundwork for outright criminal enterprises like Enron and "legitimate" criminal enterprises like Hank Paulson's Goldman Sachs and all the other high flyers who gamed a system that suddenly had no rules, except one: make your pile and screw everybody else. (It was also Clinton who gave billions to Halliburton and other war profiteers in a vast "privatization" of the U.S. military, laying the foundation for the world – historical thievery of Bush's corporate cronies in the killing fields of Iraq; but that's another story.)
And make no mistake: just as before, it will be the young, hip "progressive" candidate of hope and change taking over from a failed president named George Bush who will oversee and acquiesce in the resurrection of free market fundamentalism after a catastrophic failure of the cult's doctrine. In fact, Obama has joined the Democratic leadership in trying to keep the cult from losing its supremacy even now. He has joined John McCain in supporting the "breakthrough" on the bailout reached on Sunday. The young, hip, "progressive" candidate said that although it was unfortunate that American taxpayers and their descendants will have to endure further impoverishment and degradation just to keep rich, stupid, blind, greedy, slobbering gluttons in clover, the bailout plan "is a necessary step."
Here we can see that the resurrection of the crony capitalist cult has already begun. For if one thing is true in this wild frenzy of elite panic (some of it genuine, some of it deliberately whipped up to scare the proles into falling in line), it is this: the bailout plan proposed by Bush and championed by the Democratic leadership is not a necessary step at all. It is a step, yes; but as dozens of the nation's top economists will tell you, it is the wrong step: it will not "solve" the current crisis, will not punish the perpetrators of this global grand theft, nor bring genuine relief to the millions of ordinary people who will go down in the fallout of this elite folly.
However, if your primary goal is to ensure that the cult of coddled crony capitalism retains its divine dominion over national and world affairs, then, yes, the Bush-Obama-McCain-Pelosi-Paulson-Frank bailout proposal is indeed "necessary."
Arthur Silber and Mike Whitney continue to be the most penetrating expounders of the reality behind the financial meltdown and the disastrous bailout plan. Whitney has produced a series of richly detailed pieces at CounterPunch, outlining the financial nitty-gritty of the crisis, and also pointing to the alternative approaches offered by some of the world's most learned economic experts. Silber has built a remarkable series of posts around Whitney's articles, bringing out the deeper implications of the crisis and its connections to the wider failures and atrocities of the bipartisan corporate-militarist state that now rules in place of the dead Republic.
Silber demonstrates this once again in his latest piece on the crisis, pointing to Whitney's latest piece and drawing on other reports as well, to hammer home several hard truths that are going unnoticed in the media carnival surrounding the oh-so-"necessary" bailout.
Silber zeroes in on a Washington Post piece that, in the paper's endearingly clueless fashion, essentially gives the game away:
Both Republicans and Democrats are desperately trying to make it appear that they're looking out for the well-being of the indentured servants whose lives their rulers so carelessly dispose of. That's hardly surprising in light of the notably loud groundswell of rejection at the terms of this plan. But it wouldn't do to encourage the riffraff too much, and the Democrats understand very well indeed who is actually calling the shots here. [From the WP]:
Democrats also made a number of concessions, abandoning demands that bankruptcy judges be empowered to modify home mortgages on primary residences for people in foreclosure. They also agreed not to dedicate a portion of any profits from the bailout program to an affordable housing fund . . .
Let them live in tents! proclaim the Democrats.
But the Democrats did succeed with certain of their demands, and in every case the solution proves to be utterly meaningless and toothless:
The administration also agreed to Democratic demands that the financial services industry should help pay for the program. Under the agreement, the president would be required to propose a fee on the industry if the government has not recovered its money through sales of the assets within five years.
"The president would be required to propose . . .” Required to propose, but it appears no one is required to impose. Tough language! And does anyone honestly believe that after all the accounting gimmicks, the shifting of funds here, there and everywhere on the impossibly incomprehensible books of many different firms, any of this will come to anything?. . . . As the Post article makes clear, the essence of the Bush administration proposal will soon be enacted: American taxpayers will be forced to pay for generations to solve a problem that cannot be solved, all so that the ruling class is spared any substantial degree of discomfort.
He then points to Whitney's sobering analysis:
The financial system is blowing up. Don't listen to the experts; just look at the numbers. Last week, according to Reuters, "U.S. banks borrowed a record amount from the Federal Reserve nearly $188 billion a day on average, showing the central bank went to extremes to keep the banking system afloat amid the biggest financial crisis since the Great Depression." The Fed opened the various "auction facilities" to create the appearance that insolvent banks were thriving businesses, but they are not. They're dead; their liabilities exceed their assets. Now the Fed is desperate because the hundreds of billions of dollars of mortgage-backed securities (MBS) in the banks vaults have bankrupted the entire system and the Fed's balance sheet is ballooning by the day. The market for MBS will not bounce back in the foreseeable future and the banks are unable to roll-over their short term debt.
The Federal Reserve itself is in danger. So, it's on to Plan B; which is to dump all the toxic sludge on the taxpayers before they realize that the whole system is cratering. It's called the Paulson Plan, a $700 billion outrage which has already been disparaged by every economist of merit in the country. . . .
From Reuters: "Borrowings by primary dealers via the Primary Dealer Credit Facility, and through another facility created on Sunday for Goldman Sachs, Morgan Stanley, and Merrill Lynch, and their London-based subsidiaries, totaled $105.66 billion as of Wednesday, the Fed said."
See what I mean; they're all broke. The Fed's rotating loans are just a way to perpetuate the myth that the banks aren't flat-lining already. Bernanke has tied strings to the various body parts and jerks them every so often to make it look like they're alive. But the Wall Street model is broken and the bailout is pointless.
Yes, as I noted above, it is pointless – if your chief aim is to mitigate the now-unavoidable catastrophe in some fashion, and provide some alleviation to the innocent people harmed by it. But if you want to raise the rotting corpse of the Market Messiah, stick it high on a pole and worship it as a god, in hopes that its priests will give you money and power, then without a doubt, the bailout plan is – what's that word again? – necessary.
(*Note: The picture above is via Silber, via Corrente, via Chris Floyd.)
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This story was published on September 29, 2008.