In the short term, it was absolutely necessary for the US Government to bail out the banking system. It allowed business to continue functioning. No question about it. But do we realize what it means when we promise, on the backs of taxpayers, to amortize $700 billion dollars? First of all, Its a lot of money. It’s like paying for a couple of Iraq Wars (without a war), to put it in perspective.
Individuals bought homes, faced bad news, and walked away. Wall Street “Rating Agencies” with conflicts of interest rained capital on the venture and sold it as “AA” Safe. There was no money at stake, really. Just notes hidden in complex financial instruments.Banks proudly displayed the “assets” as real, until the illusion vaporized, along with their balance sheets. And now much of the hyper-inflated real estate value is gone. Wealth evaporated before our eyes, as it does in financial bubbles.
The worse thing is that the public will pay the bill. Private risk takers will be subsidized by public taxpayers. We have all made a promise to labor and pay taxes, in order to pay this bill. The slate is wiped clean, the notes will be serviced, and it will be as expensive as a war.
So now the federal government will struggle to make good on it’s obligations in the name of “all of us”, Maybe it’s time to look at the way things really are, and abandon our romantic notions of living in pure capitalism.
We are more socialistic this week then we were last week.The bailout is a further hybridization of Capitalism and Socialism. Hard to hear, I know…more socialist. Should I capitalize Socialist? socialist? Socialist? Is the Capital S more Un-American than the little s?
We have watched while a greater and greater divide came between rich and poor in this country. We have seen Pain Avoidance as a personal and governmental fiscal policy. Primitive emotional control and predatory lending crippling household budgets. A short-sighted financial services industry plagued with too many conflicts of interest. A regulatory environment ill-conceived and way too unsophisticated ro protect us from the sword of greed. And to top it off, an energy policy so woefully under-visited that we now witness the greatest transfer of wealth in history, mostly to our sworn enemies.
Let me suggest something positive might come from this. These financial obligations will not prove to be a complete loss. For one thing, many mortgage obligations will be paid in full, on time. Also, there is real estate value to be recouped in the event of repossession and auction. So, this crisis may be overstated when calculating the cost to taxpayers.
In “long time” I believe we are destined to evolve a balance…a bringing-together… of the best of both Capitalism and Socialism.
This may be a natural evolution, one we should recognize and be grown up about accepting. We have huge problems to solve as a collective, and lots of hard work and innovation to be done individually. Rejecting any and all “socialist” aspects to our regulatory and governmental structure may be unrealistic.
Our tax structure already facilitates wealth re-distribution, so we are in fact, already something other than pure capitalists. Get over it, and get on with designing something that works better, and acknowledge that it may be necessary and healthy for the whole economy.
Once we accept this, the Conservatives can admit we need government to provide the structure to grow sustainably, and the Liberals can accept that competition solves problems and creates jobs, not government. This could be a valuable lesson, even if it smacks of the “S” word.
