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18 March 2008
Extinct Specie of Bear

Wall Street Firm Was, in Fact, Infirm

Last week we learned of the demise of investment bank Bear Stearns, a grizzled denizen of the Wall Street forest at its deepest and darkest. The beast was snared in a trap baited with hunks of flesh of marginal householders.

The Federal Reserve orchestrated a bailout, to prevent bankruptcy, in which J. P. Morgan Chase would acquire the Bear at a huge discount of $2/share. Then, as of yesterday, Bear’s shareholders complained that the price was too cheap, so naturally the Fed signed off on a richer deal. Further proof that Wall Street governs the Fed, while maintaining the illusion that it’s the other way around.

Since an “investment bank” does not deal with the public and has no FDIC guarantee of returns, since it is loosely regulated, since it lacks even the implicit government backing of institutions like Fannie Mae and Freddie Mac, what the heck is the Fed doing backing J. P. Morgan’s acquisition of the Bear’s bloody remnants (reportedly) for $30 billion?

We’ve been using money that wasn’t real to build houses nobody wants to live in. But the bank failure is partly on the tab of you and me. And the money we’ve had to make just to see it eaten up here was all too real.

Thirty billion dollars is $100 for every American. Add up all the other bailouts and you’ve more or less wiped out the effects of the “stimulus” checks they’re sending out in May. Of course, that’s on our tab, too.

The authorities tell us that it will hurt us far more if we don’t give up the vig now. They also tell us the financial system is secretive and the extent of its problems are unknowable, hence unregulatable.

There’s no money for over 40 million Americans to have health insurance. There’s no money to keep tuitions affordable for the next generation. There’s no money to keep mercury out of the atmosphere and oceans. There’s no money for public transportation or reducing carbon emissions. But there’s always money to make sure America’s greediest and most irresponsible plutocrats keep their third and fourth houses in the Hamptons and Aspen.

The idea that there’s a government in Washington that controls the country is a sham. New York–based capital runs the country. Sure, we get to vote for a President and members of Congress. But the government is a mere student council—allowed to choose the colors and the song for the prom, but not to vote on anything that matters. While we debate flag burning and symbolic minutiae about abortion procedures that are seldom, if ever, performed, the real powers decide on how much to loot from the rest of us and stuff into their overseas bank accounts.

Then they lecture us on the importance of hard work for low wages. At least the financial propagandists used to emphasize savings and thrift. Now CNBC types and their government enablers tell us we should spend ourselves into oblivion so they can clean up on interest and fees. Not long before he retired, Alan Greenspan was urging Americans to take out adjustable-rate mortgages. We can see how that worked out.

Thus, none of the three leading Presidential candidates has an economic plan that responds to America’s developing economic troubles. Obama has a brain trust of Chicago-school economists, meaning “free market” absolutists. (Of course, in a free market, Bear would be allowed to fail. In truth, the only free markets are the sort you find in the arms bazaars of Peshawar, Pakistan, where there’s no functioning government and every vendor guards his stall with automatic weapons.) Hillary Clinton wants more taxes on renters like myself in order to subsidize people who bought too much house, another reward for irresponsible, spendthrift behavior. As for McCain, it’s just more borrow-and-spend GOP folly. None of them has a choice. Any deviation from Wall Street–Chicago orthodoxy is punished with derision from the New York–based media, whose members’ financial security depends on stocks going up, up, up and the rest of the country being milked so the plutocrats on the two coasts that matter don’t miss out on their crème fraîche.

Among the many ironies is the fact that the Fed was originally created following the Panic of 1907 because the nation had become too dependent on the House of Morgan for rescues following financial panics. So now, a century later, we have the Fed playing handmaiden to the same Morgan in a financial panic. The more things change, the more change gets picked from your pocket.

Students of history might recall the decades before the French Revolution. Government finances were wrecked by a financial panic; then the upper classes refused to be taxed in order to support the expensive and largely pointless wars they themselves had pushed on the nation. When the common people ran out of cash to pay the onerous taxes on basic commodities such as salt, and the aristocracy continued to balk at paying their way, the government fell, with bloody and chaotic results for a generation.

But this country’s ancien régime probably need not worry. Twenty-first-century Americans are much stupider than 18th-century French peasants and they are fed endless propaganda about what a great system we’ve got. As John Lennon put it, we’re doped with religion, sex, and t.v. And we’re still fucking peasants, as far as I can see. Peasants whose pitchforks were taken away a long time ago. And the Bastille can’t be stormed, because it’s in a secure, undisclosed location, maybe Davos or the Channel Islands.

When I was a kid, they used to say America was a classless society. That’s still true, but only in the sense that our rich people have no class at all.

Related Christmas-carol parody:
Christmas in the Red
Related toon:
Little Shop of Handouts
Turn over another new leaf:
6 March 2008
Vote Early, Vote Later

Little caucus on the prairie.

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