Original article, an editorial subheaded Whether or not Henry Paulson’s rescue scheme works, one thing is already crystal clear: The capitalist system has failed spectacularly, via socialistworker.org:
THE BUSH administration’s treasury secretary, Henry Paulson, is demanding the financial equivalent of martial law–$700 billion and a blank check to rescue the Wall Street system from the catastrophe caused by the blind greed of the super-rich parasites who run it.
W must be disappointed. After all, didn’t he say it’d be easier if we were a dictatorship as long as he was the dictator. Apparently, the bosses have decided he’s too much of a f$%k-up to be dictator. Instead, we’re gonna get Henry Paulson.
The Democrats who control Congress say they’ll grant Paulson’s demand for virtually unlimited powers to direct a financial rescue operation on a scale with the U.S. government’s “war on terror” around the world. They’re satisfied with nothing but a promise of a little help–maybe later, possibly–for working people.
And the Dems are running their regular subterfuge, with Pelosi saying in effect ‘No bailout’ and Barney Frank and Chris Dodd being the bad guys. Of course, all Nancy has to say is that a bailout is ‘off the table,’ and stick to her guns like she has on impeachment. Don’t worry, the bailout’s going to pass (almost certainly), and a few Dems will be able to say we put a fight, while the others just pass on whatever the bosses want.
“We need to give the secretary the authority to work,” Senate Banking Committee Chair Christopher Dodd (D-Conn.) said on ABC’s This Week. “These are complex issues. I don’t think we ought to micromanage that part of it.”
As if questioning Paulson’s demand for personal control of $700 billion in defiance of the U.S. Constitution is “micromanagement!”
Thank the political Gods that Chris Dodd isn’t the Democratic nominee.
Besides making a mockery of the U.S. political system, Paulson’s super-bailout plan buries 30 years of what the New York Times referred to as “market dogma”–the ideology that capitalism works best for everyone when unfettered by regulation. Just a few weeks ago, this was an unquestionable certainty of U.S. politics, shared by both major parties, if given a more humane gloss by Democrats.
Here, I disagree. We have a chance, and probably only this chance for the foreseeable future, to bury market dogma and neoliberalism. We won’t, almost certainly. We’re going to be stuck with this model of capitalism, or a similar one with some window dressing, and we’re going to continue on the road to financial hell.
“This past week marks a decisive turn in the evolution of American capitalism,” wrote David Wessel of the Wall Street Journal. “Black September, the biggest financial shock since the Great Depression, is prompting a Republican Treasury secretary and Federal Reserve chairman to devise the most muscular government intervention in the economy since the Great Depression in an effort to prevent the economic devastation of the Great Depression.”
The economic devastation will be felt by the working and middle classes either way. The intervention is to make sure the bosses don’t feel it. Period.
Indeed, the meltdown on Wall Street is an indictment of the whole free-market system, whose drive to enrich a tiny minority produces chaos in the best of times, and untold misery and suffering in the worst. What Paulson wants to do is save this system at the expense of the rest of us–so the same priorities can be re-imposed.
Exactly. You and I are going to be paying for this for the rest of our lives. The only question is will the bosses be paying for it also? If the bailout, as it’s being presented to us, goes through the answer will be no.
A national health care program, patterned on Medicare? Too expensive. A spending plan to rebuild crumbling public schools? Unaffordable. A government program to rebuild collapsing infrastructure and put the unemployed to work? Naïve nostalgia for the New Deal of the 1930s.
I wonder if Obama has scaled back his vision of the expansion of the war into Afghanistan? After all, we can’t afford the wars now, especially if this bailout goes through. Or will he see the expansion of the war as a way to save the markets?
Now Paulson wants total control of $700 billion of taxpayer money to buy up bad mortgage-backed securities from both U.S. and foreign financial institutions. “Comrade Paulson seizes the economy’s commanding heights,” economist and New York Times columnist Paul Krugman wrote on his blog in an ironic reference to socialism.
It’s nationalized state capitalism. It’s the marriage of the state and the finance and insurance industries (while already being married to the military industrial complex). It’s not socialism – though the bourgois centerists will try to paint it so in an effort to give socialism a black eye.
But Paulson’s nationalizations and bailout plans are the polar opposite of socialism, an economic system in which a democratically planned economy is controlled by the workers who produce the wealth. On the contrary, Paulson wants to dispense with even the veneer of democracy that exists under the Washington system–and concentrate in his own hands complete control over huge parts of the economy.
Here’s the thing about Paulson: He was CEO of Goldman-Sachs through the firs quarter of 2006, when he became treasury secretary. Now, my guess is that trading for this bad debt was well on it’s way while he was at Goldman-Sachs and that he didn’t stop it. Having him be economic dictator is like letting the fox in the henhouse, sitting him down at the table, cooking the hens and serving them to the fox. It’s stupid and naive both at the same time.
To make Paulson’s power grab more politically palatable there may be a few crumbs for workers. This could include laws making it easier to renegotiate mortgages at lower rates of interest, or perhaps a modest $50 billion economic stimulus package. But rather than insist that Paulson include aid for working people as part of his proposal, the Democrats are capitulating at the first opportunity, and promising only vaguely to do something in the future.
Thus, Democratic Sen. Charles Schumer of New York, one of Wall Street’s main men in Washington, rolled over for Paulson’s proposal. “We will not Christmas-tree this bill” with measures to help working people, Schumer said on Fox News. “The times are too urgent.” He added that a stimulus package “doesn’t necessarily have to be part of the bailout.”
Schumer’s another one of the Democratic All-Stars on the economy, isn’t he? Tells you something about the Democratic All-Stars. And that something isn’t very good.
Even if Congress gives Paulson everything he demands, huge questions remain. How much will the Treasury Department pay for the bad mortgage-backed securities? Earlier this year, Merrill Lynch sold off sub-prime mortgage-backed securities originally valued at $30.6 billion for just $6.7 billion–22 cents on the dollar. Will Paulson use U.S. taxpayer’s money to pay that amount–or twice that, or half? And what price will Paulson get when the Treasury, in turn, tries to sell that toxic debt to some hedge fund?
The bosses will make a killing off of this. You and I will get stuck with the tab. The system will continue on. That’s the plan.
“If Wall Street gets away with this,” wrote William Greider in the Nation, “it will represent a historic swindle of the American public–all sugar for the villains, lasting pain and damage for the victims.”
I wonder if hearings are going to be held on the bailout? If so, what congressperson will have the courage to question Paulson on what seem to be to be huge conflicts of interest? Will Obama find it in his politcal reasoning to vote for the bailout much as he rationalized his vote for FISA? The American public is waiting.
If Paulson’s plan succeeds, the economy could avoid the fire of a collapse of the financial system, but remain in the frying pan of a miserably slumping economy with rising jobless rates. (Then there are the possible side effects of Paulson’s program, including the devaluation of the dollar and rising inflation, as the Fed and Treasury Department pump hundreds of billions of dollars into the economy).
My guess is that we have two choices: A deflationary depression or a hyper-inflationary depression. Neither one is pretty, and the bosses will almost certainly manage to sale through either one.
If ever there was a time to use the old cliché that “the emperor has no clothes,” this is it. Those who want to fight for the interests of working people should be bold about arguing for an alternative to this corrupt and chaotic system–an alternative based on the democratic control of the economy and meeting human needs.
Keep all of this in mind as we head to the ballot box this November. There are alternatives avaialable.