Sunday, September 21, 2008

Klein gets it. Sullivan doesn't.

Klein: The reason why the stock market went up on Wall Street today is because it’s Christmas morning. Imagine waking up and being told your credit card debits have been wiped out, your mortgage has been erased. There’s a fairy godmother who has taken care of you. A guardian angel. But actually that’s the tax payers.

Sullivan: So you are in favour of real capitalism? You don't believe the government should be socialising all these industries?

Klein: This is socialism for the rich. Look, if we are socialising things, let's nationalise something profitable.

And that's the truth. As long as these companies are making profits, they are private profits, and the minute they become unprofitable, it becomes a public debt. What Klein refers to as "crybaby capitalism where when the times are good they are preaching deregulation and when the times are bad they want the bail-outs."

She also asks the killer question: "Where is this ideal capitalism of which you speak?"


Greenwald gets it:

What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism -- where they reap tens of millions of dollars and more every year while their reckless gambles are paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapse? We've retroactively created a win-only system where the wealthiest corporations and their shareholders are free to gamble for as long as they win and then force others who have no upside to pay for their losses. Watching Wall St. erupt with an orgy of celebration on Friday after it became clear the Government (i.e., you) would pay for their disaster was literally nauseating, as the very people who wreaked this havoc are now being rewarded.

More amazingly, they're free to walk away without having to disgorge their gains; at worst, they're just "forced" to walk away without any further stake in the gamble. How can these bailouts not at least be categorically conditioned on the disgorgement of ill-gotten gains from those who are responsible? The mere fact that shareholders might lose their stake going forward doesn't resolve that concern; why should those who so fantastically profited from these schemes they couldn't support walk away with their gains? This is "redistribution of wealth" and "government takeover of industry" on the grandest scale imaginable -- the buzzphrases that have been thrown around for decades to represent all that is evil and bad in the world. That's all this is; it's not an "investment" by the Government in any real sense but just a magical transfer of losses away from those who are responsible for these losses to those who aren't.

It's Robin Hood in reverse. It's taking money from the poor to give to the rich.

I have no idea whether or not this is necessary, I readily admit that I lack that economic knowledge. All I know is that the same people who told me that Iraq had WMD are now telling me that, if we don't bail out these guys, the world will end.

I'd like a bit more explanation of that theory before I sign up to it.

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daveawayfromhome said...

I'd propose a special tax on the financial sector, per transaction or something, maybe with a timed provision that lowers the tax the longer the money stays in one place. Everything is on record these days, so I dont think they can claim not to know how long money "stays" in one place (and you can bet they'll be very clever in figuring out how to game the system). Then, take that tax money and put it in a fund to cover the asses of the financial sector next time they pull a boneheaded stunt.

Kel said...

That's certainly a better idea than the writing of a blank cheque, which appears to be the Bush agenda.