More Dogs on Main Street
Several people have commented on my suggestion last week that we start cleaning up the Wall Street mess by summarily hanging the "masters of the universe" from the nearest light pole. They said that was rash and not well thought out. As a comprehensive plan, they felt that summary hanging was insufficient to solve the problem. The general sense of the folks I talked to was that hanging didn’t go quite far enough given the full range of options. The suggestions included:
Make them play on a public golf course, without a caddy.
Make them buy an anniversary gift for their spouse at Walmart for under $10.
Put them on Oprah! to explain to their children how much they will enjoy attending the nearby community college, assuming they can get a scholarship.
Make them fly commercial.
Make them fly coach.
Make them fly Southwest.
And then hang them from the nearest lamppost.
Apparently a deal has been struck, and some version of the $700 billion rescue will happen. Bush himself made a rare public appearance to scare the bejeesus out of us with comparisons to Pearl Harbor and millions of lost jobs and Saddam’s WMDs. Bush has basically been phoning it in for the last year, so if they actually got him involved we are probably in deeper stew than I thought. And there’s no comfort in knowing that Bush is on the case.
I still don’t know what to make of this. I watched a lot of the Congressional hearings trying to make sense of it. That was probably a mistake because there is little in Congress that makes sense. Right off the top, I find it troubling that Congress is complaining about lax oversight. Somehow, I thought that was what we paid them for. Excesses of greed and bad judgment on Wall Street are about as surprising as corruption in the Capitol, but when you come right down to it, when members of Congress start interrogating the Treasury secretary in a tone of voice that sounds like "there outta be a law …" well, they are dead right, and Congress is responsible for enacting the law that shoulda, coulda, woulda prevented this. Instead, they were all soaking up campaign contributions from the lobbyists for the industry who wanted to prevent regulation.
The main problem I have with is that I don’t trust the Bush administration. These are the people who brought us Saddam’s mushroom cloud over the cities of America. I don’t know why we should believe them now when they claim the financial mushroom cloud is looming. As W himself tried to say, "Fool me once, shame on you, fool me twice, shame on me." At the same time that expanding health insurance for the uninsured is dismissed as too expensive, and he vetoed extending the children’s health insurance program, he’s happy to pass out $700 billion in "bank stamps" to the poor people of Wall Street.
The Republicans have done such a great job of raiding the Treasury for their own benefit through tax policy that I just can’t quite trust them. We’ve already run up trillions in debt that will be paid by future generations. If you steal $50 from the 7-Eleven on the corner, you go to jail. If you steal a trillion from the next generation, you get a cash bonus, a private jet, and maybe a post office named after you. I can’t help wondering if this isn’t a last desperate grab by the Bush folks to loot the last of the national wealth for themselves. Snatching that kind of cash is pretty difficult with only three months left in office and the messiness of amending the tax code. So maybe they have just dropped the pretext of doing it through tax policy, and are just voting a direct appropriation to themselves.
But the bail-out has received broad support from both of the corrupt political parties, and from a lot of people out of government who seem to understand the situation (which I don’t). Warren Buffet, who is hardly a Bush supporter, seems agree that the apocalypse is upon us. So maybe it really is. The proposed bail out is worth $2,500 for every man, woman and child in the country, or about $7,500 per taxpayer. And for that expenditure, we are getting well, nobody has really explained exactly what, but I’m sure it will be lovely. At the minimum, we will be buying the survival of some big Wall Street firms, so they will live to do this to us again in 20 years. A bargain, if you ask me.
The optimists and clinically insane have been saying that the taxpayers should actually come out ahead on the deal. We buy the bundles of high-risk mortgages at a deep discount and hold them to maturity. In the end, most will be paid off, and others will result in foreclosure and the liquidation of the unfinished condos in Florida, and we put a big smiley face on the whole episode. But if anybody really believes that, why would the people now holding the rotten loans be so anxious to dump them on the Treasury?
There were a million alternative solutions floating around before this deal got approved. I personally liked the idea of a lottery. Anybody with a mortgage can buy a lottery ticket. The dodgier your loan (adjustable rate, speculative real estate, interest-only liar loan, anything in Florida, whatever) the better your odds are. Then we start drawing tickets, and use the $700 billion to pay off the loans of the winners. The Wall Street investors who are holding the mortgages get paid, the lucky homeowner is suddenly debt free, and can resume the irresponsible binge spending that got us here in the first place. The economy is stimulated and we all get fat, happy and complacent again. In a matter of months, we can watch the story repeat itself with the implosion of securitized credit-card debt and auto loans.
Oh, wait, that last part is going to happen anyway.
Tom Clyde served as Park City attorney in the 1980s and is the author of "More Dogs On Main Street." He has been a columnist at The Park Record for more than 20 years.
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