Archive for September, 2008

Conservatives for Socialism

Published September 24th, 2008 by tcarpenter

Like most of you, I’ve watched the chaos in the U.S. financial system the past two weeks with a mixture of fascination and horror.   I do not claim to be an economist, but as a former real estate broker, I assumed that something along the lines of this debacle would happen given the absurd mortgage loans being given to utterly unqualified buyers during the 2004-2006 period.  Now, the federal government proposes to use U.S. taxpayer dollars to bail out the supposedly sophisticated banks and Wall Street investment houses that bought up packets of that garbage.  The Bush administration asserts that the cost will be $700 billion.  I would treat that estimate not merely with a grain of salt, but with the entire salt shaker at hand.  The next government program that doesn’t greatly exceed the initial cost estimates will be the first.  Think trillions, not billions.

The most disgusting feature of this episode is the sight of alleged capitalists and their conservative media defenders vociferously advocating a federal bailout.  They seem to believe that socialism is bad in general but perfectly okay for Wall Street.  The editorials in the Wall Street Journal and Investor’s Business Daily, in particular, are especially prone to induce nausea.  Some Republican political figures have adopted the same hypocritical stance, although to their credit, other conservative Republicans are now in open revolt against the Bush administration’s proposal.

I am a staunch advocate of capitalism.  But capitalism means (or at least should mean) the risk of incurring losses as well as making profits.  I have no patience for a crony capitalism that allows private individuals to make tens of millions of dollars in profits if their decisions prove sound, but stick the taxpayers with  losses if their decisions are faulty.  Privatizing profits and socializing losses is a great deal, if one can get it, but an ethical society should not tolerate such an unfair scheme.

Of course, we are told that if we do not bail out the poor waifs on Wall Street, the financial system will completely melt down and we will have an economic disaster of Biblical proportions.  Maybe.  But hyping the threat is a time-honored method politicians use to stampede people into supporting unwise (and sometimes sleazy) policies.   Anyone remember the grave threat to America posed by Iraqi unmanned aerial vehicles loaded with weapons of mass destruction?  I have little doubt that the financial mess will likely produce a painful recession, but do you notice that Ben Bernanke and Henry Paulson never say HOW MUCH interest rates and unemployment are likely to rise if the bailout is rejected?  They speak in ominous, but always vague, terms.

We’re likely headed for a recession regardless of what Congress does with the administration’s proposed rescue package.  It would be preferable to let the markets work their way through this problem, as painful as that process might be, than to set a precedent that rewards utterly irresponsible behavior by multi-millionaires.  Proponents of a bailout risk discrediting true capitalism in the minds of the American people for decades, if not generations.

Washington Is So Generous–With Our Money

Published September 3rd, 2008 by tcarpenter

Secretary of State Rice announced today that the United States would provide $1 billion in aid to help the Republic of Georgia recover from the damage it suffered in its recent war with Russia.  It’s bad enough when American taxpayers have to pay for wars in which the United States was a belligerent.  But this was a war between two other countries.  And one can’t even say that Georgia is an ally of the United States.  America has no defense treaty with that country.  Even worse, the war began when Georgia’s president, Mikheil Saaskashvili, disregarded U.S. warnings not to fall into the trap of provoking Russia.  Instead, he ordered an artillery barrage against the capital of a secessionist region that was under Russia’s protection.  Apparently it didn’t occur to him that it was a bad idea to pick a fight with a country whose military forces were ten times larger than his own.

So now American taxpayers, who are already laboring under a $9 trillion national debt and an annual federal budget deficit of $400 billion, should pay for the Georgian government’s folly.  Thanks, Condi.  It’s not like we had anything better to do with that money.