1 Boring Old Man

Paulson Bailout Failure: First Shot in the Next Class War

^{Over the last 30 years the US had a class war, and the middle class lost almost every battle. Congress’s refusal yesterday to spend over $700 billion bailing out the nation’s richest people did not confirm that the US was a banana republic, as Paul Krugman would have us believe, where the top 1% of the population steals from the poor and the small middle class to take for themselves.}

^{On the contrary, the bailout’s failure signals that America rejected the opportunity to solidify its role as the world’s largest plutocracy — a country run by the rich for the rich. This was the most significant victory against US plutocracy in 30 years.}

^{The US has been trending towards plutocracy for over three decades. From being the Western nation with the most social mobility, America went to being the country with the least. From having the least inequality in the Western world it went to the most. The amount of money the rich had ballooned to Gilded Age levels and the middle class didn’t get a single raise. Families went from being able to support themselves with one wage earner to needing two.}

^{There has never been a better time to be rich in America. In the last decades the truly rich have gone from merely flying first class to owning their own jets. They’ve gone from earning 20 or 30 times what a normal employee earns to taking home tens of millions of dollars every single year—even when they are running the company, and the country, into bankruptcy.}

^{Congress after Congress, Administration after Administration systematically stripped rules and regulations from the financial system to make more and more leverage and thus more and more profits possible. Tax levels on the rich collapsed and unearned income was taxed at lower and lower rates, while those who earned their money by the sweat of their brow instead of buying securities were taxed much more.}

^{In other words a huge amount of money was very deliberately transfered by government from the working class to the rich. As Jesse Wendel points out, this transfer of wealth only accelerated in the Bush years, where most of the debt run up was for tax cuts for the rich, and most of the rest was for a war which certainly didn’t benefit ordinary Americans, but did enrich companies like Halliburton—that just coincidentally had connections at the highest political levels…}

^{I put it here because it’s pretty, not because I understand it}

So, the rich get richer, and the poor get poorer isn’t just a quirk of nature. In this case, it was with heavy-duty assistance from the government itself. By systematically destroying the regulatory forces put in place after The Great Depression, the Reagan Dynasty created an environment where the same thing could happen again. There was an accumulation of wealth by the already wealthy [top graph]. And there has been a rampant abuse of credit – to the point of trading it as if it were an asset. All of this has been rationalized as "freedom" or a "free market economy." In truth, it’s something very different. It’s a manipulation of our markets to allow short term growth oriented speculation [on credit] to take over, ignoring the inevitable day of reckoning when declining markets allow a true accounting to catch up with deficit financing schemes.

I suppose this is why Conservatives use the term "Liberal" as an attack – a synonym for "Communism." Communism arose as an anectdote to Fascism – the rule of the powerful [wealthy]. It’s an absurd comparison. We "Liberals" know that, in practice, large scale Communism is little more that dictatorship – just another form of rule by the powerful. In practice, the Liberal view is that Capitalism is a system that will always need restraints, just like we have other kinds of criminal laws to deal with greed. It’s not even Socialism. It’s just good sense informed by an understanding of human nature.

Our job now is to turn this crisis into a reform that lasts. And step one is removing its authors – all of the Reagan Dynasty including John McCain and the remnants of the Bush Administration. We need to shut down the markets where credit is a commodity; return some version of the Glass-Stegall Act [regulate Banks, S&L’s, and Insurers]; use our ownership of Freddy Mac and Fanny May to get the government back in the business of approving loans; and get Rush Limbaugh and Fox News out of the drivership of public opinion. The Bailout is only a measure to hold the line while reform takes place. And being a good old F.D.R. Democrat, I’d like to see us deal with unemployment by reviving something like the W.P.A. to rebuild our neglected infrastructure. Did I mention get out of Iraq?

It’s time for Richard the Lionhearted to come home from the Crusades, unseat Prince John,  and give Robin Hood a much needed rest…