Harvest of corruption
September 28, 2008
Chicago Cub fans hope October brings the team its first World Series title in a century. Most other Americans, after a month of stock and commodity market mayhem, just hope October brings November.
That’s anything but certain given the hash Congress, the White House and the Federal Reserve made of September. On second thought, biting off the entire month is too much. Chewing through just one week, the week before the arrival of fall, is enough to choke any free market believer.
It began Sunday, Sept. 14 with investment bank Lehman Bros. and insurer AIG staring into bankruptcy. The White House and its financial firemen, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, were watching, too. A day later, Lehman went up in smoke.
The market, the unofficial Administration explanation went, not the government, picks winners and losers. Lehman, obviously, was a loser.
Within 24 hours, however, both Paulson and Bernanke were on Capitol Hill mocking that free market gospel. On Tuesday afternoon, the Bailout Boys quietly informed a bipartisan gathering of House and Senate finance chiefs that the Fed would pump $85 billion into AIG to keep it afloat.
Wednesday’s announcement that AIG was bailout-worthy just one day after Lehman was declared unworthy brought three facts into clear focus.
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First, the free market, resuscitated just long enough to carry Lehman to the graveyard, is now back on the government ventilator. Little wonder Wall Street lurches up, then down. Which way should it go when America’s money popes praise the cold efficiency of the free market one day then blow torch it the next?
Little wonder, also, that five days after that flip-flop, Paulson would propose a $700 billion bailout of – well, no one is quite certain of who or what – with unprecedented, extra-legal power. If Congress simply taps its collective toe to each step of his Bear-Fannie-Freddie-AIG dance, then Paulson really is the last master of the universe and can be expected to act as such.
Second, when anyone says “investment banks” or “investment bankers” from now on the verb that follows will be in the past tense because neither exists anymore. Could anyone have predicted their demise given the free rein they enjoyed under presidents Reagan, Bush I, Clinton and Bush II?
Third, we all should have because when you take down the fences – deregulate – sooner or later the lions will eat every lamb. It’s just the nature of those beasts. Then, when the easy pickings are gone, they’ll eat each other.
Beginning early in the Clinton Administration, the financial industry poured over $600 million into U.S. Senate, House and White House campaign coffers. Smartly, half went to Dems and half to Repubs so whomever ran whatever, the money gang was always welcome whenever. And, slowly, the fences came down.
To then ensure no new fences were built after the Clinton deregulation, the lions poured another $500 million into DC lobbying to keep the sheep – first the Repubs, then the Dems – within easy reach. Fannie and Freddie, the mortgage industry’s toxic twins, alone dropped over $200 million in lobbying game.
Incredibly, the billion or so bucks Wall Street has spent buying Washington since 1995 may still bring a $700 billion or so return if Paulson and Bernanke can convince Congress to fund this week’s (there will be more ) bailout. Sweet, and sweetly insane, eh?
Worse, dropping that wad into this rathole doesn’t address the real problem, the dirty DC money game. Until Washington’s campaign corruption ends, October will always brings a World Series winner and a taxpayer-funded loser. Take it to the bank.
To be safe, though, wait until after the bailout, ya’ hear?
© 2008 ag comm
Write to Alan Guebert at agcomm, 21673 Lago Dr., Delavan, IL 61734, or by email at email@example.com