LET’S GET OVER IT AND MOVE ON

People still approach Justice Scalia about the Supreme Court’s 2000 decision in Bush v. Gore. His prompt and discussion-ending reply has been “Get over it.” Perhaps that’s the attitude we need to take with respect to the banking/financial crisis and the bailout plans.

We have to collectively “get over it” and move on as President Obama has been suggesting by limiting his attention to the bank bailout issue. There are too many other larger problems that he believes can and must be resolved. He has left the thankless job to Treasury Secretary Timothy Geithner. It is an unpleasant task to give billions to the same wealthy people who created this problem in order to bring closure to this entire fiasco. The Administration has much bigger goals in mind and this public outcry over the obviously excessive compensation packages at AIG and at all Wall Street Firms will eventually die down.

Despite all the criticism from economists and pundits, perhaps Secretary Geithner really knows what he’s doing. He is not a “pawn” of Wall Street. His “mindset” is simply one of a realistic observer of modern American society, economics and political power. He simply lacks the charisma, the time and the stomach to really explain that sad reality to the rest of us.

The Obama Administration does not have the power or political capital to spend reforming our entire political system and society in an attempt to make the economic system more ethical and the wealthy less greedy. Human nature has changed very little over the millennia. We just have to accept certain unpleasant realities that the wealthy have the political power and will never face the problems of everyday people. And the rest of us mortals are merely the audience that has to pay for this ongoing spectacle.

This latest bailout plan to use public money to subsidize the purchase of toxic assets by private investors from the large banks will work because Wall Street will make it work. The stock markets rose euphorically on the news of more public money being shoveled up the economic feeding ladder. They may have made reckless, self-centered, greedy, hubristic, ignorant and fraudulent decisions but they always knew to reward themselves throughout the process. They may have created those messy mortgage-backed securities and credit default swaps, and turned the system temporarily into a gambling casino, but it is always the vast majority of Americans that will eventually pay for mistakes of the demigods.

No matter what the negotiated price, once those bad assets are permanently off the books of banks, things will go back to as they were before. The wealthiest 1% of society will take a small haircut and the rest of us will take a bath in the mess they leave. That is the way it has always been and that is the way it will always be. Presidents Roosevelt, Kennedy and Johnson never changed that basic dynamic – they simply improved the overall lot of the poor and middle classes, and reduced the huge wealth disparities to levels we could accept.

Several decades ago, I realized this vast disparity between the very wealthy who control both political parties and the rest of us mere mortals was not about to change. I went about my business trying to make money in a variety of enterprises. I avoided politics and fortunately there were no blogging sites to even publicize my opinions to the world. I even thought for a brief time this past year that this huge bursting of multiple bubbles might finally alter some of the fundamental ways the world operates – but of course I was wrong.

Perhaps the reason conservatives are intrinsically happier than liberals is that they accept things they cannot change, get over it, and move on. Too many liberals endlessly gripe about the unfairness of it all and the demons within humanity that should be reformed to create some perfect and unattainable world.

President Franklin Roosevelt did not eliminate the very wealthy in society during the great depression. No, they simply became less ostentatious and waited their time – 20 years, until they re-emerged and slowly amassed their economic and political power, expanding significantly in the 1980’s and 1990’s, until the end of 2007. The New Deal really improved the working conditions, educational options, and overall living conditions for the poor and greatly expanded the middle class. However, the wealthy made quite a bit of money during World War II providing supplies, munitions, bombs, ships, planes and all the necessaries of war. The nickname “Daddy War Bucks” didn’t come out of thin air – and yes, “the sun will come out tomorrow, you can bet your bottom billion…”

Despite the mounting bankruptcies, job losses, foreclosures, defaults on all sorts of credit, lack of medical insurance, and the rest of life’s vicissitudes, about 80 percent of the American people will likely not live through any one of those personal or household calamities. They will emerge from this recession with far less savings and smaller pensions than they thought. However they did take their chances by investing in a controlled gambling casino called Wall Street. The worse some of these people have encountered recently is that the banks have rescinded unused credit cards, or reduced limits on cards with zero balances.

Most of the personal suffering has been limited to about 20% of the population – and that consists of a good number of people that have always been in severe poverty long before this economic crisis hit. Most people anguish over fear and the possibility they might end up in a worse-case scenario but fortunately most Americans will not be so unlucky. We are still a vastly wealthy and powerful nation with great natural resources and boundless entrepreneurial spirit when compared to most other nations on the planet. We are certainly not the most equitable, cultured, or well-organized – our sheer size overwhelms everything and everyone else. Our consumer society over the past 30 years essentially pulled up much of the developing world. China and India would be nowhere without the U.S.

Those facts are the essential parts of the big bet of Secretary Geithner and Wall Street with respect to the bank bailouts and toxic asset sale. Eventually most of the mortgages, loans and credit cards will be repaid over time and those toxic assets have higher values than their fright-induced assigned values of today’s market. Even if those assets do not appreciate very much, the wealthy investors will reap most of the increases and the American taxpayers will still insure any losses. We can probably bet that the American taxpayer will likely just break even. Those public loans will be repaid in full over time, and even if they are not, we borrowed all of the money for this wealth transfer from foreigners anyway.

President Obama may personally dislike the highly inequitable capitalist system of 2009, but he knows he really can’t spend much time fighting or changing it. Life is simply not long enough and he has a limited amount of time to accomplish much bigger national goals.

Some of the President’s priorities are to modify some of our society’s most egregious behaviors with better comprehensive regulations and enforcement. He also wants to reduce income disparity over time by returning marginal income tax rates to the levels during the 1990’s. His greater goals are essentially bipartisan: Reduce governmental expenses and increase governmental income. Tackling healthcare is designed to cut long-term expenditures. Investing in our energy, education and transportation infrastructures makes for future wealth and jobs. More spending on roads, bridges, highways, mass transit, high speed and conventional trains, and new energy sources, has wide support from both political parties.

The first stimulus package was a down payment on creating more jobs for Americans. That was the public’s first bailout package. It even contained many new tax cuts for the poor and middle class. However, using even the most positive estimates, the stimulus package may only create 3.5 million new jobs and we’ve lost almost 5 million jobs just in 2008. We will probably lose another 5 to 8 million more jobs officially in 2009 and 2010. So we will have to come up with more stimulus packages to get more Americans back to work in meaningful and sustainable jobs. Without a fully-employed population, the long-term economic prospects for any economy are dim. Only people in secure well-paying jobs are creditworthy to qualify for bank credit and only they have the disposable income to resume our economic growth, without having to add more debt.

Yes, cleaning up the huge mess our wealthiest citizens have created will be very expensive, and they will reap most of the rewards. But not cleaning up will be a far worse scenario for our entire economy and society. Besides, what’s a few trillion dollars among friends? So when we are finished venting and throwing tantrums, and being shocked, angered and outraged by the unfairness of it all, we will come to the simple conclusion that we really don’t have a choice.

So a word to those who wish to remain sane and focused on the big picture: Secretary Geithner and the President are probably right that the financial bailouts and the compensation excesses are mere diversions. We mere mortals of this society cannot challenge or reform Mount Olympus. We might as well get over it so we can move on to addressing more important matters over which we might have some control and input.

There is a prayer that asks God to grant us the serenity to accept the things that cannot be changed, courage to change the things we can, and the wisdom to know the difference. Perhaps President Obama in his ever surprising calmness gives meaning to that prayer and thus reveals some of his intrinsic inner wisdom for which we elected him in the first place.

3/24/09 – by Marc Pascal in Phoenix, AZ.