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24 Random Observations On The Great Financial Meltdown Of The Year Aught Eight

September 24th, 2008
By SHAUN MULLEN, TMV Columnist

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(1.) It’s no surprise that senior citizens are among the most vocal opponents of the $700 billion financial bailout plan. Only they can recall first hand the privations of the Great Depression, the last great systemic collapse of American financial institutions.

(2.) Efforts by both Republicans and Democrats to the contrary, the meltdown does not have partisan roots. Both parties must share in the blame.

(3.) Some shameless commentators are hinting that it’s all the fault of colored people.

(4.) The last major U.S. financial scandal was the Keating Five. It is obvious that we learned little from the $160 billion savings-and-loan bailout (300 billion in today’s dollars), least of all John McCain.

(5.) Yes, George Bush is a lame-duck president. But he has so little credibility that his cheerleading seems like so much background noise, and his cancellation of a fundraising trip so he could lead the bailing was appropriately greeted with derision.

(6.) American’s faith in its financial institutions has been shattered, while the approval rating of the man who will sign the bailout plan legislation is now lower than Richard Nixon’s the week that he resigned.

(7.) And that man’s record when it comes to must-have emergency measures with no strings attached is awful.

(8.) It is, in fact, Henry Paulson who is running the show. That means that the Treasury secretary has an obligation to be absolutely clear about the course he is charting. Instead, he has been absolutely vague except when it comes to fear mongering, including the inane claim that the U.S. might slide into a recession if there isn’t quick action.

(9.) While there remains some question about whether the U.S. is technically in a recession, most Americans will tell you that it sure feels like one.

(10.) While the recovery of Wall Street and world financial markets late last week was greased by a big down payment on that $700 billion, it was predicated on the belief that the bailout plan will work.

(11.) There is no guarantee that the bailout plan will work.

(12.) The bailout plan punishes the sharecroppers and rewards the plantation owners.

(13.) Beyond malfeasance on the part of the titans of the financial industry and government, the biggest reason for the meltdown is that there is way too much debt. The bailout plan does not address that.

(14.) As it now stands, the bailout plan contains no provisions for judicial review, oversight or pay limits on the executives of firms that would be bailed out. Senator Christopher Dodd’s alternative plan does all that and more.

(15.) As well as no punitive measures for the companies being bailed out because, as Fed chairman Ben Bernanke explains, anything short of a handout might discourage them from participating. Duh!

(16.) The meltdown is a pungent illustration of how a free-market economy suffers when the government colludes with and fails to regulate financial institutions.

(17.) As tempting as it is, the bailout plan must not be loaded down with stimulus measures although they are badly needed.

(18.) Homeowners holding the short end of the stick are getting trampled in the mad rush to bail out the bigs. A one-year mortgage foreclosure moratorium on primary residences as part of any bailout package makes sense.

(19.) Pardon me for asking, but how am I and other taxpayers going to be paid back? And no I Bailed Out Wall Street & All I Got Was This Lousy T-Shirt jokes, okay?


(20.) Iraq is sitting on $80 billion in oil profits. Al-Maliki: can you spare a dime?

(21.) The next president will inherit a $500 billion budget deficit and the costs of the bailout plan. Barack Obama says his spending plans may have to be delayed as a consequence, while John McCain, who also wants to keep the Forever War going, says he will cut taxes.

(22.) But, hey, here’s some good news: The collapse of the housing market slowed last month.

(23.) But, hey, here’s some bad news:There’s still no bottom in sight.

(24.) Unlike the 1929 Crash, there have been no meltdown-related suicides reported, let alone leaps from the windows of bank buildings.

(25.) The Great Financial Meltdown of 2008 is fraught with irony, but none is bigger than the fact that the conservative architects of the deregulation movement have become what they long railed against — socialists.



This entry was posted on Wednesday, September 24th, 2008 at 6:09 am and is filed under Bush Administration, John McCain, Wall Street, Capitalism, Federal Reserve, Barack Obama, George W. Bush, 2008 Elections, Money/Finance, Congress, Conservatives, Economy, Business. You can leave a response, or trackback from your own site.

Viewing 20 Comments

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    (2.) Efforts by both Republicans and Democrats to the contrary, the meltdown does not have partisan roots. Both parties must share in the blame.


    Bullshit!!!!

    Bullshit!!!!

    The Republicans have been the party of Deregulation for the last 30 years, they have also been in charge of the White House and the regulatory apparatus for the last eight years!

    The laws they could not repeal, they did not enforce.

    So if we are going to lay blame on both parties, let's do it honestly:

    - 80% to the Republicans for being greedy short sighted dumb asses.
    - 20% to the Democrats for being spineless cowards.

    and 100% to the American public who elected these dimwits.

    And one more time BULLSHIT!!!
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    Well, at least Donnie Q's comment kept Shaun from looking really bad once again.

    Yes, both parties are at fault. The problems go all the way back to the Seventies with the Community Reinvestment Act, the long-notorious behavior of ACORN (which taints Obama to this day among the knowledgeable), and Dems during the Clinton bubble years who competed with the Republicans to do whatever it took to make the masses feel good (good news is one of their opiates along with cheap money). By the way, Robert Rubin, who oversaw Clinton's approval of the repeal of Glass-Steagall, allowing banks, insurers, and investment firms to merge, undoing the barrier erected in the 1930s after mischief as well as a bubble during the 1920s was exposed, then went into, where else, the financial sector, and whose campaign is he how advising, incidentally? And whose administration might he come back to Washington to join?

    What we need to do is (a) decide how to repair the damage that has been done and is surfacing, i.e., prevent any economic disaster (which is separate from allowing the institutions that should fail, to fail); (b) reform government as well as the financial sector so this doesn't happen again.

    Of course there should be no handouts to executives, nor to occupants of the homes who wanted something for less than it really cost, or for nothing, and who now want to be maintained as federally-supported squatters (parasites) if Obama and other Dems have their way. If loans are not going to be repaid, foreclose and evict. Any federal takeover of properties (a godawful idea) should involve foreclosure, repair and improvements, and reselling at a profit to the federal government and thus a relief eventually to the taxpayers. Hold auctions if need be.

    Finally, those of us on planet Earth who have been waiting for this, and have been the first to advocate this, now have learned this is starting: The FBI is beginning to investigate fraud in and by these firms. (Cynical note to execs: Plead guilty early to lesser offenses -- you cannot hope that only underlings will take the fall for this -- and hope for a Bush pardon next January along with, say, "Scooter" Libby.)
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    Don - right back at you. Some of the most damaging changes occurred under the Democratic Congresses under Bush I, and both party's Congresses under Clinton. This is truly a bi-partisan train wreck. Its roots go all the way back to the 60's, in fact.

    Shaun - re: (3.) Some shameless commentators are hinting that it’s all the fault of colored people.

    Where have you heard or seen that! I mean, what a crock of shit, but I haven't heard a hint of racial blaming. I cannot even see how that argument can be made, unless you are talking about the complaints of lending discrimination that led to the directives to loosen credit requirements. But even if someone wants to go down that path, that may be what, 5% of the cause? And the loosened credit most certainly didn't go only to non-whites, so it is a red herring anyway.

    The real underlying cause (IMHO) was primarily the changing of the banking laws that tore down the walls between traditional banking and investment banking, and of course the Freddie/Fannie chicken finally coming home to roost (and THAT fiasco has roots stretching all the back to LBJ!)

    re: (6.) American’s faith in its financial institutions has been shattered

    So true. Multiple hundred year-old, respectable (in the past) institutions gone forever.

    re: (22.) The Great Financial Meltdown of 2008 is fraught with irony, but none is bigger than the fact that the conservative architects of the deregulation movement have become what they long railed against — socialists.

    Again, so true. We are nationalizing a HUGE chunk of our economy. And the 'we will give it back as soon as we are able' line, well, that just makes me do a spit take. What government agency, once it gets its hooks into any type of revenue stream or lever of power, willingly concedes that authority back, and shuts down?

    Also, this will make it a lot hard to criticize Chavez! (snark alert)

    As always,
    your personal troll
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    It's more like 70-30 at most or 60-40 or even 55-45, GOP-Dem ratio. This was a 1990s-onward problem and the Dems were at the forefront much of the time then. Plus there's a big "Wall Street Left" that's well entwined with Democrats in Washington.

    It's more GOP than Dem overall because of the nature of it and history shows (or demonstrates or proves) it. It's not just a matter of the GOP's own fondness for Wall Street and big money (any "privatization" program for Social Security involving large amounts of securities -- stocks and bonds, who knows, someday options and futures and derivatives as well, ayyy -- would direct vast amounts of money Wall Street's way, as we all know). The concept of deregulation is sound and obviously superior to government meddling-and-mismanaging-to-death. But that leaves us on an "honor system" and there are those ever ready to abuse it. Plus having Glass-Steagall broken during a bubble was obviously the worst thing to do (a friend of mine and I in Atlanta at the time this happened were aghast at this -- while we were also observing colleagues constantly going for call options and betting on the hotter stocks at the time in other ways as well).

    History? Community Reinvestment Act was obviously wrong, but were there any problems directly attributable to it in the late 1970s or the 1980s or earlier in the 1990s? No. Deregulation with S&Ls happened in the 1980s and by the end of that decade, that's when the problems began. Deregulation of finance began in the late 1990s and about ten years later we have another disaster. The problems seem mainly arising from deregulation if history is any honest account. Deregulation is great -- much better than too much ogovernment, the "visible foot" replacing the "invisible hand" -- but where there's cheating, where experience has shown there have been problems, there need to be limits. I'm sad that Congress isn't promptly saying first and foremost that Glass-Steagall should probably be renewed. Or must we face mergers now (for survival of the remaining firms) and try to "manage" it as best we can?
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    "We are nationalizing a HUGE chunk of our economy."

    Hell., the late Gus Hall would have loved it. "80 per cent of AIG? Better than 50.1 per cent, and why not one hundred per cent? Not merely AIG but all the firms?"

    "And the oil companies are next! Solidarity with Chavez!"
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    " What government agency, once it gets its hooks into any type of revenue stream or lever of power"

    One-way ratchet -- hooks, claws, fangs...
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    Austin Roth said: "We are nationalizing a HUGE chunk of our economy. And the 'we will give it back as soon as we are able' line, well, that just makes me do a spit take. What government agency, once it gets its hooks into any type of revenue stream or level of control, willingly conceded that authority back, and shuts down?"

    Your right AR. I have to admit, I used to have a sprinkling of socialist viewpoints in my political heart. When you grow up immersed in black nationalism, it's hard not to. But the recent financial crisis, along with this bailout talk, has dried up those socialist sprinklings. I know this isn't cool to say (well among some people) but I want all of them to fall and if we go down as well, then so be it. Maybe then we can rebuild a true capitalist structure.
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    AR: I think I can shed some light on Shaun's "colored people" snark. This appears to me to be the canard that if someone speaks against a social policy program that purports to help blacks or other minorities, regardless if one is speaking of the blatantly obvious flaws of the program, then one must be a racist.

    You'll find this 'rule' listed under 'Exceptions' of the Democratic playbook, to the more general principle:
    'Political opposition and dissent are prized as the most cherished aspect of our Constitutional freedoms, and must be preserved at all costs. Attempts to stifle dissent by impugning the motives or patriotism of the dissenting party is a despicable and unacceptable; only free and open debate of opposing opinions should be permissible. (see also, Bush, GW; Cheney, Richard; Rumsfeld, Donald.)'