Web Letters | The Nation

Web Letter

It is apparent that in lieu of looking for viable solutions to the looming credit crisis, the editors would rather spend their time speculating on the motives behind the Fed's actions and advocating the near-socialization of America's economy. I do agree that this crisis, if not dealt with promptly, will cause untold millions of people hardship both in the United States and abroad; however, there is little proof that the methods advocated by The Nation possess any degree of solvency except the underlying assumptions held by the editors. Instead of using the credit crisis as a platform for espousing an infeasible set of reforms, the editors would be better served to look at the current system and seek more practical means of preserving progressive values.

The tone of the editorial drips with vitriolic sentiments towards the Fed, essentially claiming that its attempts to preserve capital in the country are somehow a part of a manipulative scheme keeping Wall Street high rollers on top and dumping their losses on the innocent American public. The ignorance of this assumption becomes clear when one looks at how this lending crisis all began: local and regional banks (who lie outside the regulatory powers of the Fed) began to issue loans to individuals with bad credit as the housing market boomed. To only blame the Fed in this is absurd--overzealous home buyers, local banks and financial institutions were all allured by the rewards of the housing market, and unfortunately failed to exercise caution and judgment in this area.

So, should the US bail out all struggling banks, nationalize dying industries and ignore the Fed? Absolutely not! Getting out of this credit crisis will be a struggle; in pointing the finger solely at Wall Street and the Fed, The Nation is only alienating the two essential parties needed if reform of the financial system is to occur. Their response is to use Congress --potentially the least effective branch of government this year, considering the November elections; partisan divisions between the House, Senate and White House; and the overall nature of the legislative process--to enact these reforms. Let's give the Fed a chance to resolve the credit crisis before advocating the implementation of improbable and impractical economic reforms that will only stifle the US economy beyond its already fragile state.

Brian Campbell

Madison, WI

Mar 25 2008 - 6:04am

Web Letter

Thomas Jefferson (letter to the Secretary of the Treasury, Albert Gallatin, in 1802): "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Michael McKinlay

Hercules, CA

Mar 23 2008 - 3:29pm

Web Letter

I agree with the writer that the federal government needs to step in. However, I recommend a far more drastic and comsumer-oriented solution: that all subprime and prime mortgages made between 1993 and 2008, as well as all credit card debt with greater than 5 percent interest made between the same time period, be erased from the books.

That's right--I am advocating you sink the ships of the credit card and lending industry to save the rest of the fleet. If they don't like it, too bad. It was their racism, sexism and greed that got us into this mess in the first place. It doesn't take a financial expert to know that 29.99 percent interest and ballooning payments will net defaults rather than paid-off loans (and those profits as well). The industry wrote those loans to fail. They should not be rewarded for deploying such weapons of mass destruction.

My solution may result in a deep tightening of the credit market. Good! It will cut back on the rampant consumerism that has caused our current lack of empathy and global climate change and pollution crises. It will also force the banks and lenders to lend money at terms that result in people paying them back rather than defaulting or getting ripped off.

Sink those ships or lose their entire fleet.

Ash Smith

Greensburg, LA

Mar 23 2008 - 1:52pm

Web Letter

Thanks for another clear and to-the-point editorial. Whether one disagrees with the writing or not, The Nation is at least attempting to be clear on what is happening with the systemic crisis in the financial system. Most mass media are currently trying to circumlocute around this messy situation and the obvious ramifications, for fear of being seen pointing out to the public that Wall Street has again brought a risk of disaster to the entire country via its drunken excesses.

Seymour Friendly

Seattle, WA

Mar 23 2008 - 11:14am

Web Letter

Another spectacular failure of Mr. Bush. It seems our President's legacy is destined to roar by the once unbeatable legacy of President Herbert Hoover. This is a golden opportunity for serious progressive financial analysis to overcome the blatant lethargy and the outright stupidity of the American banking system. The Fed should have acted months ago instead of paying attention to another Bush siren song. It is essential that the Wall Street firms that manage pension funds not be allowed to fail, not to rescue the corporate slime that mismanaged these funds but to save the little guy's pension money that is at risk. However, it is not enough to bail out banks that could sink legitimate pension funds and wipe out thousands of regular folks' retirements, we must reverse the systemic causes.

First, radically tax or penalize corporations that send jobs to countries with no labor protections and hideous environmental records. This alone would stop the bleeding of US jobs and possibly begin an end to globalization. Second, tax Wall Street investment banks to provide the funds for such bailouts as Bear Sterns; this money could also be used to buy back the crap mortgages that the financial sector just dreamed up. Third, create a treasury bond issue specifically designed to fund and support the housing market in a socially responsible manner so that the middle and lower classes get a reasonable shot at "real" home ownership instead of the floating ARM BS. In other words redesign Fannie Mae and Freddie Mac.

In the short term, it would be extremely nice if our two Democratic candidates spent a few seconds of their twenty-four-hour day on this critical subject instead of shooting at each other. The media is of course not providing any serious analysis. It must be too damn difficult to think critically and report strategically about serious financial matters when it is so much easier to report on juicy sex scandals, the Heather Mills divorce, various Hollywood escapades, the Pope's new list of sins and the endless mumbling of pundits.

Jack Lenahan

Charleston, SC

Mar 22 2008 - 8:44pm

Web Letter

It was ironic to see J.P. Morgan Chase as a part of the Wall Street rescue of Bear Sterns. J. P. Morgan, himself, came to the rescue in the Panic of 1893. It was the 1893 panic that pushed the Progressive movement in the direction of regulating business practices. I think we have to look at the various regulatory activities of the "New Deal" as a guide to fixing abusive banking and lending practices.

This current economic fiasco should put to rest the idea of "conservative" bankers that Wall Street, and business interests should not be regulated. Many of the laws may still be on the books, but not enforced. It was the Bush Administration that openly declared class warfare on the American people in defense of the beleaguered economic elites. While the Progressive Movement was never about socialism, it did respond to corporate crimes through the rule of law and regulation. However, this article's take on corporate socialism is accurate. I have often referred to the economic policies of Bush Administration as corporate welfare, and, with the Administration's attempts to concentrate government power in the executive branch in defense of corporate interest, I have also called it a corporate fascist. While some may consider these comments inflammatory, they cannot be considered inaccurate.

Pervis J. Casey

Riverside, CA

Mar 22 2008 - 5:15pm

Web Letter

When the economy tanks we are all in the soup together. Preaching class warfare at this desperate stage is self-defeating. I only just heard the believable theory that when Hoover successfully urged large corporations to avoid layoffs and wage cuts in 1930 he only guaranteed that the Depression would get worse, as other smaller companies cut wages and laid off their employees. We sink or swim together.

Norman Ravitch

Savannah, GA

Mar 21 2008 - 8:16am

Web Letter

"In this crisis, the Federal Reserve is an untrustworthy agent for the public interest. Its institutional bias is to defend the club members and cover up its own errors." The Nation hit the nail on the head. Now, take the next step. Call for a Public Central Bank. A bank that will not charge us interest on our own money. A bank that will honor its fiduciary duty to the public. A bank that will truly be independent of the interests it regulates.

The privately owned and operated Federal Reserve has throughout its ninety-five-year history promoted the interests of its members over the good of the country. Over the last twenty years we saw bubble after bubble, panic after panic, each more serious than its' predecessor and yet the mantra was always "free markets," "less regulation" and more "financial innovation." And for what? The profits of their member banks who own all the shares of the corporation known as the Federal Reserve.

This crisis is far from over, and in the meantime the public is subsidizing the very interests that caused the disaster. The problem is that there are much bigger catastrophes looming. Tens of trillions of dollars of Credit Default Swaps and hundreds of trillions of dollars in derivatives that are in a market that is not regulated and has no financial standards for counterparties and no legal framework for determinations. Our entire gross domestic product is only about 14 trillion. The loss of even a small percentage of these markets will bankrupt the country. The failure of the Federal Reserve to regulate these behemouth markets is in itself reason enough to give them the boot.

We need a Public Central Bank that will act in the interest of the country, a fiduciary duty that has always taken a back seat in the privately owned and operated Federal Reserve.

Michael McKinlay

Hercules, CA

Mar 20 2008 - 7:01pm

Web Letter

If the Democrats are not destroyed by Billary but emerge from Election Day with the White House and majorities in both houses, the Democrats should examine very carefully undoing the Clinton legacy and restoring the Glass-Steagal separation of investment and commercial banking. This will not be easy, in the face of enormous resources that will be spent by banking lobbyists to retain the current free-market socialism now in action. Both Democratic senators from NY, for example, are avowed supporters of the current regime.

Undoing the immense harm already done will be left to us and our children to pick up the tab. Neither Democratic senator from NY have expressed genuine concern. Expect none.

R.H. Weber

Geneva, Switzerland

Mar 20 2008 - 3:37pm

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