I wholly agree with William Greider's thoughts here, but have to say that I don't know if Warren Buffett was showing the government "what they should do" or if he should apologize for stepping in front of them.
I think that someone should also discuss that the financial system is based ultimately on trust. "In God We Trust" is printed in large letters on each bill. We are not so naïve as to believe that God, if you believe that there is a God, is so mundane as to care about these matters. However, the motto does emphasize that there is trust involved in this exchange for currency. Lack of trust is exactly why the financial system is clogged and not working and it must be re-installed .
Trust has been eroded in our government after eight years of this current administration promoting ideology over the general welfare of the nation. Unfortunately, all of its appointments to high positions were of people who possessed the same "free market" ideology, including Treasury and the Federal Reserve appointments. The extremely wealthy have been rewarded with trillions of dollars pushed in their direction at the expense of all others. We have had deregulation, fraud and decriminalization, and now we have ideologues from the private sector who are now representing this exiting administration, asking for an unfathomable amount of money from the public sector. Overwhelmingly the public mistrusts them, and this event is taking place behind closed doors.
Should it be a condition of this "bailout" that any proposed agreement be pinned on a tree in the public view where it can be read, commented on by people like the sages mentioned in this article, and digested and critiqued with feedback for our representatives ? It would do well in creating confidence and restoring trust that the right things were being done for the general welfare.
William J. Hague
Sep 26 2008 - 3:01pm
I applaud William Greider's example of Warren Buffett. What would Warren do? More to the point, what are we trying to do?
1. If the needs of our economy require capital to fund credit to homeowners and businesses, then perhaps the government should open a bank to do this and hire a Warren Buffett to run it.
2. Or, if that idea is too simple and we really need the current structure that Wall Street provides, we could buy these banks as they fail (as Warren might do) and then sell them to investors.
3. Or, if we are unable to try anything new, we can just pump capital into this deregulated greed-for-all and allow these too-big-to-fail companies to run our economy into the ground also.
4. Or, if we really believe the economic theory that has governed our policies for the last thirty something years, then we should gird our loins and do nothing while waiting for market forces to adjust themselves.
Personally, I would only recommend options three or four on my suicidal days.
San Antonio, TX
Sep 26 2008 - 1:35pm
I found William Greider's article a little strange, discussing how we should take a Buffett-like approach to the bailout. Buffett, in fact, is in favor of the bailout and said he would take the same $700B bailout deal that the government is getting if he had the ready cash to do it.
From the article: "I think the Treasury will pay back the $700 billion and make a considerable amount of money,'' Buffett said, adding that if he had $700 billion on the government's terms to buy distressed assets, he would. "Unfortunately, I'm tapped out.''
Perhaps Buffett's comments came after Greider's article was published, but perhaps an additional update at the bottom of the article is in order.
Sep 25 2008 - 11:48am
If I understood President Bush’s speech well, there could be a mushroom cloud above the Wall Street if we don’t act as hastily as we did when Mr. President pushed us in an equally skillful, deceptive and hectic way to authorize the Iraq War.
After Wall Street and its hand-picked, campaign-donation-addicted, special-treatment-spoiled politicians ridiculed the federal government for years as being inept, lazy and incompetent, the Bush administration bent over backwards to please the same people who accused them of being without any backbone--a classic self-fulfilling prophecy.
Let’s repeat the fundamentals. Wall Street gambled that mortgaged-backed securities, depending heavily on the endless housing bubble, would make money. Those banks believed that in era of tremendous budget and trade deficits, enormous national debt, colossal loss of jobs, an endless export of American jobs overseas, the dwindling value of the dollar, skyrocketing oil prices, the ever-growing cost of healthcare, the ballooning defense budget and protracted wars, housing prices would continue to rise.
The Bush administration already gave $85 billion to AIG, an insurance giant that insured those mortgage-backed securities against losses. Mr. Paulson and Mr. Bernanke failed to realize that AIG is a company without a single executive smart enough to understand that there is always a 50/50 chances housing prices would fall. But under the aforementioned economic conditions, there was 99 percent certainty housing prices would fall.
That’s such a colossal amount of stupidity that the first-grade diplomas of those bankers should be revoked and their kids taken away to new foster homes and given to parents actually capable of parenting them--unless those bankers came forward and publicly admitted that they had learned a lesson by accepting full responsibility for the current financial meltdown. (Addictive gambling is always a sure sign of lacking parental skills.)
Now our federal government wants to save the banks that displayed no knowledge or common sense at all. Those banks should be punished and brought to their knees, bought cheaply with the taxpayers' money, quickly fixed under new and qualified management and sold back to the private sector at a hefty profit to the taxpayers. If this once-in-a-lifetime opportunity is declined by the private sector, it should be executed by the federal government.
Our government should show those bankers how to take care of business. In this case, leadership should come from the top. But with President Bush in charge, we can be assured that the worst and most harmful measure will be implemented, which will only deepen the crises and accelerate the decline.
The proposed $1 trillion bailout doesn’t fix anything and only creates an image of decisive action. It just wastes time by moving the taxpayers' money from the left pocket to the right pocket. The colossal losses have to be covered by the people with the money, not by the people without money.
If private investors in those banks don’t take a hit, the losses will be spread through rampant inflation to everybody, thus pushing even more middle-class families into bankruptcies, and we will soon have the same financial crisis, just this time on steroids and fully grown up.
Sep 25 2008 - 8:07am