Everyone in the policy community seems semi-paralyzed by the sheer scale of recent news and the volume of demands for basic explanations of what, exactly, is happening. But looking a bit past all that, isn’t there an enormous progressive opportunity here?
In November, there’s going to be an election. And in January, there’ll be a new President. And in the interim, progressive groups will probably come up with a lot of “ten ways to make everything awesome” proposals. And it’ll take 41 conservative senators to filibuster them all, and so they’ll all be filibustered. But if the government directly controls major financial institutions, that would give the new administration extraordinary leverage over the national economy. Suppose the new CEO of AIG decided he didn’t want to insure assets of companies whose executives make unseemly multiples of the national median income? There are all kinds of crazy things you could do. And of course not all of them would be good ideas. But some of them would! And the smart folks on our side need to be figuring out which ones they are. It seems doubtful to me that a progressive administration would ever be able to get away with this much nationalizing of everything, but what’s done is done and I think it creates a real opportunity for “socially conscious insurance underwriting” or whatever you care to call it.
Thomas Johnson says:
But Greg! Mussolini made the trains run on time and Hitler gave us the autobahn and the people’s car, the Volkswagen! All those 5 million little problems, well, they were just misunderstood.
P.S. You are really mean to call it fascism I think a kinder term would be: National Socialism.
September 18, 2008 — 9:23 pm
The Mortgage Cicerone says:
Greg – Just a minute…it worked wonderfully in Great Britian! Wait a minute, it didn’t…hmmmm!
September 18, 2008 — 10:42 pm
Robert Kerr says:
I hate it, I hate it, I hate it, but the new $1T RTC-like fund should put a bottom underneath the current collapse.
For those keeping count, it was $900B in taxpayer money just before Bernanke shoveled $180B more into the cash furnace yesterday.
Now, with this new entity, the total’s ~$2T.
Two trillion dollars.
But there’s a silver lining! The beauty of deficit spending is that none of us here will pay a dime for this massive welfare check to Wall Street. No, our kids, and their kids, and their kids will get to pay that bill.
September 19, 2008 — 5:26 am
Dave says:
George Bush, “I’m a uniter, not a divider” used the unholy alliance of religious conservatives, NRA and right wing diehards to get a republican majority elected and proceeded to strut through scenes like “Mission Accomplished”. Meantime, real governance took a backseat to misty eyed comments about patriotism and war heroes while committing more of our young men to mayhem and death in an inane and costly attempt to spread democracy. In the back room CDO’s and derivatives were devoured like kool-aid by greedy and stupid people who should have known better (and were paid to know better)and had no oversight. I hope our country can somehow recover from this totally disasterous takeover that has lasted 7.5 years. A fool and his money are easily parted – NO – this time its a foolish country and its freedom and wealth are easily parted. We need government oversight, while that doesn’t come cheap, it is better and much less expensive than what we have gotten ourselves into now.
September 19, 2008 — 6:05 am
John Sabia says:
The uniqueness about our system is the checks and balances. Accolades and blame are shared equally.
September 19, 2008 — 7:00 am
Sean Purcell says:
Dave,
I know how much fun it is to blame everything on the conspiratorial conservatives. It is simple and facile reasoning, but fun. It was just as much fun for us when we laid the unchecked growth of terrorism on the most recent liberal President, besmirched as he was.
But the key line in the above quote is here:
“socially conscious insurance underwriting”
That only sounds good to the most dyed-in-the-wool social engineers among us… and it NEVER works.
September 19, 2008 — 7:08 am
Robert Kerr says:
Dave, I agree with you completely regarding the Bush administration’s gross ignorance and ineptitude – including its Treasury and its appointed Fed Chairman – but you derailed your argument by bringing religion and the NRA into it.
Stay focused!
Bush is responsible.
Greenspan and Bernanke are responsible.
Paulson is responsible.
The OFHEO (either the most clueless or the most dishnoest govt org I’ve ever known) is responsible.
The Republicans who ran Congress for 6 years are responsible.
The Democrats who took over in 2007 are responsible.
The HFSC (Frank is an idiot or lining his pockets) is responsible.
And that’s just the government list … I’m still waiting for Angelo Mozilo do so time in Club Fed for his $140M in perfectly timed CFC option sales.
September 19, 2008 — 7:24 am
Michael Cook says:
I like how everyone here seems to think the government is smarter than Wall Street. Let’s see, if I am a genius Harvard grad, would I work for a government that pays little, is extremely bureaucratic, but has great benefits or would I work for a place that encourages “out of the box” thinking and pays me multiples of what a government job would???
Yeah, probably why no one here works for the government. Those agencies always have great intentions, but inevitably are run by the inept. If you all think Wall Streeters are idiots, than government employees must have the minds of two year olds. You all can rest assured that no matter how much “protective” regulation the government enacts, the smart guys on Wall Street will still find a way to exploit the loopholes. Regulation solves problems of the past, not the future. Until the shareholder reporting dynamic changes, there will always be an incentive to get one more penny of earnings. More risk is always rewarded.
September 19, 2008 — 7:39 am
Dave says:
Sean, What do you call what is going on now..if its not “socially conscious insurance underwriting” when you take Chinese and Middle east investors off the hook while thousands and thousands of American citizens lose their home equity, jobs and any hope for a comfortable future…facile indeed! Fun..not. Simple yes! Simple as George Bush is a incompetent.The chest beating championing of less government intervention from the pickup truck cowboy wannabe’s shows a real lack of history and knowledge. Tax cuts for the wealthy DON’T create jobs-never have, never will. And, letting financial markets pig out on the funds in social security accounts is a recipe for the end of this democracy. Social engineering got us out of the grips of the likes of the super wealthy and the result was a strong and growing middle class. Tell us all how that didn’t work and follow that up with your strategy for additional tax cuts for the wealthy and how it will help build our country.
September 19, 2008 — 7:52 am
Dave says:
Mike, You surely jest when you ask about the genius Harvard grad..the same folks that brought us “downsizing”? You know, where you do 2 jobs for the same pay. We allowed it to happen because the genius said it would increase “productivity” ..you know you work twice as hard and Mr. Genius makes twice as much..and if he can scare you into giving up your healthcare benefits..he makes three times as much. This kind of genius we can do without. By the way, why don’t you try being a little more positive about the public servants who do work hard to make this country run and don’t make outrageous amounts of money? Or do you still think that if “you play the game you’ll get some..”. Sorry, you need to have a rich and politically powerful Daddy who can get you a job and some stock to sell so you can pretend to be a successful businessman. If thats not you, stop drinking the kool aid, stop bashing public servants and start caring about the future of everyone in this country.
September 19, 2008 — 8:10 am
Michael Cook says:
Ouch… Perhaps we have different opinions, but as the son of two public servants (who agree with me) and as someone who works on Wall Street, the incentives are simply misaligned. You get the best people when you can pay the most and offer them the freedom to be great, period. While I would love to think that altruism is alive and well, it is not.
“If you play the game you’ll get some…”
Last time I checked that was the capitalist way and its been working out just fine for most people. Even though Wall Street is down now, it will most certainly be back. Great fortunes are not all made by rich and politically powerful people, heck the work force is made up of mostly small entrepreneurs that do quite well for themselves.
While I do not intend to bash public servants, I do stand by the fact that there is no way they can consistently get great people. Even if you discount the pay, its just so hard to get new ideas and smart thinking through all the red tape. It certainly happens, but more often than not private enterprise simply does things better, faster, and cheaper.
September 19, 2008 — 9:15 am
Sean Purcell says:
Dave,
Wow. So much anger and questionable reasoning.
The chest beating championing of less government intervention from the pickup truck cowboy wannabe’s
Very cogent and thought out analysis. Why deal with nuances when such a wide brush is available.
Tax cuts for the wealthy DON’T create jobs-never have, never will
That people can not only argue this but actually believe it, despite being contradicted by just about every neutral, economic analysis that has ever been done, amazes me. And even if you did not believe that tax cuts are economic stimulators, why wouldn’t you agree that the confiscation of wealth by the government is abhorrent to a free economy?
Social engineering got us out of the grips of the likes of the super wealthy and the result was a strong and growing middle class
Again, you base this on what? Your “strong and growing middle class” by all reputable studies is actually shrinking… more people are moving into the upper class. I know, I know, some like to argue that the lower class has also grown. The increase is relatively small and understood based on changes in the measurement of what lower class means more than any actual shift from middle to lower. For an interesting article on this dynamic click here.
Your revulsion for the wealthy is a pretty well known dynamic in psychology as well as negotiations and organizational motivation. Give people a common enemy and they will not look around too much at what is really happening. This is a favorite of the liberal political party and is used to devastating effect with many “minority” constituents in this country. My suggestion is to let go some of the indoctrination of conspiracy and hate and actually take a look around.
Tell us all how that didn’t work and follow that up with your strategy for additional tax cuts for the wealthy and how it will help build our country
If by wealthy you mean small business owners, then I am not going to waste time trying to explain how that helps the economy as it is self-evident to all but the delusional. If by wealthy you mean the top 20% of all income earners, which currently account for nearly 80% of all tax revenue, then you need to take a look at the story of the Golden Goose. The bottom 50% of income earners in this country pay no effective income tax. (click here for interesting article). Yet there are those, including the Democratic nominee for President, who would create more tax breaks for them. Imagine the social engineering that can be done by giving more tax breaks to those that already don’t pay taxes.
As for letting Chinese & Middle East investors off the hook, or decrying the government’s lack of discipine when it comes to feeding at the public trough… well here I believe we can find common ground. Less government – in both instances – would be better government.
Dave, I doubt we are going to see eye-to-eye on any of this. Please make the final comment if you like, but based it on something more than regurgitated vitriol.
September 19, 2008 — 9:23 am
Thomas Hall says:
Dave – understand we may be the two “liberals” here – the air is thin my friend, very thin!
Would a Harvard grad want to work for government? Seems one is running for President.
To somehow think that one party is more responsible for this nightmare is simply ridiculous – there has been a void of leadership in this country for the greater than the last 8 years – and it isn’t just the Republican party.
We as Americans have been spun into thinking that hockey moms and gay marriage is what this country is about. I get so worked up listening to the news I am beginning to make myself physically sick.
Honestly, the true genius in government is Karl Rove – masterfully reworking the pseudo issues.
The good news however is that the issues we’re really facing have boiled up and slapped us all across the face – not once – but four times.
September 19, 2008 — 9:25 am
Michael Cook says:
“Would a Harvard grad want to work for government? Seems one is running for President.”
When was the last time a president did any real work??? Sure there are a few good men/women, but just a few.
September 19, 2008 — 9:58 am
John Sabia says:
“The bottom 50% of income earners in this country pay no effective income tax”
I wonder if Biden considers this unpatriotic?
@Sean – very well said
September 19, 2008 — 10:11 am
Dave says:
Sean, Thankyou for your “silk stocking” critique. I am sure it plays well at the club (that is supported through tax deductions for entertainment). Tell all of us how the middle class has shrunk because more people have migrated to being wealthy. (Of course, I get it, all those losing their homes and savings were lower class)You are more of a comedian than an observer of the obvious. In fact your recital of the 80%-20% tax payer example is worn out. Why don’t you try writing something that is insightfull and not a copy out of the Rove playbook. Why don’t you write about some ideas to unite this country and to stop the duplicity of calling out people who are dedicated to this country and serve it for very little pay. And the phony claims about “confiscation” of money. it took a lot of money to build this country and it’s infrastructure, it’s going to continue to take a lot of money to keep it up.
And as you know so well it is going to come from all of us.
And Thankyou for analyzing my “revulsion”, I have been wondering about it for some time.. I seem to revulse when I observe a lack of reality and an overabundance of pompous, self absorbed commentary complete with a knee jerk definiton of a liberal.
September 19, 2008 — 11:10 am
Greg Swann says:
Gentlemen: Dial down the personal characterizations, or I will shut down comments on these topics. In America, we each of us have the right to be who we are.
September 19, 2008 — 11:16 am
Dave says:
Michael, I like your comment “Even if you discount the pay, its just so hard to get new ideas and smart thinking through all the red tape.”
Don’t you think this applies to all…I know plenty of people that work at GM and Ford that would heartily agree with you. I have a feeling that the same holds true in the public sector also.
“It certainly happens, but more often than not private enterprise simply does things better, faster, and cheaper.”
I am a believer in free enterprise but with whats going on now, the private sector has a very weak claim to the attributes you mention.
My point is that all of our society is faced with these problems- it is wrong to continually point at one sector and place blame. This country was built by creative dynamic risk takers, it now has to be managed by people that care about our country more than they care about making huge fortunes.
September 19, 2008 — 11:34 am
Michael Cook says:
Dave,
It does apply to all businesses, but my original point was that is what bankers do. Sure, they are misguided some of the time, but most of their job is to think of new ways to make money FOR CORPORATIONS. We make a lot of our money on advisory fees, in addition to trading. Many times that works for the good of society. The entire public market thrives on this. We are able to be better producers because bankers continue to come up with creative ways to get firms access to the capital they need.
You can certainly blame us for “down-sizing” and “synergies” and “outsourcing” to some extent, but we should also get credit for the invention of the stock market, record homeownership and fueling the growth of the economy. Its very hard to build something when there is no money available.
One has to wonder why NASA is turning to the private sector to build spaceships and why the government increasing uses private sector to get jobs done. The government has the resources and probably the talent, but they are just to darn stubborn and slow to get things done better, faster and cheaper.
September 19, 2008 — 11:51 am
Sean Purcell says:
Greg,
I appreciate your comment. I’m too busy to continue this debate in any case. Apparently, the Rove playbook is missing. I’m going to walk my silk stocking’d feet right over to the social director here at the club and have a word with him about the carelessness. Thank you.
September 19, 2008 — 12:12 pm
Michael Cook says:
I gotta say, if you cant laugh at that silk stocking line, what can you laugh at. While I disagree with some of Dave’s points, I must say he knows how to put words together.
September 19, 2008 — 3:53 pm