Sep 22, 2008
In a matter of days, once mighty financial companies toppled like dominoes. Lehman Brothers, the giant investment bank, and AIG, the biggest private insurer in the world, went broke. Other giants, Merrill Lynch, Morgan Stanley, Goldman Sachs, Washington Mutual, and Wachovia Bank, teetered on the edge.
So, once again, the federal government rushed to the rescue with obscene amounts of taxpayer money. It pumped 85 billion dollars into AIG to keep it on life support and on the very next day injected a fresh 300 billion dollars into financial markets.
But stocks still plunged. So federal officials came up with a proposal for the godfather of all bailouts. They want to use taxpayer money to buy up the securities based on mortgages of foreclosed homes that U.S. financial institutions concocted. The price tag for all this is supposed to come to 700 billion dollars, according to Treasury Secretary Paulson. Others put the cost at a trillion dollars... or more. And that’s on top of the other enormous bailouts over the past year, including for Bear Stearns, Fannie Mae and Freddie Mac.
The leaders of both parties got behind the proposal right away. President Bush said, “Given the precarious state of today’s financial markets... government intervention is not only warranted, it is essential.” Top congressional Democrats, including Nancy Pelosi, Harry Reid and Charles Schumer, concurred. At a news conference with Paulson and Fed Chairman Bernanke, the proposal’s architects, Senator Christopher Dodd, the Democratic chairman of the Banking, Housing and Urban Affairs Committee, explained why. The new bailout is necessary, said Dodd, because “we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”
All those politicians and officials pretend that an enormous bailout will clean up the financial mess, save the economy from disaster and save people’s jobs, homes, savings, 401(k)’s, pensions.
No it won’t.
Giving these companies even more trillions of dollars is like handing gasoline and matches to an arsonist. Those financial institutions will greedily snap up the money in an incredible feeding frenzy in order to enrich themselves even more, through speculation and every scheme imaginable. The financial mess will get bigger, laying the basis for even worse crises in the future.
This bailout will not stop the housing crisis from getting worse. It will not stop millions more ordinary people from losing their homes... and their life savings. Nor will it stop the recession from getting much worse, with its increasing unemployment and cuts in pay and benefits. As for inflation, the cost of the bailout will make it much worse, an invisible tax that slices ordinary peoples’ standard of living every day. And at exactly the moment when working people need more social programs and other forms of government aid to fall back on, the politicians will try to cut them, in order to force the mass of working people to pay the full cost of the bailout.
No, this bailout is a disaster. It is a rip-off of monumental proportions. The thieves and con artists at the top of the financial establishment shouldn’t get one cent. They should be thrown in prison.
Working people can have only one response: we have to be protected from the crisis that the capitalists created. The trillions that are going to bail out the capitalists and their profits should be used to create jobs that pay decent wages, improve education, health care and retirement, as well as build what our society so sorely lacks – schools, hospitals, roads, mass transit, flood control systems, parks and on and on.
The Democrats and Republicans will say there is no money for this. We can’t afford it. No, there is plenty of money. And it should go to us and not the filthy rich.