Happy Days

Some thoughts on the ongoing economic collapse

©Bryan Zepp Jamieson
9/17/08
http://www.zeppscommentaries.com/Politics/happydays.htm
 

One of my readers dropped me a line in the wake of my piece, “The Bloodletting,” saying, “Seems like somebody should write about what the implications of the Wall Street debacle may have relative to the privatization of Social Security, which I understand McCain & Co. are still advocating. It's not popular and thus hasn't been on the top rung, but it's pretty clear it's still on their agenda....”

Back when the push to privatize Social Security was in full swing, a favorite gimmick of right wingers was to post tables showing rates of return on various investments. The dates of the investments, like the stocks themselves, were usually cherry-picked to produce optimum results . If you had bought 5,000 shares in Microsoft in 1980 you would own Canada and several of the outer planets by now. Instead of getting a boring old check in the mail every month that never had any surprises. Those tables assumed that someone would know exactly what stocks to pick, and when to pick them, and wouldn’t charge you a dime for that service.

Such calculations had a way of making those government checks look pretty puny.

Now, if you had taken your life savings and all the money that was deducted from your checks over the years for Social Security, and let Lehman Brothers manage it, you would be looking at a rosy future in which you could reenter the workforce at the age of 85 and hope for a part time job as a greeter at Walmart.

My reader probably surmised correctly that Republicans would continue to push for privatizing Social Security despite all this, and there’s a dirty little secret there: they aren’t interested in privatizing Social Security for your benefit; they want to privatize it so they can control the funding and loot it.

I watched the employees from the suddenly defunct brokerage houses scurrying out onto the streets of New York and London with their desk contents in cardboard boxes, and wondered how many of them were long-time secretaries just a few years from retirement and now realizing that their pension had gone up the spout. Bankruptcy allows companies to forego paying debts such as private pensions, something that would have resulted in serious jail time 25 years ago, when companies weren’t allowed to TOUCH the pension funds, let alone invest them in dicey stock portfolios. One in three private pensions failed prior to the ongoing economic meltdown, and that number can only increase. The problem with private pensions is that they are private, and subject, not only to greed and criminality, but the usual vagaries of the market, which can lash out and destroy healthy well run companies as well as all the corporate shells that have been gutted through free market accounting.

How bad are things right now?

Bonds hit negative interest rates today. That means that market speculators were so frantic to find something stable to hang onto until the storm passed that they were willing to pay the government interest on the bonds, rather than the other way around.

In Moscow, the market stayed open a full hour and a half before it crashed again. It had lost a staggering 17.5% the day before – the equivalent of the Dow dropping 1,800 points – and it lost another 13% today. It’s one thing to say it lost a third of its value in two days, but it really managed to do it in four hours spread out over a two day period. Well, Russians do everything in a big way.

And who would have thought that the Bush administration would end up socializing more of the economy than FDR ever dreamed of? The Feds have sunk well over $300 billion into bailing out the mortgage houses, investment banks, and American Insurance Group. They flat-out own 80% of AIG, and I wonder if they should change the name to People’s Insurance Group. Just as a reminder of how it came to fall from its pinnacles of free market power.

Here’s a stray thought: the government runs AIG as an insurance company, specializing in medical insurance. It isn’t run on a for-profit basis, and employees are all civil servants.

I wonder how it would do as a socialized insurance company in competition with Snake Farms and the Tramplers and so on? Especially – dare I say it? Medical coverage?

Americans say they don’t want nationalized health. They really believe that millions of Canadians cling to barbed wire all along the US border, looking out like Auschwitz inmates, all because Canada has public health. But they’ll hold still for single-payer. One insurance company, one set of forms, consistent and non-profit-oriented coverage.

Wouldn’t AIG fit the bill now that it’s owned by the government, i.e., us? If we’re going to bail these undeserving upholstered parasites out, we should get something back in return.

We’ve got McPander running around sounding like Will Rodgers, talking about the fat cats and the hard workin’ laborers. It’s funnier than hell to watch, and I guess he’s gotta do something to distract from the fact that he supported Gramm-Leach-Bliley and the Commodities Modernization Act, two of the many nasty little bits of legislation the GOP pushed that led us to our present mess.

But neither McCain nor Obama are doing much other than promising change and an end to the economic spiral. Nothing is being said about how a lot of the deregulation that allowed the banksters to run hog-wild and eat their own children needs to be rolled back immediately, if not sooner, and the massive monopolies and oligarchies / consortiums that have so corrupted our government and economy have to be broken up. The guys on wall street don’t like to admit it, but the economy really does do best when the big companies are broken up into little companies that must compete, and bankers have to follow rigid – and conservative – rules.

You can never stop money from influencing and corrupting. As long as humans are imperfect, that’s going to happen. But you can contain and control it, and keep it at a level where you don’t have a handful of people robbing the vast majority of the society blind, and using some of the stolen money to buy media and legislators who are willing to tell the people they are much better off if they are poor and let rich people see to their welfare.

I don’t know if we can escape another Great Depression or not. Obviously, you and I would both be better off if we can. But I remember that it was the Great Depression, and the loss of power and prestige among the plutocracy, that made the vast reforms leading to the incredible economic engine of post-war America possible.

Maybe this time we won’t wait until a third of the population is starving.