Last night I was up much later than I should be watching the news about the financial crisis that has been unfolding. And to be honest it made it hard for me to go to sleep.
I do not work for a financial services company, nor do I have a significant investment portfolio as far as financial holdings go. But I could not stop running scenarios through my mind how my quality of life (and that of my daughter when she is older) is going to be worse off than previous generations.
To be blunt, we are in for a WORLD of hurt - possibly rivaling that of the Great Depression.
I found myself wondering, “Where’s the outrage?” I tuned into CNN today and they were covering OJ’s new trial live. Here we are in the midst of a very important presidential election, the economy is in shambles, we have no energy policy, we are in an open-ended war. And despite all that CNN figured it was in our best interests to follow OJ’s latest courtroom saga.
So where’s the outrage? Where are people DEMANDING change?
It’s to the point where it is just another short-lived news headline anytime a major institution fails. You know, like Enron or Arthur Andersen.
But this is not just another news item. It’s not every day a 150-year old institution fails. That is something that definitely does not happen every day.
So how bad is it? It is bad enough that the venerable Lehman Brothers filed for chapter 11.
Lehman Brothers is one of the oldest, perhaps one of the most respected securities firms out there. It was founded in 1850 and not only survived the Civil War, but they were instrumental in financing the reconstruction in the south, particularly Alabama.
Lehman also weathered the Great Depression, primarily by focusing on venture capital.
So let me repeat that - Lehman Brothers survived both the Civil War AND the Great Depression, but could not survive the Bush years.
Bear Stearns, Countrywide, Fannie Mae, Freddie Mac, Merrill Lynch etc. The list goes on and on. Some of the largest financial institutions in the nation dead or close to. Or being bought for pennies on the dollar.
And all of this is a result of republican policy - or lack there of.
In republican circles, laissez-faire is the only way they know. Their ardent adherence to the ideology of Milton Friedman, that government regulation of any kind is evil, or better yet, corrupt.
From Wikiquote:
Corruption is government intrusion into market efficiencies in the form of regulations.
Now how does this tie into the current events?
Well, it just so happens that John McCain’s economic adviser, Phil Gramm, was the author of a bill in 2000 that deregulated what is known as credit default swap.
A credit default swap is a very complicated financial instrument that basically allows financial institutions to “insure” their debt using other institutions.
The undervaluation of credit risk and the lack of regulation caused speculation (and greed) to run rampant, and ultimately as institutions failed, it had a cascading effect through the financial system.
And this thing is far from done. We have AIG and Washington Mutual in precarious positions as well.
So this brings me back to the point again - WHERE IS THE OUTRAGE? These businesses are not simply folding. They are imploding, bringing the larger economy down with them. Republicans who always come out against “handouts” are first in line for the bailouts. Jobs are being lost. And yet there is no outrage.
There is that old saying, “If a tree falls in a forest and no one is around to hear it, does it make a sound?”
But what if we have a FOREST falling down and MILLIONS of people around to hear it, but no one is making any sounds?
Something is very wrong.
–Jon
It is now near the end of 2007 the first year the democratic party has controlled both houses of congress since 1993 and a good time to evaluate the past year.