It was precious to see the former AIG CEO Hank Greenberg begging for money during his interview on MSNBC. He implored the Fed: "AIG is a national treasure." And it just so happens that most of his wealth is tied up in shares of AIG.
What was even more precious was learning that the Fed bought the sob story and floated a $85 billion loan to AIG.
I found myself agreeing with Republican Senator Richard Shelby (member of the Senate Banking Committee), who said "No entity is too big to fail."
The events of last week should make it difficult for Conservatives to bemoan "welfare dependency" without including "corporate welfare dependency."
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The "PC" term on Wall Street for this move by the Fed is "leveraged buyout." Government "bail out" is less PC. However, it could also be called "nationalization" (the term the British newspapers use). So the U. S. government has nationalized, Freddie, Fannie, and AIG.
Somewhere, Hugo Chavez must be smiling.
When Chavez or Evo Morales do it, it's nationalization. When Bush-Paulson-Bernanke do it, it's "stabilization."
I think this duck quacks.
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I don't know what to make of business leaders who plead for government help and yet resist government oversight. Should they be allowed to have their cake and eat it too?
The politics of blame has taken an interesting turn: now short sellers are the evildoers (not incompetent CEOs like Fuld of Lehman Brothers or Willumstad of AIG).
John McCain could send Governor Palin on a hunting expedition to kill bearish short sellers.
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It would be nice to have the billions dumped into Iraq back at this point.
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Since the Reagan era, "liberalism" has been a political schimpfwort and the Democratic party has been tainted by association with liberalism. However, if liberalism is associated with laissez-faire (economic liberalism), then the logic behind this association of liberalism and Democrats becomes more complicated: both Republicans and Democrats are economic liberals, with perhaps more rhetoric on that front from the Republicans. (In reality, laissez-faire is a myth, as the current nationalization of AIG indicates). One offshoot of economic liberalism can be termed "crony capitalism." A commentary by Tim Egan comparing Palin's governing style with the issue of golden parachutes for CEOs of failed corporations is enlightening.
"People should stop picking on vice-presidential nominee Sarah Palin because she hired a high school classmate to oversee the state agricultural division, a woman who said she was qualified for the job because she liked cows when she was a kid. And they should lay off the governor for choosing another childhood friend to oversee a failing state-run dairy, allowing the Soviet-style business to ding taxpayers for $800,000 in additional losses.
What these critics don't understand is that crony capitalism is how things are done in Alaska. They reward failure in this Last Frontier state. In that sense, it's not unlike Wall Street's treatment of CEOs who run companies into the ground.
Look at Carly Fiorina, John McCain's top economic surrogate -- if you can find her this week, after the news and her narrative fused in a negative way. Dismissed as head of Hewlett-Packard after the company's stock plunged and nearly 20,000 workers were let go, she was rewarded with $44 million in compensation. Sweet!
Thank god McCain wants to appoint a commission to study the practice that enriched his chief economic adviser. On the campaign trail this week, McCain and Palin pledged to 'stop multimillion dollar payouts to CEOs' of failed companies. Good. Go talk to Fiorina at your next strategy meeting.
Palin is a cultural cousin to this kind of capitalism. The state may seem like a rugged arena for risky free-marketers. In truth, it's a strange mix of socialized projects and who-you-know hiring practices."
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I see no substantive distinction between American "liberals" and "conservatives" concerning the economy: both groups are pro-capitalist (the charge that liberals are 'socialists' is preposterous). Hence, we have different political parties that both operate on the assumptions of economic liberalism and have the goal of perpetuating the form of life that derives from economic liberalism. Anti-capitalist, populist rhetoric is a ruse employed by politicians of both parties to appear to be the friend of the "common man." No president of either party would risk enacting anti-capitalist policies for fear of an investment strike or capital flight (of course, capital flight -- outsourcing and relocation -- has already occurred under business-friendly policies).
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Both parties have put in place policies that have impacted the economy negatively. Everyone can point to a particular example. My example will be energy policy. To be sure, prior presidents have set this policy, but my immediate reference is Bush-Cheney. Today, it seems everyone is alarmed by America's "oil dependency" on foreign oil ("dependency" is a particularly stigmatized term: think "welfare dependency"; this is one step removed from "oil slavery"). After years of denying the existence climate change, now Conservatives are talking about "alternative fuels." However, one can ask who set the pro-oil dependency policies of the Bush-Cheney presidency? Was it not Cheney's still secret energy policy harem? Who can forget Bush's hand-holding diplomacy in Saudi Arabia? Is Cheney "liberal" or "conservative"? Will the U.S.'s energy policy cease to be premised on economic liberalism after the odious pair are gone?
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I expect free trade, small government, anti-tax Republicans to throw up a road block to the $700 billion dollar bail out of the unhappy few whose improvident behavior has backfired magnificently and will cost the many dearly. The Paulson plan seems to be a reversal of the principle of utility: the greatest happiness for the smallest number.
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