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Sunday, October 26, 2008

Wall Street: The World's Greatest Welfare Queen

$70 Billion of $700 Billion "Rescue" Funds Being Distributed to Wall Street Executives as Bonuses and Salaries

Can anyone think of a more compelling reason to steeply raise the income and capital gains taxes on high incomes, than the distribution of 10% of the "financial rescue" funds underwritten by our tax dollars, to the top executives of the financial firms whose greed, malfeasance, poor management, and failure to control risk is causing the cascading collapse of our financial system and the financial decimation of almost every non-rich American? These awards are being made while financial firms are shedding middle and lower-level jobs by the tens of thousands, and while the remaining rank-and-file employees are accepting pay freezes and cuts. The funds are definitely not "trickling down".

Does anyone out here believe that the recipients of this incredible largess could be said in any sense to have "earned" these awards? If you make a mistake that costs your firm $100,000, say, will you be given $300,000 of the taxpayer's money, or your company's, for that matter, as a reward for your performance?

By "high income", I don't mean $250K a year, or even $500K a year. I mean $5 million to the stratosphere, for we are talking here about people who commonly receive $10 Million or more in compensation, and sometimes receive hundreds of millions of dollars in return for destroying the value of their companies and our financial system, in the process.

The "rescue" funds are being distributed at the discretion of Paulson, whose first loyalties are to Wall Street, and who has total, unrestricted discretion over the use of the funds. Congress has imposed no guidelines or control on their use, even though this was "suggested", but merely rammed the funding package through with haste that is truly incredible given the stakes involved.

We are being systematically plundered, as well as being set up for complete financial and economic collapse including a treasury default, in order to guarantee lifestyles comparable to those of Saudi Oil Sheiks to the most rapacious and unprincipled passel of crooks, thieves, and con artists ever to manage the finances of a major nation. 90% of our population is being rendered poorer and less secure as a result of the mismanagement of our financial system that has been enabled and subsidized for the past two decades by our authorities, and all hope of a reasonable recovery, and the rebuilding of the economy on a sound, honest foundation, are being destroyed by the ballooning of treasury debt and the wave of hyper-inflation that will surely result. Long-standing businesses are being destroyed, along with many formerly well-off citizens, while the the middle-classes are being driven to near poverty and the poorest among us are losing their last faint hopes of bettering their situations and climbing to the next rung of the ladder. Our cities and towns, and our necessary services, will lose essential funding and "give backs" of the taxes they have sent to Washington D.C., while local taxes whither with dropping incomes and inflating costs, so we can expect less police protection, steeper deterioration of essential water, sewer, and road infrastructure, and higher local tax rates to offset the money we toss into the deepening hole of the federal budget.

What we can now clearly see is that both of our political parties are not only ineffectual at the task of steering our economy, but that both have colluded in bringing the country to the pass we're in now, which is that we are a bankrupt and impoverished country that has squandered its resources and destroyed its ability to make a living by encouraging the destruction of what was once the world's mightiest industrial economy, and fostering the financialization of our economy, with the result that we are dependent upon financial scams and debt creation to make a living, and are now saddled with non-survivable levels of public and private debt

We can also see that our leaders from both political parties have no stake in the well being of either our economy nor in that of the segment of the population that has a net worth of less than $50 Million.

We can see that both political parties are growing increasingly irrelevant, and that neither is fully addressing the concerns and urgent needs of the polity at large, or of most of the citizens who comprise it.

Most of all, we can perceive, or ought to be able to reason by now, that that certain decisions are simply too major and too far-reaching to be entrusted to politicians and policy makers, and that economic policy is one of them. We now know that many major policy decisions that seemed timely and brilliant in the hour they were made had disastrous effects over the years, and often immediately, because they are too large and because their unintended consequences cannot be predicted, and because they cut off the possibility of making the small, local, fine-tuned adjustments to shifting circumstances that enable individuals and entities to adapt to changes in the economic landscape, for these policies cause massive, sudden changes that are too sweeping for successful adjustment.

I'm not optimistic that we will be able to change the course we're set on now anytime soon, and that path seems to be toward greater socialization of our economy in lockstep with an even greater income divide, and with a bias towards guaranteeing lavish unearned rewards to the very wealthiest class of Americans while destroying all incentives and all hope for anyone not born into this privileged order, whose ranks will be this society's owners. In other words, we will have government sponsorship of private ownership by a small oligarchy, whose ranks will be guaranteed an absence of competition or exposure to risks commensurate with their rewards. The rest of us will assume the risks while being permanently blocked from rising from near or total poverty.

1 comment:

Manny Rodriguez said...

Laura:

I read your fascinating expose of America's economic model and of Ayn Rand's Atlas Shrugged in Dr. Housing Bubble. I must say, one of the few blog posts I've truly enjoyed this year. I share your interests, as an attorney and CPA in Miami, Florida specializing in fraud and forensic evaluation, especially financial statement fraud. You accurately pegged most of the social, cultural and economic trends of the last 100 years, and how most of them have contributed to the disintegration of our economic model. I worked for many years for the largest law firm in the country that was engaged in suing large corporations for financial statement and securities fraud, and considered it almost a moral obligation to expose the corruption. I share your passion. Please contact me at Mannyar@gmail.com. I would be interested in collaborating with you somehow.

Manny