Saturday, September 20, 2008

Trust, But Verify

Chuck Kennedy / McClatchy Newspapers
Meet the New Socialists: Bernanke, Bush, Paulson, Cox

Savannah, Ga. Trust, but verify. Although not coined by the man, it was a phrase used often by Ronald Reagan whenever he was discussing relations with the Soviet Union. It's time to re-use this locution with respect to the proposal made by the four men in the Kremlin Wall photo above.

Yesterday--September 19, 2008--these same individuals drove the final nail into the coffin of Free Market Capitalism in America. If it was a myth before, it is dead now. "Socialism for the bankers; capitalism for the taxpayers" is no longer the rhetoric of populist politics, it is the simple truth.

In the largest governmental intervention into the markets in over 80 years, the Bush administration asked taxpayers to pay for the greedy excesses of financial institutions to the tune of nearly THREE QUARTERS OF A TRILLION DOLLARS. Our neo-Soviet leadership hopes to have Congress rubber-stamp the proposal as early as next week.

Among the financial reforms created during the Great Depression 85 years ago were the two Glass-Steagall Acts of 1933. The FDIC was established, providing a degree of insurance for bank deposits; currency was allowed for use by the federal reserve; the surfeits of speculation were curbed by separating banks by their business type and model--commercial and investment. A large degree and measure of equity and stability returned, all part of FDR's First One Hundred Days. Conservatives have had their gun sights set on repealing Roosevelt's New Deal, in general, and this regulation of banking, specifically, since its inception. For election cycle after cycle they touted the wonders and marvels of Free Markets, lambasting this "socialist" or "communist" intrusion by the government. Cro-Magnons on the Right have used this strategy to beat up liberals ever since. Rightists won their battle against Glass-Steagall when the republican-controlled Congress passed the veto-proof Gramm-Leach-Bliley Act of 1999, and these progressive banking reforms were finally removed. As they say in the Olympics, the quest for gold had begun.

Nine short years of unfettered avarice have brought us to the events of the past few days.

We are faced with a classic dilemma; Congress will likely channel the Politburo and quickly approve Bush's plan. America's money-grubbing problem is also the world's. What we do--or don't--profoundly affects other governments, other markets. Our meltdown would likely produce a global chain-reaction.

But because Wall Street has so nakedly revealed what ordinary taxpayers have so long suspected--that it has much more to do with entitlement, privilege, power, rapacity, than it does with Adam Smithsonian Free Markets--we need some assurances, along with our good cash, that regulations will return to the financial institutions to better check against a recurrence of this crisis again. As it presently stands, the Bush Administration bailout only pours our money into a gaping mouth; if we write Wall Street this check, we need some concrete insurance we're not being suckered more than we already are.

Trust, but verify.