Many of my more progressive / Liberal / left-wing friends and family are up-in-arms over this bailout plan by Treasury Secretary Paulson. $700BN of unrestricted spending (no congressional or judicial oversight) is a huge leap of faith for a nation to take when they have an executive in power with a 19% approval rating and a record of profligate spending. Call your Congressperson and senators and demand accountability for this money.
What I think a lot of folks don't understand is that we're all in this together. From the loftiest Wall Street mogul to the farmers and laborers, we all share the risk of the market in one way or another. Systemic failures in the financial markets don't do anyone any good. Failure for one means failure for all.
Let's take that farmer, for instance. Chances are he has liens against various pieces of equipment that help him participate in the most productive farming system ever created. Tractors, combines, even the grain he buys to plant every year, much of it is leveraged in one way or another. But what if that leverage goes away? Let's say the credit markets fail, or severely contract, and he can't buy grain the next year? When he can't plant, he can't harvest. What happens when his equipment is repossessed? Now you've reduced the productivity of the American farmer 100 fold. He'll become a subsistence farmer until the bank kicks him off his land for failure to pay his mortgage.
The laborer is equally engaged with the capitalist. Her job works on the same supply and demand curve that anyone engaged in the most basic way should understand. If the economy falters, demand for goods and services will drop leading to a drop in the need for labor. She too will loose her job and become, in one way or another, a ward of the state. A state with no money and massive debts.
Clearly reform is needed in the sector. Greed has overwhelmed the system to the point that it's become pathological.
Yes, the fictional Gordon Gecko had that right, to a point. Greed is good in that it drives individuals to excel. But when that greed begins to eat at the foundation of the very system which rewards that greed, greed becomes a cancer. And that kind of greed, the kind of greed we have now on Wall Street, needs to be exterminated. And the way you exterminate it is through increased regulation and oversight. The kind that, hopefully, will have Ronald Reagan spinning in his grave.
Unrestrained capitalism leads to unrestrained corruption as the rich get richer and the poor go nowhere. Regulation is needed to ensure that with the reward, comes the risk. No one engaged in high finance should be allowed to risk the taxpayers money just because they're able to leverage billions of dollars to gamble. That is what these investment banks did. They gambled with money they didn't have, they speculated on an ever-increasing housing bubble with no end and when it all came tumbling down, they came to us, the taxpayers, for relief.
Well, as I said earlier, we're all in this together. But now is the time to strike our Faustian bargain with the capitalists. Now is the time to get the regulations in place so that this never happens again. So I say NO to the unrestricted bailout. Take the actions necessary to secure our future.