The political and financial events of Thursday evening were baffling, and too many at one time to make any immediate sense of. I don’t know if anyone heard, but the biggest bank failure in the history of the world happened. Wall Street was supposed to have been saved by the politicians in Washington, but hundreds of thousands of Americans rose up against it. John McCain showed up in Washington all of a sudden, not realizing that he was in the middle of a historic moment in the history of the Republican Party, and managed to ruin everything for Paulson and Bernanke by just sitting sheepishly in a meeting. Here’s a confused summary of recent events:
First, I don’t know exactly why Washington Mutual failed, but I suspect the answer is rather simple: the banks and Wall Street firms are continuing to hide the bad assets that they have on their books, and I’m sure a majority of these firms are using some sort of fraudulent and criminal accounting techniques to do so. Someone must have been on to WaMu, and this is certainly not the last bank failure we will see. Within a couple of years, I think we’ll see a financial landscape in America where there are only a few very large banks running the financial show. Don’t count on the good times in the stock market to return in the next ten years, as this stock market will have to depend on the production and success of real merchandise rather than pieces of paper with unsolvable equations on them.
Second, Wall Street as we know it is gone. When the American people realized that the bailout was going to amount to literally giving Wall Street executives billions of dollars with no strings attached, it was enough to break the magic spell that has bound the American people for 30 years: the spell that makes you believe that the stock market can replace real pensions, labor rights, saving for the future, investments in public goods, and just about anything that concerns the economic life of citizens and government alike. Hundreds of thousands of Americans wrote and called their Congressmen (myself included) and told them to stop this madness. In the face of 99% of voters vehemently disagreeing with the bailout, a few politicians had to do something.
Third: three cheers for the right-wing nut jobs in the south! 30 years ago, they shacked up with the traditional, conservative, country club elite when the conservative backlash was started. How the men in suits on corporate boards were able to convince the low-income social conservatives that their bosses’ salaries should be increased by ten thousand per cent, while theirs should be lowered and later stagnate for decades while the social safety net for them should be dismantled, is a little strange to me. It happened nonetheless. The free market never did these people any good, obviously, and not much happened in the social arena either. Kids don’t pray in schools, homosexuals are getting married and abortions are still being performed.
On Thursday evening, though, it seemed that enough was enough. The conservative Republicans in Congress refused to go along with the $700 billion bailout, realizing that it was Wall Street welfare. This type of welfare is, of course, something that the traditional wealthy conservative is very much in favor of, but it was too much to swallow for the social conservatives. They actually came up with a great plan, under which Wall Street would pay for the bailout itself, through buying insurance from the government, at a premium, against losses from the toxic investments. Why didn’t I think of that?
It could be that the social conservatives are finally realizing that economics actually has something to do with politics, which they completely forgot about 30 years ago. I hope so, because it has been extremely detrimental to this country that economics has been broken out of the political equation for 30 years, and that is a big factor in the crisis we’re seeing today. I believe that the social conservatives must split with the Republicans, and although I very much disagree with their viewpoints, I think it is utterly unfair that these people could never form a viable party of their own in this political system. In a system with proportional representation, all the people who are socially conservative and poor, could form a party that addresses both of those issues at the same time, instead of having to be played repeatedly by the wealthy in society, even to the point of a nationwide financial meltdown.
10% of the vote = 10% of the seats! That’s a political system that works.