I don’t know when people will learn that the politics of personal responsibility, pure free market ideals, and the false idea sold to us as American capitalism leads to wealth being hoarded at the top, a weak middle class and, thus, a weak economy. If this financial crisis doesn’t hammer it home for most people, I don’t know what will.
A couple articles on Truthdig describe the failures of this policy and one of the safety nets for preventing it from occurring again.
“Whatever Happend to Personal Responsibility?” by Ellen Goodman:
In the economy even more than the culture, personal responsibility has been a best-seller. We were told by conservatives and free-market holy rollers that markets were smart and governments were dumb, that the government was the problem not the solution. So when credit cards come through the mail, college freshmen are expected to just say no. When poor people were wooed and seduced by subprime mortgages, they are the ones dubbed irresponsible.
Over time, the same rhetoric justified a huge shift in economic risks of the average citizen. In the name of the ownership society, many pensions became 401(k)s while health insurance costs moved from employer to employee. All of these risks were covered like a bad bet by the idea that people could take better care of themselves.
The ownership society turned into the everyone-on-your-own society. Three years ago, Congress passed a law making it harder for people to declare bankruptcy. Just six months ago, Henry Paulson, the treasury secretary who now wants to be czar, insisted the government actions to prevent mortgage foreclosures would “do more harm than they would do good.”
Of course we do not want an over-legislated citizenry. The problem is that Republicans confuse good governance with impeding freedoms. It is in fact the political left that protects civil liberties and freedoms far more than the right. The are mechanisms through which the business sector – which will have some regulation no matter who receives the most votes – can receive appropriate oversight.
“A Special Prosecutor for Wall Street,” by Joe Conason: (an important read especially for those in favor of limited government)
Anyone who doubts that massive fraud is at the center of this crisis hasn’t been reading between the lines. While much coverage in the business press has focused on tick-tock accounts of the final days of the big investment houses or the vagaries of the roiling market, there is no shortage of stories showing how we got into this morass.
The simple version of this decentralized criminal conspiracy can be summarized as follows: Mortgage lenders handed out loans to unqualified borrowers and sometimes tricked them into signing agreements they could not fulfill. Those same companies and others then marketed those loans with false assurances of their soundness to convince investors to buy them. Some of those investors then resold the packages of crap mortgages to other investors both here and abroad. Among the miscreants implicated in these activities were many with actual criminal records, whose entry into the mortgage industry was in no way hindered by the state regulatory agencies. They proceeded to amass fortunes large and small, using the same techniques familiar from previous financial scandals—pressurized sales techniques; targeting of the weak, elderly and insecure; outright fraud, forgery and deception.
Which of the participants knew what was going on here? Which of them merely failed to perform any due diligence before passing along undue risk to the individual investors, pension funds and others to whom they owed fiscal prudence? Which companies and executives actively encouraged thievery, and which simply looked away while they booked big profits?
Those are the questions that must be sorted out by competent judicial authorities if we are ever to establish the rule of law in our markets. The FBI is currently investigating more than 20 lenders, including the defunct Indymac, but there is much more to be done—and at the moment, the prosecutors seem to have set their sights too low. Someone with prosecutorial authority and resources should scrutinize the major players at UBS, Bear Stearns, Lehman Brothers and all the rest. The passage of the Sarbanes-Oxley law was meant to discourage this kind of financial chicanery by major firms. Now is the time to apply its criminal sanctions to those who flouted the law.
State authorities, whose years of incompetence and negligence led directly to the debacle, cannot be trusted to enforce the law now. In Florida, for example, which has suffered the worst of the national epidemic of mortgage fraud, the state regulators were recently found to have permitted thousands of brokers with criminal records—including actual bank robbers!—to enter the marketplace. The best estimate is that up to 25 percent of the mortgages recorded in the Sunshine State over the past few years were tainted.
Whether it comes to the pharmaceutical industry, health insurance, the credit industry, the energy industry, we need regulation and oversight.
One of the largest problems we have is that our government – all sides of the aisle – are in cahoots with these robber barons.
Our vote is the most powerful tool we have and we must collectively demand an end to corporate political donations, further increase in the limitations on lobbyist influence, elect politicians – especially at the executive level – who will put a stop to the rampant criminal activity influencing the policies that govern our lives.
The Republicans call for personal responsibility for poor, unwed teenage mothers, minimum wage workers, credit card users. When it comes to industrial giants, however, Repubs are off the clock – as well as many Democrats. Until the American electorate decides to exercise informed voting and support a multi-party system, this collusion and illegal cooperation will continue.
POLITICAL BLIP 