Tuesday, September 23, 2008
According to Federal Reserve Chairman Bernanke, the markets only err when they inflict pain upon transnational financial institutions by exposing the minimal value of speculative debt instruments. Otherwise, they are accurate when they result in more expensive housing, food, education and medical care for the rest of us.
Originally I expected the plan to have two components: 1) buy troubled assets from institutions, and 2) an RFC type recapitalization plan. However the plan did not include the recapitalization provision, so the clear intent is to pay premium prices (to current market prices) for troubled assets to recapitalize the institutions (with no equity participation for taxpayers).
Finally, the public is begining to recognize the hypocrisy of the neoliberal charade. All over the Internet, message boards are full of angry, belligerent posts. The phone lines to the offices of congressional representatives are jammed with the calls of enraged, otherwise apolitical people. But, in the end, does it matter?
Yes, it does. Every day that this plan is stalled is a victory, another day of more losses for the people that caused this crisis. If it can be stalled long enough, then the markets may exact their revenge upon the malefactors who looted the economy. I am still doubtful that the Congress will act to prevent the grotesque subsidy of wealthy speculators, but the odds are much better today than they were last weekend. At least, we can hope that the speculators are subjected to a more painful, agonizing punishment before they engorge themselves with the largesse of the federal government.