Oh my. It’s looking like the American taxpayer is going to fund the bailout of private financial institutions for an initial $700,000,000,000. This is at the same time that some politicians said a week ago that the financial system is fundamentally sound. There are also huge and fundamental pieces of this debate that are consistently missing. We need to address the causes of the financial situation, not simply set the pattern for Americans to bail out troubled private institutions. We need to examine why and how it happened, then set out to protect the U.S. public and rebuild the U.S. economy.
Earlier last week U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke said that they believed that the root cause of the financial troubles is the bad mortgages debt. Indeed, if you dig down only 1 inch into the ground of the problem, that is what you will see, but it’s much deeper than that, and these are our appointed leaders. They should know, probably do know, and they should create policy to protect the People in the United States.
The root of the problem is that accounting methods were changed under the Reagan administration in 1980. They also began deregulating the financial sector. Deregulation continued under the first Bush and Clinton administrations, then accelerated under the current Bush administration. They told us that it was to ‘free the market’ and that it would benefit us, but the opposite happened and is continuing.
In the 1980s, laws and policy were changed at the highest levels of government as they began taking away and dismantling the regulatory structures that governed and insured the savings and loans. It took about 8 years before the lower level governmental regulators found out the horrible reality of what had occurred and began shutting down the insolvent (no funds) savings and loans institutions. In the deregulation policy, the regulatory agencies that kept the institutions financially sound, were also dismantled. Simultaneously, the American taxpayers were put in charge of insuring and bailing out the system, just in case anything were to go wrong. (Previously, the larger savings and loans both regulated and insured the smaller ones. Roosevelt set it up this way so that another Great Depression would not occur. In this manner, the larger saving and loans had a vested interest in keeping their industry sound. This policy was changed and the regulation was taken away under the Reagan administration in order to ‘free up the economy’. Yet this is also a strange phenomena because in saying that they were ‘freeing the market’, one would think that this would be a policy of the free market, yet in backing it with American tax payer dollars it has set up a corporate-socialist system. Weird. Horrible, yet true.)
After we bailed out the savings and loans financial institutions, our policy makers through both Republican and Democrat administrations have continued to deregulate, while ignoring the causes of the changed accounting methods. This led to the downfall of some of the largest corporations: WorldCom and Enron among them. They all follow a similar pattern. The appearance of massive profit is booked. Marketing masterminds are hired to lull the American public to invest in it (tax deductible expense!). They will often say they are green and care about us (as Enron did). The institution encourages donations to all sides of the political spectrum. The institution lobbies the Administration, Congress and Justices to bolster their bottom line, saying that it will benefit Americans. The leaders of the company siphon the money out to their own bank accounts, often also putting funds in their wife’s and/or children’s names, to order to spread it out and avoid getting it taken away, they will the move the large bulk of the funds out of the U.S. and to a tax free country, (similar to how Halliburton moved its headquarter to Dubai, the capital of the United Arab Emirates partially in order to pay taxes into the U.S. treasury), and then a few years later, the few lower and local level regulators who are still left, and who have worked tirelessly and valiantly to figured out the wacky, dishonest accounting, discover that was appeared as profit, never actually existed in real funds. This has been repeated time and time again, for almost 30 years.
All this time, a large portion of the U.S. media has been focused on celebrities, animal tricks and the bickering between the two main political parties. Also keep in mind that large multinational corporations spend a lot of money (tax deductible) funding various nonprofit spin machines to further confuse and divide the U.S. populace. Many of these large corporate behemoths pay almost no tax because of it various deductions. Lobbying is also a business expense which can also be deducted. The U.S. system of governance has been corrupted. Now, where to go?
We, as the American public need to begin looking at various solutions and have the courage and strength in order to do so. We will find that other markets based in other countries will be able to better weather the coming financial difficulties because they have better and stronger safeguards in place, more transparency in their media forms, and policy and legislation that protects their citizens. They will also be hurt, but not as badly as the U.S. dollar and economy.
The current $700,000,000,000 bailout is also very dangerous because many other types of policy are being attached to it, yet the underlying causes the the financial distress are not being addressed. It’s created a predatory market and U.S. citizens and taxpayers are footing the bill. The current bill may also have aspects of oil drilling in order to get more of the GOP to vote for it. It also very dangerous because it will allow foreign banks to transfer their bad assets into the U.S. subsidiary, creating the need for the U.S. taxpayer to once again bail out the financial sectors, but those from other markets. We do not have a free market when our government policy helps certain huge corporations. This phenomena seems to highlight the powers that be.
Perhaps we could start talking about this. U.S. policy is quite different from all the other representative democracies – or republics. Perhaps we could look at their systems of governance for possible solutions. Perhaps we could begin discussion on the rights of corporations versus the rights of People. Let me also clarify: businesses are very important to societies and have been for thousands of years. They provide valuable goods and services. But should they have the right to create government policy? Perhaps we could begin discussion on creating policy that would benefit the People in the United States. Ah, yes, and at one time wasn’t there something about – no taxation without representation? And wait. How does the Constitution start? ‘We the . . . People‘ Just something to think about. And discuss! (Nicely and rationally please.)