The Wall Street investment firms who got the billions of public dollars in the bailout are refusing to say what they are doing with all the money even though the public was promised that the government would not just hand out the money with no strings attached and that there would be transparency.
And, to add insult to injury, they are paying out billions of dollars in bonuses, which of course are made possible by bailout money, to pay those who lost the money in the first place.
They argue that they have to pay top people top money, but the bonuses they pay are way beyond the pale (at least to the vast majority of citizens of planet Earth) and if these people were so talented those entities would not have needed the bailouts.
(I did read that some executives are getting paid in those questionable securities that have taken so much blame for this economic mess, rather than cash this year. But before you feel too good about that, that is that they got what’s coming to them, I also understand that some think those securities actually might be worth something some day.)
I was so hot about this that in my first blog draft (unpublished) I said now is the time for the revolution, whoops, there I said it, but I don’t mean it. But I do find it galling that the average citizen is forced to fund the extravagance of the Wall Street set.
But rather than taking any drastic steps as citizens ourselves, we should e-mail all of our legislators and let them know of our feelings.
While I see no justification in paying bonuses, I find myself having to be somewhat circumspect about whether the banks are improperly using the bailout money by not doling it out in loans. As one commentator put it, they may be having a hard time finding a prudent investment in this economically uncertain climate. Recklessly loaning out money is part of what got everyone into trouble in the first place. I read that some banks have invested in bonds (which are essentially loans). I would think, though, that the government needs to demand more transparency and control over the use of taxpayer money. I’m not even sure why the government has to funnel this printed up money through the banks.
On the subject of the bailout for the American auto makers I have said that they should not get the money – I know, too late, Bush decided to give them a bailout (and now I hear on the nightly news that the Big Three American automakers are expected to go bankrupt anyway). I wrote that foreign auto makers are producing cars here and they’re not going out of business. Well Toyota is posting its first operating loss ever due to depressed auto sales. I also wrote that maybe there is not a good market for new autos. And that seems to be the case (although I did hear a report today that suggested low gas prices might result in a new demand for gas guzzling SUVs – crazy, I know). The current poor demand for autos is partly the result of the spike in fuel prices a few months ago, although followed by a current downward spiral (caused by people not driving because of the high price of gas), and a lack of credit to buy cars, and the bad economy and a ballooning unemployment rate. Whatever, there’s a lack of demand right now.
But, if people decide they need or want new cars, car makers, be they American owned or foreign owned, might think about lowering prices.
But back to the abuse of the bailout. First there was strong resistance among the public and lawmakers to the original bailout. Then folks were cowed into supporting it when they saw their 401K fortunes vanishing with a tanking stock market.
But the stock market makes no sense. It has gone way up one day and way down the next and way up again – although the trend certainly is down.
But the stock market has always been a gamble and sometimes it’s a fixed game. Yes the experts will tell you that story that over the long haul people who stick with the market have made money. The truth is a lot of people who stuck with it have lost their life savings and may not have enough years left to get it back. And then there is the undeniable fact that there is manipulation in the stock market. It is not a level playing field. Just read an article in Forbes online that said electronic trading programs think and act much quicker than humans can and that the systems take advantage of those investors who are unsophisticated and not marketwise.
While I don’t believe in lockstep government control of the economy, I do believe that people need a transparent and regulated system that offers relatively safe ways of investing, and at least a level playing field for those up to gambling on the markets (CDs at guaranteed interest over a term, are an example of a safer way of investing).
Gambling pits that they are, the stock and the commodities markets need strict controls. After hours trading and gimmicks such as short selling should not be allowed. Even for those who do not participate in the trading markets there need to be safeguards, because we are all dependent upon the economy which is dependent upon these markets, as we have all found out in this current economic upheaval.
But I would urge everyone to e-mail their lawmakers and let them know we do not intend to continue to be extorted by sending our tax dollars to fund the wealthy set.
Most of us have hope that President-Elect Barack Obama will set things on the right course once he takes over. I would hope that he does not intend to hand out more money unaccounted for.
But I would say, don’t look to the Democrats or the Republicans to get us out of this mess. Look to yourselves.
P.s. I recently suggested in a blog that while I don’t want us to have to go to war to get us out of what looks like the second Great Depression, maybe we should build up the military. Now I read in the Wall Street Journal in an opinion piece by Martin Feldstein that defense spending should be increased now (we’d need to do it sooner or later anyway) and that there ought to be increased recruitment into the military, perhaps by offering two-year enlistments. I had suggested a military draft. Feldstein was an economic advisor to President Reagan (and by the way, I am not now nor have I ever been a fan of the late President Reagan, but I’ll let history judge how good a president he was).
P.s. Ps. MERRY CHRISTMAS!!!