Tuesday, March 18, 2008

Congrats, taxpayers. The American financial industry now owns you.

Paul Krugman has a lot to say today, but the conservative mismanagement of the economy has given him a lot to talk about.

Don't forget, the Reagan administration and deregulation gave use the Savings and Loan bail-out. That was nothing.
if history is any guide, the coming taxpayer-financed bailout will end up costing a lot of money.

The U.S. savings and loan crisis of the 1980s ended up costing taxpayers 3.2 percent of G.D.P., the equivalent of $450 billion today. Some estimates put the fiscal cost of Japan’s post-bubble cleanup at more than 20 percent of G.D.P. — the equivalent of $3 trillion for the United States.

If these numbers shock you, they should. But the big bailout is coming. The only question is how well it will be managed.
Let's say it again. The big bailout is coming. You and I, fellow taxpayers, are going to bail out the wall street bankers who, with their Reagan Revolution allies, created this mess.

How many of us taxpayers does it take to support one financial manager in the style to which he is accustomed?

This is what the conservative movement has brought America to. The Bush administration pushed through the tax cuts for the wealthy so that they could afford their $5000 an hour hookers, and the Republican Congress deregulated Wall Street so that they would be free to get even richer. That's what it meant when now ex-Senator Phil Gramm forced through the repeal of the old FDR era Glass-Steagall Act that separated retail banks from investment banks. Glass-Steagall wouldn't have prevented the financial mismanagement that has created the current credit crisis, but it sure would have lowered the ultimate cost.

Watch what is going to happen, though. The bailout is going to pump a lot of money into the failed Wall Street banks andleave the current managers who brought the failure on in place, still drawing their multi-million dollar salaries and even larger year-end bonuses.

And who is going to pay for all this luxury in the yacht-owning bank-mismanaging class?

You and me, fellow taxpayer, you and me and our kids and grandkids. A significant portion of the value we taxpayers each create from now on is going to the undeserving wealthy to pay for their mismanagement of their banks and our economy. Hey! If it doesn't, they might actually have to move out of their gated communities and give up their luxury cars and expensive vacations.

That's the Republican Reagan Revolution at work. Ain't conservatism great??

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