Ideology Gone Amok

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From Joe Klein at Time:

. . . the financial titans have been going for the quick buck rather than the sound one. Money and creativity have been redirected during the Reagan-Bush era away from substantive loans to real businesses into a Ponzi scheme of borrowing by investment bankers, so they could engage in the most irresponsible, if lucrative (for them) speculative lending imaginable...In this sense, the mortgage crisis was a perfect metaphor for Republican financial governance: Investment banks like Lehman--R.I.P.--took loans to invest money in...bad loans. In this case, the loans were bad mortgages. This is called throwing good money after bad.

John McCain has excellent experience--a ringside seat--in the vagaries of this experiment in greed and anarchy. He was a member of the Keating Five. This was the signature scandal of the Savings and Loan crisis, twenty years ago. It concerned the insider help that five Senators gave Charles Keating and his Lincoln Savings and Loan, in return for contributions and gifts. The deregulation of S&Ls--community banks dedicated to local mortgages (like George Bailey's bank in "It's A Wonderful Life")--enabled slick operators like Keating to make reckless loans in new areas where they had no expertise. The final tab to the taxpayers was $165 billion.

What we are seeing on Wall Street today is the result of an ideology gone amok. There was call to loosen and change the antiquated regulations governing investment back in 1980. But the Republican era has seen that loosening go to the point of near-cataclysm. Banks are failing, markets dropping. We are in the midst of a slow-motion economic crash. What happens next is an economic contraction: loans aren't available, so businesses can't expand. A crash comes at the beginning of a period of economic trouble.

Comments

Nancy Ewart said…
Let's hope that the Repubs can't cover over this mess with their usual lies. I'm not optimistic, given the latest poll numbers but I am still hoping. If Obama does win, he will have a god-awful mess to clean up and you know that the right wing media will be bombarding him with bs from day one. In any case, we are in for a bumpy ride. Stay well, take care, keep painting.
9:48 PM
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