Many writers have noted that the administration is asking for an unregulated bailout. It is, in fact, an unregulated bailout of an unregulated industry.
For years now, the Republicans have complained that the government is the problem: Get government out of the marketplace. Let free and unregulated markets decide what is best. Well, they got their wish. Now they want the government to save their skins. Their bloated corporate carcasses are simply too big to be left in the public sun.
Globalization has been akin to the wild west: Each man is his own law, grabbing what he can. We have sweat shop labor camps and cryptically packaged poisoned financial instruments. What has been the result?
Some rascals cut corners, giving us deadly toys and even deadlier milk. Others, dressed in Armani suits, cleverly fashioned intricate tranches and arcane credit default swaps.
Transparency has often been the buzz word when we complain about China. When a Chinese company published fradulent financial statements, lack of transparency was the answer. When Chinese, Russian, or Indian companies pay bribes….no transparency. Japan complains of China’s lack of transparency in Tibet. The U.S. wants more transparency regarding China’s military modernization. Are we complaining about Chinese subsidies? Well, they have no transparency, apparently.
And yet, and yet, here in the U.S. lack of transparency is the name of the game. We have nourished a shadow banking system, a system that lies outside of Fed regulation: hedge funds, investment banks…. When you cannot see what is happening, what lies really beneath the covers, you should worry.
I see little difference in principle between rascals in China cutting corners on milk and rascals in the U.S. cutting corners on investment vehicles. Secrecy in both is critical. Everything is opaque.
Is there really a difference between China’s milk scandal and the financial wizards in the shadow banking system? Not really. The only difference is that China executed their former food and safety chief. We are much more humane: Many who made immense personal fortunes out of the present scandal will remain untouched. We merely suggest that they forego any golden parachute as they jet off to gated island sanctuaries…to play golf and laze in the sun.
As Wall Street folds up its tend and disappears into the night, we now come to the end game: an unregulated bailout, a bailout that lacks any transparency whatsoever. Paulson can buy and sell mortgage related securities. Buy what for how much and sell to whom for how much? Whose skin is being pulled out of the fire?
And how much of that 700 billion slush fund is to be paid to what experts giving what advice?
Will all books be open as to what will happen? Will we be able to read in detail each and every transaction? each and every paycheck?
As assets are purchased, we will be allowed to see in detail those assets?
As the assets are sold, will we see who bought them and for how much? Are we to believe that this process will be corruption free?
Why not open the books, all the books? Why not be transparent? I have a stake in what happens. Should I not be allowed to see all the detail?
Paulson wants the whole process outside the rule of law. If some unscrupulous scoundrel–be he seller, buyer, or hiree– games this system, is he too outside the rule of law?
Ah transparency! Ah responsibility! At least China executed those responsible for the milk scandal. What will we do? Give them more opportunities to game an increasingly unregulated system?
Let’s open the all the books.