To Bail, Or Not To Bail… That Is the Question

maternity-dress.jpgThe short version: Paulsen and Pelosi thought they had a done deal. A faction of house Republicans (and some Democrats)were unhappy with the bill. McCain showed up at the talks, told Boehner that the Republicans could not support the plan without core changes. Obama pressed McCain on alternatives. McCain refused to answer and left the meeting. Nancy made a speech. The house voted. The measure failed.

The big question is whether or not it was a good thing that the bailout failed. They’re nationalizing banks in Britain, Belgium, and Iceland. Still, it’s unclear whether the bailout is actually necessary. Here’s my observation: Our country’s economic system is predicated on the success of the ultra-wealthy. Nobody talks about this any more since Ayn Rand, but it’s a fact. If the captains of industry don’t succeed, we all fail. We are the wide-end of the pyramid supporting the top. Conversely, if there’s no top, there are no jobs, no grocery stores, no corporations to employ millions. Our system is capitalistic. It’s the nature of the beast. So, what the president and congresspeople cannot say, is that we need to bail out a lot of ultra-wealthy people or we’re all screwed.

Here’s a quote from a 2005 Businessweek article discussing who owns AIG:

AIG has a highly unusual arrangement with three private entities, governed and controlled by Greenberg and other AIG executives. Each serves a different purpose and raises unique concerns. SICO is a holding company that owns about 12% of AIG stock — making it the company’s largest shareholder — and pays out some of that stock to an elite group of AIG managers as deferred compensation. Greenberg and other AIG directors sit on the board, have large personal stakes, and decide who gets paid what. Regulators believe SICO hides executive pay and takes away powers that should rightly lie with the compensation committee of the board.

C.V. Starr & Co., on the other hand, is a group of agencies that develops business and issues specialized policies for AIG. It’s owned and operated by AIG executives — many of whom perform functions similar to what they do at AIG — and controls 1.8% of AIG shares… The arrangement creates endless possibilities for conflicts of interest. Says North Carolina State Treasurer Richard H. Moore, who oversees a stake in AIG worth more than $300 million: “I don’t think you can have a publicly traded company that allows board members to own a private entity that does business with the publicly traded company. [It's] impossible to know if shareholders are being taken advantage of.”

Yikes. Thank goodness the government bailed those guys out.

Is it fair? No. Is it right? I don’t know. But it is a fact of our country, the great secret the Republicans, who have become the great guards of the wealthy, don’t talk about. It’s the secret most Americans don’t want to think about. We spend all our time imagining that someday, we or our children will make it to that top income bracket. The American Dream. Republicans know this. They know it so well, that they’re planning a big distraction to get their guy elected.

According to the Times Online:

Inside John McCain’s campaign the expectation is growing that there will be a popularity boosting pre-election wedding in Alaska between Bristol Palin, 17, and Levi Johnston, 18, her schoolmate and father of her baby. “It would be fantastic,” said a McCain insider. “You would have every TV camera there. The entire country would be watching. It would shut down the race for a week.”

Don’t think about the bailout. The press will keep you titillated with BUZZ about Bristol’s choice of wedding dress to cover “the bump.” Aaaaack!

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September 30, 2008 | Filed Under Great Recession 

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