This is not a LiveJournal.

Three Cheers for State Capitalism!
Ever since I found out that I (along with the rest of the American taxpayers) now own 80% of AIG, I've been thinking about what to do with all those foreclosures. I feel the most gracious thing to do is only select one foreclosed house to live in rent-free. I'll be calling AIG tomorrow to find out what their holdings are in the area. I hope someone's there to take my call.

Yes, the free market kills our economy again. I didn't believe the Bush/McCain administration couldn't fuck anything else up. It's good to know they keep reaching for that failure star. As Jon Stewart said recently, this is "the turd icing on the shit cake." Bush and his friends used their trickle-down theory and their belief in deregulation to take a huge dump all over the American real estate market, and now all of the sudden that whole crew are state capitalists and want to give these failing companies billions of dollars. It's true, there aren't any free-market economists in foxholes.

Let's examine the history of deregulation, shall we? It's the 1980s, and Charles Keating of the Lincoln Savings & Loan Association has paid five senators $1.3M to deregulate savings and loans -- allegedly. Among these senators were an astronaut and a current presidental candidate. It turns out that $1.3M is exactly how much you have to pay for deregulation (including sales tax), so Mr. Keating got what he wanted. With no oversight of S&Ls, Keating and pretty much everyone else starts making risky investments with their customers' money. The result was that 21,000 mostly elderly investors lost their life savings -- $285M. That's right, Keating and his friends took money from grandmothers and lost it on the bond market. The fallout? Keating goes to jail, McCain and the other senators finish their terms (and get re-elected in some cases) and the American taxpayer pays out $2B.

Now we head to the 1990s, when energy was deregulated, probably because Enron gave $7M to government officials. With no oversight, companies like Enron began trading energy in markets, which drove the cost of energy up and made millions of dollars for traders. Enron began trading energy over the internet without having any real assets, and caused rolling blackouts in California, which directly led to the replacement of Gov. Gray Davis with Gov. Schwarzenegger. And I'm only scratching the surface of the shadiness here, there were many outright illegalities that might have been caught if someone was watching them. The fallout? Many people involved go to jail, Enron investors and employees lose everything, and one of the nation's top accounting firms goes under trying to hide all the shady dealing.

Now the housing market got deregulated, which led to sub-prime mortgages, which led to the sub-prime mortgage crisis when no one could actually pay their loans. All those loans were made into bonds, people foolishly bought those bonds, and the whole shitpile collapsed when people found out they were worthless. The fallout? Lots of people lost their homes, Fannie Mae, Freddie Mac, AIG, Bear Sterns, and Lehman Brothers are tanking, and now Bush wants the American taxpayer to shell out $700B. Man, it's almost like every time we deregulate some industry, people get greedy and crash the whole market, and then we have to pay the tab to make sure that the whole American economy doesn't fail.

I'm not against the state regulation of industry, especially given deregulation's track record these days. A truly free market might not bother me either, except that, like Marxism, it doesn't seem to work in practice. What bothers me is that we have Republican officials speaking on behalf of their corporate owners for free markets, and as soon as the corporations can't actually handle existing in a free market, they come crying to the Republicans demanding that they be let out of their financial obligations. I wish the government would bail me out when I spend too much money. But I guess they'd call that communism.

Next up: McCain wants to deregulate the health care industry!

Advertisement