Wednesday, September 26, 2007

Privatizing Profits, Socializing Risk

Stop for a minute, and take a look around. You might notice some things about our great country that don’t look quite right. One being the proposed socialization of corporate risk in the form of bailouts for bankers thinly veiled as a bailout for mortgage holders at risk.

If you haven’t noticed, the federal bailout of mortgage holders won’t really help them, it will only keep them chained down to a life of mortgage serfdom. It in turn helps the big money boyz who were involved in making those bad loans to keep their profits, foisting the bill for their grand mistake onto tax payers.

If the bail out goes through the average American will have to bend over twice and hold still while wealthy bankers engage in multiple counts of unauthorized rear entrie: First for the mortgage, then for the taxes.

The average home ownrer didn’t invent mortgage tranches, C.D.O.s or derivatives nor did he profit from their schemes, but he will get the bill for their failure. Bankers and brokerage firms will be rewarded for their wanton greed and careless business practices by these very bailouts.

Many people think the banks will come and take their house if they default on their loans. Here’s the truth: Bankers don’t want your house. It’s a depreciating asset with a diminishing pool of buyers. They want you to stay in it guaranteeing an income stream. It will be far better to re-price the loan and send the bill for the paper loss to Uncle Sam who will forward it to you and me in the form of taxes or print more money devaluing each dollar we have stuffed in our mattresses. (I call that a back-door tax as it screws the average American saver.)

Will John Q. Public put up with paying taxes to help retain the profits of bankers? Wealthy business men who profited when he got into the mess that left him a debt slave, or is our government asking too much?

Privatizing profit for the rich but socializing the debt if it goes wrong is not just wrong, it’s dangerous. Mr. Average American will at some point look around and notice that he is no longer guaranteed privacy, The Patriot Act took that away along with a raft of other freedoms. He will start to wonder why he got the bill for someone else’s reckless behavior, while those ‘someones’ skated with the profits and did so with the blessing of his government. He will begin to see an America that is increasingly for the rich and the connected. A country that no longer represents him, and he will begin to simmer.

The implications are not pleasant. As the average family is inevitably forced to deal with their new standard of living there is sure to emerge deep resentment. High oil prices coupled with rising grain prices hold the promise of increasing economic pressure on the average American family. A crumbling dollar, and a weakening economy promise more of the same. Something will have to give…

Disenfranchising the Average citizen in this way will come at a price that we’ll all pay.
How long will it be before our government accomplishes what terrorist could not?

Say NO! to bailouts.



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