The Grave Dancers
I'm so happy to see that Sam Zell, the "grave dancer" who has already destroyed our local newspaper, the L.A. Times, has found fresh territory to plunder. Sam and a bunch of former Resolution Trust Company (R.T.C.) officials are working day and night to position themselves to take advantage of the Credit Crisis.
What is obvious to former R.T.C. officials is that, like the last go around, a great deal of money will be made by a select group of investors and business operators, particularly those with government contacts. The former government officials said in interviews that much of what is motivating them is a desire to help the nation recover from this latest stumble. But they acknowledge they intend to be among the winners who emerge."Fortunes will be made here, no doubt about it," said Gary J. Silversmith, one of more than a dozen former R.T.C. officials interviewed who now are involved in enterprises seeking to profit from bank bailouts.
Look, I understand this is the nature of capitalism, but somehow I envisioned that after the taxpayers bailed out the capitalists, it would be the U.S. Treasury that benefited from the resale of these distressed assets, not the Robber Barons.
Wasn't that the premise of TARP?
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Look, I understand this is the nature of capitalism . . . .
Not really; it's the nature of all government regulated economies.
December 29, 2008 11:49 AM | Reply | Permalink
In a true capitalist economy, the government would simply be another player bringing money to the table. There is no incompatibility between capitalism and government investment unless the players make different sets of rules depending on who supplies the capital.
"Our" capitalism (vis-a-vis the American "free-market" model) requires a government regulated economy in order to maintain viability and demands that the government provide funding while prohibiting participation in the outcomes of their investment. To this day it has never actually been successfully implemented. It is a failed theory but still favored by the ultra wealthy who benefit from it.
So what's your point?
December 29, 2008 12:47 PM | Reply | Permalink
There's an ancient truth that goes something like this - In theory, theory and practice are the same thing but in practice they're not. (This is particularly true when the human animal is involved in either.)
Markets, governments...are all flawed because all human constructs are flawed. We operate at our peril if we don't recognize and account for this in our theories and their practices.
December 29, 2008 12:41 PM | Reply | Permalink
The more I see of today's Government and political system the more I'm convinced they're interconnected webs of corruption.
I always suspected William Seidman of the RTC of selling off assets at fire sale prices to many who caused the S&L scandal. Now, like the legendary Phoenix, he rises from his ashes to once more feast on the carcass left by corruption.
December 29, 2008 2:39 PM | Reply | Permalink
selling off assets at fire sale prices to many who caused the S&L scandal
This is known among gangsters as taking a cut off the top and the bottom.
December 29, 2008 4:27 PM | Reply | Permalink
The premise of TARP was always to fleece the taxpayer. We got minor equity positions in banks that can only be monetized by either waiting and collecting dividends (good luck) or selling them to the Sam Zells of the world and they're not going to buy unless it's to their advantage.
December 29, 2008 5:20 PM | Reply | Permalink
Capitalism is a direct descendant of the feudal system of the middle ages. All the resources are owned by a few extremely wealthy individuals who use their wealth and power to exploit the rest of the people, and the natural resources, for their own benefit.
The modern analog of the feudal lord is the corporation.
Capitalism is not the same as free enterprise. Capitalism is focused on gaining control of resources, destroying competitors, amassing great wealth at the expense of the people and the environment. Free enterprise is (or should be) a system with a level playing field where individuals with good ideas are able to develop them and profit from them.
Three things are required for economic development: human resources (labor, inventors, ideas); natural resources (energy, land, water, materials); and capital (or savings and investment) to build factories, infrastructure, etc. for the betterment of society.
Why should "capitalists", i.e. the people who amass wealth, be given more importance than human and natural resources? Why are workers fired when they are no longer needed? Why are they last in line when a company declares bankruptcy? Why are their pensions and health care plans not protected? Who wrote these laws? Why is the people's wealth -- oil, coal, minerals, etc. -- turned over to private corporations to exploit?
The Republicans have traditionally represented the interests of capitalism; the Democrats have represented labor. But those roles have broken down now. Since Reagan was elected in 1980 the Republicans have occupied the White House for all but 8 years -- 1992-2000, the Clinton years. But Clinton declared himself a centrist and basically pursued the same agenda as the Republicans: "free" trade, deregulation, support for Wall Street.
Will Obama be any different? His economic team is much the same as Clinton's; and Obama too claims he is a centrist.
And who represents natural resources, which includes the environment? Nobody; the Green Party is much too weak.
December 29, 2008 7:39 PM | Reply | Permalink
Government for plutocrats. I love it. When I was a kid, my mom (sadistically) sat me and my twin brother down for a game of monopoly, except one started out with $1200 and the other $2500. Guess who won.
It's as if we forgot to implement democracy in all the spheres of power. The vote only covers so much. But...the Continental Congress probably wouldn't have gotten NY's vote otherwise.
January 3, 2009 12:55 PM | Reply | Permalink
Oddly enough, natural resources don't have the vote. Probably a good thing; an oil field in the White House would be hard to clean up after.
Clinton was a centrist; he balanced the budget and presided over a great economic expansion. I hope Obama learns from that example. Clinton famously said "My economic program is in the hands of a bunch of fucking bond traders?"
Yeah, Bill. It is. But if you recognize that, you can do well.
And he did. We've lost sight of the purposes of regulation lately in the ideological war between the Paul Krugmans of the world and the Grover Norquists of the world.
They're both wrong. We don't need more regulation, or less regulation. We need minimal, but serious and smart regulation. We need transparency and limits on leverage (for institutions embodying counterparty risks).
The government is not and should not be an engine of growth; governments aren't any good at it. That way lies Japan, 1990-2008; an utter failure. The government just needs to protect the public from the dangers that individual players don't, or can't, see.
Instead, our government massively magnified those dangers by encouraging subprime lending and creating publicly financed securitization machines.
If you want someone to blame, look no further than the Capitol.
December 30, 2008 11:34 AM | Reply | Permalink
Clinton . . . balanced the budget . . . .
Or more accurately, the Y2K stock market bubble balanced the budget -- and surprised everyone including Clinton.
December 30, 2008 11:48 AM | Reply | Permalink
Ellen:
I don't disagree; but Clinton's policies contributed to the reduction in the deficit which allowed the condition of surplus to occur. Reductions in military and social spending were keys to the success of the decade of the 90's.
December 30, 2008 3:35 PM | Reply | Permalink
They who scam best, make the most.
We are but their clay pigeons in the financial shooting gallery. The problem is they've killed the golden goose. There is no one left to buy what they are selling. Please ask Mr. Zell how many new subscribers he's gained? New advertisers knocking on his door.
It's like Monopoly, once you own all the property, and have all the money, there's nobody left to play with. Poor Sam...
December 30, 2008 7:44 PM | Reply | Permalink
It is deja vu all over again. Only these conservatives are just a new generation of sociopathic monsters.
1936 Fed Chairman Marriner Eccles said the Great Depression was caused by this: "...a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped."
How much cash money has been pumped so far?
LA Times, December 29, 2008:
"If and when investors decide that they want to buy stocks again, they won’t lack for dry powder. Bloomberg News and Leuthold Group crunched the numbers and tallied $8.85 trillion now in cash, bank deposits and money market mutual funds. More striking is that the cash total is equal to 74% of the entire market value of U.S.companies, the highest ratio since 1990, according to Bloomberg:
"There is a store of cash out there that is able to take the market higher," said Eric Bjorgen, who helps oversee $3.4 billion at Leuthold in Minneapolis. "The same dollar you had last year buys you twice as much S&P 500 as it did a year ago."
The conservatives are not ready to turn off the suction pump connected to the "low class you and I" until we are pumped fully dry. Then the game stops. We will then be even less than wage-slaves.
January 2, 2009 10:23 PM | Reply | Permalink