OK, so We Are Likely to Have a Corporate Bailout -- Now Can We Please Deal with the Real Problems?

This evening the US Senate passed a new pork-laden bailout package that many are hopeful will pass the House of Representatives and provide relief, however temporary, to seizing credit markets. The new measure added tax cuts for businesses, upped the FDIC insurance limit to 250,000, and added other targeted sweeteners. In general, the bailout is likely to help the market get back on track, at least for a short while. Unfortunately, I am not confident that the buying off of Wall Street's toxic mistakes will provide a long-term fix to our current financial situation. Here's why:

Bailout blackmail
What the bailout measure has shown us is that Wall Street and financiers command such a large proportion of our economy that they, in effect, have the ability to dictate economic terms in times of plenty and in times of hardship. It is my opinion, therefore, that the sector needs to be reined in lest we find ourselves arriving at this place in history repeatedly -- much to the detriment of the real economy. Though we have been assured, many times, of a magical free market that cures all ills. What we are finding is that, in reality, when left to its own ends, the world financial system is incapable of behaving responsibly. The temptation of power and wealth is far too great to be entrusted to unbound, frail, and flawed human individuals. Our government was designed to separate and share powers. But an unchecked corporate system operates under the lawlessness of anarchy, dictatorship, and the tyranny of the strong.

An unbound market is not the solution, it is the problem
We have been taught that an unchecked "free" market creates wealth and prosperity for all. What we have learned is that it shifts wealth and prosperity into fewer and fewer hands. In short, the idea that a free market can solve all ills is nothing short of an unabashed lie. Many at the top of the wealth spectrum have claimed that this past year has been one of prosperity. And while that may be true for an upper segment of US and global society, it is decidedly not true for the rest of us. According to the US Labor Department, while GDP has grown a total of nearly 17 percent since 2000, US median income has fallen. In short, the tide has risen, but only to fatten the coffers of a very few. Perhaps this is why McCain claims the fundamentals are strong. From his point of view, at 13 homes and $100 million plus, things must be looking pretty peachy. But for the rest of us plebes, not so much.

But even the fattened incomes of the wealthy in recent years hides a disturbing trend. Most of these growths and profits were imaginary, not even a result of real economic activity. The result is that the ongoing losses occurring now are dwarfing any past gains, eating up the potential prosperity of the present as well as the future. Another way to put it is simply this -- how much of the energy of society feeds narcissistic, unproductive, endeavors? How much do we put into box stores, fast food, a hundred million restaurants. How much goes into the creation of bizarre, hard to understand, investment vehicles? How much goes into gambling, alcohol, shopping for shoes? Not that many of these endeavors do not have a place. But if they become the point of society, their driving force, what does that say about a society? Where Kennedy brought us to the moon, Reagan brought us to derivatives and the strip mall. One produced a wealth of real value -- innovation, technology, and benefit to broader society. The other brought us to the brink of ruin.

If future real GDP numbers continue to point down, it is direct evidence that the supposed growth of the past was nothing but sound and fury on a road to no-where. That policies focused only on financial profit and so-called efficiency are abject failures. For what worth is profit if it does not benefit the society that made that profit possible? What good is wealth if it only migrates to a few hands while the other hands toil?

Proofs of the failure of greed abound
Since the 1970s, we have seen real wages and purchasing power stagnate or decline, pensions evaporate in favor of, now ephemeral, 401Ks, health-care disappear for 46 million while the costs for everyone else skyrocketed, energy and food costs increased, and other key benefits wilted. And so, at the time of our economy's greatest need, at the time when the failed policies of the past have resulted in collapse, the financial portion, the segment that caused the trouble in the first place cries out for help, lest ruin come to us all. For those who benefit from such a position, a little news -- ruin has already come to many and it is those who have suffered who will, again, bear the burden of your misdeeds.

It has often been the cry of the wealthy that too much is taken from them. That taxes are unjust, egregious, and unnecessary. It was argued that these taxes were an undue burden on the economy and that economic growth would flourish, everyone would prosper, were those taxes removed. What happened was a farcical mockery of the financial Utopian ideal. The taxes that went to pay the salaries of doctors evaporated and so we have less doctors to care for the sick. The taxes that went to build infrastructure failed and so we are desperately in need of roads. The taxes that went to science faded and so now there are less scientists. The taxes that went to retirement wilted and so now some elderly subsist on cat food. The taxes that went to produce alternative energy dried up and so, at the time of our greatest need, we have a pittance. The taxes that went to the space program were cut and so we are still earthbound. What taxes remained went to build Hiltons and Walmarts, the former of which most of us can no longer afford and the latter of which have become a basic necessity. And the result of this great undermining at the last has put at threat the very wealthy who created the problem by taking too much. Why? Because without all these systems that taxes support working like a finely tuned machine, the ability to create real wealth, real value, declines, along with the rest of civilization.

The ultimate end of greed, as a result, is less wealth for everyone, even the wealthy who would become increasingly cloistered, fewer in number, and disliked by broader society. Is this the end the wealthy wish for? Is it one that they would enjoy? Unfortunately, greed is a short-sighted creature. It borrows from the future to pay for today. It, in general, lacks all notice of consequence. Well, at the very last, consequence has come home to roost.

Unfortunately, many politicians still don't get it
Though we may, hopefully, be a the end of the age of greed, our political systems are still disfunctionally geared to enable it. The machinery of politics dutifully maximizing the income of a few while marginalizing the rest. Politicians of all varieties support the bailout package despite massive and loud protests by their constituents just like they supported deregulation, labor market reform (read pay laborers less), free trade (read no rules for traders), the race to destroy government by collecting zero taxes, and other 'wise' policies. In general, the media, is certainly not liberal and instead, is altogether corporate. In general, the media has defeated or dampened criticism of the bailout. The result of an insider class who tend to benefit from the winner-take-all policies described above.

What to expect next
But not all is lost. The current bailout, though lacking the kind of teeth necessary to hold Wall Street entirely accountable, sets a strong precedent to roll back the greed-based policies that got us here in the first place. Furthermore, a massive groundswell of support for progressive policies and politicians, primarily democrats, has the potential to essentially change the rules of the game. Barack Obama, though reluctantly willing to pass the bailout to sustain credit flows has campaigned on a number of platforms with the intent to shift more of the power back to a larger number of citizens. Furthermore, he has set his policies on holding Wall Street accountable for its misdeeds.

Today, he repeated his call for a Financial Stability Fee set on the financial services industry to help repay Americans in case the rescue plan results in losses. Such a fee would help set up a real insurance plan if the toxic assets bought by the government fail to pay dividends. "As I modernize the financial system to create new rules of the road to prevent another crisis," he explained, "we will continue this fee to build up a reserve so that if this happens again, it will be the money contributed by banks that's put at risk," he said. "Let me be very clear: when I am President, financial institutions will do their part and pay their share, and American taxpayers will never again have to put their money on the line to pay for the greed and irresponsibility of Wall Street."

The segment of the Republican Party that have served as the defenders of this greed-based, winner take all, system, however, are not likely to go down without a fight. Staying in power and doing whatever it takes to do so appears to be the primary talent of this group -- even if it means pretending to be something they aren't. So expect a tough struggle over the next month. Expect more distractions, lies and dangerous games of brinkmanship. Expect even worse things to be used to deny or avoid a reality that has come to weigh decidedly against them. The alternative now is either a full departure from the past, like the "New Deal" of the 1930's, or a move towards extremism and war - the latter being our current elites' only means to keep power. Unfortunately, the machinery of both extremism and war are already in place. The former in the form of the most hate-filled segments of the religious right, and the latter in the form of an aggressive, invasive, unilateral, military-first/diplomacy-last, neocon foreign policy. Finally, a right-wing media misinformation machine is well positioned to spread any tainted message it should choose.

But don't listen to the false messages that pander to the fallen angels of our nature. We don't want to go down that dark and desperate path. It is, most decidedly, a bridge to nowhere. And, come November, we will have the opportunity to give that future of American failure a resounding "NO!"