Wall Street Meltdown: Is The BIG ONE Coming?

[Publisher's Commentary: Election 2008]

The United States is suffering from a crisis of confidence; a condition that may not be easily reversed.

It certainly can’t be done by a mere $700 billion package; that “proposal” was based on a figure literally pulled from thin air.

The financial meltdown is happening under the Republican watch, which is not surprising. Years of “let’s deregulate everything” philosophy and “leave it to the market’s invisible hands” was a recipe for mass corporate theft disguised as market capitalism.

The chickens have come home to roost.

While it’s true that only a bipartisan solution will stand a chance at the long-term solution required to boost confidence in government and the “markets,” it’s equally true that actions –or in the case of Republicans lack of appropriate action—have consequences. The permissiveness favored by Republicans since the Ronald Reagan era such as the elimination of oversight over the functioning of the “markets,” allowing pretty much fictitious products, dressed in fancy words such as “derivatives” to be sold, led us to where we now find ourselves.

Buyers didn’t know what they were purchasing and sellers didn’t know what they were selling.

Yet, some of these “products” got high marks from the rating agencies; people were being sold nothing but air. How could this have happened? Through greed.

Many hands were washing many other hands. The so-called captains of industry on Wall Street presided over highly-paid gamblers, called “traders” and “analysts” who lied to the public and sold these lies for real money; hard earned main street paychecks.

These captains of Wall Street had nothing to lose. If a lie was discovered, and the value of some shares declined, only the suckers, Joe and Jane Mainstreet, suffered. At the end of each year, these Captains of industry, super bandits, paid themselves handsome sums; tens and even hundreds of millions of dollars in “salary” and “bonuses.” Yet, they did not create any real products or wealth.

All good lies ultimately come to an end.

When the lies began to unravel, as it has –when each entity, buyer and seller, conceded that they had been engaged in a deceitful relationship—it all came tumbling down.

The government, elected officials, Democrats, Republicans, the presidential candidates, arm chair pundits, economist—all have commented on the proposed $700 billion bailout, currently stalled.

It’s amazing how everyone seems to accept the $700 billion figure as if it were based on scientific exactitude. Since no one really knows the value or quality of the illiquid assets now held in the books of all those Wall Street firms and in commercial banks, what’s to say the bailout may not require $1 trillion or $2 trillion or 3 trillion?

Moreover, the rush to “bailout” means that once the financial markets are stabilized –meaning the wild gyrations in the Dow stops—it will be back to business as usual.

Unless the “bailout” is accompanied by a series of fundamental reforms –which can only begin once adults admit that there is no such thing as a “free market” since resources and access to information are not equally shared—Wall Street firms will once again be allowed to gradually sell more and more fictitious products, and the lies will be condoned –by seller and buyer—until the next crash.

Eventually, nothing will be able to rescue us from the Big One.

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