Toban Black

Perspectives on what’s been happening in and around Wall Street and Washington -

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“lenin” (on September 8th) -

“The American government has just formally nationalised the two biggest mortgage firms in the US.”

“It just goes to illustrate one of the profound paradoxes of American politics, namely the coexistence ultra-free-market ideologies among the political and economic elites with a constant orientation toward heavy state intervention to protect corporate interests.”

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Geordie (on September 14th) -

“Though the US bailouts of Bear Stearns, Fannie Mae and Freddie Mac were supposed to prevent a ‘domino effect’ of US banks collapsing, it appears banks are failing anyways.”

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Jeremy Seabrook (on September 15th)

“Attempts to assimilate the workings of capitalism to the equivalent of a natural phenomenon have been so successful that even the words used to describe the present downturn borrow a lustre from primeval nature: we hear of mortgage famine, credit drought, floods of bankruptcies, contagious insolvencies, epidemics of repossessions: the language evokes biblical plagues and last days. Is not nature red in tooth and claw? Or was that capitalism?”

“If the coming impoverishment brings about an increase in violence, crime, racism and breakdown, who will bear those costs, who will bail out a bankrupt society? Certainly not the makers of fortunes whose activities we were until recently expected to admire as the acts of heroes and demi-gods.”

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“lenin” (on September 15th) -

“Some bankers have expressed worries that the nationalizations would actually precipitate a further collapse into a full-blown depression.”

“There are limits to what the US government can actually do. It can make the landing softer for its rich friends, certainly, and invest heavily in the main infrastructure to prevent the whole global system that functions overwhelmingly in US interests from collapsing overnight.”  “But ultimately, the US government can’t turn back the tide. If the world economy slides into depression, the only way it will be able to raise money will be through war bonds.”

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Dave Lindorff (on September 17th) -

“Clearly there are no safe harbors in the stock market, which could as easily drop 40 percent or 70 percent tomorrow as rise 3 percent.”

“The good news is that, if the US economy collapses, the Pashtun farmer in northeastern Pakistan, the Iraqi shopkeeper in Fallujah, the Iranian worker in Tehran, and the peasant in Venezuela, will no longer have to worry about being bombed or having their children mowed down by a US helicopter gunship. The US would no longer have the funds to pay for such foreign wars. And because a collapse of the US consumer economy would also drag the rest of the world into a prolonged global slump, perhaps reminiscent of the 1930s, we might actually see a significant enough drop in carbon emissions from idled cars, factories and power plants that the global warming catastrophe that is threatening us all will be significantly delayed, giving humanity time to come up with a serious long-term response.”

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Daniel Cohn-Bendit (on September 17th) -

“This financial crisis is for capitalist neo-liberals what Chernobyl was for the nuclear lobby. It’s a catastrophe. I hope we all learn lessons from it.”

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Caroline Lucas (on September 17th) -

“We’re going to have to break up financial institutions into smaller units: mega-banks make mega-mistakes that affect us all.”

“The situation we’re in now is an opportunity, although it remains an enormous threat also.”

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Chris Harman (on September 17th) -

“This is a very, very serious crisis of capitalism: it has been the build-up of private borrowing that has kept the system going, and it’s coming unstuck. The whole system is unwinding; the other day we saw the biggest nationalisation in the history of humanity and that still wasn’t enough. Governments don’t know what to do, and it’s the rest of us who have to live with the consequences.”

“We have to build resistance. Because so far we’ve only seen the minor problems; people stuck in foreign airports or having a bit of trouble getting a job. Things are going to get much, much worse.”

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“lenin” (on September 18th) -

“The capitalist class has a procedure for situations like this: cut your losses, shred papers, fire staff, take the profits, retreat behind some gated communities with armed guards, let everyone else fight over the scraps, and wait patiently for a decent investment opportunity.”

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Chuck Collins (on September 19th) -

“With the specter of financial Armageddon raised in headlines everywhere, two questions keep occurring to me. Where will the government find the $85 billon to bail out AIG and other Wall Street giants? And how will [the U.S. government] pay for the proposed Main Street recovery, including federal aid to states, relief to homeowners, and public works projects for the unemployed?

The Bush administration plans to add to the $400 billion projected deficit and our $9 trillion national debt. But it’s irresponsible to shift the bill entirely to the next generation. The corporations that rigged the casino economy and the wealthy CEOs and investors that profited at everyone else’s expense should bear the recovery costs, not [U.S.] kids and grandchildren.

[Americans] can’t recover the money from the companies now. They have extracted the profits and their CEOs have cashed they gilded paychecks. The speculators bought mansions, private jets, and small islands. Lehman Brothers declared bankruptcy on Monday and 25,000 workers are on the brink of unemployment. But Lehman CEO Richard Fuld is sitting pretty, with his $354 million compensation from the last five years and a mega-mansion in Greenwich, Connecticut.”

“What happens when a whole sector of the economy has been cooked and billions of dollars have already been stashed in offshore bank accounts? How are the crooks held accountable for robbing [the] entire economy?”

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Dave Lindorff (on September 19th) -

“Odds are those people facing foreclosure will still be unable to pay their mortgages, and besides, there’s no way there will be relief for the majority of homeowners who aren’t missing their mortgage payments, but who are struggling mightily to meet them each month.

Primarily, who gets helped by this enforced taxpayer largesse are the fat cats who own all the stock in these financial institutions, all the executives who pay themselves outsize salaries each year for their lousy management records, all these hotshot traders who make the deals that later turn sour, long after they’ve run off to another job taking their bonuses with them.

We ordinary [Americans], who live from check to check, will feel the pain of this ‘rescue’ in the form of higher taxes in coming years, and in a devalued dollar–because you can bet that all that money they’re printing, and all that added debt they’re piling on to the mountain of debt already out there is going to make the rest of the world pretty queasy about holding onto dollar-denominated debt, or about buying any more of it.”

“The real reason we have mega financial institutions is that mega financial institutions pay mega bucks to managers and make mega donations to the campaign coffers of politicians. They also get to put some of those mega-buck managers into key advisory positions in each administration, Republican and Democrat, to ensure that government polices allow them to get even bigger and even richer–and to ensure that when they screw it up, they get rescued at the taxpayers’ expense.”

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Naomi Klein (on September 19th) -

“Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of “free market” ideology. Free market ideology has always been a servant to the interests of capital, and its presence ebbs and flows depending on its usefulness to those interests.

During boom times, it’s profitable to preach laissez faire, because an absentee government allows speculative bubbles to inflate. When those bubbles burst, the ideology becomes a hindrance, and it goes dormant while big government rides to the rescue. But rest assured: the ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis that will be the rationalisation for deep cuts to social programmes, and for a renewed push to privatise what is left of the public sector. We will also be told that our hopes for a green future are, sadly, too costly.”

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Mike Whitney (on September 21st) –

“The problems cannot be resolved by shifting the debts of the banks onto the taxpayer. That’s an illusion. By adding another $1 or $2 trillion dollars to the National Debt, [Treasury Secretary] Paulson is just ensuring that interest rates will go up, real estate will crash, unemployment will soar, and foreign central banks will abandon the dollar.”

“Why should the taxpayers be happy that the stocks of Morgan Stanley, Washington Mutual and Goldman Sachs surged on the news that there would be a government bailout yesterday? These banks are essentially bankrupt and their business models are broken. Keeping insolvent banks on life support is not a rescue plan; it’s insanity. ”

“The Paulson strategy is to create another ocean of red ink while refusing to face the underlying problem head-on.” “The broader economy does not need the added downward pressure from higher taxes, bigger deficits, or inflation. Paulson’s plan is a band-aid approach to a sucking chest wound. The debts are enormous and the pain will be substantial, but the problem cannot be resolved by crushing the middle class or destroying the currency.”

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Glenn Greenwald (on September 21st) -

“[Some have] … created a win-only system where the wealthiest corporations and their shareholders are free to gamble for as long as they win and then force others who have no upside to pay for their losses”

“It’s not an ‘investment’ by the Government in any real sense but just a magical transfer of losses away from those who are responsible for these losses to those who aren’t.

And all of this was both foreseeable as well as foreseen”

“Generations of Americans are almost certainly going to be severely burdened in untold ways by the events of the last week — ones that have been carried out largely without any debate and mostly in secret.”

“What’s probably most amazing of all is the contrast between how gargantuan all of this is and the complete absence of debate or disagreement over what’s taking place. It’s not just that, as usual, Democrats and Republicans are embracing the same core premises (’this is regrettable but necessary’). It’s that there’s almost no real discussion of what happened, who is responsible, and what the consequences are. It’s basically as though the elite class is getting together and discussing this all in whispers, coordinating their views, and releasing just enough information to keep the stupid masses content and calm.”

“There’s virtually no discussion … in America’s dominant media outlets. All one hears is that everything that is happening is necessary to save us all from economic doom. And what’s most amazing about that is that the Natural, Unchallenged Consensus That Nobody Questions can shift drastically in a matter of days and still nobody questions anything.”

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Paul Krugman (on September 21st) -

“Looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets”

“There’s … nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.”

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Richard W. Behan (on September 22nd) -

“The Bush Administration’s proposal to buy, with taxpayers’ money, $700 billion of toxic liabilities from the corporate financial titans of Wall Street is a fraud. It is by no means necessary, as Treasury Secretary Henry Paulson claims in the agency’s Fact Sheet, ‘…to promote market stability, and help protect American families and the U.S. economy.’

It is necessary only to assure the financial survival of Wall Street banks and brokerages, the Administration’s most loyal supporters and its greatest political contributors-and in large measure the cause of the financial meltdown the country is facing.

These financial corporations lobbied ferociously to be free of government regulation. Had they not succeeded, they could not have done what they did next. They created and leveraged trillions of dollars of complex ‘derivatives’-mortgage-backed securities, collateralized debt obligations, and credit default swaps-all riding on an unprecedented real estate bubble stimulated by their frenzy of creative finance. When the bubble burst, as bubbles do, many of these financial titans faced bankruptcy, their obligations far exceeding their assets.”

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Sean Gonsalves (on September 22nd) -

“[The United States has] overthrown regimes and threatened others with military action for nationalizing industries. When other governments do it, it’s evidence of their evil, socialist heart. When [the U.S.] government does it, it’s necessary.”

“The economic reality is: socialism for the rich; capitalism for everybody else. ‘Compassionate conservatism’ for the wealthy. ‘Market discipline’ for the poor.”

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Thomas F. Schaller (on September 23rd) -

“Notice how those same chest-thumping capitalists of talk radio and at the corporate-funded think tanks often fall silent in the face of fixed markets, no-bid contracts, bailouts and subsidies for the very corporations that demand less government oversight when things are going well, then turn to Washington when things go horribly wrong.

The hypocrisies abound.”

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Sarah Anderson and Sam Pizzigati (on September 23rd) -

“Treasury Secretary Henry Paulson is not just talking about bailing out mortgage lenders and traders any more. The federal government, Paulson now envisions, will be buying up all sorts of troubled investments. Even foreign banks will be able to get in on the bailout action.

Meanwhile, a host of power-suited vultures are hovering overhead, anxiously awaiting federal contracts to manage — for a handsome fee, of course — all the bad debts the Treasury starts buying.

In other words, the bailout figures to drive a huge swatch of the U.S. economy for years to come. Indeed, the bailout could soon become the economy’s driving force.”

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Devinder Sharma (on September 23rd) -

“In the past six months, three of America’s top five investment banks have disappeared. The remaining two - Morgan Stanley and Goldman Sachs - are gasping for breath. While Morgan Stanley is considering merger options, the stocks of Goldman have slumped.”

“These firms were no ordinary business houses. As others have said, they represented the pride of the American financial system.”

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Geordie (on September 23rd) -

“How bad is it and what does it mean?

A couple of US Congress members who had a … chat with the US Fed Chairmen and the US Treasury Secretary had this to say last Friday:

‘We’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally. Somber doesn’t begin to justify the words. We have never heard language like this.’

But is it all a smoke-screen designed to give the Fed and Treasury complete control over bail-out money?”

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Otto Spengler (on September 23rd) -

“Why should American taxpayers give US Treasury Secretary … Paulson a blank check to bail out the shareholders of busted banks? Why should the Treasury turn itself into a toxic waste dump for their bad loans?”

“Why are the voices raised in protest so shrill and few? Why will Americans fall on their fountain-pens for their bankers?”

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AlterNet Staff (on September 23rd) -

“Already deep in deficit, the administration wants to borrow $700 billion dollars — in addition to the $900 billion already spent this year to prop up troubled lending institutions and deal with the fall-out from the housing crisis — and entrust it to Treasury Secretary Henry Paulson, fresh from a long run on Wall Street himself. He’d then buy up worthless paper from struggling banks.”

“It is an economic coup d’etat in the making.”

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Naomi Klein (on September 23rd) -

“The best summary of how the right plans to use the economic crisis to push through their policy wish list comes from Former Republican House Speaker Newt Gingrich. On Sunday, Gingrich laid out 18 policy prescriptions for Congress to take in order to ‘return to a Reagan-Thatcher policy of economic growth through fundamental reforms.’ In the midst of this economic crisis, he is actually demanding the repeal of the Sarbanes-Oxley Act, which would lead to further deregulation of the financial industry. Gingrich is also calling for reforming the education system to allow ‘competition’ (a.k.a. vouchers), strengthening border enforcement, cutting corporate taxes and his signature move: allowing offshore drilling.”

“What Gingrich’s wish list tells us is that the dumping of private debt into the public coffers is only stage one of the current shock. The second comes when the debt crisis currently being created by this bailout becomes the excuse to privatize social security, lower corporate taxes and cut spending on the poor. A President McCain would embrace these policies willingly. A President Obama would come under huge pressure from the think tanks and the corporate media to abandon his campaign promises and embrace austerity and ‘free-market stimulus.’”

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Those are quotations (in chronological order) that I’ve been gathering as I’ve tried to make sense of all of this.

(I don’t mean to advocate the rest of the articles that those quotations are taken from.)