Tag Archives: Wall Street meltdown

Pandemonium: Wall Street loses its panache

Pandemonium: wild uproar and noise, from Greek pan=all, daimon=demon, in other words, all hell breaking loose.

Panache: A plume of feathers, especially on a helmet; dash, swagger, verve.

Wall Street’s mighty firms have fallen like the houses of cards they were.  That perky plume looks more like the soggy victim of an oil spill. The bloom is off the rose, the balloon has popped, and the souffle has collapsed.  Greed apparently has no limits and, in the financial orgy that accompanied the deregulation of the financial markets, nobody thought it could end.  Like a cancer that consumes its host – it forgets that when the host is used up they will both die.

So now the demons are loose and we, the little people, may get sold down the river again as the Bush administration considers bailing out these titans with OUR taxpayer dollars.

As Dean Baker, who wrote The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer said:

They leveraged themselves to the hilt. The investment banks, like Lehman and Bear Stearns, leveraged themselves to a ratio of thirty-to-one. In other words, if they had $10 billion in capital, they had loans on the order of $300 billion. I mean, this was just asking for disaster.

And … it did collapse. It was totally predictable it would collapse.  I didn’t know when, didn’t know exactly who, but it was totally predictable. And now they’re running to us and asking us for handouts. Think of what we do to welfare people, when they have to go through to get a $500-a-month check, and these people want billions, no questions asked. Unbelievable.

The bailout being proposed is itself a totally predictable scheme. The blogger devilstower wrote a brilliant essay yesterday on DailyKos describing the history of the mess we find ourselves in, and concluding that we’ve been had, AGAIN:

When taxpayers are left holding the bag for $1 trillion this time around, it’s hard to believe it’s any sort of accident. This is enemy action. This is a bullet deliberately fired into the economy by men willing to exercise their ideology regardless of the cost to taxpayers. Men who have every expectation that they can plunder the system again and again, while the public picks up the tab.

My ex is one of the victims of the real estate version of the mess on the west coast. He invested in an assisted living center in Colorado through an investment partnership called SunWest Management. The property is now being foreclosed on and he stands to lose his entire investment.  The company is being sued for unlawful business practices, false advertising and consumer act violations in several states, and they’re teetering on the edge of bankruptcy, threatening upheaval for thousands of senior citizens and potentially leaving company investors empty-handed.

Sunwest Management Inc. is (was?) the nation’s fourth-largest assisted living company, with 275 properties in 36 states and estimated annual revenue of $600 million. The company employs 12,000. They grew like crazy during the last few years, leveraging off their own leveraged mortages.

And it was a deck of cards.

Privatization: your Social Security could have crashed too

Privatization: the Republican economic philosophy that government sucks and we should turn over government functions and agencies to private enterprise, which in its infinite unregulated free market wisdom will make the rich richer and the rest us dumpster-diving. In the case of Social Security our personal accounts could be invested in various managed investment funds…

Yesterday Barack Obama said current Wall Street woes prove that the Republican economic philosophy has failed, but he hasn’t yet pointed out the obvious: if McCain had had his way, that would be our Social Security money Wall Street is losing.

John Neffinger at Huffington Post says:

…not that long ago we had a rare political moment in this country, a moment where the public sat up and took notice of economic policy — and spoke out and made its voice heard too. When George W. Bush made it to term #2, he decided to try to privatize social security to reward his supporters on Wall Street with a new source of capital, customers, and fees. (Those would be the same people whose firms are now cratering under the weight of the bad debt they recklessly took on while Republican regulators looked the other way).

But as it turned out, we Americans were not about to let our elected representatives turn over our social security taxes to Wall Street financiers to gamble with if it meant losing the guaranteed income that has allowed millions upon millions of American seniors to live out their sunset years with at least a basic measure of dignity.

But while ordinary Americans spoke out, John McCain stood with Bush (hugged him awkwardly in public, even), against the American people. In fact, just six months ago, McCain again let slip his fondness for privatization…

It’s time to remind Americans what the world would look like if John McCain was in charge of our economic policy. Plenty of people are losing plenty of their retirement savings as it is. But if we had let Bush and McCain privatize social security, some of those people would be losing a lot more. And a lot of other people with less retirement savings would be hurting even more, because they depend on social security to cover basic needs.

This is something Americans understand: social security is secure, and the stock market is anything but. There are few more personal or dramatic ways to illustrate McCain’s terrible judgment than to imagine the nightmare scenario so many Americans would face if McCain and Bush had gotten their way on this — or if McCain were to get his way as President.

Wakie, wakie! Can we talk about something besides pigs, lipstick and bridges to nowhere?