The privatization of profit and socialization of risk

Anyone who believes that Republicans stand for a free market is delusional. If you look at the various Republican economic follies, from the fall of Drexel Burnham Lambert in the 1980's to the fall of Enron, to the collapse of Bear Stearns, one thing is clear: When individuals make mistakes or fall upon hard times, the government and our society regard it as their own fault. They're weak. They're lazy. They're stupid. They deserve what they got. But when the greed of corporatists explodes in their faces, the very same people who hate immigrants and decry "welfare queens" are utterly silent as they receive bailouts composed of taxpayer cash.

E.J. Dionne, today:

Never do I want to hear again from my conservative friends about how brilliant capitalists are, how much they deserve their seven-figure salaries and how government should keep its hands off the private economy.

The Wall Street titans have turned into a bunch of welfare clients. They are desperate to be bailed out by government from their own incompetence, and from the deregulatory regime for which they lobbied so hard. They have lost "confidence" in each other, you see, because none of these oh-so-wise captains of the universe have any idea what kinds of devalued securities sit in one another's portfolios.

So they have stopped investing. The biggest, most respected investment firms threaten to come crashing down. You can't have that. It's just fine to make it harder for the average Joe to file for bankruptcy, as did that wretched bankruptcy bill passed by Congress in 2005 at the request of the credit card industry. But the big guys are "too big to fail," because they could bring us all down with them.

Enter the federal government, the institution to which the wealthy are not supposed to pay capital gains or inheritance taxes. Good God, you don't expect these people to trade in their BMWs for Saturns, do you?

In a deal that the New York Times described as "shocking," J.P. Morgan Chase agreed over the weekend to pay $2 a share to buy all of Bear Stearns, one of the brand names of finance capitalism. The Federal Reserve approved a $30 billion -- that's with a "b" -- line of credit to make the deal work.

I don't fault Ben Bernanke, the Fed chairman, for being so interventionist in trying to save the economy. On the contrary, Bernanke deserves credit for ignoring all the extreme free-market bloviation. He doesn't want the economy to collapse on his watch, so he is willing to violate all the conservatives' shibboleths about the dangers of government intervention. As a voter once told the legendary political journalist Richard Rovere: "Sometimes you have to forget your principles to do what's right."

But if this near meltdown of capitalism doesn't encourage a lot of people to question the principles they have carried in their heads for the past three decades or so, nothing will.

The silence from the American people surrounding the collapse of Bear Stearns and the shoveling of taxpayer cash into the hole left after the implosion to back up the purchase of the rubble by yet another shyster operation is yet another example of the Tipping Point of Evil -- the point at which things are so bad that the American people are rendered dumbstruck into silence.

And so the Fed prints more money to back up J.P. Morgan's purchase of Bear Stearns for seven cents on the dollar, while the rest of us watch our retirement savings dwindle and watch as our contributions disappear the minute we put them into those accounts. Joe Scarborough would have you believe that the only people affected by the subprime mess are speculators -- flippers who inflated home prices by buying up distressed properties, applying some paint and installing granite counters and stainless appliances and selling at a huge profit. Funny how none of Scarborough's ire is saved for the speculators who packaged bad loans into "investment vehicles". And of course Scarborough has zero sympathy for people who were seduced into the "Anyone can afford a house" myth because they didn't understand the ins and outs of how amortization works and didn't understand the risks of the mortgages they took. And as a member of the party that professes to worship "the BAYBEEEEEEZZZ", Scarborough has no sympathy either for the children beyond babyhood who will be tossed from their homes along with their parents because financial predators lured them with false promises.

So now financial reporters are referring to the guy who ran Bear Stearns into the ground as a "valuable asset", and while the manic Jim Cramer is uncharacteristically sober (even as Scarborough wonders what the fuss is about, after all, HE has a job and what else matters?):

...and Mort Zuckerman says we are nowhere near the bottom yet:

...Lawrence Kudlow, the guy who was grinning from ear to ear on the night of September 11, 2001, because the attacks meant an end to talk about a Social Security lockbox, comes across like the 1980's cokehead he used to be as he extols George W. Bush's optimism and says that everything is going to be just fine and dandy:

Note how he says that in free market capitalism, there are winners and losers, and Bear Stearns was a loser. Funny how when the "loser" is big enough, the Fed is right there with a wheelbarrow. But if you lose your job because your employer can get through the quarter by sending your job to India? And if you're over 50 and no one else will hire you? You can just live on the goddamn street. Because in free market capitalism, there are winners and losers. And you are a loser.

After all, Larry Kudlow says so.

Funny how HE's never a loser.