Jonah Goldberg, a prime example of nepotism in the conservative punditry machine recently posted another one of his characteristic incoherent spiels at the National Review Online site, and I had a few thoughts after reading it.
In a typical manner for Jonah (what a perfect name for a guy who’s been swallowed by the leviathan of the ‘free market’), that is one of the most incoherent editorials I think I have ever read. Are ‘conservatives’ of his type completely oblivious to irony? I suppose nothing better is to be expected from the guy who can’t distinguish fascism from socialism.
While writing that he would like to see the bank CEOs “holding cardboard signs on the side of the road”, he simultaneously attacks the Representatives who asked why federal funding hasn’t been used to ameliorate the financial crisis in the housing market. He seems to think the various Congress are upset because the banks haven’t used “bailout money to make more bad loans”. WTF?
Nobody is telling the TARP recipients to “make more bad loans” but they are asking why are multi-billion dollar bonuses being paid out to employees of companies that are basically bankrupt. Wasn’t the idea of bonuses originally meant as a way to award superior performance? The TARP funds were intended to free up lending again so as to maintain at least a minimum level of business in America. Unfortunately, for too many years America has been driven by a credit-based economy.
It will take time to change our ways but to abruptly cease lending as the banks have done, to raise credit card rates as the banks have done, after they had received money to maintain at least a minimum level of lending, is throwing a massive monkey wrench into the machinery of America’s economy. Many people want to blame those unfortunates who signed up for inappropriate mortgages, the sub-prime, no money down, interest only for five year type loans on properties with inflated valuations, all the time seeming to ignore the criminal actions of mortgage brokers and loan officers who were getting paid by the mortages passed thru their financial institution. Yes, there were some lowlife borrowers but the majority of criminal cases to date are against those who made the loans.
A problem that is all too frequently passed over in the popular media is the brake on small business development caused by the banks refusing to extend credit even when the businesses have maintained payments on previous loans. Small enterprises, particularly during their startup days rely on credit to pay workers and suppliers, they must maintain themselves thru loans until they have built up a customer base. Banks that refuse to extend credit or impose onerous requirements on borrowers are even more of a problem than delinquent mortgage holders.
Hooray for capitalism, Goldberg writes, failure “burns away a lot of deadwood”!! Sure it does with the resulting social cost of falling home prices, lowering lifespans, increased social stratification, higher crime rates – oh yeah, pure capitalism is such a winner all round. For too long, we have worked under a system of ‘socialism’ for the wealthy and the multi-nationals, they get support and funding but when ordinary people ask for the same considerations, the answer is frantic screaming about “the commies are tryin’ to take over!!”
The central fact about economic collapse is: fewer people working means less economic activity. This is an even more serious and immediate problem in the US owing to the extremely low savings rate amongst Americans. As a consequence, instead of a gradual slowing as people carefully dole out money from the savings account we experience the economic equivalent of running into the wall at the end of the Dead End street. The single simplest fact to remember is that during bad economic times, if even the jobless can go out and buy food and pay the rent using government funds, a higher level of economic activity will be maintained and recovery of the overall economy will be that much quicker.