Welfare King

Dana Milbank at the Washington Post had an intriguing column this morning. He calculates that the $30 billion that we, the American taxpayers, spent on saving Bear Stearns could be seen as the ultimate welfare payment, a welfare payment justified by our desire to keep Bear/Stearns financial mess from spreading to other banks and throughout the rest of the economy. 'We save ourselves by saving Bear Stearns' - is what government officials have argued.

And so, as Milbank points out, we have offered up a HUGE loan guarantee, that effectively bails out those who made very poor business choices by investing in risky sub-prime mortgages. Of course, there are plenty of lower-middle class folks who also made poor choices - trying to buy their own home even when they weren't paid enough to afford to do so. And I am sure that these aspiring homeowners would really appreciate a similar deal. But it doesn't seem likely that their bailout is coming anytime soon. So much for owning your own home, I guess.

So we might ask ourselves, why does Bear Stearns get a bailout while Joe Smith down the street doesn't get jack shit? The answer you hear from most pundits and economists is that the entire American economy would go down in flames.

But, despite the 'sky is failing rhetoric', I remain unconvinced. Perhaps something had to be done, and perhaps we all would have suffered much more if J.P. Morgan wasn't given 30 billion in guarantees to buy those execs and stockholders out of their mess. But any fair and reasonable person might wonder... why is it that they get the help while the little guy gets the shaft?

Because the system is fucking rigged that's why. And there is nothing fair about it.

Alan Schwartz is the CEO of Bear Stearns. Arguably, he is the person most responsible for allowing the conditions which created the crisis for his company's meltdown. But will he be held responsible for his poor decisions? No! Well...maybe, at least partially. But will he suffer like those who lost their homes? Uh....no. And I guarantee you he won't come close to losing his shirt over it, mostly because the U.S. taxpayers bailed his ass out.

According to the Washington Post, Schwartz did miss out on his bonus for 2007, leaving him just the $141 million dollars he has been paid the past five years. Dana Milbank writes, "Things have become so bad that, the Wall Street Journal discovered, Schwartz has had to rent out his 7,850-square-foot home on the ninth green of a suburban New York golf course -- leaving the poor fellow with only his 17-room, seven-acre home in Greenwich, his condo in Colorado and the athletic center he built for Duke University."

So the point of this rant: Don't fool yourself in thinking that this political / economic system is "free" or "fair" or "democratic" in any way, because it isn't. Don't allow yourselves any such illusions: this government is run by the rich, for the rich, to serve the interests of the rich.

Enjoy your fucking mansion, Alan Schwartz. But watch out for your homeless neighbor down the street.