Thursday, March 20, 2008

The Horror of Bear, Stearns.

Marxists often derisively refer to capital markets as a casino for the very wealthy, rigged to their advantage, and designed to protect them from harm in any downturn. Regarding the events of the past week and the actions by the Fed, it's not hard to see their point of view.

The fed is bailing out the financial industry, with 30 billion dollar gifts to wealthy investment houses. At the same time, many of these bad loans were taken out by ordinary working people who were simply duped by that same financial system. The cheaters as a group are *rewarded* for being cheats. And big investment banks that fail are shown that they will be bailed out when the S. really hits the F.

The system ought to work so that ordinary people get bailed out first. These mortgages aren't that hard to identify: They are taken out by families that hold one mortgage and occupy a dwelling. They should be bought up and re-negotiated. Ben Bernanke has much more sympathy for the bad boys of the financial class than for home owning families, so see who he tends to first.

The other people who are really scrod are Bear Stearns employees who held a substantial fraction of their 401K portfolio Enron-like in their employer's stock. The CEOs of corporations should be required to *personally* guarantee the value of employee-held stock in pension plans.

Noblesse Oblige. And it would be a nice brake on reckless tactics. How much did the CEO of BS take home in bonuses this year already? They should be up for grabs right now to discourage this kind of thing.

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