BartBlog

I hear a lot about the War on Terror, the War on Drugs,and  the War on Poverty.  I wonder how much longer I’m going to have to listen to people talking about the “wars” we “need” to win yet never once mentioning the one war “We, the People” need to win: The Class War.

“Class War” issues are easy to identify.  When those at the economic “top” of any hierarchy argue in favor of privatized profit and socialized risk, it’s a class war issue.  They pretend it’s ALL “free market” but manage to slither between the basic concepts of a “free market”.  That’s why, for example, drug companies claim they should be allowed to recover the costs of developing new drugs (free market)  even though much or most of the research for those drugs is done at educational institutions on the taxpayer dollar (socialized risk).  What is today being touted as the “sub-prime mortgage” problem is yet another example of how the “upper classes” are using their position to protect themselves from…well, themselves…

Bear Sterns is an investment bank that failed under the weight of its own avarice.  They got caught holding huge numbers of “sub-prime” (read: “fraudulent”) loans.  So many, in fact, Bear Stearns became unworthy of credit among other bankers.  They were headed to bankruptcy.  So, George-the-lessor and the rest of the ‘pull-yourself-up-by-your-bootstraps’ crowd did what any good conservative administration would do: they guaranteed up to $30 Billion dollars worth of Bear Stearns “assets” using taxes collected from Joe Six-pack.

This encouraged JP Morgan/Chase to step up and “buy” Bear Sterns for the bargain basement price of $2/share.   See?  Not a bail-out at all, simply a business transaction that, coincidentally, wouldn’t even been worth $2/share without a Federal guarantee.

Meanwhile, Joe Six-pack lives on Mainstreet, USA.  By that of course, I mean he’s now living on Main Street, USA.   When the value of his investment fell, nobody could figure out any reasonable, workable option to help.  Nobody was even sure “help” was the proper course.  The populace, via corporate media, is told that for Joe, things are going to have to work themselves out.  “It’s going to be painful”, we’re told, “but it’s a correction that must take place.” Why?  Because, we’re told, he “shouldn’t have been in that loan in the first place” or the one that REALLY infuriates me, “He should have done his homework”.

That one bothers me most because it’s akin to blaming the victim of a con for being conned.  To me, it’s the ultimate in class warfare and it amounts to little more than the self-described “upper-class” smugly dismissing the day-to-day realities of Joe Six-pack.  My attitude is that once a novice has admitted he doesn’t know enough about a given subject and so hires an “expert”, the “doing the homework” obligation has been fulfilled.  Otherwise each of us is going to be required to obtain a contractor’s license before hiring a contractor or a medical degree before accepting a doctor’s word for it or a class one driver’s license before getting on a city bus.  No.  You know who “should have done their homework”?  Bear Stearns, that’s who “should have done their homework”!

Who should have the higher responsibility in understanding the ins and outs of complex financial transactions, a guy who works 10-hour days on a construction site or an investment bank that deals with securities every day?  So who’s most deserving of help when the entire house of cards collapses, Joe Six-pack who turned to experts for direction and advice or Bear Stearns, the experts to whom he turned?

But who gets help?  Joe has little or no ability to defend himself from the vagaries of an unregulated and predatory “free market”.  Bear-Stearns controls billions of dollars in assets and enjoys cozy relationships with “regulators”, politicians, and other corrupt, dishonest individuals.  More, Bear Stearns is apparently backed by the full faith and credit of the United States of America.  Joe’s on his own because filthy rich people can’t even conceive of helping someone not filthy rich – that would be socialism.  But Bear Stearns is called “too big to fail” and so must be “rescued” because filthy rich people can’t even conceive of the idea that filthy rich people might be made to suffer the consequences of their own actions.

So the deal is done.  Joe’s out by the 31st because Joe can’t be helped.  It’s just the “free market”.  Meanwhile, Bear Stearns is rescued by hyper-wealthy people in a socialized risk deal backed by tax dollars collected from Joe to protect what’s left of the investments of other hyper-wealthy people because, apparently, the hyper-wealthy can’t be helped enough.  Sadly, it turns out that’s not just hyperbole.

As you read this, remember that Bear-Stearns failed.  They were headed to bankruptcy.  After a $30 billion dollar guarantee, a purchase offer of $2/share was made by JP Morgan/Chase and accepted by Bear-Stearns, thereby completing the deal right?  Not so fast, cowboy.  This morning an article in the BBC News reports that  JP Morgan has increased their offer to $10/share.  Why?  Because one guy – one guy -  invested $10 Billion dollars in Bear Stearns stock and now doesn’t want to lose his investment and he thinks the $2/share bailout was too low.

To me this is like driving your car off a cliff, finding a buyer who will give you $200 dollars for parts, shaking hands, and then having the buyer come back and offer $2000 dollars instead because you paid so much for the car before the crash.

The United States government should NOT offer any guarantee of any kind but they will, of course.  After all, it’s not their money they’re using to protect their investments…

NOTE: I’m OUTRAGED to report that even as I wrote this essay, the article upon which it is based was “updated” to eliminate the references to the Brit who has promised to do anything necessary to “protect his investment”.  He threatened to sue.  Three paragraphs of information about him and his intended actions were replaced by: “The raised offer might calm shareholders who feel that Bear Stearns was sold at a bargain price.”