Selective Bailouts: Help for Wall Street, Not Your Street

[marmar]

from HuffPost:




David M. Abromowitz
Selective Bailouts: Help for Wall Street, Not Your Street
Posted March 17, 2008 | 01:27 PM (EST)


As the Roaring Twenties were sowing the seeds of the Great Depression, the chronicler of that age, F. Scott Fitzgerald, famously remarked, "The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function." By this measure, President George Bush's Treasury Secretary, Henry Paulson, apparently is an "A" student.

In the run up to the Federal Reserve Board's decision Sunday to essentially finance the takeover of collapsing investment bank Bear Stearns Cos. by J.P. Morgan Chase & Co., the president, Secretary Paulson, and other top Bush administration officials adamantly told us that aid to neighborhoods devastated by foreclosures would be an unacceptable bailout of lenders and would remove necessary market discipline from punishing the sins of "speculative" homeowners.

In fact, their comments suggested that the current free fall in home prices resulted mainly from excessive individual risk taking and bad bets by individuals--and these speculators should suffer the consequences of their decisions. In Paulson's March 3 statement to the National Association of Business Economists, for example, he spoke dismissively of government intervention.

"We know that speculation increased in recent years; a resulting increase in foreclosures is to be expected and does not warrant any relief," he said. "People who speculated and bought investment properties in hot markets should take their losses just like day traders who speculated and bought soaring tech stocks in 2000." .......(more)

The complete piece is at: http://www.huffingtonpost.com/david-m-abromowitz/selective-bailouts-help-_b_91899.html