Socialization Of Risk - Privatization Of Reward

It is abundantly clear that the next administration will be under unheard of pressure to stabilize the economy. It is also abundantly clear that the government is broke. The Bush administration drowned any hopes of a universal health care system by breaking the bank.

How fitting that George Bush's final assault on the American public is a trillion dollar public bail out of a deregulated free roaming private financial sector. For his encore, Bush will dump a trillion dollar's worth of garbage debt on America. Bush has set the bar as high as it gets. No president has transferred more publicly held wealth into the hands of private corporations, and this finale is off the hook.

The unconscionable lackey for the ultra Wall Street elitist, cracked America in half.

In a brighter time, the trillion dollar bailout should pulverize McCain's chance of winning the White House. McCain was on board for deregulation from the start, Gramm was his economic adviser. The people in the center of the McCain campaign were central to the deregulation that caused this collapse.

McCain's saving grace is that Americans lack the will to understand their own best interests. Americans historically vote against their interests, voting for McCain is an historic and colossal vote against one's interests. Its a super regressive vote.

ZNET: New Wall Street Rules

The undoing of that New Deal regulatory regime, and its replacement, largely under Republican administrations (although Glass-Steagall was repealed on Clinton's watch), with what some have called the "socialization of risk" has contributed in a major way to the mess we're in today. Beginning most emphatically with the massive bail-out of the savings and loan industry in the late 1980s, Washington committed itself, at least under conditions of acute crisis, to off-loading the risks taken by major financial institutions, no matter how irrationally speculative and wasteful, onto the backs of the American taxpaying public.

Backstopping the present bail-out is the ever-credulous, put-upon American public with its presumably inexhaustible resources. Even while Washington was instituting the periodic "socialization" of bad debts, it was systematically abandoning the New Deal's commitment to regulation. That, of course, was in the very period when financial markets became ever more arcane, ever less comprehensible even to their Frankenstein-ian inventors, and ever more in need of monitoring. So the "socialization of risk" was accompanied by the "privatization of reward," which now is likely to prove a truly deadly combination.