Streetwise for April 4,  2010

Streetwise

Lauren Rudd

Sunday, April 4, 2010

Repairing Years of Financial Neglect

For Christians this past week was Holy Week, the commemoration of the last week of the earthly life of Jesus Christ before his crucifixion on Good Friday and his resurrection on Easter Sunday. For the Jews it was the week of Passover, a commemoration of the Hebrews' escape from enslavement in Egypt. And the best many of us do is to simply pay lip service to the meaning of those events.

I say that because the current hue and cry by various groups over healthcare reform, financial reform, the national debt, etc, bears a strikingly resemblance to the frenzied mass hysteria that gave birth to witch burning, mob lynching and Kristallnacht.

The Queen of Hearts in Lewis Carroll’s Alice's Adventures in Wonderland had a way of settling all difficulties. “Off with his head,” she said; a painful parallel to the views being foisted on us by a vocal minority that attracts the media like moths to an open flame.

While torrid commentary never fails to inflame those inflicted with the pain of unemployment, much of the public is perplexed and confused as to the underlying cause their economic quandary and the seemingly lack of a clear path to a better future.

Interestingly, when those who protest the loudest are asked for the definition of a credit default swap, a mortgage backed security, a repo, or the aspects of the legislation about which they are so angry, they are like a deer caught in a car’s headlights. Nonetheless, with little but anger for sustenance it is easy to fall prey to false idols whose proposed solution is to grab your gun and light the torches. And yet a funny thing happed on the way to the latest witch hunt.

When asked if they were utilizing such socialistic, debt producing, government encroaching takeover programs, like Medicare, social security and unemployment insurance, many protestors answered yes. The justification being that the government, “owes it to them.”

In actuality, it is the government’s unfathomable disregard for the budgetary requirements of engaging in incessant military actions, a stripping away of the regulations put in place after the Great Depression to avoid its repetition, and the implementation of tremendous tax cuts at a time when we should have been raising taxes that have brought us to where we are today.

Although we would like to blame Wall Street for all our ills, up to and including “original sin,” the Street merely played by the rules, or rather the lack thereof. The solution of course is to reinstate and then enforce stricter regulations. While easier said than done, reform does not mean we mimic the French proletariat and bring back the guillotine.

Nor is it beneficial when John Boehner, the House minority leader, encourages bankers to block efforts by Congress to impose stricter regulation. “Don’t let those little punk Democratic staffers take advantage of you,” Boehner said.

Senator Richard Shelby of Alabama picked up the baton in the Senate, claiming that tougher oversight of systemically important banks will mean an implicit government guarantee against collapse going forward. Senator, the market already views those firms as being implicitly backed by the government...because they are!

The supposed pain emanating from banks over financial reform is to be expected. However, their insatiable feeding frenzy at the expense of Main Street must be brought under control. We have entrusted the current Administration and Congress with the responsibility for righting our economic ship. Will they always make the right or most popular decision? No, for they are burdened with frailty of being human.

Robert Townsend wrote in his book, “Up the Organization,” that if he made the right decision 80 percent of the time he considered himself a success.