In case you missed it, Feb. 19 was the Tea Party’s fifth birthday. The usual pundits had plenty to say about how the Tea Party movement is fading fast, doomed. No it’s not – but the Tea Party needs to focus on what really matters, and darn quick.
The movement began in 2009 after MSNBC financial talker Rick Santelli belted out an epic Chicago trading-floor rant about the mortgage bailout provisions in the $800 billion “stimulus.” Obama’s stimulus, of course, was hot on the heels of Bush’s “Troubled Asset Relief Program” that rescued Wall Street’s boneheads from their own folly (on our grandkids’ nickel) – just more insult on top of injury.
“We’re thinking of a Chicago tea party in July, all you capitalists that want to show up at Lake Michigan, I’m gonna start organizing,” yowled Santelli, to hoots and whistles from his trader buddies. “What we’re doing in this country now is making [our founding fathers] roll over in their graves.” It was great TV, went viral and is still worth watching today – Google “Rick Santelli rant.”
Nonetheless, I think a shout-out by a trader mattered most: “Why don’t we all stop paying our mortgages? It’s a moral hazard.”
“Moral hazard” is very specific business terminology: When circumstances (policy, law, information advantages) allow one party to take risks because the costs of failure will fall upon somebody else, that’s moral hazard.
When government institutionalizes and facilitates moral hazard, that’s big trouble, exemplified by, um, letting mortgages be brokered by people with no skin in the game, who bundle up the toxic paper into junk financial instruments, then foist them off on Wall Street investment banks whom, upon realizing they are dead meat, run screaming to the Congress they bought for salvation – a bailout backed by Other People’s Money!
How’s THAT for moral hazard!?
Anyway, after watching Santelli’s riff for the umpteenth time, I wandered down to our library’s nonfiction section and stumbled across “The Great Deformation,” by Reagan Administration budget director David A. Stockman.
Remember him? Stockman famously quit his budget job when Reagan’s voodoo led to budgets with irresponsibly huge deficits – back when our national debt was around $1 trillion. Not so famously, Mister Fiscal Sanity then went hedge-funding in the big casino. Stockman confesses “after 20 years in the financial bubble,” he had “become as oblivious to the dangers of leveraged speculation” and “simply not noticed the financial landscape morphing ever deeper into a debt-fueled casino of speculation and rent seeking” – until he made a stupid leveraged-buyout bet and lost, getting indicted for fraud with charges eventually dropped.
Stockman then had enough spare time to write “The Great Deformation,” 700 pages covering 100 years of sordid bipartisan fiscal witchcraft by both Republican and Democratic “free-lunchers,” that now has America on the skids.
Stockman’s bottom line: Capitalism’s old rules of business investment no longer apply. Smart investors don’t bother with productive enterprise any more – rather, they bankroll politicians who will look the other way as America’s asset base is stripped off into the offshore accounts of the one percent. America faces a day when “the gangs of crony capitalism will fight tooth and nail to preserve their slice of an imperiled pie” at the expense of “ordinary taxpayers and citizens who have no voice in the Washington policy auctions.”
Well, guess what? After suffering through Stockman’s book (you should, too), I understand much better why America is nose deep in debt, and how we got here. The establishment elites of both political parties facilitated the plunder of America by K-street ripoff artists and Wall Street pillagers – and if this fiscal craziness is not stopped, none of America’s other “issues” will matter much, if at all.
What can be done? Don’t expect the Occupy Wall Street crowd to be much help voting the free-lunch cronyists in the Democratic establishment out of office. So – it seems America’s best hope is if the Tea Party focuses on what needs to be done to the free-lunchers of the Republican establishment: Drown ‘em in tea, before they drown us in debt – or worse.
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