Wall St. Is Winning: Elizabeth Warren "Speechless" About Record Bonuses

Yahoo News ^ | 10-16-2009 | Aaron Task

[blam]

Wall St. Is Winning: Elizabeth Warren "Speechless" About Record Bonuses

Posted Oct 16, 2009 10:58am EDT
by Aaron Task in Newsmakers, Banking

Elizabeth Warren, chair of the Congressional Oversight Panel, is the rare public official who doesn't mince words.
But Warren admits to being "speechless" at reports of record bonuses on Wall Street.

"I do not understand how financial institutions could think they could take taxpayer money and turn around and act like it's business as usual," Warren says. "I don't understand how they can't see that the world has changed in a fundamental way - it's not business as usual. All I can say right now is they seem to be winning this argument."

In the accompanying video, taped at The Economist's Buttonwood Gathering at Pace University, I asked Warren about Treasury Secretary's claim at the same event that the government has been "remarkably effective" in combating the financial crisis.

[snip]

[ClearCase_guy]

If you want money to go to Main Street, cut taxes.

If you want money to go to rich and influential people, give the money to rich and influential corporations.

Duh.

[brownsfan]

“If you want money to go to rich and influential people, give the money to rich and influential corporations.”

There is no doubt in my mind that the intention was to give the money to the rich and influential. But, feigning outrage and indignation will help with the voters.

[Hans]

Where is this profic coming from?
Is this the commission of Federal bond sales?

[Hans]

Should read ‘profit’ I am sputtering with irritation.
The center of the US economy is slowly dying while these greedy ‘women of the night’ are at the trough.

[Dixie Yooper]

In another few years (or months) we will all be millionaires, and the dollar won’t be able to buy the paper it’s printed on.

[texson66]

Any government worker should NOT have the right to “set” limits to compensation or salary in ANY industry.

Besides, the government is hardly the ideal example of “taking care of business” with record printing of dollars and depression causing deficits now and for the foreseeable future.

[originalbuckeye]

“I do not understand how financial institutions could think they could take taxpayer money and turn around and act like it's business as usual" Well, the Obama Admin is confiscating billions from the taxpayer and redistributing it to those who didn't work for it. At least these executives have done SOME work. She is a hypocrite of the highest order! "I have a real problem when we describe to taxpayers their money will be taken and used one way and in fact it's used another way" She has a problem?? It's SOP for the Obama Admin to lie about where the money is going. How did our country come to this???

[blam]

London Mayor: The barefaced greed of bankers and their bonuses beggars belief

[TChris]

"I do not understand how financial institutions could think they could take taxpayer money and turn around and act like it's business as usual," Warren says.

Maybe it has something to do with the fact that it was an offer they couldn't refuse. The government made it clear to all these institutions that they would take the money, whether they wanted to or not.

Now, after cramming taxpayer money down their throats, you're going to act indignant that these institutions have the gall to run their own businesses?

There's some staggering gall here allright. But it isn't coming from financial institutions.

[STONEWALLS]

“There is no doubt in my mind that the intention was to give the money to the rich and influential. But, feigning outrage and indignation will help with the voters.”

....I expect you’re right...Lefties like Warren are perpetually annoyed about big bucks paid to top people in the private sector....the TARP/public money, angle just makes their indignation more righteous....but you can’t give a fox the key to the hen house....he’s a fox; stealing chickens is what he does....and don’t tell me you’re outraged when the fox chows down.

....at heart, a lot of academics feel they are brilliant so why should athletes,entertainers and CEOs make staggering sums....when they, the intellegensia, get small potatoes by comaprison...I know...I’ve been married to a professor for 21 years and have heard it all at faculty parties.

[TopQuark]

"All I can say right now is they seem to be winning this argument."

Of course they do: contract law is not negated by taxpayers' money.

Politicians fight the very basis of our society, and most people of our country cheer them on -- as long as that is supposedly directed against "evil corporations."

[TopQuark]

"If you want money to go to rich and influential people, give the money to rich and influential corporations."

More socialist propaganda on this supposedly conservative forum.

Go check who owns corporations in this country before you spew this nonsense.

[Repeal The 17th]

“...Any government worker should NOT have the right to
“set” limits to compensation or salary in ANY industry...”
-
And I extend your statement further to say that they should
not be able to determine minimum OR maximum wages.

When the general public came to fully accept that it was OK
for the government to determine a minimum wage,
it was just one small step further for them to accept that it was OK
for the government to determine a maximum wage.
Some warned against the establishment of a minimum wage
for that very reason but they were largely ignored.
-
“A government big enough to give you everything you want
is a government big enough to take from you everything you have.” -President Gerald Ford in an address to a joint session of Congress (12 August 1974)

[Enterprise]

""I do not understand how financial institutions could think they could take taxpayer money and turn around and act like it's business as usual,""

Odd, but the Democrats think nothing of confiscating taxpayer money and act like it's business as usual. Looks like financial institutions are acting just like the Democrats.

[TopQuark]

"There is no doubt in my mind th7at the intention was to give the money to the rich and influential."

Another member of the Marsixst proletariate fighting the "evil rich."

[ClearCase_guy]

Sorry. It was certainly not my intention to spew socialist propaganda. I merely question whether the federal government has disburded the Stimulus funds in the best possible manner.

Since I'm not a socialist, I wish that taxpayer money stayed in our own pocket.

[loveliberty2]

Just another example of how the politics of the Left lacks realistic understanding of human nature. The Left's vision is that coercively "taking" from some and "redistributing" to others (whether big banks, auto companies, or poor people) is, somehow, benevolent and beneficial to society.

They use this "vision" to appeal to the better nature of unsuspecting citizens as a means to acquire political office and power for themselves.

The "vision" collides with reality when the consequences of such "taking" results in what is then deemed to be undesireable.

Many examples exist. In this case, it happens to be with large financial institutions, but this lack of factoring in human nature when policies are put in place also can be found in so-called "poverty programs," in "incentives" for locating industries, and on and on.

America's Founders understood human nature and wrote a "People's" Constitution to protect the liberty of citizens from those to whom they delegated very limited powers to tax and spend. They understood that imperfect persons in positions of power in government likely would make no better decisions than would likewise imperfect individuals in the society. They also understood that elected officials, because of their human tendency to abuse power, might lead the nation away from liberty, resulting in debt, oppression, and tyranny.

[dfwgator]

Politicians fight the very basis of our society, and most people of our country cheer them on -- as long as that is supposedly directed against "evil corporations."

That "fight" of which you speak is but an illusion. Government and Wall Street are in cahoots, but they put on their little "dog and pony show" to convince the sheeple that it isn't.

[eclecticEel]

"I don't understand how they can't see that the world has changed in a fundamental way"

Obviously it hasn't. The narcissism of these people is breathtaking; they get their guy in the White House and they believe the constraints of reality are gone forever.

[maggief]

Each “crisis” results in a pay for play.

JMO

[blam]

U.S. Treasury Controlled by Wall Street

Stock-Markets / Market Manipulation
Oct 19, 2009 - 02:48 AM
By: Bob_Chapman

Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms.

The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.

As part of Geithner’s kitchen cabinet, Sperling and Sachs wield influence behind the scenes at the Treasury Department, where they help oversee the $700 billion banking rescue and craft executive pay rules and the revamp of financial regulations. Yet they haven’t faced the public scrutiny given to Senate-confirmed appointees, nor are they compelled to testify in Congress to defend or explain the Treasury’s policies.

[snip]

[BertWheeler]

I wish Elizabeth Warren would recede back to the “academic” cesspool of which she crawled out of. She’s always trotted out for the interviews and her point of view can be summed up “Socialism is the answer.” Enough already of these clods.

[TopQuark]

Thank you for clarifying your position. "Since I'm not a socialist, I wish that taxpayer money stayed in our own pocket."

I completely agree with you and believe that you are not a socialist. What dismays me is that many people repeat SOCIALIST propaganda without even realizing that. Consider the previous post:

"If you want money to go to rich and influential people, give the money to rich and influential corporations." Only socialists and other lefties equate "rich and influential people" with "rich and influential corporations." The truth is, practically all largest (hence influential) corporations are owned by MILLIONS and TENS of MILLIONS of Americans. You don't read about that in school or newspapers; the schools present the image of a lasrtge corporation as if we still lived in the age of robber barons.

What happens to the money you or your employer contribute to 401K and other pension funds? What happens if you, when saving for retirement, purchase of a house, of college education buy some shares of a mutual fund? Where does that money go?

The mutual or pension fund buys shares in (usualle largest) corporations. Through that mutual fund, you own major corporations. Ask further, who has most of his/her money in these funds? Retirees, widows and orphans that receive inheritance, etc. That is, your parents and grandparents. It is they who own "rich influential" companies, it is they whom you thus declare, incorrectly, as "rich and influential."

Socialists the dominate our education and media don't want you to know this. And, as majority of conservatives on this board, you rave against corporations as the leftists WANT you to do. You are not a socialist, but have repeated, however inadvertently, purely socialist propaganda.

When you hurt markets and corporations in this country, you hurt retirees, widows and orphans and not some imaginary "rich."

[TopQuark]

"Government and Wall Street are in cahoots"

No more that government and Alcoa, government and a coal company.

And, whatever you mean by "cahoots," against whom are they united?

[Tublecane]

“I do not understand how financial institutions could think they could take taxpayer money and turn around and act like it’s business as usual”

Um, because they had contracts already in place when you gave them their no-strings money. Oh, and a lot of them have already paid back, or want to pay back, the money, so it’s not really tax payer money at stake anyway.

[TopQuark]

"government worker should NOT have the right to “set” limits to compensation or salary in ANY industry"

Thank you for standing on the position of sanity.

Labor markets are markets more or less like any other. Just as the government should not fix prices of refrigerators, it should stay away from fixing the price of labor --- salaries, bonuses, etc.

[Tublecane]

“I have a real problem when we describe to taxpayers their money will be taken and used one way and in fact it’s used another way”

Would it surprise her to learn that way back when, when everything was all Emergency! and Uh Oh, I Hope the World Doesn’t Burn!, the Federal Reserve and Congress didn’t put too many stipulations on the money they shoveled out. They earnestly hoped the money would be used to boost willingness to extend credit, but hope in one hand and poop in the other...you get the point.

[TopQuark]

"The government made it clear to all these institutions that they would take the money, whether they wanted to or not."

And then the politicians made ignorant taxpayers believe that it was charity to the corporations and the "rich."

Thank you for pointing our the truth, which is often forgotten on this forum.

[mysterio]

Maybe it has something to do with the fact that it was an offer they couldn't refuse. The government made it clear to all these institutions that they would take the money, whether they wanted to or not.

While I have read articles about instances of that, you have to have pretty selective memory to argue that the big ones weren't lobbying like crazy for bailout cash.

The proper remedy would have been to allow the corporations to go bankrupt. There would be no bonuses in that case. They could get their bonuses by building new corporations.

So fascism has screwed up the "free" market.

[TopQuark]

"Odd, but the Democrats think nothing of confiscating taxpayer money"

You are really kidding yourself. It was Republicans in congress and the Bush administration that increased the government by 56% since 2001. It was the Bush administration that shoved the taxpayer "bailout" down banks' throats.

Sometimes Republicans, whom we expect to stand on conservative principles, resort to socialist (confiscation) and fascist (complete control without confiscation) measures. That happened after 1929 market crash, for example. And it was Nixon who fixed prices and wages in 1970s. "act like it's business as usual. Looks like financial institutions are acting just like the Democrats."

If you know anything about management, you know that its main task is implementation of the company's mission in a given, ever changing environment. No manager today -- of GE or a local Burger King --- acts as if it were "business as usual in THIS environment."

Your observation is factually incorrect.

[TChris]

While I have read articles about instances of that, you have to have pretty selective memory to argue that the big ones weren't lobbying like crazy for bailout cash.

No selective memory, FRiend. The big ones probably were, but the government had bigger plans, and knew that they could take over much more than just the big ones.

The proper remedy would have been to allow the corporations to go bankrupt. There would be no bonuses in that case. They could get their bonuses by building new corporations.

So fascism has screwed up the "free" market.

Agreed.

[TopQuark]

Could you kindly point out a single honestly reported fact and and a single logical conclusion in the piece of propaganda you posted?

In order to vent your righteous anti-capitalist rage, do you have to stoop to the gutter of some stupid "market-watchers" who know nothinhg what they speak of? At least you have honesty is adnvertising: your post is what it says --- blam.

[TopQuark]

"big ones weren't lobbying like crazy for bailout cash."

Unlike the automakers, Wall Street was NOT lobbying for bailouts. Some (e.g., Goldman Sachs) openly and sternly refused to take the money. The CEOs of the major Wall Street firms were called into an urgent meeting with Paulson and Bush and (while standing up, according to some reports) were lectured that they HAVE to sign the paper that was given them. That simple.

It is you memory, therefore, that may be selective. You've seen hours and hours of Detroit CEOs that came begging to Congress AFTER the rape (oh, I mean "bailout") of Wall Street.

[Tublecane]

“Government and Wall Street are in cahoots, but they put on their little ‘dog and pony show’ to convince the sheeple that it isn’t.”

What you describe as a little conspiracy is, in fact, a perfectly natural turn of events that isn’t exactly foreseen by either of the parties involved. Individuals notice it, but not the groups as such.

Here’s the thing. However much the central government benefits by attacking private power on behalf of The People, it is reliably reactionary in its static form. Karl Marx got this part right, at least. As things evolve, the central government tends to take over more and more power. Laws tend to protect property less, for instance. Hence, it can be said that it is reliably radical in its dynamic form. Which is to say, the state always tends to grow, with the help of The People, at the expense of private power, i.e. “the rich”.

One of the ways it does so, ironically, is to offer help to Big Business. They give them all sorts of goodies, all sorts of breaks. They embrace individual capitalists while scorning capitalism itself. I don’t need to tell you what sort of system emerges. It certainly isn’t a purely free market, in any case. Not to say that the market doesn’t yet exist. Individual businesses have a choice: work hard, guess right, and win profit on your own. Or make nice with the state. Is this really a choice?

Hence, “the rich” don’t use whatever’s at their disposal to hang on to power. They use the easiest means of hanging on to profit. They, at least on Wall Street, give money to Democrats. Others give money to Republicans for the same reason. Appears to be a shrewd plan. Gets them stimulus money, anyway.

Except one day they’ll look around, notice that though they’re still supposedly controlling elections with their almighty dollars, no one listens to them. They listen to unions and professional activist groups. Government still gives them goodies, but not for the sake of themselves. Purportedly for the sake of The People. They bail them out, for the good of The People. And when the bailouts allow them to go on doing what they do, which they thought was the point, the government is angry that they’re not running things the way The People want.

Meanwhile, a web of vague regulations strangle them, taxes confiscate their winnings, politicians demonize them daily. They thought they were supposed to be friends. They were wrong. Government was using them.

[TopQuark]

"The proper remedy would have been to allow the corporations to go bankrupt."

What you say here is absolutely correct under the normal functioning of free markets. That has not been the case for a long time, at least since the 1980s bailout of the S&L industry: it is then that the markets were given a CONSISTENT signal that, if you are to big, the government will not let you fail. The situation was far from healthy in 2008. Different remedies apply to a sick person. [Consider that literally. A statement "cold showers are good for you" is true UNDER ASSUMPTION that the person is sick. Prescribing that to a flu patient can kill it.]

As a consequence, the question of what should've been done in 2008 is much, much more complex and lacks simplistic answers such as that which you offered.

"There would be no bonuses in that case."

You don't know that. Bonuses are often a compensation agreed upon at the time of hiring. As such, they are subject to contract law. The recipients become CLAIMANTS to the assets of the bankrupt company, and the bankruptcy judge could well award those bonuses or part thereof.

We should remember that "for every difficult problem there is a simple answer, which is usually wrong (Einstein). "

[dools007]

My God, will the self-rightous blather that eminates from Wash, DC, these days never stop. Here are our corrupt and traitorous law makers castigating Wall Street bonuses while they are responsible for more fraud, waste and abuse than the entire private sector could amass in centuries.

[TopQuark]

Thank you for you informative and insightful post. Your emphasis on dynamics is a deep observation overlooked by most people.

Even business schools had focused -- until quote recently (mid-1990s) --- on the DECISION-theory view of the world. Cases and models had typically presented a problem: Given the world (situation), what is the best way for the management to proceed? (Here is a competitive situation in the soft-drink industry, for instance, what is the best way to price this or that Coca Cola product?) This overlooked the fact that the world will itself will change depending on what action the management will take. (Pepsi will respond in some way depending on the price Coca Cola chooses). The proper way to pose such question is within the realm of GAME (rather than decision) theory. As you probably know, in game settings one chooses the best strategies AFTER conjecturing the FUTURE actions of others. While this has been recognized in principles, and most business schools presents some rudimentary game thinking, it has NOT yet penetrated sufficiently and has NOT become commonly known. I very much appreciate your rare and insightful emphasis on DYNAMICS.

I have a small disagreement with the picture you presented, however. There is no black box such as a "corporation." When one talks about "corporate interests," one has to be careful and explicit: are you talking about shareholders-owners, management, employees, etc.?

The left leaning of major Wall Street players, for instance, is we well documented fact. When they send donations to Dems, however, they act as private citizens, however. We have to differentiate that from lobbying, wherein they act on behalf of the company. When talking about the benefits of lobbying, moreover, we should remember that the main beneficiaries are TENS of MILLION of retirees, widows and orphans that own major American companies. Most of them are NOT "rich" and "powerful" --- unlike perhaps the senior managers of those corporations. A model of this world should address such important distinctions.

I enjoyed reading your post.

[Tublecane]

“That has not been the case for a long time, at least since the 1980s bailout of the S&L industry: it is then that the markets were given a CONSISTENT signal that, if you are to big, the government will not let you fail”

What better way to remove that signal from the economy than to let them fail? Sometimes it’s better to let cast a sick person out than to let him go on infecting others.

[mysterio]

Goldman Sachs participated in and profited from the fascism probably more than any other company.

And of course Wall Street was lobbying for bailouts.

The failed companies should have gone bankrupt. That's how the system works. Bailouts artificially prop up companies that can't compete in the free market.

[Enterprise]

Hey QUARK, I did not, and do not, agree with the stupidity that the Republicans engaged in while they were in power. That being said, IMO, the Democrats currently in power have exceeded the greed and stupidity of the Republicans by huge margins. Now, if financial institutions are taking taxpayer money and acting like it's business as usual, they are indeed acting like Democrats who also take taxpayer money, by the TRILLIONS, and act like it's business as usual because for them, it IS FRIGGIN business as usual.

Tell you what though, if it makes you happy attacking Republicans for past misdeeds, y'all go on and keep attacking them. I prefer attacking the greater evil, who are the Democrats, because their policies are the HERE and NOW danger to this nation.

[TopQuark]

"What better way to remove that signal from the economy than to let them fail?"

A better way is first to state, very firmly, that the present (Bush, Obama) administration has changed its stance; repeat that several times, and THEN let some mid-size firm to fail, thereby showing that we mean business. The markets then have a chance to process this information and adjust accordingly.

In contrast, the freezing of credit in October of 2008 was precipitated by the abrupt change in the government's position --- letting Lehman fail contrary to the decades-long policy. The market understood that the rules of the game have changed. But what were the new rules? Nobody knew, and the markets froze in response to that uncertainty.

Actual policy implementation is much harder than any general truism. The devil is in the details, and unforeseen consequences can ruin any seemingly obvious solution.

[Tublecane]

“There is no black box such as a ‘corporation.’ When one talks about ‘corporate interests,’ one has to be careful and explicit: are you talking about shareholders-owners, management, employees, etc.?”

Very true, and when I talk about Big Business or “the rich,” I keep myself intentionally vague. Because it is of sweeping cultural/political/economic movements of which I speak. And perhaps I’m as guilty as Marxists of treating largely fictitious blocks of my own creation as real, breathing entities.

It is the case that there are tensions between various factions within Big Business, too many for me to enumerate or frankly comprehend. However, there is this movement, and it is real, toward what has been called corporatism, if not fascism. I blame it all on the state, which is what, more than anything else, seperates me from socialists. But that’s beside the point.

The important thing is, I have to have some means of expressing what I think is happening, writ large. And the best way to do that, without writing an extended essay, is to deal with what some might call childish concepts like “the rich” and The People.

One concept I feel comfortable treating as a monolith is the state, although it, too, has various internal contradictions. Damn the contradictions. The Founding Fathers knew as well as I that it is motivated by one obsession (much as humans are motivated by eros or the fear of death): aggrandization and centralization.

By the way, it was from the French philosopher Bertrand de Jouvenel in “On Power” that I cribbed the idea that government is reactionary in its Being and radical in its Becoming. Most interesting to me, personally, he went through all the famous revolutions in European history—the English Civil War, the French Revolution, the Bolshevik coup—and demonstrated that in all cases, a more populous group stood up to an elite group, resulting in a more powerful central government. This holds true for the American Revolution as well, if you stretch it out to the birth of the Constitution.

[TopQuark]

" if financial institutions are taking taxpayer money and acting like it's business as usual,"

They are not, as I said earlier. Whatever follows a false supposition is irrelevant.

"if it makes you happy attacking Republicans"

Another false suppositon: you don't know me and don't know what makes me happy. What you COULD've concluded from my post is that the problem we face is greater and more difficult than Dem vs. Rep battle. The whole country has turned left (and has been turning for a century, with a breaf breake during the Reagan years). Dems are more left than Republicans, but Republicans are no longer conservative either.

"y'all go on and keep attacking them. I prefer attacking the greater evil"

You attack whomever you want. But if you understand the situation better, you'll be more effective. Our real enemy is the CULTURE, where even conservatives don't know how major instiution work and are inflicted with class envy (raving against CEOs, Wall Street, etc.). You can ignore that if you want; evn under Obama, it's still a free country.

[Tublecane]

“In contrast, the freezing of credit in October of 2008 was precipitated by the abrupt change in the government’s position -— letting Lehman fail contrary to the decades-long policy. The market understood that the rules of the game have changed. But what were the new rules? Nobody knew, and the markets froze in response to that uncertainty.”

I can see the argument for the bailouts. Better to choose the evil you know, or whatever it is they say. However, I do not buy into the Lehman Brothers game-changer argument. I think it’s a weak excuse for a way to blame the free market on the financial disaster. It is my belief that credit would have frozen anyway, and indeed it did, even with all the bailouts.

The argument is always that it would have been worse, and yeah, I guess it would have. But that’s not all we have to bear in mind. There’s also the fact that the markets have to liquidate, have to go down before they can go back up. Have to. Aversion to risk and unwillingness to further overextend finance is a necessary part of returning to prosperity. With the bailouts, this process takes a while. Without, it’s swifter. Of course, it’s aslo more terrifying.

The question, then, is how horrible would the crash have been? Doesn’t much help the anti-bailout cause that the stock market tumbled and unemployment shot up. Again, people are more willing to bear those evils they know. So you had Paulson warning about martial law and Bernanke wringing his hands about a second Great Depression. You had rumors about a few guys in nice suits selling and selling, to the point that the entire world was about to be ripped of their wealth. Can’t very well confirm or deny such claims.

That brings us back, once again, to Lehman Brothers. Free marketeers must argue that it happened, and it wasn’t so bad, was it? We didn’t all starve. Interventionists shoot back, what are you talking about, have you not noticed the recession? Yes, the other side responds, a recession which would have been shorter had we chosen a different path. Longer, say the interventionists, had we taken your path.

It all depends on whether you’re a Monetarist, a Keynesian, an Austrian, or what-have-you. That’ll give you your answer.

By the way, I think you overstate the inevitable bailout signal. That Fannie and Freddy would be bailed out was undeniably clear. And by extension, certainly most people thought this would help save their asses. However, the ‘08 bailouts were, if I’m not wrong, completely unprecedented. I doubt the signal had been out there all along that the entire financial industry, and every business within it, was too big to fail.

There were all sorts of bad signals out there, from the interest rate to the Right to Own a Home movement, but I’m not sure “We won’t let you fail” was one of them. They did let people fail during the S&L scandal, by the way. So your assertion that the government’s position abruptly changed with Lehman is dubious.

[TopQuark]

"there is this movement, and it is real, toward what has been called corporatism, if not fascism. I blame it all on the state,"

I completely agree. The implication that follows, at least in my mind, that one has to focus on the government. It is true that large corporations' RESPONSE to the government results in less than desirable consequences. But, as you yourself has observed astutely, they have no choice; they do the best they can. Fighting the corporatist (fascist) behavior of the government has to be the main focus.

It has to be the SOLE focus, moreover. This is because any attacks on the abstract "rich" and "corporations" puts one, regardless of intentions, in complete alliance with Marxists. It also damages those that are still uneducated and/or still undecided. When someone without sufficient knowledge hears anti-Wall Street, anti-capitalist, anti-corporate rants from ALL sides, one concludes that that is a UNIVERSAL truth, whereas it is a complete falsehood. We are responsible for our actions. In sum, undeservedly attacking innocent people is not only a defamation (hence immoral) but runs contrary to your own intentions.

"best way to do that, without writing an extended essay, is to deal with what some might call childish concepts like “the rich” and The People."

Concepts may well be "childish" or simplistic --- we all have but limited knowledge. They should not be so simplistic, however, as to be false and devoid of content. Observe that the concept of The People, although not precisely defined, has quite a bit of content: we may not know exactly where it end, but we know that a very large part of the population is included in it. The concept of the "rich," in stark contrast, is almost empty and grossly misleading. As I mentioned earlier, it inadvertently includes the poorest and unfortunate people --- widows, orphans and retirees that own American corporations. When you speak of poor as rich, the concept loose whatever meaning one could try to give it.

"One concept I feel comfortable treating as a monolith is the state,"

This comfort stems from the lack of proper models and proper analysis. I don't blame anyone here: just as game theory is a recent phenomenon, proper analysis of governments is only recently began in political science and economics. It has been recognized (since 1980s) that people signing contracts have incentives to violate them. (This is the central observation of agency theory.) Managers of corporations have incentives to diverge from the interests of shareholders that hired those managers. (This is why "bonuses" and stock options have become widespread in the last two decades: they help align managers' interests with those of shareholders). What's the point here? Governments are organizations just as corporations. Its members (politicians) have incentives to diverge from teh interests of stakeholders (the people of the United States) that put them in power. The study of incentives here --- that is, viewing governments as organizations rather than monoliths -- is equally appropriate. Our Founding Fathers did just that, at the intuitive level, in our Constitution.

I am not suggesting, of course, that one cannot have preliminary opinions (working hypothesis) without full knowledge of these matters. I mention these things to you, who is clearly a very careful thinker not vulnerable to hasty conclusions, only to suggest the paths for further analysis.

"By the way, it was from the French philosopher Bertrand de Jouvenel in “On Power” that I cribbed the idea that government is reactionary in its Being and radical in its Becoming."

I have not read that apparently interesting work. Thank you for mentioning it; I will get to reading it as soon as I can.

[TopQuark]

"The argument is always that it would have been worse,"

That is the statement of a belief that we were supposed to accept. I personally have never heard an ARGUMENT. As a consequence, I suspend judgment: I don't know and cannot even estimate whether things would be worse.

What I do accept that some intervention (by a doctor, the government) into the financial sector (a patient made previously sick by the same doctor) was necessary. Whether it was a bailout, whether that bailout had to have the form it did --- I don't know that (and have serious doubts).

"But that’s not all we have to bear in mind. There’s also the fact that the markets have to liquidate,"

For the sake of truth, the point of the bailout was not to have in place of liquidation but to make that liquidation orderly. They have recognized the point you make.

"With the bailouts, this process takes a while. Without, it’s swifter. Of course, it’s also more terrifying."

I agree. And not only terrifying. If the recession is deeper, there is something to be said --- even by free-market proponents --- about unemployment and related misery.

"The question, then, is how horrible would the crash have been? Doesn’t much help the anti-bailout cause that the stock market tumbled and unemployment shot up."

You and I know that the same would've happened without the bailout. The real question is what the size of those effects would be.

"nice suits selling and selling,"

You will have scum violating laws and ethics in any system. That by itself is not an issue to me, because the economic effect of what you mention in negligible.

"Free marketeers must argue that it happened,"

Well, a free-market proponent would say that that too was a government failure: it is the idiotic mark-to-market regulation that brought down Lehman (the run on its assets, which was exploited by short-sellers of stock).

"It all depends on whether you’re a Monetarist, a Keynesian, an Austrian, or what-have-you. That’ll give you your answer."

Beliefs about the unknown do indeed depend in part on the overall philosophy. I have no problem with that. To me the real issue is to refrain from IRREVERSIBLE changes. I don't mind an opposing "school of thought" proving me wrong on some small policy issue. Neither monetarists nor Austrians have an agenda of changing American forever; Keynesians, the intellectual enablers of fascism, do have such intentions. That happened during 1930s, when they turned a recession into Great Depression, and this is happening now.

"That Fannie and Freddy would be bailed out was undeniably clear. And by extension, certainly most people thought this would help save their asses."

Yes, but nobody I know or read about expected that they would let Lehman go down.

"the ‘08 bailouts were, if I’m not wrong, completely unprecedented."

Not at all. They pale in comparison with FDR takeovers, price-fixing and other control of the economy, and changes in law. [YOu may be interested in two excellent books: "FDR's Folly" and "New Deal or Raw Deal"]

"the signal had been out there all along that the entire financial industry, and every business within it, was too big to fail." Exactly, and that was my point. This signal was there for decades. But then the government send an opposite signal by letting Lehman to fail. THAT created a shock and froze the market. Subsequently, the government reversed itself again and went back to the previous routine of bailing out those that are too big.

[TopQuark]

"Goldman Sachs participated in and profited from the fascism probably more than any other company."

And Jews started WW I and made Germany lose it. That's what the Nazis said. I don't respond to such broad, unsupported and vague statements, which prove to be false, of course, upon examination. Your statement says nothing but "I hate Goldman Sachs."

You are free to hate if you so choose, but there is nothing to discuss here.

"And of course Wall Street was lobbying for bailouts."

Nonsense. Why don't you check the date of the article to which you linked? The point was that the INITIAL bailout, in the fall 2008, was forced on the banks.

I guess, you don't seek the truth but look at the items that seem to confirm the position you already have, not matter how irrelevant those items are. I cannot contribute to this process, sorry.

[mysterio]

Way to work the Nazi thing in there.

Your statement says nothing but "I hate Goldman Sachs."

I don't hate them. I disapprove of them leveraging themselves to make money from the fascist bailouts that were lobbied for by the banks.

[Tublecane]

“The concept of the ‘rich,’ in stark contrast, is almost empty and grossly misleading. As I mentioned earlier, it inadvertently includes the poorest and unfortunate people -— widows, orphans and retirees that own American corporations. When you speak of poor as rich, the concept loose whatever meaning one could try to give it.”

While it is true that corporations benefit all sorts of people, including the poor. Also, that some of whom we might term the poor have say in corporate policy. But it is my aim to isolate, as accurately as possible, whatever private power exists in our society. That is, groups and individuals with the ability, if not the propensity, to act as counterbalance to central power. Traditionally, this includes landowners and the Church (which owned land too, of course) foremost, and capitalists secondarily. The poor no doubt have some private authority, if only over their own families.

But the sort of authority held by capitalists (again, for lack of a better term) are of a different quality. They have extra power, granted them by their ability to market goods and services. In the olden days, their power derived from an original grant of land by the state (which won it through violence), which subsequently supported them. Herein, perhaps, lies the key to what I’m talking about. “The rich,” whoever they are, are by my definition the ones who not only hold social authority outside of the government. They are the group that benefits most from government AS IT IS. That is, in its static state.

They are the ones who own the most property, and have the most to fear from the rule of law breaking down. It wouldn’t so much be accurate to say that they are the ones who run corporations, since of course corporations are ultimately run by the shareholders. But let’s say they’re the ones who benefit most from and have the most say in corporations. Private authority includes others, as well. The more and more intrusive becomes the government, and the more and more it benefits different strata, the less clear it becomes who stands in for “the aristocracy”. Used to be much clearer. Is he a landowner? Then he’s gentry, and therefore not a peasant.

The peasantry, on the other hand, are the ones who stand to benefit the most from an expansion of the central government. They have nothing to lose but their chains, as someone once said. Well, not really, but they have less to lose than others, which makes them natural allies for the state AS IT EVOLVES.

So we have three groups: the state, the people, and the rich. Or if you don’t like to call them rich, let’s call them aristocrats. Today’s aristocrats are not yesterday’s, but they share some things in common. They are the ones who benefit now, and stand to lose in the future, as the state grows. It is in the state’s self-interest to use the larger group, The People (i.e. the ones who pull less benefit from the state as it is, and have most to gain through expansion of state power), against the smaller group, the aristocrats.

If these terms are all too imprecise, I’m sorry. The ideas behind them are clearer. If not in my head, then in the heads of those from whom I’ve learned.

“Governments are organizations just as corporations. Its members (politicians) have incentives to diverge from teh interests of stakeholders (the people of the United States) that put them in power. The study of incentives here -— that is, viewing governments as organizations rather than monoliths — is equally appropriate.”

I have a problem with identifying government’s stakeholders as the people, or even the electorate. But let’s assume for a moment that they are. It can’t be accurately said that the aim of government is to provide for the best possible society, be it through decreasing or increasing its authority. They are monolithic in goal, which is what I was getting at. I hold that the state has but one goal, or rather one cumulative goal, and that is self-aggrandizement.

When I say they’re monolithic, perhaps I’m being careless, you’re right. They’re no more monolithic in goal then is Big Business. Only business wants profit, whereas government wants power. So nevermind the monolithic stuff. I simply want to get across the idea that the state acts for its own benefit, at least in the long term. I misspoke earlier, and didn’t mean what I said.

What I really meant to get at was that corporations have roughly two options to attain their goal of higher profits: playing along with government and going it alone. Government, on the other hand, largely has one option, in the long term, for attaining its stated goal of producing the best society possible: increasing its own power. If occasionally a man like Reagan comes along and says government is the problem, you can bet his message will slip away over time, and that he personally won’t be very effective anyway.

As long as it’s understood that I mean the central government, as opposed to peripheries which from time to time attempt to grab power for themselves, I think this holds true in the test lab of history. Whatever organizational frictions and internal tensions there are, the tendency is always more and bigger. Whenever the center of power recedes, the state is said to be in decline. Or, better yet, dying.

So when I say the state is monolithic, I mean it is monolithic in its ultimate goal. That as time passes, the likelihood that more and more power will be centralized approaches 100%. To what degree and how fast the process takes varies, depending on the culture, how strong the private counterbalance is, how strong the competing interests within government are, etc. I don’t exactly know why this is so. Perhaps it has something to do with the nature of power, based as it is in violence and compulsion.

“Our Founding Fathers did just that, at the intuitive level, in our Constitution.”

They did indeed, especially as regards the competition between the periphery and the center of government, which is second only to the competition between the king and the aristocracy in forestalling the center’s tendency to grow. I think they vastly overrated the importance of counterbalances within the center (the famous “checks and balances”). I’m sure courtiers of Louis XIV quibbled with one another, but whole lotta good it did.

Even in the U.S., where an appreciation of what you term its organizational tendencies was perhaps more accute than at any other time in history at the inception of its political form, proves the case that the center tends to grow. For all there careful planning, did the Framers succeed in their goal of empowering but limiting the federal government? Absolutely not. There were stops, reversals, and stutter-steps, but eventually, the center had its way. The only question remains when the balance was tipped. Was it right away under the Hamiltonians, during the Civil War, the progressive age, the New Deal? I don’t know.

Perhaps I’m reading too much in to quotes from Madison like, “I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations.” Maybe he didn’t realize that encroachments, gradual or not, are inevitable according to the natural course of things. But I think he did, which is why, above all his little legal and institutional tricks, he accentuated the need for leaders among the citizenry, men educated in the necessity for liberty, to stand up and limit the government. He stresses this fact over and over, and indeed it is one of the main arguments for the efficacy of the Electoral College.