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The New New Deal

Footing the bill and holding the bag

By Mike Rivage-Seul

22/09/08 "ICH" -- - Funny how gambling terms routinely pop us in discussions of globalized economics. Here I’m not just talking about desperate absurdities like state-sponsored lotteries to finance public education of all things. It’s about the “casino economy” itself, where international “players,” “stakeholders,” and “high rollers” “win” and “lose” fortunes by betting on the market’s ups and downs. And then there are periodic reshufflings and “new deals” like the famous one following the Great Crash of the 1930s. All of those are gambling terms.

Presently (following the Great Crash of 2008), we’re in the midst of yet another reshuffling and redistribution of cards – another New Deal. But whereas 30s version shifted money from the haves to the have-nots, the re-run promises an income redistribution from the disappearing middle class to the super-rich. They’re the gambling addicts who got us here in the first place.

And what will we get in return? Nothing, nada, zip.

The gamblers’ codependent enablers are making sure of that. Samuelson and Bernanke, along with corporation heads, their lawyers, professional economists, and the government representatives who share their beds are intent on pushing through a one-sided deal. They think we’re all too stupid to understand what they’re doing. So with a wink and a nod, they slip aces from the bottom of the deck into the hands of the card sharks that have been cheating all along.

Watch closely. Samuelson and Co. want to cancel their cronies’ losses, reshuffle the cards, and allow their pals some kind of do-over. All of this flies in the face of what we’ve been told are the rules of the game. Adam Smith’s version of Hoyle says losers should pay their gambling debts and suffer the consequences.

Of course they tell us that the consequences would be too much for the rest of us to bear. It would be the end of civilization as we know it, they warn. I’m still not sure about that. That rationale sounds a lot like the trickle-down thinking everyone’s running away from as fast as they can. It pretends that we’ve all been somehow benefitting from the market’s unreasonable exuberance over the last few years. I don’t think so. The ones cashing out at the casino bank are drawing those seven figure salaries we read about. Even Bear Stearns and Lehman execs are not suffering. Feeling no pain at all, they’re comfortably drifting to earth under golden parachutes.

I’m not an economist. But I do know is that Samuelson and the gang are not only doing all of this with our money. They’re doing it in secret and fast. And they’re working behind closed doors, behind our backs. They say we may not know the results of their confab perhaps for weeks.

But if we don’t act now, we who are footing the bill will be left holding the bag. We’ve got to prevent that pronto. Robert Reich has recently shown us how. In a mailing from Kate Stayman-London, CREDO Action [] he lays out 5 guidelines and an ultimatum for Pelosi and Reid to demand. First the guidelines:

  1. If the taxpayers are shouldering the risk, the taxpayers should reap any eventual benefits. We accomplish this by giving the government an equity stake in every company we bail out proportionate to the amount we give them.

  2. If we're paying (more than) our fair share, the CEOs and executives should have to, too. All of the fat cats who got us into this mess should relinquish their stock options and salaries until they start showing us, their investors, that they can once again be profitable. Future salaries should be linked to profitability.

  3. No more campaign contributions from Wall Street executives and PACs. Taxpayer dollars should be used to get our nation out of a crisis. They cannot be used to fund giant, powerful lobby operations that will be used to strong arm Congress into making bad policy.

  4. Better regulations start right now. Wall Street can't expect to take thousands of dollars out of your paycheck without agreeing to increased transparency and more stringent oversight — the kind that might have helped avoid this mess to begin with.

  5. Bankruptcy judges get broader leeway to help homeowners. Why should we lose our homes so the CEOs can keep theirs?

And then the ultimatum

If Wall Street doesn't like these conditions, then it is welcome to find private investors to help it out of this debacle. But if the American people are going to take this hit, then we must have a say in the terms of the deal — even if we don't have an army of high-paid lobbyists at our disposal like they do.

Reich is correct, of course. But even his recommendations, as sound as they are, don’t go nearly far enough. In effect they recommend that the monitors watching each gambling table from up there in the ceiling booths wake up and start doing their job. What ever happened to the Sherman Anti-Trust Act?

But even in Reich’s vision, the economy still remains a casino, though better monitored and regulated. He overlooks the fact that the globalized economy based on competition and risk-taking is a relic of the past -- fundamentally unviable. Peak oil and global warming are seeing to that. Goodbye corporate globalization. There is no alternative to consuming closer to home. And for that the economy must be fundamentally rethought and restructured. Untargeted economic growth (in Bush I’s terms: “Computer chips or potato chips; what’s the difference?”) is no longer acceptable. But that’s another story.

Phone Pelosi and Reid today. Tell them to make the Wallstreet losers play by the rules.

Mike Rivage-Seul teaches at Berea College where he has taught for more than 30 years. He is the director of Berea’s Peace and Social Justice Program. He may be reached by phone at (859) 986-1361 (H) or at (859) 985-3741 (W). His e-mail address is  

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