Wednesday, September 28, 2011
Tea Party Has Been Successful, But...
Some people like to ridicule the Tea Party but I suspect their disdain conceals some envy. Except for the Know-Nothing movement of the 1850’s, no other populist movement has been as successful in electing supporters to all levels of government as the Tea Party was in 2010. After thirty years of “don’t tax but spend more” Republicanism, it was the Tea Party that restored the GOP to its core belief that debt does matter.
The Republican Party has a golden opportunity it seems to be missing. We now know the Wall Street bailout was successful at saving the largest investment banks in the country. Over $170 billion dollars went to bail out AIG. Much of that ultimately went to Goldman Sachs to cover bets Goldman made betting against triple A rated junk that Goldman was promoting to investors as safe. Yet not a single senior Goldman executive has been prosecuted for investment fraud. Instead, ex-Goldman executives serve as Secretary of the Treasury, Chief of Economic Advisors and head of the Commodities & Futures Trading Commission. To reward themselves for how smart they were, Goldman paid out $16 billion dollars in compensation and bonuses in 2009. The justification for the bailout – that these banks were “too big to fail”, left us with banks that were even bigger.
Yet Wall Street must have been smiling when newly elected Tea Party candidates opposed regulating them. Except for those receiving Social Security checks and are covered by Medicare, our experience with government is not a positive one. We’ve all been taxed, fined, zoned, regulated, paid fees, and maybe subpoenaed. Our natural aversion to government and regulation is being used against us.
But the most obvious lesson from the economic collapse is that the fundamentals haven’t changed – since the beginning of the Republic depressions have been caused by overleveraged assets. Without regulation speculators will always look for ways to leverage assets to make more money faster. How many bubbles have to burst before we learn? Those at the top who’s pain is to be forced to sell off a luxury yacht, or one of their vacation homes at San Moritz, already understand this game. But they don’t suffer a lost job the same way you do when they lose. After AIG lost $11 billion, the CEO was kept on as a consultant for one million dollars per MONTH. After running Merrill Lynch into the ground the CEO collected a $160 million severance package.
A populist party who truly advocated for the people would demand accountability. Everyone on Wall Street knows that accounting and securities fraud occurred on a massive scale. Not a single financial firm has been successfully prosecuted. The Tea Party is too obsessed with their fears of Socialism, Communism, and Aliens to notice. Democrats are too timid. Where are you Teddy Roosevelt? We need you now.