David Sirota relates swine flu to the banking crisis. Both have the same cause. See Piggish capitalism endangers us all,
The Associated Press says scientists suspect that swine flu began in a Mexican town that “has been protesting pollution from a large pig farm” partially owned by the Smithfield company. That’s the same Smithfield that used three decades of lax anti-trust enforcement and corporate welfare to become one of the few megacorporations now controlling global agribusiness.
Decades of lax enforcement of regulations and corporate welfare leading to megacorporations. I wonder where he might be going with this?
Unregulated, taxpayer-subsidized oligopoly spreading risk – sounds familiar, right? It should, because at the very moment agribusinesses were vertically and horizontally integrating themselves, so too were financial firms.
In 1999, five days before Congress rejected a proposal to temporarily stop agribusiness consolidation, President Bill Clinton signed a landmark deregulation measure that “ushered in an era of aggressive bank mergers,” as Reuters reports. The result was what critics like Rep. John Dingell, D-Mich., predicted at the time: Wall Street created “a group of institutions which are too big to fail” and that “taxpayers are going to be called upon to cure.”
Taxpayers required to provide a cure. And the clincher:
Mass producing mortgage-backed securities that were quickly infected with subprime mutations, these financial factory farms became so enormous and unregulated that they spread toxic assets throughout the entire economy.
Incredibly, our government hasn’t learned from these crises. Regulation-wise, there have been no serious initiatives to replace factory farms’ voluntary self-inspections with mandatory government probes, and new financial rules have yet to move in Congress.
Here is something I have noticed. We went through all of this before, with the Savings and Loan crisis! The causes of the S&L crisis were deregulation, “unsound real estate lending,” and connected insiders gaming the system (with names like Neil Bush).
Look back at the Savings and Loan crisis. People got really, really rich looting financial institutions, and then when the taxpayers came in to fix it connected insiders got really rich from that, too. (One or two were held up as examples and put in jail for a while.) Valuable properties were sold to connected insiders for pennies on the dollar. Pretty much everyone was allowed to keep what they made from what we think of as bad practices.
So look at the results of the current crisis. A few got really rich by looting financial institutions, taxpayers on the hook to bail everyone out, and the cleanup looks like it involves connected insiders getting really rich. I think SOMEone clearly learned a lot from the S&l crisis.
So maybe the lesson WAS learned. For example, we think Lehman was a failure? But a few people made millions, even hundreds of millions from those decisions. What’s-his-name made $400 million in six years bankrupting Lehman. And they were all allowed to keep the money.
So the lesson for US to learn is that this stuff works out really well for the people making the decisions. If we want these things to stop we need to get the money back — all the inflated salaries and bonuses from each and every one of them, going back ten years — and put enough of them in jail. Otherwise the incentive structure guarantees this will happen over and over. It is set up that way.