Market meltdown

The Cape Cod Times editorial on the “market meltdown” with the subheading “ big business can’t be trusted to police itself” is right on the money.

I am saddened, ashamed, and disgusted at the plight the financial community and our government has visited upon the country. Saddened at the losses, not of the big money hedge funds and other greed driven financial entities, but of the small investors who trusted the system to protect them.

I am ashamed of our government watchdogs that saw the whole catastrophe brewing and not only did nothing but rather cheered on the excesses. Conservative ideology diligently dismantled the regulatory mechanisms put in place after the previous depression, led by Phil Gramm and John McCain.

I am disgusted that the institutions such as Moody’s and Standard & Poor’s and Fitch were either complicit in giving AAA and AA ratings to financial bundles that were of such high risk that today no one is able to backtrack the transactions to their source. Or they are guilty of malpractice in not doing the diligent risk evaluation they are paid to do.

There are sufficient grounds for a criminal investigation into the malfeasance of those involved. I fear however that the bailout package will be “sheltered from court review” as reported in the Cape Cod Times.

Now that the horse is out of the barn and the barn has burned down an excellent book that describes the history of this meltdown is “Bad Money” by Kevin Phillips.

Phillips details how searchers for profits had to scramble after the technology bust in 2001. They recognized that the burgeoning housing market contained the greatest asset source. Led by the federal government’s penchant for debt, in the midst of a costly war, handing out a multibillion dollar tax break to the already wealthy, the money grubbers utilized the removal of banking safeguards to devise “financial innovations” that were based on subprime mortgages. Very high risk investments that were resold in packages that were again resold all over the world. The profitability of debt was so great that the instinct of greed in the financial world created the, now famous, housing bubble.

It did not happen all at once and people like Alan Greenspan recognized what was happening years ago. Being happy to see so much wealth created, for a select group, he did nothing to sound the alarm. If/when the bubble collapsed the government would bail them out. That has been the history of “boom and bust” for decades.

Privatize the profits and socialize the debt. That is the legacy of this Bush conservative government?