Marie Cocco: Fiddling While Wall Street Burns

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from Truthdig:



Fiddling While Wall Street Burns

Posted on Sep 17, 2008
By Marie Cocco


So Alan Greenspan thinks this could be among the worst of the worst, a financial crisis that ranks as “a once-in-a-half-century, probably once-in-a-century type of event.”

Greenspan was speaking Sunday on ABC on the eve of the stock-market plunge that followed the demise of Lehman Brothers and the sale of Merrill Lynch to Bank of America. These in turn followed the federal seizure and expected taxpayer bailout of Freddie Mac and Fannie Mae, which followed the federally engineered, taxpayer-backed rescue of Bear Stearns by JP Morgan Chase. When Greenspan says this all could become a once-in-a-century type of event, does he mean to invoke the Great Depression?

I hope not. I want Greenspan to be wrong again—just as he was in 2005 when he said there was no speculative housing bubble but just “froth” in a few local markets.

But the more fundamental reason I hope Greenspan is wrong is because a crisis that approaches the worst in a century would mean that millions of Americans would become homeless, starving and so desperate for help that—gasp!—we might need a new New Deal. And we can’t afford a new New Deal in good part because Greenspan in 2001 gave his approval to President Bush’s signature tax cuts. Enactment of these tax cuts was an early marker on the road to the great unraveling.

Suddenly, everybody is talking about “risk,” as in the risk of letting venerable Wall Street institutions crumble right into New York Harbor. And all this talk about risk recalls that much-maligned political phrase of a few presidential campaigns ago, “risky scheme.” ......(more)

The complete piece is at: http://www.truthdig.com/report/item/20080917_fiddling_while_wall_street_burns/