by Walter Brasch
American Reporter Correspondent
March 24, 2008
OUR WELFARE STATE FOR THE RICH
BLOOMSBURG, Pa. -- Listen to conservative talk show pundits and blowhards. Listen to any of the political candidates who proudly amend their names with the phrase "conservative Republican."
One theme resonates in all of the heavy wind - keep the government out of our private lives; let business enjoy a free market economy. Not only should government regulation be minimal, they say, but we must end the "welfare state."
Of course, what they mean is, don't help the individual; help only corporations, by giving them significant tax breaks and low-interest loans.
The Federal Reserve last week approved a $200-billion loan program at significantly less than market rates to aid the nation's largest banks. It has also created an open-ended credit line for the top 30 banks and investment banking firms. On March 16, it approved a $30 billion credit line to allow financial giant JP Morgan Chase to take over failing financial giant Bear Stearns.
Less than a year earlier, we learned that over a 15-year period JPMorgan Chase was the recipient of city and state subsidies of more than $750 million, despite having assets of about $1.6 trillion. It is the nation's third-largest financial institution.
The $236 million sale, brokered and sanctioned by the Fed and the Department of Treasury, includes Bear's New York skyscraper and about $30 billion in assets of a company just days away from filing bankruptcy. Bear's stock in January 2007 was selling for $170 a share; JPMorgan Chase paid just $2 a share for the entire company last Monday in a deal urged on both by the Fed and panicked banking executives. As many as one-third of Bear's 15,000 employees, and several thousand of JPMorgan Chase's 175,000 employees, are likely to be laid off in the acquisition.
Twice in the past three years, Fortune magazine rated Bear Stearns as the nation's "most admired securities firm." The 85-year-old company had survived the huge stock market crash of 1929, the Great Depression that followed, and many recessions; it couldn't survive the current one. But President George W. Bush doesn't even believe the recession exists.
Bear's problems, like that of dozens of major lenders, stemmed from aggressive sub-prime lending practices. About $1.3 trillion of sub-prime loans is still outstanding, according to the Center for Responsible Lending. The materialistic greed of two years ago, which led to inflated stock prices, has become the financial panic of Mr. Bush's last year in office.
Perhaps the Fed's multibillion-dollar dealings will help the economy. President Bush says he's "on top of the situation." He says that although there is "a lot of uncertainty," things are "not that bad." He says he wants Americans "to understand that in the long run we're going to be just fine."
That isn't much consolation to all Americans who are paying more than $3 a gallon for gas, or to the 7.4 million Americans who are unemployed, the two million Americans who were forced to declare bankruptcy in the past two years, or the one million Americans, most of whom have unblemished work histories, who have already lost their homes - none of whom are beneficiaries of the government's corporate welfare system.
AR Correspondent Dr. Walter Brasch's "Sinking the Ship of State: The Presidency of George W. Bush," is available at amazon.com. He is president of the Pennsylvania Press Club and Professor of Journalism at Bloomsburg University. Contact him at www.walterbrasch.com, or email@example.com.