What’s right isn’t always what’s good
Posted: October 28, 2011 Filed under: Bailout Blues, Banksters, financial institutions | Tags: Financial Crisis 30 CommentsThere’s something that bothers me about the current conversation (diatribe?) about the sins of the bankers.
The tone of a lot of the talk is as if they belong to some other species, as if they commit crimes nobody else does, but also as if they keep their heads when nobody else can.
Holding them to sub- or superhuman standards means it’s hard to understand why they do what they do. And that means it’s hard to make them do the right thing.
Let me explain what I mean.
After the crash, US banks were bailed out. People were outraged, and rightfully so. It’s just wrong for a thief to rob your house and then grab your savings when the jerk can’t make his rent.
But.
The time to worry about the thieving was before the crash. While it was going on. Then it would have been possible to stop it without crashing the economy.
It would have also stopped the wild ride, and — at the time — not many people wanted that. Plenty of people are just like bankers without a bank. There’s a big difference in impact, but the difference is one of degree. They’re no more subhuman than everyone else.
When the crash happens the sad fact is the thief lives in the same house you do. When he (the high-flying financial mavens were almost all “he”) can’t make his share of the rent, you both get evicted.
The thieves are literally in the same house. They’re in the same economy. The 99% and the bankers all depend on it. If the economy is destroyed, everybody is just as homeless. Your pension loses money. Your job is destroyed. The value of your house goes down. That’s been made rather clear by now.
There is no way — during the actual crash — to limit the damage to the people who caused it. There is no choice but to bail out the jerks who caused the problem. It’s not right. It’s maddening. But doing anything else means more damage for you. It’s not about punishing the guilty at that point. It’s about saving the innocent.
That’s why the bailout was the right thing to do. It wasn’t done well, or enough, or with any of the necessary rules attached to it, but it did avert a much bigger disaster. That’s all clear by now, and leads even compassionate economists to point out that economics is not a morality play.
The time for retribution is afterward. That is, now. But now the 1% are going scot-free and raking in more money than ever. That’s criminal laxity. Not the bailout.
However, bankers are just people with banks, so they’re now going through the same process of preferring moral outrage to emergency assistance.
Europe is having a similar problem with inability to repay debts. In their case it’s a country, not mixed salads of mortgages, but the problem is the same.
Unless Greece is convincingly bailed out, everybody with money in the market will be worried about how much they could lose if they don’t get out now. If everybody pulls their money out, economies freeze up, and we all go broke.
So what have the bankers been arguing about? How to create the funds for an adequate bailout? No, it’s about not wanting to bail out those profligate Greeks. It’s the same routine, but with more numbers and graphs: I was frugal. It’s not fair to make me pay some gambler’s debts. They should just suck it up.
These are people whose jobs are dealing with money. They, of all people, should know that economics is not a morality play. They, of all people, should know that when the sheriff is at the door with the eviction notice, it’s not the time to beat up the crackhead brother for squandering the rent. At that point, you just scrape together the rent. Later, you send the brother to rehab.
What’s funny, though, is how far the inability to recognize the common roots of feelings extends. Krugman is smarter than I am in practically every way, but even he is continually mystified by the non-rational adherence to austerity when austerity will cost the earth. (Read his blog. There are dozens of posts asking What were they thinking?.)
There’s nothing mysterious about it. It’s the same reaction everybody has. Don’t make me pay for someone else’s mistakes. It doesn’t matter whether you agree with the bankers’ definitions of mistakes. Nobody wants to pay for what they see as somebody else’s mistakes. And when something turns out to be a mistake, it’s amazing how fast it becomes somebody else’s.
The other unspoken, non-rational motivation is the equally simple one that austerity for thee but not for me is a great way for the rich to get richer. That, too, may be unmentionable, but it is not mysterious.
The point is this. Once the emotional roots of a non-rational stand are recognized, there’s a chance one could deal with it. It’s only a chance, but without that understanding, there’s none at all. Understanding allows us to start fighting the right battles instead of the distractions.
For instance, bankers are professionals, so they hang an economic story around their outrage. They come up with theoretical underpinnings for why austerity is such a good idea. None of those pins stays in place when examined, but they don’t care. And that is the hallmark of acting on feelings, just like an ordinary human being. They’re no more superhuman than everyone else.
I’m not suggesting that every argument one doesn’t like can be written off as “emotional.” All arguments have to be evaluated against the evidence, and evaluated several times to make sure the results are right. But once that’s done, if people keep clutching an anti-rational position, it is not insulting to figure out why they’re doing that. It’s essential.
And then when one argues with them, one needs to argue with their real reasons, not their stories.
So, in the present case, if the roots of the cries for austerity were faced squarely, we could clear the way for useful solutions. We could discount the more-for-me motivation as the bog-standard grabbiness we all have and decide to ignore it. And to the extent that the cries are rooted in a sense of unfairness, maybe we could get past it.
We could acknowledge the unfairness. We could resolve to deal with it after the crisis, instead of letting the rich and powerful off scot-free. And we could acknowledge that fairness is better served by helping millions of small people through the crisis, even if it also carries along some perps. That’s the good thing to do. Punishing the perps may feel right, but it’s stupid to let it cost us everything we have.
[Update Oct 27th: It remains to be seen whether today’s agreement in Europe to help Greece did enough or just did the minimum to keep the markets from panicking this very minute. Still, any prevention of panic is better than none.]
Crossposted to Acid Test
peej
Carissa
bostonboomer
ecocatwoman
grayslady
mablue2
JJ Lopez aka Minkoff Minx
peggysue22
skydancingguestblogger
Mona (aka Wonk the Vote)
Sky Dancing 
Wow, we are on the same wave length. It’s amazing to me that we know what’s happened and yet the justice system isn’t going after the crimes and the legislative process isn’t correcting the problems. Instead, we have people making up stories to cover up the crimes and the problems. What can we do when money so infiltrates our systems that the good of the people and of the country come in last place?
It seems to me that most thinking people know what happened by now. Searching for what can be done is the issue,
Let me amend to say “what can be done considering the corruption”. Otherwise, perp walks and going to something closer to the New Deal regulations would be nice.
Bailing out the banks might have been the right thing. I’m not so sure. I think it would have been better to force Citi into bankruptcy and see what happened–as Obama wanted to do, along with Sheila Bair. Even if the bailout was right, regulations should have been put in place immediately, and the use of taxpayer money for bonuses should not have been allowed.
In addition, the top 1% are not in this with us. They are doing fine now and will continue to do fine even if unemployment continues to rise. They don’t need us–or at least that’s what they think.
I would’ve preferred some of the big banks were given the GM treatment, frankly, but all that was done under Bush and set into motion then … I think Citibank and BOA should’ve been split up
As Krugman wrote, Iceland is the only place that is doing somewhat well.
and Canada?
Canada is doing better than we are in some ways. Problem with Canada is they are inexorably linked with the US. If you see their stats they follow US like a mini me. Kinda Scary. But, they have less systemic risk. The countries in the catbird seat are the Scandinavian ones right now and some of the Asian ones. Of course, any one with oil has a get of catastrophe free card.
Don’t forget Argentina. They are doing OK now as well after their default.
I agree, it may have been necessary but the lack of oversight and forethought as to the use of the funds leaves one wondering why? Today I finally heard CNN acknowledge that the Obama Administration has been having ‘coffee’ meetings with lobbyists which aren’t on his visitors lists cuz the coffee house is across the street….loop de loop…fooled us NOT!
Until we get money out of politics and get honest politicians we the working class will continue to get screwed. I don’t know if I agree that the 1% are feeling it too, as all the reports show their incomes rose while the lower wage workers were laid off. The ratio of CEO to worker is 1:475 (Worker it takes to make the the CEO’s salary) and the disparity is continuing to grow.
Health care is less accessible today despite however many speeches Obama gives, because he didn’t mean any of the words he uttered, he just found loop holes through which he thought he could hid and the press even today continued to hide who he is really working for…and it isn’t us.
Someone said that the youth of Occupy Wall Street had finally prodded Obama to do something, and don’t be fooled, if they (OWS youth) hadn’t Obama’s people would still be having more coffee appointments with the ‘special’ people without even throwing us a bone. Maybe we need to Occupy The Coffee House Across from the White House!
I like that Occupy movement! We should occupy K street tool!
Dak, is that the street with the GOP ‘congress frat house’?
K Street is the lobbyist street … C street is the street with the Dominionists
Ok, K Street sounds better than ‘C’ Street. 😯 Where is that cartoon of your ‘Out Demons OUT!’ would come handy at ‘C’ Street.
It’s in the media library when needed!!!
Evening, while looking up pain medications, neither Tylenol with Codeine nor Lortab is working…why did they have to take Darvocet off the market?
I found this at Guardian, I don’t know if it has been posted yet: Scott Olsen ‘cannot talk’ after injury at Occupy Oakland protest | World news | guardian.co.uk
They believe he could get his speech back in time…but damn!
I think it is a bit off topic, because I am not sure what has been going on today…
I tried real mint/lemon leaves tea with a baby aspirin and then low light and pressure points ala accu-pressure (gently to the right/left of eyebrow). I hope you feel better soon.
Yes, that is the latest I have been able to find, and they are still awaiting surgery to relieve pressure. I hope he recovers, he is so young and so kind as is his roommate. I hope all goes well in the next day, but it will be a long recovery…
Gosh, Minx, I”m so sorry. I wish there was something that would help you.
I sympathize, Minx. I used to be able to take Darvocet for brain tumor-related headaches and it was effective. I can’t take NSAIDS. I can’t tolerate any meds with codeine. Ultram can cause seizures, so that’s out for me. Darvocet was on the market for many years and had few side effects. My mother took it daily for a long time for her rheumatoid arthritis. So why was Darvocet removed from the market? And what’s a person to do if he/she has severe pain? Extra-strength Tylenol helps me a little bit. I take it along with a strong cup of coffee, which seems to increase its effectiveness. You might try that, Minx. I hope you find something that works for you.
The story about Scott Olsen is heartbreaking. The brain is a such a mysterious thing. It’s very difficult to predict outcomes from brain injuries. I pray that Olsen will be able to speak again soon.
Darvaset was what my mother-in-law used to take, a lot. Why did they take it off the market, particularly when there doesn’t seem to be a reasonable substitute? Sorry yo’re feeling so miserable, Minx.
The Scott Olson story makes me personally wince. I have experience with brain injury, and this young man is going to have a very long haul. His biggest asset is his age–the younger you are the better chance you have for a reasonably good recovery. And since he’s been in the Marines and on 2 tours of duty, I suspect he’s in good physical condition. Another asset. Brain injury is very unpredicable but even the best recoveries are slow. When Giffords was shot and the press was asking again and again: will she have a 100% recovery, I felt like throwing something. There’s no such thing as a 100% recovery because brain injury is brain damage. You hope that new neural pathways will reconnect and function returns [and the brain–short of the brain stem–has an amazing self-healing capacity] but even when the brain does its magic, the function is . . . different. And sometimes, not as good as it once was.
The really bitter irony is this Marine survived two tours of wicked duty, only to be nearly killed in his own country. I wish him and his family the best. They have an ordeal ahead of them.
As for the bankers and their ‘get out of jail free’ card, I’m somewhat encouraged that Eric Schneiderman and Beau Biden are continuing with their investigations on the mortgage fraud. The MERS suit is a step in the right direction. My personal feeling is lawlessness begets more lawlessness. It seems to be a standard set since the Bush/Cheney years and has spread throughout the system. If we don’t get a handle on it and people lose faith in the Government’s capacity or willingness to invesitgate and proscecute criminal activity then the show is over. Why should anyone follow the rules or adhere to the Law?
Btw, I sent a note to Biden thanking him and his staff for the work they’re doing. Maybe, I’m naive but I think we’re living in a time when giving kudos for right-minded behavior and practices is as important as condemning the shady and shoddy practices that have become all too standard.
We shall see. Good article.
Judge refused to sign OWS arrest warrants! Finally someone in power is seeing the injustice of trying to take our #FreeSpeech Rights away!
Wow!
Sorry for the absence, folks. Real Life got in the way.
Re the bailouts: absolutely. It was NOT done right. Thank heaven *something* was done. They should have made lending a requirement of receiving bailout money. (I.e. the banks couldn’t just take the money, use it to pork up so they could satisy their capital requirements, and then sit on it while the rest of the economy died on the vine.) They should have nationalized some of the worst offenders (Bank of America, which goes on acquisition spree just before the crash, apparently for the sole purpose of become Too Big To Fail), etc., etc., etc. Dak could and has given us a lot more on all that.
It is so good to read you again. I am so glad you joined us here!
But there’s a dilemma there. If the bank bailout was required to keep from crashing the economy, how could a lending requirement be enforced? The banks could just do whatever they wanted, lend or not lend, and be bailed out anyway (or else the economy would crash).
As Dak mentioned with respect to GM, when the gov is handing out money it can attach any conditions it wants. They could have made lending some sensible portion of the bailees’ capital a requirement. At, say, 2% above prime and no more, because the next thing would have been 27% interest rates. Instead they attached no strings. Zero, zip, nada. So much so that the parasites could pay themselves bonuses out of the money!
Geithner was one of the high flyers himself, so there’s no way he wouldn’t have realized they’d do that if they could. Which means that leaving the door open for that kind of rip-off was, at best, accidentally-on-purpose.
Minx, you get migraines, right? As opposed to plain old bad headaches?
Either way, it’s no fun. Hope it’s getting better!
Colossally Low Residential Investment Due to Fraudulent Housing Market
Well, duh.
“he noted that servicers, by selling the servicing rights, can fire the borrower, but the borrower cannot fire the servicer. This leads to a major lack of focus on consumer needs.”
I love the dry understatement of that last sentence.
I’m late to the party… but brilliant post, quixote! I esp. loved the sidebar about Krugman constantly asking ‘what were they thinking?’ I hope for his sake it’s rhetorical… I had to stop reading him as regularly as I used because he just seems so confused by the obvious.
http://cannonfire.blogspot.com/2011/10/anti-ows-propaganda-and-myth-of.html
Cannonfire thought it was great too!!!