Friday Round Up

As we head to the last weekend before the holidays let’s recap a couple of stories:

First, as expected, the White House stepped in and lent money to GM and Chrysler. The amount seems small to me. $17.5 billion is chump change to companies who are bleeding red ink the way those two are. So this is very much a short term effort. Whether the time being bought is sufficient for the auto makers to make the changes they need to is highly unlikely. In reality this looks more like an expensive punt into the Obama administration’s lap. I think we will be seeing another rescue package in the spring.

Second, the Madoff affair has been given yards of column space in the papers for good reason. The guy was an abomination. But we should all remember that his scam would have been caught long ago if not for the deregulatory efforts of the Republican party. This is not a partisan statement [well not really!] because it is a fact. Under Cox, tits Bush appointed head, the SEC has actually reduced the number of inspectors it has working in the financial industry. This is even though that industry has boomed during the Bush years. Plus the SEC changed its investigative attitude and significantly reduced its oversight. This was not an accident. It was a direct outcome of the market driven ideology that the Republicans have firmly espoused for decades. The reduction in oversight and investigation was deliberate. The outcome, that we are now paying for in spades, has its direct origins in right wing ideology.

It is ironic in the extreme to watch the most deregulatory administration in memory fade away as it attempts to undo the damage it wrought by re-regulating and nationalizing the very industries it claimed to be more robust than ever. That claim was based upon the false premise that markets can regulate themselves.

Let’s all pay attention: markets cannot self-regulate. Learn that lesson wisely folks lest we all end up in a similar sea of red ink sometime in the future.