Relentlessly Progressive Political Economy

For those of you who have not already read this might I suggest you check-out Nouriel Roubini’s rant about who is responsible should the markets meltdown. Lefties should take note. Here is an excerpt:

Who is to Blame for the Mortgage Carnage and Coming Financial Disaster? Unregulated Free Market Fundamentalism Zealotry
Nouriel Roubini | Mar 19, 2007

The sub-prime and overall mortgage carnage is now likely to lead to a financial crisis whose cleanup and bailout costs will make the S&L bailout bill look like spare change. We are only at the beginning of this fallout but, already, several proposals and bills in Congress have been submitted to help millions of sub-prime homeowners on the verge of bankruptcy and foreclosure. The prospect of millions of homeowners thrown homeless on the street is already shaking politicians of every stripe. The relatively modest bailout envisaged by the first bills currently proposed in Congress will mushroom into a much bigger fiscal bailout of homeowners, borrowers and lenders once the garbage of sub-prime, near-prime and pseudo-prime toxic waste spreads around the economy and likely leads to a hard landing recession that will cause a much bigger financial and banking crisis.

Given the fallout and real, social and financial costs of this disaster the political blame game will soon start. So it is important to make sure that the self-serving spin game that accompanied the game of those who happily ignored since last summer the looming housing, mortgage and economic mess will not be repeated again. Powerful political and financial interests will spin their self-serving ideological spin on who is to blame for this mess. Specifically be ready for a cabal of supply side voodoo ideologues – from the Wall Street Journal editorial page (and its invited op-ed writers) to hacks (calling them economists would be an insult to my profession) such as Arthur Laffer, Steve Hanke and other assorted voodoo religion priests – to start spinning a tale blaming government regulation and interference for this disaster that has instead its core in the lack of sensible government regulation, not the existence of such regulation. In the meanwhile powerful financial interests that repeat the mantra – or better the proof-less dogma – of unregulated free markets and do not like any – even sensible – supervision and regulation of the financial system will happily blame government action – rather than their own reckless greed and stupidity – for this disaster while happily demanding and receiving billions in bailout funds from the same government that they so happily disdain. This will be the most appalling form of corporate welfare: privatize the profits in good times and socialize the losses in bad times.

………..

Travis Fast

Updated: One important fact to keep in mind when reading this: Frank Stronach’s compensation was a cool 40,320,836 last year. Yes, you read that right 40 million and some change. This means the Ontario government (your tax dollars) is essentially covering Frank’s fees. I have yet to hear one squawk from the business press.

The Ontario Liberals earmarked 50 million dollars for a direct grant to Magna. Magna is rapidly becoming like that other Canadian success story Bombardier which was has seen more than its fair share of government subsidies. The question I have is why should we put in 50 million dollars of public money into a company that is notoriously hostile to unions, happy to move jobs outside of Canada and for which “we the people” receive zero direct compensation?

If Magna needs 50 million dollars in investment should not the taxpayers of Ontario receive 571,428 shares in Magna(50 million/ 87.50)? That is, if the government is going to be in the business of investing in Canadian companies why is this happening in the form of grants and not as would any other investor through an equity stake or as a holder of corporate bonds?

This is especially so in light of the fact that Frank Stronach’s attachment to Canada is about as stable as an accountant’s heart. As Frank once said:

To be in business your first mandate is to make money, and money has no heart, soul, conscience [or] homeland”

Given this, surely an ownership stake would not be too much to ask. At least Ontario would have something to sell when Frank’s fickle heart found a more lucrative trough to feed in.