By All Means, Punish Wall Street, But Don't Forget Own Profligacy

IBD Editorials ^ | September 26, 2008 | VICTOR DAVIS HANSON

[Kaslin]

When the mortgage bubble burst, Americans were "shocked" at how many Wall Street buccaneers had been gambling in a vast pyramid scheme with someone else's money.

Paper fortunes were made buying and selling questionable subprime mortgages on the silly assumption that such gargantuan inside profiting would always expand — even as the number of homebuyers able to buy overpriced properties was shrinking.

Now, after the recent crash in subprime mortgages and the stocks of several investment firms, a trillion dollars in "assets" could be nearly worthless. An already indebted American government must restore some sort of trust to banks and markets by either printing money or borrowing hundreds of billions of dollars from foreign creditors to guarantee loans.

We Did This

All that remains of this Ponzi scheme is the election-year blame game. Republicans charge that important financial firewalls were dismantled by the Clinton administration while insider liberal senators got shady campaign donations in exchange for aiding Wall Street. Democrats counter that the laissez-faire capitalism espoused by Republicans for two decades encouraged financial piracy while tax policy favored the rich speculator over the middle-class wage earner.

But no one dares ask what really drove the wheeler-dealer portfolio managers. Who re-elected these shady politicians of both parties? Who fostered the cash-in culture in which both Wall Street profit mongering and Washington lobbying are nourished and thrive?

[nmh]

BUMP!!!!!!

[dalebert]

Wall Street wont be punished. the small investor will.

[muir_redwoods]

Wall Street is like Main Street, most people are decent; a few are criminals. The criminals get all the attention but that's to be expected. Left unpunished, the criminals can make the place unlivable.

Any measure the treats all of Wall Street the same is bound to fail. Punishing everyone when the guilty can be found may be a good way for the democrats who set up Fannie and Freddie to hide their guilt but it won't fix the fundamental issues.

[eyeamok]

Immediate asset forfeiture, Instant Death Penalty for All Financial Crimes over $100. They would self regulate.

[muir_redwoods]

They do self-regulate. If they cheat each other they are basically banned for life. All we need to do is get that ethos spread to cover the investors as well as the traders.

Easier said.....

[Tublecane]

As I’ve always said, the FBI (or whoever) can start investigating Wall Street once they investigate Congress.

[Alia]

Thank you, Kaslin, for posting this very at-root-common sense penning from Mr. Hanson. He's right on each his major points.

Mr. Hanson: But Americans should remember that Frankenstein was not the name of the monster but of its creator.

Superb conclusion line.

[singfreedom]

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