A Sense of Desperation

As we hear that the Obama Justice Department reached settlement with Goldman Sachs there are many reactions. My reaction is that the establishment is feeling desperate, fearful of a teetering capitalist system that cannot tolerate the implications of an honest judgment.

Goldman Sachs designed an investment package of subprime mortgage loans that was highly likely to fail, invested in its failure, but sold it to others as a good investment. They get caught, and by most accounts by analysts who understand these things, the record Securities and Exchange Commission (SEC) penalty of $550 million is well below the $1 Billion that was expected as a baseline for settling this fraud case. But you don't have to take the word of the analysts, the reaction of Wall Street was a sigh of relief expressed in terms of a rise in Goldman's market value that greatly exceeded the penalty amount.

This is just one example of many in which the establishment's fear of a teetering economic system has led to tepid, dishonest policy. The inability for the Washington establishment to consider a single-payer system is another example. We're told that there simply wasn't the political will, and that the insurance and other health related industries were "too strong." I suspect the real reason is that the capitalist economic system is too weak to endure a transition from the current inefficient, paper-pushing health care system to a more efficient one.

I'm sure there are many other examples.

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Cross-posted at GDAE Podcast.