Please give to The Capital Times Kids Fund.

Business Beat: Yo-yo economy comes home to roost

Mike Ivey  —  10/08/2008 6:04 am

Well, if this is the ownership society, I'm not digging it.

Since the Reagan revolution of the 1980s vowed to get government out of the way, Americans have been told to go it alone. Some have labeled it the yo-yo economy: you're on your own.

Lose your job? Start your own business.

Need health care? Open a medical savings account.

Want money for retirement? Better start an IRA.

But now after some 30 years of deregulation, tax cuts for the wealthy and trickle-down economics, something has gone drastically wrong.

Millions of Americans who have followed the rules and dutifully contributed money to their 401(k) accounts are watching helplessly as their balances plummet. Many still haven't recouped losses since the 2000 dot.com bust and are watching again as the markets test new lows.

Yet in another great right-wing sleight of hand we're being told that poor people are somehow behind the financial mess on Wall Street that has rocked markets worldwide.

As the blame game continues to unfold, fingers are being pointed at low-income homebuyers who were unable to make payments on their mortgages, setting off a cascade of events that culminated in the collapse of major investment banks. That darn Community Reinvestment Act.

Almost reminds me of the welfare reform debate during the Clinton years, where the poor were again blamed for all the country's woes.

Certainly, some home loans were made that should not have been. But people have been urged for years to purchase real estate. A home is the best investment you can make, the industry has long claimed.

Not to be forgotten are the fees and commissions collected by Realtors, lenders, appraisers, title insurers and banks as loans were made, packaged and sold off so more mortgages could be written.

(For a funny and concise explanation of mortgage-backed securities visit www.mymoneyblog and look up the subprime-loan-crisis-explained-by-cartoon-stick-figures. Be warned: there is some spicy language.)

But now that the house of cards has collapsed, the same guys who wanted government out of the way are crying for Washington to bail them out.

"It's funny how great cheerleaders for capitalism back the Wall Street bailout," says James Carlini, adjunct professor at Northwestern University, in a column on the Wisconsin Technology Network Web site.

Carlini wonders why free market types think it's okay to rescue financial markets but if government funds health care, for example, then it is called socialism.

"What about damages done to the American economy by these CEOs?" he asks. "Thousands suffer while a few wait to calculate their latest bonus that they didn't earn."

At least one good thing has come of the market meltdown. You don't hear much talk about privatizing Social Security anymore. It might be the only sure thing left for old age.

Acorn King

Former Madison City Council President Austin King has found himself in the middle of the nation's mortgage crisis, working for the past year in New Orleans for the Association of Community Organizers for Reform Now, or ACORN.

"I love New Orleans," says King, 27, who left the council in April 2007. "It has been an amazing experience so far. Talk about a tale of two cities, though."

ACORN has drawn the wrath of many conservatives, most notably talk radio blowhard Rush Limbaugh who has blamed the group for everything from voting fraud to the mortgage meltdown.

"Yes, Rush certainly has a thing for us," says King. "So does Lou Dobbs. I taped an interview for his program last week and they used 12 seconds of it surrounded by five minutes of crazy right-wing conspiracy theories about how we stand to get hundreds of millions of dollars from the bailout, which is an all-out fallacy."

Good to see King is still ruffling feathers.

Mike Ivey  —  10/08/2008 6:04 am