Another Sign of the Failure of the Free Market?

The "sub-prime mortgage" fiasco, referred to as "sub-crime" by the great Danny Schechter at Media Channel. Perhaps I am just pointing out the obvious by saying that the sub-prime mortgage crisis is a sign of the impending doom of the free-market policies of the neoliberal cabal in this country, but nevertheless I feel I should point it out, because nobody else seems to be.

Here's the basic problem: Fanny and Freddie Mac - the two giant lending institutions originally set up in order to facilitate the purchase of homes by low and middle income Americans, known as the "dream machine" - have such an unbelievable amount of money tied up in these bad loans that both institutions are "too big to fail and too big to bail.(1)" You see, if the government bails out both of these institutions, it is in effect admitting that the free-market, deregulated banking policies that have been in action since the Reagan Administration (both banks were deregulated under Reagan) are a failure. On the other hand, if they don't bail out the banks, this could be the very thing to take the economy totally into the tank, causing people to run on their own banks.

Could this be it? Could this be the time at which we might actually see the big slam dunk, the crash? I mean, historically, the big crashes in every country never come with much warning. Usually, the economy is doing bad, but the average person is just a little more under the gun than they normally are and then all of a sudden they are financially ruined. One thing we know for sure, because many prominent bankers and economists have already said as much, is that there will be 200-300 other small to medium sized banks that will fail in the next month or two in addition to the Macs. Well, you get the point. It is going to get much worse before it gets better.

This is a very serious issue folks. We just might be looking at the beginning of the end. And chances are, the crooks in the Bush Administration are just going to waltz down out of Washington DC, leaving the rest of us - including the next President - toiling in the muck.




(1) Statement made by a professor from the New School in New York City on DemocracyNow.org, July 17, 2008.