Wall Street's Lifeboat Ethics

I hear on the news that the Obama campaign already has an ad out using clips from last night's debate. Entitled "Zero," it highlights the fact that McCain never once used the words "middle class." Implication: The omission speaks volumes about McCain's priorities. That, and having his campaign staffed by lobbyists.

More striking was this clip of an exchange this week between Larry Kudlow (CNBC, National Review; formerly with the Reagan administration, Freddie Mac and Bear-Stearns) and Vermont Sen. Bernie Sanders:



Sanders mocks free-marketer Kudlow as a socialist for supporting the disaster capitalist bailout of Wall Street. Ordinarily, government expenditures designed to help Main Street pay bills or provide health care for families are non-starters for Kudlow and his fellows. Benefiting Main Street is irrelevant. Such actions are un-capitalist. They present a moral hazard and tilt the country towards socialism. Conservatives oppose such actions on principle. "Oh, no!" Sanders mimics. Yet here Kudlow argues, "Every twenty or thirty or fifty years, I'm okay with it." Yes, when it is his friends in peril.

Kudlow argues [1:59] that a taxpayer-funded bailout of Wall Street moguls will "first and foremost help Main Street, middle-class people." Why the sudden concern for you and me?

"Wall Street went bust! I mean, look what happened. Bear-Stearns went under. Lehman Brothers went under. Merrill had to sell," argues Kudlow [3:58]. When Wall Street is in trouble, government must not blink before rushing to the rescue.

Uh, huh. When New Orleans went under (water) and people drowned, conservative pundits and bloggers argued that taxpayers had no responsibility for bailing out people who "irresponsibly" lived in a town established below sea level in the eighteenth century. Bush promised help. New Orleans is still waiting.

These are Wall Street’s lifeboat ethics. As the titanic U.S. economy lists badly, Wall Street brokers, bankers and speculators of the second Gilded Age want those of us in steerage to buy them lifeboats - to the tune of $700 billion - promising to come back and pick us up after the ship goes down.

We have seen that movie.