However, no more. Modern-day “capitalism” in America is to flatten
the risk curve for people who already have money, by borrowing
from future generations with debt-fueled bailouts for companies.
We have consciously decided to reduce the downside for the
wealthy, thereby limiting the upside for future generations.
CNBC guest: Equity holders deserve to get wiped out.
CNBC host: Why does anybody deserve to get wiped out in a crisis
like this? This is a natural disaster, why does anybody deserve to
get wiped out? Wouldn’t that be immoral in and of itself?
“Immoral,” here we go. Morality for CNBC, and the current
administration, is not capitalism but the worst type of socialism,
cronyism. Rugged individualism and capitalism on the way up,
privatizing the gains — and then socialism/cronyism on the way
down as we socialize the losses with bailouts.
The analogy has been used enough to border on cliché, but it really is a “heads they win, tails we lose” system. It’s a scam, when you honestly examine it, but as Galloway pointedly observes, it’s become a foundational belief in the Wall Street class.
Take the cruise line industry. They’re getting crushed by this pandemic for obvious reasons, and they very much want to be bailed out by the U.S. government. But why do they deserve it? For tax and regulatory reasons, they don’t even register their ships in the U.S. — Carnival Cruise Lines is incorporated in Panama, Norwegian in Bermuda, and Royal Caribbean in Liberia. Bermuda is not part of Norway and, last I checked, Liberia is not in the Caribbean. Not only do these companies want U.S. funded bailouts, they don’t even want to pay U.S. taxes or comply with U.S. laws during normal times.
The thing to remember is that if allowed to fail, the cruise ships won’t sink to the bottom of the ocean. The jobs won’t disappear. The companies will go into bankruptcy, existing shareholder equity will get wiped out, and new ownership will take over. A bailout won’t rescue the industry or the jobs — it will rescue the shareholders.
★ Saturday, 18 April 2020