Mitt Romney has unveiled his plan to overhaul Social Security and Medicare. Unsurprisingly, it involves cutting benefits to the greedy geezers, orphaned children, and the disabled who depend on it. As Matt Taibbi sarcastically observes:
Actually, it makes sense. If we don’t cut health care and retirement benefits for old people, how can we pay for the carried-interest tax break that allows private equity guys like, well, Mitt Romney to keep paying 15 percent tax rates?And, naturally, another major part of his "reform plan" is to privatize the two programs. Because Wall Street has done such an awesome job with your 401k.
Taibbi points out the truth about the so-called "Masters of the Universe:"
...they’ve all proven their complete and utter incompetence to do their ostensible jobs, i.e. the care and stewardship of money.
For instance, the top five investment banks in the country sought to remove capital requirements in the middle of the last decade, and all of them instantly jacked their debt-to-equity ratios above 20-1, some of them going as high as 33-1 or 35-1. Of those five investment banks, three (Bear, Lehman, and Merrill) went out of business during the crash, and the other two (Goldman and Morgan Stanley) required massive government aid to survive.And here's why O and I decided to celebrate "Move Your Money" Day by transferring our vast fortune from Wells Fargo to a local credit union.
The commercial banks have not been much better, with two of the biggest (Wachovia and Washington Mutual) imploding thanks to bad investment decisions and three of the biggest survivors (Bank of America, Wells Fargo, and Citigroup) recently facing downgrades.
The recent downgrades, incidentally, were widely seen as Wall Street’s way of making two interlocking judgments about these big banks. One is that their accounting is so fucked up and dishonest that it simply cannot be believed, leading to widespread expectation that one or more of them will ultimately collapse. The other is that when they collapse, the government may no longer be able or willing to completely bail these companies out. The downgrades were spurred by vague fears that implementation of new reforms via Dodd-Frank will make it harder to get bailouts.
So the mere hint that these banks might be denied future bailouts caused a company as massive as Bank of America to be downgraded to just above junk status. That means, in other words, that without the implicit promise of government aid, Wall Street considers these banks to be junk or below-junk businesses. Evaluated purely on their own merits, without the implicit attachment to the taxpayer, these companies actually have negative trustworthiness.
And these are the people we want managing the nation’s Social Security accounts?
P.
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