Washblog

One the one hand, it's both inevitable and desirable that more-prudent lenders handle the deposits and assets of less-prudent ones. On the other hand, it's a massive privatization, often at a very bad price. American citizens become the caretakers of these broken banks only to send the assets off at a profit to for-profit companies that have plenty of capital today because they aren't lending.

Moreover, it speaks to the American tendency towards what I call "vulture capitalism". If you do the math, most people who have capital would just as soon pull the meat off a dying economy as help raise up a new one. That's bad for everyone - except them. Vulture Capitalists will always cite past virtue and complain bitterly about costs. Sound familiar? They'll always talk about how everybody else did it, it's not their fault and why should they pay more than the broken market will bear? Meanwhile, they are moving capital from ventures focused on the future towards saving their money (often at the Fed, which now pays them interest to do it) so they can get low prices on businesses that struggle more and more. They call it "smart business". I call it "being a parasite".

Here's another piece of math for you: a dollar saved today is worth a dollar. A dollar invested in tomorrow is generally worth about $1.30, particularly when it's invested in high-return activities like education. Governor Gregoire is overwhelmed with the need to save dollars, but the state of Washington needs to invest dollars. The Governor has to cut, yes, but while she's reducing risk for Washington's bondholders and keeping taxes low for Washington's taxpayers, she has to make sure that she improves the engine of investment for the citizens who will make this state prosper again.

If, Virginia Governor McDonnell was right when he said, in his response to the State of the Union, that "the government closest to the people, governs best" then it doesn't make a lot of sense to let the investment engine of our state be governed by Wall Street, does it? Wall Street's record on local, sustainable investment is horrendous. Under the influence of Wall Street, the engine of local, sustainable investment has been corrupted and destroyed in America. If Wall Street and Washington D.C. are too blinded by greed and self-interest to do anything but pass out the carrion of our fallen financial system, Governor Gregoire must act responsibly and create a financial system for our state that is local, sustainable, independent and responsible.