Payback time in Orange County


A FUNNY thing happened in the birthplace of Reagan-style supply-side economics. Orange County, Calif., one of the nation's richest and staunchest right-wing Republican communities, lost over $2 billion into the speculative black hole known as "derivatives."

Serves 'em right.

Their county treasurer was a hot-shot gambler passing himself off as a stock expert and regular guy. He even wore polyester pants.

The Reagan years were marked by borrow and borrow, spend and spend. Something for nothing was its motto, and who cared about the debt -- "we can grow out of it," they said.

Today we are still trying to pay down the debt from that era, and the Democrats who undertook that thankless task have just been thrown out of office by a new crowd that looks very much like the old Reagan free lunch set, only with white hair.

Under Reagan, tens of thousands of people in the private sector danced merrily on top of newly made fortunes. Most of their money was made on crazy -- pardon me, "innovative" -- types of securities whose suspect value was apparent in their very name: "junk bonds."

The S & L industry and the banks went on the most reckless and irresponsible lending binge since the Roaring Twenties. They lent money based on junk bonds and on the most speculative of real estate deals, inflating values until they plunged themselves and their depositors into oblivion.

Marylanders saw Maryland National Bank flounder and be taken over by NationsBank largely as a result of such recklessness. Nothing was sacred to the free marketeers and supply-side hustlers.

Private companies were taken public and public companies went private. Fortunes were made while workers suffered the first rounds of downsizing. Ordinary people were fired in order to pay for the high rollers profits from junk bond deals.

Out of this dazzling display of excess, corporate management ++ salaries soared into the multi-million-dollar-a-year range, while middle management joined older Americans and displaced blue-collar workers flipping hamburgers at the local fast-food joint.

In a fair, just and truly free enterprise system the flagrant stupidity of these white-collar gangsters would have been pTC rewarded with bankruptcy both for their corporations and their greedy investors. Their reputations and fortunes should have been devastated when the results of their disastrous policies became apparent.

They should have been on the unemployment line like all those who jobs and careers they had exported to the Pacific Rim nations. Instead, they floated down safely on golden parachutes.

The Reagan administration wasn't about to allow its friends and supporters to go down the tubes, never mind that they had raped the American economy.

So, along with its allies in the Democratic Party, it engineered a massive bailout program paid for by middle-class working people, who saw their taxes diverted from programs that would have benefited them -- such as health, education and housing -- to a scheme designed to cover the defaults of the robber barons. Then someone managed to convince them that it was really the poor and helpless who were "taking" their money.

Now, having diverted billions to protect the rich from their own folly, and having been rewarded in the last election for the voters' short memory of what they did the last time around, these same characters are right back trying to work their perennial shell game.

This time the name of the game is "derivatives" and other fast-buck schemes, and many of the same banks and loan associations that were bailed out by the government last time are back in the thick of it. They say there's a sucker born every minute. Orange County has a couple of million of them.

Orange County, ironically, is only the most recent and spectacular victim of the predatory economics it helped legitimate through its support of Reaganism and its supply-side quackery. I hope nobody comes to its aid this time around.

Let the good folks there bleed a little, like middle- and working-class Americans have bled for the past decade. Let their taxes go up and let their gold-plated services be cut.

Then maybe the stockholders who see their money disappear down the drain will give their multi-million-dollar-a-year corporate managers the boot instead of taking it out on the poor workers with another round of downsizing.

Maybe they will demand the high rollers give back their inflated salaries and stock options to compensate for their malfeasance and misfeasance.

I know know it probably won't happen, but at least one can dream.

Walter S. Orlinsky writes from Baltimore.

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