Plutocratic Paranoia

Paranoia strikes deep
Into your life it will creep
It starts when you’re always afraid
Step out of line, the man come and take you away

—Stephen Stills, “For What It’s Worth

In a God-fearing, if not God-ordered, world, one would think that when a billionaire, worried about “a rising tide of hatred of the successful one percent,” stupidly compared progressive critiques of wealth inequality in America to “fascist Nazi Germany,” that reputable institutions, say, like The Wall Street Journal, would have the sense to unequivocally condemn such outrageous nonsense.

Nope. Not only did the Journal publish this disgruntled plutocrat’s letter about a week ago, today we find that the paper’s editorial writers, always happy apologists for our emerging plutocracy, have now become defenders of plutocratic paranoia. Oh, there was the gentle admission that one ought to be more careful in one’s use of comparisons to Nazi Germany, but the real condemnation was saved for what the writers called “the politics of economic class warfare,” which is how the rich right views any criticism of the one-percenters gobbling up most of the bennies the economic recovery has handed out the past four years or so.

Paranoia is striking deep into the hearts of some of America’s wealthiest folks and the ideological defenders of an out-of-adjustment economic system. Perhaps they are starting to believe that liberal critiques of what has been happening for the last 35 years are beginning to resonate with the electorate. Why else would the WSJ editorialists end their defense of the disgruntled plutocrat by falsely saying that liberals are “promoting personal vilification and the abuse of government power to punish political opponents”?

In any case, back to reality. Paul Krugman published a piece a few days ago that addressed the billionaire’s comparison of progressivism to fascism, but he went much further:

Anyway, thinking about this sort of thing makes me realize that there’s a danger, especially for progressives, of confusing the proposition that Obama’s billionaire haters are stark raving mad — which is true — with the proposition that Obama has done nothing that hurts the plutocrats’ interests, which is false. Actually, Obama has been tougher on the one percent than most progressives give him credit for.

Oh, I know that some lefties don’t want to hear it, but Krugman, who has been somewhat critical of President Obama over the years, has some facts to back up what he is saying:

Start with taxes. The Bush tax cuts haven’t gone completely away, but at the very high end they have been pretty much reversed; plus there are additional high-end taxes associated with Obamacare. The result is that taxes on wealthy Americans have basically been rolled back to pre-Reagan levels:

Meanwhile, financial reform looks as if it will have significantly more teeth than expected.

So the one percent does have reason to be upset. No, Obama isn’t Hitler; but he is turning out to be a little bit of FDR, after all.

That chart (which was lifted from an excellent article written by the Atlantic’s Jordan Weissmann) along with Krugman’s remark about the unexpected “teeth” in financial reform (“Dodd-Frank“) may explain why some billionaires, who should have nothing in the world to complain about—what good is all that dough, if you are still afraid of the rabble?—would resort to Nazi references when talking about liberals criticizing them. They feel victimized. Yep. Victimized.

Matthew O’Brien, in a piece titled, “Why Do the Super-Rich Keep Comparing Obama to Hitler?” referenced an occasion during Obama’s first term in which some really wealthy folks, including some of those Obama had referred to late in 2009 as “a bunch of fat cat bankers on Wall Street,” leaned on Obama’s campaign manager, Jim Messina, for a little love from the President. Messina was in New York looking for campaign money—since Obama had done very well among Wall Streeters in 2008—and The New York Times described what happened:

For the next hour, the donors relayed to Messina what their friends had been saying. They felt unfairly demonized for being wealthy. They felt scapegoated for the recession. It was a few weeks into the Occupy Wall Street movement, with mass protests against the 1 percent springing up all around the country, and they blamed the president and his party for the public’s nasty mood. The administration, some suggested, had created a hostile environment for job creators.

Messina politely pushed back. It’s not the president’s fault that Americans are still upset with Wall Street, he told them, and given the public’s mood, the administration’s rhetoric had been notably restrained.

One of the guests raised his hand; he knew how to solve the problem. The president had won plaudits for his speech on race during the last campaign, the guest noted. It was a soaring address that acknowledged white resentment and urged national unity. What if Obama gave a similarly healing speech about class and inequality? What if he urged an end to attacks on the rich? Around the table, some people shook their heads in disbelief.

“Most people in the financial world,” a top Obama donor later told me, “do not understand how most of America feels about them.” But they think they understand how the president’s inner circle feels about them. “This administration has a more contemptuous view of big money and of Wall Street than any administration in 40 years,” the donor said. “And it shows.”

How a group of people with more money than Allah could feel victimized by Obama or any other slightly left-of-center Democrat is beyond me. Perhaps they are starting to hear too many comparisons they don’t like. Maybe they don’t like it when they hear, as it was recently reported, that “The 85 richest people in the world now have as much money as the 3.5 billion poorest put together.”  Or maybe they don’t like it when they hear Paul Krugman’s latest comparison, which he presented yesterday on NPR’s All Things Considered:

I just had my favorite statistic of this morning. The top 40 hedge fund managers in America earned as much as 300,000 schoolteachers in 2012. So that gives you an idea of how unequal a society we’ve become.

You can see where that might ring with a sting in the ears of those “top 40 hedge fund managers,” sort of like a Hitler comparison rings in the ears of a liberal.

But let’s be clear here. No one, at least no one that I know, is talking about “punishing” rich people. It’s not a bad thing that hard work and innovation is rewarded over sloth and foolishness. As Krugman said on NPR:

Nobody thinks that we should be a society without monetary incentives. No one thinks that we should have exact equality or even anything close to that. The point, however, is that our notion of what kind of society we should be, I think, is something like the kind of society we actually were 30, 40 years ago where we had a broad middle class, where the gap between people at the top and the average or the median American was not that large.

See? There’s no need for those hyper-sensitive, fraidy cat billionaires to go all Hitler on us.

Finally, even though there is a rather robust defense of plutocratic paranoia going on among some conservatives, there is some evidence that even Republicans are starting to get the message that the inequalities we see among us threaten our stability as a nation, or, more likely, they are starting to think that such inequalities threaten their electoral prospects as a national party. They are starting to talk about the issue, even though they largely blame it on Obama, and offer as solutions the same old tax-cutting, trickle-down, anti-regulatory nonsense.

But at least for now the issue is front and center and that’s not a bad thing.

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Has Obama Been Soft On Wall Street? Yep. Does That Make Him Mitt Romney? Uh, Nope.

President Obama has done some amazing things since he took office in January of 2009 (many of those things have been chronicled on this blog). Much of what he has accomplished he had to do with only Democratic support, and much of his time has been spent trying to overcome the economic recovery saboteurs in the Republican Party who were trying to destroy him politically, many of whom are still trying to undermine, if not outright destroy, his remaining presidency.

But that’s no excuse for the President’s horrible record on pursuing, or, really, not pursuing, banksters—those financial folks responsible for the ongoing economic misery among working-class people in the country, people long on class but short on work. The Administration should have been, and still should be, making the banksters, for God’s sake at least some of them, pay for their crimes.

Aggressively pursuing these miscreants from the start would not only have been the right thing to do, it would have been politically popular too. It might even have helped, ever so slightly, endear him to a few folks on the right who also hate it that big-time money men and women seem to have escaped without so much as a rugburn, after the most horrific financial meltdown in 80 years.

There will be some stains on the Obama legacy, but perhaps no stain will be as dark and ugly as the President’s failure to see to it that some sense of justice was satisfied, or at least aggressively pursued, for what happened in the fall of 2008.

But having said that, I’m not one of those on the left who will write ridiculous things like Eric Zuesse wrote recently for HuffPo (“Is The Obama Administration the Most Corrupt in U.S. History?“):

The rot certainly starts at the top. I am a proud Democrat who can tell a phony one clearly, especially when it’s demonstrated by four years of remarkably consistent criminal (and profoundly conservative) decisions by him. Obama is a phony Democrat. He is, at best, Romney-light. Maybe he is, in some ways, even Bush-heavy. As regards non-prosecutions of financial fraudsters, the data show him to be Bush-heavy.

Zuesse urges Democrats to turn on Obama, mainly over his dealings with Wall Street and his proposal to possibly change the way the cost of living adjustments are made to Social Security benefits:

The rot is on both sides now. Let’s see if our side will clamp down against it – as Senator Warren obviously wishes to do. Are we with her, or are we with Obama? That question does not concern a white woman versus a black man; it concerns a nation of equality under law, versus a champion of “Too Big To Fail.” In fact, Obama has been disastrous for Blacks, and not just for the rest of “the 99%.”

The Democratic Party will have to show where it stands – and with whom, and for whom.

The Republican Party has already failed its test regarding Bush. Will the Democratic Party fail its test regarding Obama?

Come on. Sure, there is plenty to criticize the President for over his handling of the banksters. Sure, he has surrounded himself with too many people wrapped up in that Wall Street-runs-America culture. Sure, at times his actions haven’t always lived up to his campaign rhetoric.

And there are other reasons why liberals should lately be a bit upset with him, including his embracing the chained CPI scheme and the quiet, very quiet, signing of a bill last week that will undo much of a law passed in 2012 called the STOCK (“Stop Trading on Congressional Knowledge”) Act, which prohibited members of Congress and their staffs from profiting from insider trading.

By signing the latest bill—a true symbol of corruption of our political system— President Obama reveals himself to be what he has always been: a politician with political motives that often involve sweetheart deals with those in power. (For an excellent telling of this sad tale, go here.)

But Eric Zuesse calling Obama a criminal and a phony Democrat and labeling him Romney-light and Bush-heavy? Please. Give me a break. And for Zuesse to say that “corruption has…been rampant during his Presidency”? Get a bleeping grip, Eric. That’s the same kind of stuff that happens when uncompromising ideologues on the right take out after one of their own whom they perceive to be philosophically disloyal. And it’s the same kind of stuff they say about the President.

Ironically, Zuesse criticizes Obama for acting too much like a conservative, which is sometimes a fair criticism, but then Zuesse acts like the worst of the conservatives himself when he blasts him and suggests he has done nothing worthy of respect, even from people on the left.

And particularly given the environment within which President Obama has had to work since 2010—a totally hostile House and a filibuster-drunk Senate, which has to figure into any realistic evaluation of his performance—Zuesse’s comments about Obama remind me of something exiting the lips of, say, a Rush Limbaugh.

Geeze.

Meanwhile, for some level-headed, but hard-hitting criticism of the President’s policies vis-à-vis Wall Street, see today’s piece at HuffPo by Ryan Grim and Shahien Nasiripour, which begins:

New York Attorney General Eric Schneiderman has privately criticized the Obama administration and the Department of Justice for not aggressively investigating dodgy mortgage deals that helped trigger the financial crisis, according to senators and congressional aides who met with him this month.

As this article demonstrates, there is plenty of frustration to go around regarding the Obama administration’s failure, and it is a failure, to put orange jumpsuits on otherwise well-dressed Wall Street bankers. But that frustration should not lead those of us on the left to treat President Obama the same way hysterical conservatives have always treated him: like a Kenyan-headed American stepchild.

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[image from Seeking Alpha]

“Failure Is Not An American Habit”

I’m going to quote at length a passage from President Obama’s speech in Green Bay this morning because it represents his closing pitch to Americans, and, unfortunately, most Americans won’t hear much, if any, of it, only what fits into a short segment on the nightly news or a snippet on radio or cable TV:

Back in 2008, when we talked about change, I told you, I wasn’t just talking about changing presidents, I wasn’t just talking about changing parties, I was talking about changing our politics. I ran because the voices of the American people, your voice, had been shut out of our democracy for way too long, by lobbyists and special interests, politicians who believe that compromise is somehow a dirty word.

By folks who would say anything to win office and do anything to stay there. 

The protectors of the status quo are a powerful force in Washington. And over the last four years, every time we’ve tried to make changes, they fought back with everything they’ve got. They’ve spent millions to stop us from reforming health care and Wall Street and student loans.

And their strategy from the start was to engineer pure gridlock in Congress, refusing to compromise on ideas that both Democrats and Republicans have supported in the past. And what they’re counting on now, Wisconsin, is that the American people will be so worn down by all the squabbling, so tired of all the dysfunction, that you’ll actually reward obstruction and put people back in charge who advocate the very policies that got us into this mess.

In other words, their bet is on cynicism.

But, Wisconsin, my bet is on you. My bet is on the decency and good sense of the American people. Because despite all the resistance, despite all the setbacks, we’ve won some great fights. And I’ve never lost sight of the vision we share. That you would have a voice, that there would be somebody at the table fighting every single day for middle-class Americans who work hard. 

You know, sometimes Republicans in Congress have worked with me to meet our goals, to cut taxes for small businesses and families like yours, to open new markets for American goods, or finally repeal Don’t Ask, Don’t Tell.

And sometimes we’ve had big fights, fights that were worth having. 

Like when we forced the banks to stop overcharging for student loans and make college more affordable for millions. 

Like when we forced Wall Street to abide by the toughest rules since the 1930s. 

Like when we stopped insurance companies from discriminating against Americans with pre-existing conditions like cancer or diabetes, so that nobody in America goes bankrupt just because they get sick. 

I didn’t fight those fights for any partisan advantage. I’ve shown my willingness to work with anybody of any party to move this country forward. And if you want to break the gridlock in Congress, you’ll vote for leaders, whether they are Democrats, Republicans, or Independents, who feel the same way. 

But if the price of peace in Washington is cutting deals that will kick students off financial aid, or get rid of funding for Planned Parenthood, or eliminate health care for millions on Medicaid who are poor or elderly or disabled, just to give a millionaire a tax cut, I’m not having it. 

That’s not a deal worth having. That’s not bipartisanship, that’s not change. That’s surrender to the same status quo that has hurt middle-class families for way too long. But I’m not ready to give up on that fight. I hope you aren’t either, Wisconsin. I hope you aren’t either.

See, the folks at the very top in this country don’t need another champion in Washington. They’ll always have a seat at the table. They’ll always have access and influence. The people who need a champion are the Americans whose letters I read late at night, the men and women I meet on the campaign trail every day.

The laid off furniture worker who’s retraining at the age of 55 for a career in biotechnology, she needs a champion. 

The small restaurant owner who needs a loan to expand after the bank turned him down, he needs a champion.

The cooks, the waiters, the cleaning staff, working overtime at a Vegas hotel, trying to save enough to buy a first home or send their kid to college, they need a champion.

The auto worker who is back on the job, filled with pride and dignity because he’s building a great car, he needs a champion.

The young teacher, doing her best in an over-crowded classroom, with outdated textbooks, she needs a champion. 

All those kids in inner cities and small farm towns, in the valleys of Ohio, or rolling Virginia hills, or right here in Green Bay, kids dreaming of becoming scientists or doctors, engineers or entrepreneurs, diplomats, or even a president, they need a champion in Washington. They need a champion.

They need a champion because the future will never have as many lobbyists as the past, but it’s the dreams of those children that will be our saving grace. That’s why I need you, Wisconsin. To make sure their voices are heard, to make sure your voices are heard.

We’ve come too far to turn back now. We’ve come too far to let our hearts grow faint. Now’s the time to keep pushing forward. To educate all our kids, and train all our workers, to create new jobs and rebuild our infrastructure, to discover new sources of energy, to broaden opportunity to grow our middle class, to restore our democracy, and to make sure no matter who you are or where you came from or how you started out, you can work to achieve your American Dream.

You know, in the midst of the Great Depression, FDR reminded the country that “failure is not an American habit. And in the strength of great hope we must shoulder our common load.” That’s the strength we need today. That’s the hope I’m asking you to share. That’s the future in our sights. That’s why I’m asking for your vote.

I urge all of you to go here and read the complete text of the speech, given 80 years ago, from which the FDR quote above was taken. It is remarkable.

Roosevelt does a short survey of American economic history, including the Industrial Revolution, including a devastating critique of corporations, how they “threaten the economic freedom of individuals to earn a living,” how “we are steering a steady course towards economic oligarchy, if we are not there already.”

He said the day of the “financial titan” was over, and the “day of enlightened administration has come,” an administration with the task of,

distributing wealth and products more equitably, of adapting existing economic organizations to the service of the people. 

Remarkable. Imagine if Barack Obama said that!

Or this:

As I see it, the task of government in its relation to business is to assist the development of an economic declaration of rights, an economic constitutional order. This is the common task of statesman and business man. It is the minimum requirement of more permanently safe order of things….

The Declaration of Independence discusses the problem in terms of a contract. Government is a relation of give and take, a contract . . . Under such a contract, rulers were accorded power, and the people consented to that power on consideration that they be accorded certain rights. The task of statesmanship has always been the redefinition of these rights in terms of a changing and growing social order. New conditions impose new requirements upon government and those who conduct government . . .

Every man has a right to life, and this means that he also has a right to make a comfortable living. He may by sloth or crime decline to exercise that right, but it may not be denied to him. We have no actual famine or dearth; our industrial and agricultural mechanism can produce enough to spare. Our government formal and informal, political and economic, owes to every one an avenue to possess himself a portion of that plenty sufficient for his needs through his own work….

If, in accord with this principle, we must restrict the operations of the speculator, the manipulator, even the financier, I believe we must accept the restriction as needful not to hamper individualism but to protect it….

If Obama said those words, then Fox “News” commentators would undergo such ideological convulsions that all the drugs in Rush Limbaugh’s medicine chest wouldn’t be enough to calm them down.

America, The Owned

No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. You cannot serve God and mammon.”

—Jesus 

t’s time to face some uncomfortable facts about America, as yet more banking malfeasance makes the news:

WASHINGTON — Shareholders of JPMorgan Chase filed two lawsuits Wednesday against the biggest U.S. bank, accusing it and its leaders of taking excessive risk and causing the recently disclosed $2 billion trading loss.

The provision in the Banking Act of 1933 (Glass-Steagall) that prohibited commercial banks from gambling investing gambling using depositors’ money (and vice versa) had been gradually weakened over time, apparently starting in the 1970s, through permissive interpretations of the law by federal banking regulators and the courts.

As the Congressional Research Service put it:

Facing lower profits and stiffer competition from securities firms, banks began seeking approval from regulators to engage in a greater universe of securities activities.

Facing lower profits,” you see, can justify nearly anything in an increasingly corporatized America. And if there is enough campaign money spread around (this, before Citizens United), well, things can get fixed and profits can rise again like Jesus on Easter!

Seeking to stick a fork into and finish off Glass-Steagall, in 1999 a Republican-controlled Congress (you know, the same one that impeached and tried Bill Clinton), with a shameful assist from, uh, Bill Clinton (and too many Democrats to contemplate), passed the Financial Services Modernization Act, which finally allowed commercial and investment banks and securities and insurance companies to stop slyly shacking up with each other and unite in unholy but legal matrimony.

Now, to be fair to Clinton and his conservative-minded pals, they argue that their legislative efforts to finally kill Glass-Steagall actually “softened” the Great Recession. Gulp.

Clinton actually stated:

I have really thought about this a lot. I don’t see that signing that bill had anything to do with the current crisis…On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I’d be glad to look at the evidence. But I can’t blame [the Republicans]. This wasn’t something they forced me into. I really believed that given the level of oversight of banks and their ability to have more patient capital, if you made it possible for [commercial banks] to go into the investment banking business as Continental European investment banks could always do, that it might give us a more stable source of long-term investment.

It’s nice to know that Mr. Clinton hasn’t lost his unparalleled ability to rationalize.

Fortunately, around at the time of the repeal of Glass-Steagall was Democratic Senator Byron Dorgan. Unfortunately, not many listened to him.

Dorgan was one of only seven—seven!—Democrats in the Senate who voted against finishing off Glass-Steagall (Missouri’s two senators at the time, Messrs. Ashcroft and Bond were Ya-Ya sisters). He warned us in 1999:

I think we will look back in 10 years’ time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930’s is true in 2010…We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.

Fortunately, once again Dorgan the Prophet is here to present a way to fix things. Unfortunately, once again not enough people are listening to him. But you can for half a minute:

Vodpod videos no longer available.

Get that? Restore Glass-Steagall, prohibit naked credit default swaps, and break up too-big-to-fail companies. By the way, here is the way the Financial Times described naked default swaps:

A naked CDS purchase means that you take out insurance on bonds without actually owning them. It is a purely speculative gamble. There is not one social or economic benefit. Even hardened speculators agree on this point. Especially because naked CDSs constitute a large part of all CDS transactions, the case for banning them is about as a strong as that for banning bank robberies.

Pretty simple, no? So why won’t any of it happen? Oh, that’s pretty simple, too. Senator Bernie Sanders blurted it out Wednesday night in a beatified bit of truth-telling:

Let me tell you what many others might not tell you. Some people think, well, gee, the Congress regulates Wall Street. I think the truth is that Wall Street regulates the Congress.

Yikes. He restated the truth a little bit later:

Let me just say again what many people will not be happy to hear. Wall Street is extraordinarily powerful. Congress doesn’t regulate them, the big banks regulate what Congress does.

Another Senator, Dick Durbin, said three years ago:

…hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.

Well, at least we still get free checking! What? Oh my God.

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Here is the entire 7-minute segment from The Ed Show, featuring Sanders:

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It’s Like Sex For Them

Remember the supercommittee from last year? Remember how it failed to engineer a deficit deal and thus triggered those dreaded sequestered cuts that were supposed to make lawmakers see the light or else?

Well, we all know that “or else” won’t likely materialize in the end, but why deprive Republicans of a little fun in the mean time? Despite knowing they will not get any cooperation from Democrats who have given too much already in exchange for, uh, not much, House Republicans are set to bring up a their own hand-crafted bill for debate this week that would replace $78 billion in sequestered cuts that are scheduled to take effect in 2013.

Now, wasting their time on such useless legislation before the election this November is perhaps understandable, since there isn’t much else for Republicans to do these days—the ongoing War on Women hasn’t exactly been a polling success.

But as I suggested there must be some fun in it for the hard-core legislators, and sure enough here it is:

In addition to the $78 billion in sequester replacement, the bill contains an additional $180 billion in cuts aimed at reducing the deficit. Among the federal programs hit are food stamps, funding for the 2010 healthcare and financial regulatory laws and the refundable child tax credit.

Ah, there’s the orgasmic rub: Besides taking a stab at the Affordable Care Act, they’re putting a hurt on those most in need by cutting food stamps and healthcare funding and the refundable Child Tax Credit—such needy folks aren’t exactly big donors to GOP campaigns, now are they?—all the while making sure that Wall Street gets to take off its greed-monitoring ankle bracelet and go back to its life of slime.

Fun, fun, fun!  The collective conservative climax that will result should this Republican effort pass the House this week will likely be audible all the way to Joplin. Ozark Billy‘s in for a good time as he contemplates how much damage his (likely) vote can do to folks around here who need food stamps and a little money refunded to help raise their kids.

Vulture Class Says To The Carcass Class: Stop Your Bellyachin’

The Plum Line’s Greg Sargent pointed out “an extraordinary anecdote” in an upcoming New York Times Sunday magazine article:

Wall Streeters are so upset about Obama’s harsh populist rhetoric that they privately called on him to make amends with a big speech — like his oration on race — designed to heal the wounds of class warfare in this country.

Now let me get this straight: Wall Streeters—let’s call them the Vulture Class—want Mr. Obama—let’s call him the champion of the Carcass Class—to apologize for his “contemptuous view of big money and of Wall Street,” as the New York Times article suggests.

In other words, the vultures want the carcasses to stop whining about getting their bones picked.

Oh, my.

Here’s how Ed Schultz handled it on Wednesday night, with help from Bernie Sanders:

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Obama Created The Financial Crisis, Says The Stanford Man

Thomas Sowell is a regular columnist appearing in the Joplin Globe. Thus, the locals are exposed to his, uh, erudite opinions. Here is one that appeared in Wednesday’s paper: 

Washington gridlock may turn out to be the salvation of the Obama administration.

Not only does gridlock allow the president to blame Republicans for not solving the financial crisis that his own runaway spending created, the inability to carry out as much government intervention in the economy as when the Democrats controlled both Houses of Congress means that the market can now recover on its own to some visible extent before the next election.

Rarely have I read such breathtaking foolishness from the mind of an educated man, and a man who is a senior fellow at Stanford’s Hoover Institution. 

Obama “created” the financial crisis with his “runaway spending”? Is Thomas Sowell and Rush Limbaugh sharing the same warped brain? Are you kidding me?

Where do you go after reading something like that except to scientific journals to see if we have all been ushered into a parallel universe where white is black and black is white and Thomas Sowell is a genius? It is hard to come to grips with something so appalling, written by a nationally syndicated columnist and author of multiple books. 

That one subordinate clause, “Not only does gridlock allow the president to blame Republicans for not solving the financial crisis that his own runaway spending created…,” should disqualify Mr. Sowell from any consideration as anything other than a print version of Sean Hannity. 

And isn’t it convenient that a columnist has set himself up for a later column or two or three where he can say, if the economy turns around significantly, that Obama’s policies had nothing to do with it? And if it doesn’t turn around he can say it was, after all, Obama’s policies that kept it from performing. That’s job security, I suppose.

Later in the column he writes, incredibly: 

First of all, this country existed for a century and a half without the federal government intervening to save the economy.

Yes, and the country existed for a century and a half without the federal government intervening to insist on clear air and clean water and food that doesn’t poison us and air traffic controllers and on and on. Surely, even a Stanford fellow can understand that the complex economy of our times is a little different from the one in which our forefathers lived and moved and had their being, as an old Greek poet might say. 

All of which makes the point that the financial crisis was a crisis that could only have been realized in our time, in our complicated time, when banksters on Wall Street and beyond had the technological capacity to put the world’s financial system in unspeakable jeopardy. 

And make no mistake about it: The financial crisis was averted by the intervention of the government, ours and governments elsewhere.

And apparently it takes more, or less, than a Stanford man to figure that out.

 

A “Crude And Poisonous” Political Lie

I don’t know how many times I have addressed the falsehood, widely circulated among conservatives and transmitted through talk radio and talk television, that the financial crisis of 2008 was the fault of sappy-hearted Democrats who used government—the Community Reinvestment Act of 1977, for instance— to force banks to make loans to poor folks so they could purchase unaffordable homes.

But here we go again. Friday’s Joplin Globe featured an editorial by Jay Ambrose, whose column attacking filmmaker Michael Moore contained the following paragraph, pregnant with deceit:

That’s not to say joblessness doesn’t haunt us. Here’s why: a fiscal crisis brought on by the Federal Reserve and mostly liberals conniving in Congress with Fannie Mae and Wall Street to get mortgages in the hands of people who could not afford them. That gave us a fiscal crisis and a recession made worse by President Obama’s mismanagement of deficits and additional regulations scaring businesses out of expansion.

Now, that is fairly standard bulldook from conservatives, but it seems as if these people really do believe that if they keep passing this stuff off so matter-of-factly that it will actually become a matter of fact.

Fortunately, Friday’s Globe also carried a column by Gene Lyons that began this way:

So here’s my question: If the Community Reinvestment Act of 1977 effectively caused the Wall Street meltdown of 2007 by forcing banks to make bad home loans to improvident poor people (and we all know exactly who I mean), how come it took 30 years for the housing bubble to burst?

Next question: If fuzzy-thinking Democratic do-gooders enacted such laws in defiance of common sense and sound economics, why didn’t Republican Presidents Reagan, Bush I or Bush II do something? Was Rep. Barney Frank, D-Mass., secretly running the country?

Exactly how did the wealthiest and most powerful individuals in the United States — the investment bankers and corporate execs who host the $1,000-a-plate fundraisers, scoop up the Cabinet appointments and ambassadorships, and party down at White House galas — end up having less power over the U.S. economy than unskilled day laborers in Newark, N.J., or Oakland, Calif.?

The columnist went after New York City mayor Michael Bloomberg, who last week said,

It was not the banks that created the mortgage crisis. It was plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp …

Lyons called that “a conspiracy theory so absurd that it had previously been confined to such dark corners of American life as the Rush Limbaugh and Sean Hannity programs and the Wall Street Journal editorial page.”  He said that Bloomberg couldn’t possibly believe such a “crude and poisonous” political lie.

But it really doesn’t matter much whether Bloomberg believes it.  The point is that he wants you and me to believe it because it is designed to deflect attention away from the banksters in his fair city and elsewhere around the country and around the world.

Lyons makes these devastating points:

♦ …there was no law forcing or even encouraging banks to make shaky loans. The Community Reinvestment Act merely required FDIC-insured institutions to apply the same standards to all borrowers — i.e., no more “redlining.”

♦ …the law applied only to retail banks, never to Wall Street investment houses or mortgage companies…and 84 percent of subprime mortgages were written by private, totally unregulated lenders.

♦ Fannie and Freddie, the quasi-governmental mortgage underwriting companies, don’t actually make loans…Did they buy worthless mortgage-backed securities along with other victimized investors? Yes, but too little and too late to have caused the crisis. Although far from pristine, they were more victims than perps.

Those “worthless mortage-backed securities” were created by the financial industry, cut up and sold by the financial industry, rated as AAA by the financial industry, and insured by the financial industry.

A commenter responding to one of my columns in the paper wrote that it was “government social engineering that started the financial fiasco in the first place.”  Okay. Let’s pretend that statement is true for a second. That’s a little like saying that it was a Chinese butterfly flapping its dainty wings in early May that created the EF-5 tornado that wasted a third of Joplin later that month.  I mean, sure, you could weirdly make the case that an unwitting lepidopteran in Shanghai was responsible for the scorched earth here in our town, but that would leave out a lot of significant intervening events, wouldn’t it?

In the case of the financial disaster, those significant intervening events involved spectacularly stupid—because they were so spectacularly greedy—people on Wall Street and elsewhere. 

I remained amazed at how conservatives have created all kinds of ingenious explanations to explain away one brute fact about the financial crisis: the free market failed to account for and control the behavior of greedy banksters. 

And conservatives in the media continue to hope that repeating their lies about the cause of the crisis will morph not necessarily into the truth, but at least into common wisdom.

Alan Greenspan And The Un-American Mob

“For who hath despised the day of small things?”

—Zechariah 4:10

Herman Cain will never be president. 

But he does serve to represent something important—at least in terms of temperament and values, if not in complexion—about a rather large constituency in the Republican Party.  He famously remarked to the Associated Press that the Occupy Wall Street protesters were “un-American” and anti-capitalist, and, naturally, it’s all Obama’s fault:

I don’t have facts to back this up, but I happen to believe that these demonstrations are planned and orchestrated to distract from the failed policies of the Obama administration. Don’t blame Wall Street, don’t blame the big banks, if you don’t have a job and you’re not rich, blame yourself! It is not a person’s fault if they succeeded, it is a person’s fault if they failed.

I don’t have facts to back this up, but I happen to believe…”  That introductory clause represents a terrifying peek into the Republican mind these days.  Beliefs need not be supported by facts.

But beyond what Cain’s remarks reveal about the quality of analysis of the average GOP presidential candidate and the average GOP primary voter, Cain essentially voices what a lot of Rightists believe about the 99% of folks who don’t enjoy the best of the best in American society: If you aren’t scarfing down the majority of Grandma Margie’s Magic Pie, then it’s because your fork is too small.

Either get a bigger fork or get up from the table.

Majority Leader Eric Cantor says he is “increasingly concerned about the growing mobs,” and Glenn Beck, hiding somewhere on the Internet, said:

Capitalists, if you think that you can play footsies with these people, you’re wrong. They will come for you and drag you into the streets and kill you.

But believe it or not, most revealing and disturbing of all  is what Republican Congressman Peter King of New York said:

It’s really important for us not to give any legitimacy to these people in the streets. I remember what happened in the 1960s when the left-wing took to the streets, and somehow the media glorified them and it ended up shaping policy. We can’t allow that to happen.

No legitimacy.  That’s why Fox “News” ridicules the Wall Street protesters, whose diverse faces look like the America to come, not the America that was.  After months and months of promoting the pale-faced Tea Party movement with orgasmic fervor, suddenly Fox goes limp over the sudden appearance of a leftish backlash against greed and inequality.

The Right must not, as King pointed out, allow the media to “glorify” the Wall Street protesters, lest they end up “shaping policy.”

Well, notwithstanding the remonstrations of Mr. King and Mr. Cantor and Mr. Beck and other voices of the moneyed class, the mostly young and diverse folks that make up the Occupy Wall Street movement—whose unfocused demands are rooted in a very focused moral outrage about what greedy banksters have done to the country—will play a role in shaping policy.

Whether it will be through this current fire of protests, or whether it will be through a fire to come, frustrated young folks will do what they have done throughout American history: help clear the social forest of underbrush in this tall-tree democracy.

Forget Peter King’s fear of the protest movements in the streets of the 1960s. The best analogy to what is happening now is from the 1930s. Robert Cohen wrote of the great student movements at that time:

During its peak years, from spring 1936 to spring 1939, the movement mobilized at least 500,000 collegians (about half of the American student body) in annual one-hour strikes against war. The movement also organized students on behalf of an extensive reform agenda, which included federal aid to education, government job programs for youth, abolition of the compulsory Reserve Officers’ Training Corps (ROTC), academic freedom, racial equality, and collective bargaining rights.

The impetus, of course, for this youthful activity was the Great Depression:

Undergraduates in the early 1930s faced hard times, with the collapse of the job market and the exhaustion of student loan funds and parental financial support. In 1932 and 1933 even the student body itself began to diminish because of the sinking economy; some eighty thousand youths who in more prosperous times would have attended college were in these years unable to enroll. The economic crisis and its growing impact on campus led students to start questioning both the logic and value of American capitalism.

Sounds eerily familiar today, doesn’t it?

Young folks should question “both the logic and value of American capitalism.” And sober adults should be able to answer their questions, not with a knee-jerk response like Herman Cain’s or a stupid assertion like Glenn Beck’s or with expressions of fear from Republican congressmen, but with an acknowledgement that American capitalism is sick and it needs a regimen of life-saving treatment.

Some of us want to save it and have been arguing accordingly.

In the late 1990s, Alan Greenspan—who is to laissez-faire capitalism what Herman Cain is to pizza—was worrying about the uneven distribution of America’s wealth and income, and none other than The Wall Street Journal would jump his Randian behind for “blathering about income inequality.”

In 2002 Greenspan said of the increasing compensation for corporate executives:

It is not that humans have become any more greedy than in generations past. It is that the avenues to express greed had grown so enormously.

And in 2005 he dared to say:

In a democratic society, a stark bifurcation of wealth and income trends among large segments of the population can fuel resentment and political polarization. These social developments can lead to political clashes and misguided economic policies that work to the detriment of the economy and society as a whole.

About the widely divergent outcomes of people in the labor market, Greenspan told a Joint Economic Committee in 2005:

As I’ve often said, this is not the type of thing which a democratic society – a capitalist democratic society – can really accept without addressing.

The way Republicans these days have chosen to address the fruit of Alan Greenspan’s fears—the Wall Street protesters around the country—is by calling them an un-American mob who must be delegitimized and ridiculed at all costs.

A sure sign that the protesters are having an effect.

Is Ben Bernanke A Closet Democrat?

If you watched the television reporting on Federal Reserve Chairman Ben Bernanke’s appearance before Congress’ Joint Economic Committee yesterday, you likely don’t know much of what he said, except for this:

…the economy is, the recovery is close to faltering.

That clip was played over and over, without proper context.  What Bernanke was doing, in context, was simply defending the Fed’s decision a couple of weeks ago (“Operation Twist”) to replace $400 billion worth of short-term securities in the Fed’s portfolio with longer-term securities.  While not a game-changing move, said Bernanke, it was,

…particularly important now that the economy is, the recovery is close to faltering.

His expectation, though, for the economic recovery is that it will continue, albeit slowly, and that GDP growth should pick up the second half of this year.

That’s not very exciting for broadcast on cable or nightly news, however.

And what you may have missed in the sensationalist TV coverage is that Bernanke essentially informed Congress in rather loud terms—for  a Fed chief—that it had better get its act together and (1) address “long-run fiscal sustainability” while (2) avoiding “fiscal actions that could impede the ongoing economic recovery.”  If that sounds familiar, that is exactly what President Obama and the Democrats have been saying since the fuss over the national debt became a going-over-the-cliff-tomorrow issue.

Here is what Bernanke said in his statement:

These first two objectives are certainly not incompatible, as putting in place a credible plan for reducing future deficits over the longer term does not preclude attending to the implications of fiscal choices for the recovery in the near term.

Here’s what Mr. Obama said in August:

When Congress gets back in September, my basic argument to them is this:  We should not have to choose between getting our fiscal house in order and jobs and growth.  We can’t afford to do just one or the other.  We got to do both. 

Hmm. No wonder the right-wing wants to indict Bernanke for treason. He agrees with Obama on the salient economic issue of our times.

In any case, an interesting question was asked of Bernanke by an interesting man, Vermont Senator Bernie Sanders:

SANDERS: …Mr. Chairman, as you know there are people demonstrating against Wall Street in New York City and other cities around the country, and I think the perception on the part of these demonstrators—and millions of Americans—is that as a result of the greed, the recklessness and the illegal behavior on Wall Street, we were plunged into this horrendous recession we are currently in. Do you agree with that assessment? Did Wall Street’s greed and recklessness cause this recession that led to so many people losing their jobs?

BERNANKE: Excessive risk-taking on Wall Street had a lot to do with it and so did some failures on the parts of regulators.

Note that Bernanke didn’t say that efforts to help poor minorities buy houses was the cause of the problem—a typical charge from conservatives.  “Excessive risk-taking” translates into “greed and recklessness.” And the “failures on the parts of regulators” tranlates into a repudiation of Republcan anti-regulatory philosophy.  Period.

Also interesting was Bernanke’s acknowledgement of the incredible wealth gap in America.  Rep. Maurice Hinchey (D-NY) read off the following statistics:

♦ The top 1% of Americans hold 33% of the total wealth.

♦ The top 5% hold nearly 60% of the total wealth.

♦ The top 10% hold 72% of the total wealth.

♦ The bottom 50% of Americans hold only 3% of the total wealth.

Mr. Hinchey asked Bernanke what caused this gap and what can we do about it.  Bernanke said:

It’s not a new phenomenon, it’s been going on for 30 or 40 years.

Let me see… What happened a little over 30 years ago?  Oh, yeah. Reaganomics was born.

But Bernanke said of the wealth inequality that “a lot of it has to do with divergent educational skill levels,” which, of course, is true.  But he ignored the point of Rep. Hinchey’s question, which was our tax policies—tax cuts—have had a lot to do with it, too.

Finally, Bernanke was asked about the role the housing crisis is playing relative to the sputtering economy, and he said, “Housing is very central to the situation we have now.”  Loss of equity means less willingness to spend, he noted.

Rep. Elijah Cummings (D-MD) asked him:

CUMMINGS: Would you agree that it’s going to be impossible to resolve our economic situation, when you’ve got people losing their houses at the rate they are losing them?  Would you agree with that?

BERNANKE: I would agree with that, yeah.

Think about that. The Chairman of the Federal Reserve—essentially our national economist—agrees that it is “impossible to resolve our economic situation” while folks are losing their homes at breathtaking rates. 

And while neither political party has made the foreclosure issue a national priority—as they should—some Democrats have urged President Obama to take some additional action beyond his mortgage modification program, which hasn’t worked so well.  

Just six weeks ago, Sen. Jeff Merkley (D-OR) wrote the President a letter strongly advising him to do something about the foreclosure crisis:

…we can and should adopt an aggressive strategy to substantially reduce foreclosures nationally.  There are as many as five million foreclosures anticipated to come – this is a huge tragedy for individual families but it is also a drag on our communities and our economy as a whole.  Our economy cannot get out of the ditch with so much uncertainty hovering over so many homeowners.

Again, if you followed Bernanke’s testimony on this and other issues, he and the Democrats seem to be on the same page. Which means that should Rick Perry get elected president, Bernanke can expect to be charged with treason soon after.

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