The passing of the $850-billion bailout pulled the plug on the New Deal. The Great Society is now gasping for air, mortally wounded, coughing up blood. It will not recover. It was murdered by the Democratic Party.
We are on our own. And don't expect any help from Barack Obama and Joe Biden, who lobbied hard for the bill and voted for it. Ignore their rhetoric. Look coldly at the ballots they cast against us. We, as citizens, have only a handful of representatives left in Washington, most of whom were left sputtering in rage and frustration on the House floor. The sad irony is that some of them were Republican.
"This was the largest single act of class warfare in the modern history of this country," Rep. Dennis Kucinich, D-Ohio, who led the fight in the House against the bailout, told me by phone from Cleveland. "It is a direct attack on the American people's ability to be able to stabilize their homes and their neighborhoods. This single vote will define the careers of everyone. We are back to taxation without representation, to markets that are openly rigged."
"We buried the New Deal," he said of the vote. "Instead of Democrats going back to classic New Deal economics where we prime the pump of the economy and start money circulating among the population through saving homes, creating jobs and building a new infrastructure, our leaders chose to accelerate the wealth of the nation upwards. They did so in a way that was destructive of free-market principles. They ripped away all the familiar moorings. We are in an uncharted sea where the traditional roles of the political parties are being switched. The Democrats have unfortunately become so enamored and beholden to Wall Street that we are not functioning to defend the economic interest of the broad base of the American people. It was up to the Republicans to protect not just a so-called free market but the American taxpayer and attempt to block this. This is an outrage. This was democracy's Black Friday."
Obama arrived on the Senate floor Brutus-like to thrust a knife into the back of the working and middle class. He lobbied hard for the bill. He did so, according to some who met with him on Capitol Hill, because he feared that if he opposed the bailout and it triggered a market collapse it could cost him the election. Better to placate the thieves on Wall Street than stand up for the masses of enraged and swindled citizens.
Obama's betrayal is the betrayal of the Democratic Party. The Democrats gave us the Financial Services Modernization Act of 1999, which ripped down the firewalls that were put in place by the 1933 Glass-Steagall Act. The 1933 act, designed to prevent the kind of meltdown we are now experiencing, established the Federal Deposit Insurance Corp. (FDIC). It set in place banking reforms to stop speculators from hijacking the financial system. With Glass-Steagall demolished, and the passage of NAFTA, the Democrats, led by Bill Clinton, tumbled gleefully into bed with corporations and Wall Street speculators. They achieved fundraising parity with the Republicans. They used institutions like Fannie Mae and Freddie Mac as a welfare gravy train. The Democrats, including Obama, are as compromised as the Republicans.
Obama's voting record in the Senate is in line with the corrupt Democratic mainstream, including Biden, who works on behalf of corporations and especially the credit card industry. Obama knows where power lies in the United States. It is not with the citizens, who with ratios of 100 to 1 pleaded with their representatives in Washington not to loot the national treasury to bail out Wall Street investment firms. Power lies with the corporations. These corporations, not us, pick who runs for president. You cannot be a candidate without their blessing and money. These corporations, including the Commission on Presidential Debates, a private corporation, determine who gets to speak and what issues candidates can or cannot challenge, from universal, not-for-profit, single-payer health care to Wall Street bailouts to NAFTA. If you do not follow the corporate script you become as marginal and invisible as Ralph Nader or Bob Barr or Cynthia McKinney.
Obama has always served his corporate masters. He opposed Rep. John Murtha's call for immediate withdrawal from Iraq and supported continued funding for the war. He voted in July 2005 to reauthorize the Patriot Act. He did not support an amendment that was part of a bankruptcy bill that would have capped credit card interest rates at 30 percent. He opposed a bill that would have reformed the notorious Mining Law of 1872, which allows mineral companies to rape federal land for profit. He did not back the single-payer health care bill HR 676, sponsored by Kucinich and John Conyers. He advocates the death penalty and nuclear power. He backed the class-action "reform" bill-the Class Action Fairness Act (CAFA)-that was part of a large lobbying effort by financial firms, which make up Obama's second-biggest single bloc of donors. CAFA would effectively shut down state courts as a venue to hear most class-action lawsuits. Workers, under CAFA, would no longer have redress in many of the courts where these cases have a chance of defying powerful corporations. CAFA moves these cases into corporate-friendly federal courts dominated by Republican judges.
Obama's support for the bailout, however, is his most egregious betrayal. He had a brief, shining moment to prove he could lead, to capitalize on a popular revolt that cut across the political spectrum. He never attempted to address or mobilize the aspirations and passions of the vast majority of Americans. He was as craven, servile and cowardly as the party he represents. He returned to the campaign trail after Friday's vote as a slick and polished sales representative for our corporate state, telling us to calm down and accept the inevitable.
"Some of the most powerful speeches against this were given by members of the Republican Party who are on the political right," Kucinich said. "They did a superb job in poking holes in the underlying assumptions of the bailout. They say what they believe. Give me somebody who says what they believe and I can figure out how to get them to a new place. When people say one thing and do another it is very hard to be able to move a debate."
So let us honor, in our moment of defeat, the handful of elected officials who valiantly defied their party leaderships in the House to stage a remarkable revolt that at first succeeded. Kucinich is one. There were others-Brad Sherman, Marcy Kaptur, Peter DeFazio, Lloyd Doggett and Robert C. "Bobby" Scott. They are about all that is left of the old Democratic Party, the party that once looked out for the poor and the working class. Send them a note of thanks. They deserve it. And if you live in their districts make sure you get to the polls in November. They did not sell you out.
"We had two take-it-or-leave-it propositions and the second one was worse than the first," Kucinich said, referring to the plan that came loaded with pages of tax cuts. "Tax cuts are antithetical to a bailout. We never solved the problem. There were never any hearings on the bill. This premise, that we could prop up the stock market with a $700-billion investment and create some liquidity, was flawed. The problem is that banks do not want to loan to each other. It is not a liquidity problem. Banks are afraid they are going to collapse in short selling. There is a war going on between security firms and banks. Banks are under assault. They are not loaning. The dynamic is driven by the Accounting Standards Board, the Securities and Exchange Commission and the Fed."
The root of the financial crisis, as critics of the bailout plan point out, is that millions of homeowners cannot pay their mortgages. The bailout, as the market decline on Friday following the vote illustrated, does not address the crisis. It solves nothing for the 10 million Americans who face foreclosure. It solves nothing for the growing numbers of unemployed and underemployed. It may well be the equivalent of tossing $850 billion of taxpayer money (including $150 billion in tax cuts) into a furnace and watching passively as our economy continues its plunge.
"We face a perfect financial storm," Kucinich warned. "The elements are the deficit spending for the war of 3 to 4 trillion dollars, the trillion and more tax cuts, the war itself and the lack of serious investment in the country. We are being hollowed out. We are going to see more unemployment and more people losing their homes. With $700 billion we could have made a real investment in the country, in jobs, in infrastructure and in homes. Instead, we got robbed."
Amen Denny! This is exactly what I was saying is the problem here. Ugh. I doubt the Bailout stops our steady march into recession. Why would it? It merely secures those at the highest rungs of the ladder, who are still not necessarily going to lend money out because the WORLD MARKET is in a down turn. All this has done is secure them! McCain and Obama both royally screwed this one and all of us not at the very top! Thanks A-holes!
BTW thanks to my friend J.J. for sending me this article.
5 comments:
In all honesty, I am not a proponent of the bailout, and God knows I love Denny. I backed him in the primaries and even gave money to his campaign. And in principle, I agree with him. But I do think that taking the line that he has shows something of lack of understanding of how the credit market works. Make no mistake, I hate that this is the way the world works. I hate that bastard capitalists have been allowed to construct a system that allows them to gamble billions of dollars and then blame the people they sucker into playing their game. They are a lot like shady used car dealers with more cash and better suits. They can go fuck themselves. As can the politicians that have abetted them or turned a blind eye (and this may well include McCain, Obama, and about 97% of the Congress).
The catch here is that if many of these banks fail the credit markets dry up and interest rates skyrocket. Likely inflation increases as well. And here is what goes down: If businesses can't get the loans they need then their production slows and prices go up because goods become scarcer and more costly. If production slows people lose jobs. If goods become more costly people can't by as many goods. This works backs to equilibrium where supply=demand, but if production has slowed and people are unemployed then there is more burden on the public system and without some exogenous influence there is no way to stimulate the production-consumption cycle.
This is just one set of issues. And I don't have space or time to delve into how interest rate increases influences this or a host of other factors. But to hit one point briefly, if the bank that issued your credit card is running short on cash and wary of extending credit, they may increase your interest as a deterrent to your using the card to essentially borrow money from them. They may also limit your credit line. So who gets fucked there? People, a lot of poor people, who rely far too much on credit cards. Their reliance on the card is problematic, but let's not forget how the Reagan administration (and Johnny McCain) thought it was a fan fuckingtastic idea to get rid of about any and all regulations on the CC companies. Remember that this is why your rates can double overnight even if you did nothing wrong and paid every bill on time.
So, the system sucks ass. But that is aside from the issue of something being done in the immediate. If you want to chat about what could have been done better, I am all for it. The first thing is that there need to be a lot more regulations put on the banking industry. Regulation probably does impede growth to a degree, but it also makes a system more stable in the long run and prevents bullshit like this from happening to begin with. Second, every CEO from a firm receiving money from the bailout should be fired. No severance package, nothing. Get thee to the unemployment line like everyone else. Third, the government temporarily buys controlling interest in the companies and after a predetermined period (say 12 mos) opens the option to buy its shares to the public and reaps the benefits. After tax payers are reimbursed, the reaming profits should be diverted to a public good like education.
Let me reiterate though: oversight and regulation would prevent this shit from happening in the first place. Libertarians can yell all they like about how the market corrects (and it probably will), but at the end of the day average people get fucked. This lesson might shape up Wall Street (for a while), but we can't forget how in bed Wall Street is with the government. And I don't care who is in the White House or what kind of anticorruption pandering they do, that is the nature of politics. If you want to keep this crap from happening, you have to fucking regulate business. It will not self regulate anymore than horse will regulate eating. And the same thing happens to both—when they overeat they get colic and might well die. That is why someone has to monitor their portions.
That should say "reaming" benefits, not "reaming" benefits...though that is sort of funny in itself.
Odd, seems to me, if you bail out the bottom instead of the top, then consumer spending increases, bank loans are paid, market confidence returns to the average investor, businesses big and small benefit from increased spending (see American spending habits with the tax cuts)... perhaps I am too simplistic. But I definitely think that not assisting real people in this crisis is a mistake that will not soon be surmounted.
I agree on regulation, but disagree on the underlying assumptions people are making about our credit system. For instance, why would banks fail if we pay off consumer debt and allow for a wholesale refinance of individuals to the federal government? I am sure I am missing the nuances of the system, but I doubt 99.9% of people DO understand what is happening - save the fact we are being screwed.
In part I agree. Rescuing homeowners should have been priority one. The US government should have bought billions in home loans and secured mortgages of millions of Americans. That is, in part, what the bailout did, it just gave the money to the banks who hold the debt rather than the government buying out the loans directly. But I agree, the government's first priority should have been homeowners.
Still, though, failing banks is bad for everyone. I am not sure of the numbers, but I am not entirely sure that just shoring up mortgages would have solved the problem. But, again, I would agree with a people-centered government-run approach. But Christ, do you honestly think that economic conservatives would have EVER let that happen. I mean, enough Congress members had a big enough problem with giving money to the banks; I doubt many, other than a core group of progressive Democrats and maybe a handful of Republicans, would have supported such massive government intervention in the market. Ahhh....Socialism.
Just an illustration of how the credit markets extend well beyond Wall Street and even just mortgages. The following story suggests how a tightening credit market and rising interest rates affect bond markets and rates as, which can be painful for hospitals, colleges, non-profits, and other organizations.
http://www.npr.org/templates/story/story.php?storyId=95460507
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