"...Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world." -http://www.theatlantic.com/doc/200905/imf-advice
Obama is not doing the right thing in his attempts to cure what ails the economy, but he did not break it in the first place. He did not deregulate the financial markets, allow savings banks to also be investment banks or the other myriad things that the financial elite, the Oligarchs of this country, started to usher in for the second time in 100 years around the time a certain Hollywood movie star took office.
Do people have such a short memory in regards to the financial shenanigans of the Bush regime? The Terror War Deficits? Or is it simply easy to throw darts at the seemingly impossibly popular Obama, whose promises of change are growing into a more bitter echo in my head every day?
I admit, I still have hope. He may yet surprise us all with a complete turnaround as he brings temporary nationalization into place in order to break up the institutions which should never have grown to be "too big to fail". Yes, I used the N word.
As Simon Johnson, a professor at MIT's School of Management and former chief economist at the International Monetary Fund explains quite eloquently in the above linked article, nationalization may not be pretty, but it is one of the only things that will save the U.S. economy in the face of the massive debt unwind that is unspooling as we speak.
"...the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards—contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible. "
The scale of the problem indeed. Since about when Reagan tore the solar cells off the White House, Wall Street firms have been working on getting rid of the regulations that were put upon them after the last Depression. Here is just one quote from a Bloomberg article published last October:
``There's a huge gap in our regulatory system,'' former U.S. Securities and Exchange Commission Chairman Harvey Pitt said at an industry conference yesterday, referring to legislation almost a decade ago that excluded the derivatives from government oversight. The regulatory system is ``terribly broken,'' he said.
After the New Deal and the destruction of Europe's industrial capacity during World War II, America found out the name of the game was consumption. We had seemingly inexhaustible reserves of oil, brand new factories, a whole new sector of workers to make use of (women) and rationing was declared a thing of the past in 1946. Britain would not see the complete end of rationing until 1954, but what did Americans care?
We had a whole world waiting for us to make things for them to buy. Things bumped along pretty well economically until the oil scares of the 70's, when domestic oil production peaked. Faced with the prospect of losing the ability to make money from an economy based on the manufacture of actual things, large portions of the economic elite started working out how to form bubbles. Enter the S&L scandals of the 80's, the dotcom boom and bust, then it really became about debt and houses and somewhere along the way, everyone started believing the good times could go on forever. Now the realities of peak credit and peak fossil fuels are showing the "truth" of that statement. Soon enough, it will become apparent that much of that debt will never be repaid and then the good times are going to stop rolling for a long time if we do not power down our resource consumption and make local arrangements for the neccessities in this country.
Once upon a time, many people kept their word, honor was not just a name starlets gave their babies and the industrial world had enough fossil fuels to meet demand. It is highly probable, especially when one takes into account the lack of oil infrastructure investment the current economic crisis is causing, that the all time peak rate of oil production occured last summer.
Check out this site and this one as well for tons of solid information, if the words "peak oil" do not mean anything to you.
Without sufficient oil, production cannot grow. Without growth of production, debt cannot be serviced. Without debt servicing, our modern economy will falter and likely fall. There are other options, thankfully, which I will discuss here soon, but time is running out.
