No Bama No, No Bailout for Plutocrats

by: fairleft

Thu Feb 19, 2009 at 15:29

The situation we find ourselves in at this moment is very strongly reminiscent of the situations we've seen many times in places we don't like to think of ourselves as being similar to. It's Russia or Indonesia or a Thailand type situation, or Korea. And, yet, we somehow find ourselves in the grip of the same sort of crisis and the same sort of oligarchs.

- - Simon Johnson (former IMF chief) on Bill Moyers

The Obama/Summers/Geithner neo-liberalist response to this economic crisis will only make it much worse. Post-election I had been stupidly hopeful that Obama would do the right thing, somehow allow the mega-banks to fail -- perhaps gracefully but fail, THEY MUST FAIL! - and then deal concretely with an economic crisis that -- on the real, not financial side - is at bottom, a 2-3-4 year overbuilt property market (and so a depressed construction industry). That, to me, meant massive deficit spending on construction. And, with sugar pops and candy canes dancing in my head, I thought, "What the hell, let's strike huge blows against global warming and for energy efficiency over this 2-4 years of government-jacked-up construction!"

Dealing with the real economic crisis had nothing to do with bailing out all the big financial sector players/gamblers. But that's not how the financial kingpins feel, and they've gotten it all from Obama: we have the most reactionary possible, the most neo-liberal, big banker oriented response possible. I'm talking about the 'mortgage (banker) rescue plan installment 1' announced yesterday. I'm talking about the big banker bailout bill, installment 2 referenced a few days ago by Timothy Geithner. The 'stimulus' bill was admittedly a mess and didn't satisfy my dreams, but it will do a lot of good and is not a right-wing plutocratic piece of legislation. These other two are.

Most importantly, they will make our economic crisis much worse. I said exactly the same thing about the Bush big bankers' bailout bill, that $700 billion dollar waste of money, with a chorus of smart (i.e., they correctly predicted the current economic crisis) economists behind me, and I say so again. But now the money figures, the debt impossible to repay, will be that much larger. Out of whose hides will these trillions of dollars be taken? Mirror! Are we truly committed to rescuing all the big banks, keeping them private and making them solvent again, without any regulatory reform or writing off of debts? I.e., are we truly committed to the Geithner/Obama plan?

Do we realize that we don't need to rescue the giant banks? That there are hundreds of smaller U.S. banks who sensibly did not base lending practice on obscuring, bundling, and selling off bad loans? Only the 'stupid' and/or irresponsible banks did that, the big ones who 'knew' they could buy, with campaign donations, a bail out for whatever their stupidity and irresponsibility might get them into.

Now is the time to hear from the left, the most important moment since the 1930s. But where are the voices on the left opposing this giveaway? (Is there a left here?) Where are the voices opposing Obama and pointing out a better way? I mean, I can link to non-right-wing economists, but where are the politicians, the activists, the union leaders?

The plutocrats' army has critically breached the defenses of the middle and working classes, Obama leading the charge. Yet still, leaders who are labeled progressive shout, "Hold your fire!"

Essential reading (bold added), and notice the repeated reference to the sooner than you imagine apparent end game, the U.S. getting the IMF ('structural adjustment') austerity treatment:

Raising the Bar: Praising Obama Is Fine For Starters, But Not Being Bush Is Just The Beginning

by: Paul Rosenberg

Tue Nov 25, 2008 at 16:30

Bob Herbert is thrilled that we will finally have a president who "gets it" when it comes to job creation:

The idea that the nation had all but stopped investing in its infrastructure, and that officials in Washington have ignored the crucial role of job creation as the cornerstone of a thriving economy is beyond mind-boggling. It's impossible to understand.

Impossible, that is, until you realize that bandits don't waste time repairing a building that they're looting.

This nails it exactly, I think.  After all, it wasn't Markos, or Chris, or Matt, or David, or even me who called the Bush Administration budgets "a kind of looting."  It was Nobel Prize-winning economist George Akerlof.  But, by the same token, getting this basic fact and pledging up front to take significant action on it does not equate to being a progressive.  Heck, there was a time when someone might have cited this as evidence of being a proud, far-sighted, but sober-minded American conservative.

More importantly, perhaps, given how confused folks have gotten about labels lately, this pledge is not enough to make sense economically, in terms of basic economic justice. Which is why we need to raise the bar in terms of what we should expect from Obama.  Without more details, this could be just be a different--albeit much more responsible--way to make wealthy Americans even wealthier, using taxpayer money.  This was explained by economic analyst and historian Michael Hudson explained on Democracy Now! this morning, as part of a powerhouse interview also including Robert Kuttner and Naomi Klein.  As Hudson explained, multi-billion dollar infrastructure investments routinely increase nearby property values by considerably more than the cost of such public investments: