by Zach Carter, Media Consortium MediaWire Blogger
Progressive media is sounding the alarm on the AIG bonus scandal, demanding that policymakers stop repeating Bush administration mistakes and offering concrete solutions to the dire economic situation those missteps have created.
Former Secretary of Labor Robert Reich describes the bonus insanity in a blog distributed by AlterNet. "Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid," Reich writes, noting that institutions like AIG "are no longer within the capitalist system because they are no longer accountable to the market." If AIG is not accountable to the Treasury Secretary of the country that owns an 80% stake in AIG, then the company has unlimited access to taxpayer coffers without being accountable to anyone at all.
I spoke to my dad this morning. Like many, he is very concerned about how things are going in this country. He's a snowbird, spending his summers in Island Park, about 30 west of Yellowstone National Park, and winters at a condo near Phoenix. I told him that I heard on the radio this morning that Micron, Idaho's largest private employer, announced today that they were laying off 2,000 people, which is likely to be pretty brutal to our economy. He said he'd never seen anything like what is happening in his entire life.
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.
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:
by Zach Carter, Media Consortium MediaWire Blogger
President Barack Obama unveiled his administration's plan to fight foreclosures on Wednesday. Unfortunately, the most important element of the program will require Congressional action—and the banking and business lobbies are already on the attack. The Homeowner Affordability and Stability Plan has three chief components:
Powerful government officials and financial analysis from Joseph Stiglitz to President Obama to Senator Lindsay Graham (R-SC) to Alan Greenspan have stated that temporary and partial nationalization of banks on the "Swedish model" should be on the table. This model is, in short, finding the insolvent banks, placing them into federal receivership, closing them, paying off their depositors, wiping our their shareholders, straightening out their books, and then reselling them to the private sector at auction. It is heartening to see this sort of open-mindedness from important figures with such a wide ideological perspective. No matter someone's ideological predilections, it is good not to become an ideologue (even though the term "ideology" has unfortunately become synonymous with "ideologue" lately) and close yourself off to available options that have a demonstrated track record of success.
by Zach Carter, Media Consortium MediaWire Blogger
In this week's Audit, we're examining Treasury Secretary Timothy Geithner's thoroughly uninspiring bank bailout plan, which fails on almost every level. What's more, some of the most insightful (and stinging) critiques of the proposal are coming from progressive media
by Zach Carter, Media Consortium MediaWire Blogger
The U.S. economy lost nearly 600,000 jobs in January, bringing total losses in the past three months over 1.5 million—more than the entire population of Philadelphia. If there ever was a good time to mend the tattered U.S. social safety net, it's now. While unemployment benefits and food stamps remain relatively uncontroversial, basic welfare continues to be neglected by the general media and vilified by the right. And as of this moment, a responsible welfare program is needed more than at any point since the 1930s.
(Via existenz in Quick Hits). Tonight, The New York Times has a new story about tomorrow's forthcoming announcement on the Obama administration's strategy for the second round of TARP money (that is, how the Obama administration will spend the second $350 billion of the Wall Street bailout). If the story is correct, it appears the corporatists in the Obama administration have prevailed over the populists / leftists in the administration on most areas of bailout strategy. This includes, most importantly, placing minimum to no conditions on how bailout recipients spend money, and a decision for the government to not take operational control of any banks.
The story is also a classic case of exactly why cabinet appointments make a huge difference in determining policy. Rather than all appointees simply following orders from President Obama, they take part in a vigorous debate on policy. In this case, corporatist Treasury Secretary Timothy Geithner appears to have won on virtually all counts, even over senior administration advisors such as David Axelrod.
My only reaction to Daschle's withdrawal from Health and Human Services is that I wish either Treasury Secretary Geithner or Defense Secretary Gates had been defeated, too.
Giethner, like Daschle, had tax issues, and yet he was confirmed by the Senate. Now, he is about to light hundreds of billions of dollars on fire as part of the biggest corporate welfare program in history. He also worked with the Bush administration in handling the first $350 billion of the bailout.
The three largest federal departments, in terms of budget outlays, are easily Treasury, Defense, and Health and Human Services. While I don't want to defend Daschle, I do wonder why nominees for the two other large federal departments--both of whom were directly tied to the Bush administration, both of whom have ethical questions, and both of whom are currently lighting hundreds of billions of dollars on fire--passed and Daschle was defeated. Why did Daschle have to fall on his sword, but Gates and Geithner did not? It is a worthwhile question to ask, and one of the few thoughts I have on the Daschle story.
I want to draw more attention to Geithner's justification for not simply nationalizing the insolvent banks and liquidating shareholder equity as quoted in the NY Times:
He discouraged speculation that the plan would include the nationalization of some banks.
"We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system," he said.
This is a flat out ideological statement. One might even call Treasury Secretary Geithner an ideologue for this stance.
After 8 years of George W. Bush and his anti-government government, now Obama's chief economic advisers have somehow contrived to elevate the old familiar meme of "anything government can do, corporations can do better" to an even more stratospheric level of arrogance and absurdity.
Explicit nationalization of financial companies has little support among key Obama officials, sources said. Treasury Secretary Timothy F. Geithner and top White House economic adviser Lawrence Summers think governments make poor bank managers and cannot efficiently manage a vast number of institutions, according to some of their associates.
Governments make poor bank managers?
Here's some news for Geithner and Summers and the brain-dead dweebs at the Washington Post who print this garbage year after year with the same dead-pan cluelessness...
Corporations make incompetent, predatory, and demented bank managers!
Were Obama's economic geniuses out to lunch when the whole corporatefinancial system melted down?
Were Larry Summers and Tim Geithner in a coma while corporate bank managers destroyed the American economy?
Corporate bank managers just turned $6.5 trillion into toxic waste, and this self-inflicted catastrophe has sucked all the air out of the American economy and suffocated the rest of the world along with us.
So let's pretend it's governments that have a problem managing banks!
What a wonderful time to endorse the neocon mantra that "anything government can do, corporations can do better," at exactly the moment when corporate bankers have transformed the American economy into a screaming train-wreck!
To put it another way...
If governments make "poor bank managers," what can you call the corporate imbeciles who set their pants on fire, doused their butts with gasoline, and then danced all the way from New York to Washington to beg for multi-trillion-dollar bailouts?
There are conventions, customs, and words, thought to be complementary. Consider; Fat and jolly. Short and sweet. Tax-and-spend-liberal. These words, while often far from tantamount, are in the minds of many, inexorably tied.
I was fat. However, I did not feel jolly during those days, months, and years. I am short. Sweet? I am not especially so; nor am I sour. Balanced might better describe me, which takes me to the next paired, or triad of adjectives. I like my taxes progressive, my spending minimal, and I am a liberal.
However, I do not support the oft-titled tax-and-spend-liberal Democratic President's appointment, Timothy F. Geithner. Perhaps, some would say, I do not appreciate the need for an economic expert. This duo of descriptive qualifiers, I believe, can be an oxymoron, just as the others might be. It seems those farthest "Left" on the political aisle may concur.
Russell Feingold [Wisconsin Democrat], Thomas Harkin [Iowa Democrat,] and Democratic Socialist, Bernard Sanders [Vermont Independent] voted nay when asked to approve Timothy Geithner for Secretary of Treasury.
Timothy Geithner is going to be the pick. I like that he's never worked directly on Wall Street or for corporate America, though he did work for Rubin at Treasury. Beyond that, insiders like him, which is not necessarily a good or bad sign. I'm pleased it wasn't Larry Summers, and it's worth noting he didn't escape to the private sector after his stint at Treasury but moved to the Fed.
Update: Summers is a senior White House advisor, and that is a powerful position. Not promising.
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