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‘The Great American Stickup’: Blame Clinton More Than Bush for the Economy

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Posted on Sep 16, 2010

By Robert Scheer

The Great American Stickup

Chapter 1
“It Was the Economy, Stupid”


Part II: The first half of this chapter was excerpted on Truthdig here.



Since the collapse happened on the watch of President George W. Bush at the end of two full terms in office, many in the Democratic Party were only too eager to blame his administration. Yet while Bush did nothing to remedy the problem, and his response was to simply reward the culprits, the roots of this disaster go back much further, to the free-market propaganda of the Reagan years and, most damagingly, to the bipartisan deregulation of the banking industry undertaken with the full support of “liberal” President Clinton. Yes, Clinton. And if this debacle needs a name, it should most properly be called “the Clinton bubble,” as difficult as it may be to accept for those of us who voted for him.


Clinton, being a smart person and an astute politician, did not use old ideological arguments to do away with New Deal restrictions on the banking system, which had been in place ever since the Great Depression threatened the survival of capitalism. His were the words of technocrats, arguing that modern technology, globalization, and the increased sophistication of traders meant the old concerns and restrictions were outdated. By “modernizing” the economy, so the promise went, we would free powerful creative energies and create new wealth for a broad spectrum of Americans—not to mention boosting the Democratic Party enormously, both politically and financially.


And it worked: Traditional banks freed by the dissolution of New Deal regulations became much more aggressive in investing deposits, snapping up financial services companies in a binge of acquisitions. These giant conglomerates then bet long on a broad and limitless expansion of the economy, making credit easy and driving up the stock and real estate markets to unseen heights. Increasingly complicated yet wildly profitable securities—especially so-called over-the-counter derivatives (OTC), which, as their name suggests, are financial instruments derived from other assets or products—proved irresistible to global investors, even though few really understood what they were buying. Those transactions in suspect derivatives were negotiated in markets that had been freed from the obligations of government regulation and would grow in the year 2009 to more than $600 trillion.


Beginning in the early ‘90s, this innovative system for buying and selling debt grew from a boutique, almost experimental, Wall Street business model to something so large that, when it collapsed a little more than a decade later, it would cause a global recession. Along the way, only a few people possessed enough knowledge and integrity to point out that the growth and profits it was generating were, in fact, too good to be true.


Until it all fell apart in such grand fashion, turning some of the most prestigious companies in the history of capitalism into bankrupt beggars, all the key players in the derivatives markets were happy as pigs in excrement. At the bottom, a plethora of aggressive lenders was only too happy to sign up folks for mortgages and other loans they could not afford because those loans could be bundled and sold in the market as collateralized debt obligations (CDOs). The investment banks were thrilled to have those new CDOs to sell, their clients liked the absurdly high returns being paid—even if they really had no clear idea what they were buying—and the “swap” sellers figured they were taking no risk at all, since the economy seemed to have entered a phase in which it had only one direction: up.


Of course, this was ridiculous on the face of it. Could it really be so easy? What was the catch? Never mind that, you spoiler! Not only were those making the millions and billions off the OTC derivatives market ecstatic, so were the politicians, bought off by Wall Street, who were sitting in the driver’s seat while the bubble was inflating. With credit so easy, consumers went on a binge, buying everything in sight, which in turn was a boon to the bricks-and-mortar economy. Blown upward by all this “irrational exuberance,” as then Federal Reserve Bank chair Alan Greenspan noted in one of his more honest moments, the stock market soared, creating the era of e-trade and a middle-class that eagerly awaited each quarterly 401(k) report.


Later, in the rubble, consumer borrowers would be scapegoated for the crash. This is the same logic as blaming passengers of a discount airline for their deaths if it turned out the plane had been flown by a monkey. Shouldn’t they have known they should pay more? In reality, the gushing profits of the collateralized debt markets meant the original lenders had no motive to actually vet the recipients—they wouldn’t be trying to collect the debt themselves anyway. Instead, they would do almost anything to entreat consumers to borrow far beyond their means, reassuring them in a booming economy they’d be suckers not to buy, buy, buy.

That this madness was allowed to develop without significant government supervision or critical media interest, despite the inherent instability and predictable future damage of a system of growth predicated on its own inevitability, is a tribute to the almost limitless power of Wall Street lobbyists and the corruption of political leaders who did their bidding while sacrificing the public’s interest.


While much has been made of the baffling complexity of the new market structures at the heart of the banking meltdown, there were informed and prescient observers who in real time saw through these gimmicks. The potential for damage was thus known inside the halls of power to those who cared to know, if only because of heroines like gutsy regulator Brooksley Born, chair of the Commodity Futures Trading Commission from 1996 to 1999. When they attempted to sound the alarm, however, they were ignored, or worse. Simply put, the rewards in both financial remuneration and advanced careers were such that those in a position to profit went along with great enthusiasm. Those who objected, like Born, were summarily crushed.


Of the leaders responsible, five names come prominently to mind: Alan Greenspan, the longtime head of the Federal Reserve; Robert Rubin, who served as Treasury secretary in the Clinton administration; Lawrence Summers, who succeeded him in that capacity; and the two top Republicans in Congress back in the 1990s dealing with finance, Phil Gramm and James Leach.


Arrayed most prominently against them, far, far down the DC power ladder, were two female regulators, Born and Sheila Bair (an appointee of Bush I and II and retained as FDIC chair by Obama). They never had a chance, though; they were facing a juggernaut: The combined power of the Wall Street lobbyists allied with popular President Clinton, who staked his legacy on reassuring the titans of finance a Democrat could serve their interests better than any Republican.


Clinton’s role was decisive in turning Ronald Reagan’s obsession with an unfettered free market into law. Reagan, that fading actor recast so effectively as great propagandist for the unregulated market—“get government off our backs” was his patented rallying cry—was far more successful at deregulating smokestack industries than the financial markets. It would take a new breed of “triangulating” technocrat Democrats to really dismantle the carefully built net designed, after the last Great Depression, to restrain Wall Street from its pattern of periodic self-immolations.


Clinton betrayed the wisdom of Franklin Delano Roosevelt’s New Deal reforms that capitalism needed to be saved from its own excess in order to survive, that the free market would remain free only if it was properly regulated in the public interest. The great and terrible irony of capitalism is that if left unfettered, it inexorably engineers its own demise, through either revolution or economic collapse. The guardians of capitalism’s survival are thus not the self-proclaimed free-marketers, who, in defiance of the pragmatic Adam Smith himself, want to chop away at all government restraints on corporate actions, but rather liberals, at least those in the mode of FDR, who seek to harness its awesome power while keeping its workings palatable to a civilized and progressive society.


Government regulation of the market economy arose during the New Deal out of a desire to save capitalism rather than destroy it. Whether it was child labor in dark coal mines, the exploitation of racially segregated human beings to pick cotton, or the unfathomable devastation of the Great Depression, the brutal creativity of the pure profit motive has always posed a stark challenge to our belief that we are moral creatures. The modern bureaucratic governments of the developed world were built, unconsciously, as a bulwark, something big enough to occasionally stand up to the power of uncontrolled market forces, much as a referee must show the yellow card to a young headstrong athlete.


Click here to check out Robert Scheer’s new book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”


Click here to check out Robert Scheer’s book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”


Keep up with Robert Scheer’s latest columns, interviews, tour dates and more at www.truthdig.com/robert_scheer.

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By Gerard Lamontagne, October 11, 2010 at 7:57 am Link to this comment
(Unregistered commenter)

I hope that this book will be translated in other languages particularly in french as it would it would be an attraction for a great number of people and help understand this global crisis where we all lost huge amounts of money

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By johncp, September 22, 2010 at 6:19 pm Link to this comment

Precisely what is the “slick” in slick willy?  I especially want to know in what ways President Clinton was uniquely “slick,” compared to other presidents.  I’ve always suspected that right wing media were conditioning the American people to detest president Clinton, for commonplace politician conduct that was made to appear uniquely Clintonian.  This appears exemplified by Clinton’s having “continued” with Nafta, after it had been signed into law by Bush.  I doubt that Bush personally or particularly favored NAFTA, but certainly signed it into law, happily doing what rich folk dictated, whereas I assume that Clinton continued with NAFTA, even though he was unhappy with it.  Unless you believe that Clinton continued Bush’s politics, even if it was injurious to Clinton’s base, injurious to Clinton’s interests, so dedicated would it appear to have been with Clinton, perpetuating NAFTA, however harmful it was to the majority of Americans.  Anyone want to set me straight?

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By samg, September 22, 2010 at 10:15 am Link to this comment
(Unregistered commenter)

robert scheer, as is his wont, goes too far in blaming clinton more than bush for the collapse of the american economy. yes, clinton signed nafta, and the ‘96 communications act, and the elimination of glass-steagall, and made trading of derivatives easier. but he also produced 22 million jobs; eight years of prosperity ; increased taxes on the rich that led to four years of budget surpluses, among other good things. bush produced none of these. he tried to privatize social security; he deregulated much more than clinton had done; under him the SEC went to “voluntary” cooperation by business instead of law enforcement, he increased the national debt by 75 percent by, among other things, borrowing to fight two wars and institute a medicare drug program. Scheer is a self-hating liberal, so he’s happy to blame Clinton more than Bush. But he’s dead wrong.

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By samosamo, September 22, 2010 at 9:34 am Link to this comment

****************


poppy signed it with the leaders of the other
countries, mexico and canada, in Dec. 1992, then
it went back into each country’s
legislatures/congress to be ratified then slick
willie signed into law on Dec 12, 1993.

http://www.freerepublic.com/focus/f-
news/1750332/posts

http://en.wikipedia.org/wiki/North_American_Fre
e_Trade_Agreement

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By johncp, September 22, 2010 at 4:50 am Link to this comment

Didn’t papa Bush sign NAFTA into law?
jp

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By samosamo, September 22, 2010 at 3:03 am Link to this comment

****************


johncp

I believe it is like sherlock holmes said, ‘when all
the logical reasons don’t work, then whatever
seems illogical but probable, is what works.
That’s paraphrased but close to ACD’s detective’s
hypothesis.

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By johncp, September 22, 2010 at 2:43 am Link to this comment

I’m at a loss to understand, how a presidential aspirant can achieve his goal without the benefit and aid of big money?  Please help me out with this, if I have it wrong.  If he has little or no money to run his campaign, he’ll almost certainly lose, yes, he’ll lose even if he has the “cohones” to stand up to corporate America.  If he has the help of big money, how can we expect him to betray that support?  At the very least, he’s likely to give those well-heeled supporters what they want, early on in his presidency, and spend the remainder of his presidency, gradually and increasingly, posing as a populist, granting the poor, smaller victories, after his earlier big concessions are largely and safely forgotten, and make a grab for re-election.  He’s almost assured of pulling off this deceptive re-election stragegy.  If the economy has gotten to desperate conditions, partly due to his efforts on behalf of his corporate and big-money supporters, he can always blame something or someone if the economy is not improving.  If the economy is improving, however slowly, he can take credit for that, whether he had anything to do with that improvement, or not.  Does that sound familiar?
If a president gets too far out of line, the rich, by way of the TV networks and other media, can discredit and humilate him, and in other ways, derail his presidency.  Most of the citizenry are so full of anger, resentment and disappointment, they’re anxious to fall for any hate campaign set up against a president.  Am I wrong?  It seems that “we’re” the problem.  Maybe we’re despearate to find a president with outstanding ethical and intellectual qualities, because so many of us are such a bunch of weaklings, morally bankrupt, cowards, such money and power hungry fools.  Why should our leaders be any different, especially if “we” choose them?

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By Napolean DoneHisPart, September 21, 2010 at 12:50 pm Link to this comment

Understand, that was my summation of parts of your posting, not trying to imply any words onto your discourse.

Just asking, always interesting to read what others see as the major hurdles to true sovereignty, state-hood or freedom or American Dream except for these people, or who the powers at be are today…

... just like to find out how some folks think, if at all ( broad joke to all readers and writers found herein, myself included 8^).

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By drbhelthi, September 21, 2010 at 11:36 am Link to this comment

The terms “jewish conspiracy” are not my words, nor in
my response, anywhere.

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By drbhelthi, September 21, 2010 at 10:46 am Link to this comment

“- they can´t both be at the helm “

OH?

What is an oligarchy?

Is Skull & Bones composed of one person or many?

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By Napolean DoneHisPart, September 21, 2010 at 10:39 am Link to this comment

drbhelthi, I’ve read about Bernanke and the FED, agree so far with that.

But you mentioning, as I think I read it, a Jewish conspiracy and at the same time point out the Bush/Nazi/Rockefeller conspiracy…. but they can’t both be at the helm… or you simply pointing out the A vs. B scenario?

For surely their may exist a hierarchy of power among the blue bloods and supposed ‘kings’ and ‘douches’ of the planet, each maybe overlapping one another or subverting one another… but then the parties stay the same, only the generations pass through history…

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By Napolean DoneHisPart, September 21, 2010 at 10:28 am Link to this comment

Business as usual at Goldman Sachs… finding cash-flow by buying out those who took the bait and believed the money was real, over-leveraged their assets without knowing the game of money and didn’t know they could be ‘written down’ or ‘shorted’ and lost their companies to the Banksters, who know how to read numbers and define the game, not run businesses…. for that is what the chattel is for.

Entire news article below just released minutes ago:

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By Napolean DoneHisPart, September 21, 2010 at 10:26 am Link to this comment

=DJ Quantum Energy Partners Launches US Power-Generation Company


  By Mark Peters
  Of DOW JONES NEWSWIRES

  NEW YORK (Dow Jones)—Private-equity firm Quantum Energy Partners is launching a new company to buy and develop power plants in the U.S., targeting long-term supply deals with utilities.
  The Houston-based firm said Tuesday it’s committing $500 million in capital and raising an additional $500 million from investment partners to start Quantum Utility Generation LLC. The new company will be run by Larry Kellerman, former president of a power-plant generation subsidiary of Goldman Sachs Group Inc. (GS).
  Quantum enters a robust market for asset deals in the U.S. as regional power prices remain depressed. Buyers are eyeing opportunities to pick up plants on the cheap, while sellers hit by the slump are looking to get out of the business. In the last six weeks, private-equity giant Blackstone Group LP (BX) agreed to buy Houston-based generator Dynegy Inc. (DYN) and PPL Corp. (PPL) agreed to sell several plants to LS Power, a power-generation and transmission investment group.
  In an interview, Quantum executives said their strategy isn’t to place a bet on a rebound in electricity prices. Instead, the new company plans to buy and develop plants with an eye to inking long-term agreements with utilities with specific supply needs.
  “It is the right assets, in the right locations linked in with the right utility market where we can find undervalued generation that truly makes sense as a long-term resource,” said Kellerman, former president of Goldman’s Cogentrix Energy and now chief executive of Quantum Utility Generation.
  Quantum executives declined to discuss possible asset targets but said the company could announce its first deal by the end of the year.
  They said the need for new power supplies will increase as older coal-fired plants are shut down in the face of increasing environmental regulations. Meanwhile, state renewable-energy requirements will drive the development of new wind and solar generation. Despite this perceived need, utilities appear to be growing averse to building new plants, preferring to spend their limited capital on less risky projects such as upgrading home meters to help trim demand or building new high-voltage lines.
  Quantum is targeting markets in the Midwest, Southeast and Southwest for investments, and expects to steer clear of more deregulated markets in the Northeast. In particular, the company is aiming to reach long-term agreements with utilities to sell power supplies, the power plants themselves or a combination of the two. Executives said Quantum will likely focus on natural-gas fired plants and wind- and solar-power generation.
  “There are dozens of opportunities today—more so than I’ve seen in a long time,” said Dheeraj Verma, managing director at Quantum Energy Partners, who will serve as chairman of the new company.
  Joining Kellerman will be Sean O’Donnell, a former head of North American generation for the power and utilities group at J.P. Morgan Chase & Co (JPM), as chief financial officer, and Tim Sullivan, a former managing director at Deutsche Bank AG (DB), as chief commercial officer.

  -By Mark Peters, Dow Jones Newswires; 212-416-2457; .(JavaScript must be enabled to view this email address)

  Click here to go to Dow Jones NewsPlus, a web front page of today’s most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=y0WvuAJUXA/TdmmViRx9cA==. You can use this link on the day this article is published and the following day.


  (END) Dow Jones Newswires
  September 21, 2010 13:14 ET (17:14 GMT)
  Copyright (c) 2010 Dow Jones & Company, Inc.- - 01 14 PM EDT 09-21-10

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By Robert Lewis Egolf, September 21, 2010 at 10:21 am Link to this comment
(Unregistered commenter)

The only thing bipartisan in the current Congress is
its corruption by Wall Street.  If Obama were not in
Wall Street’s pocket Larry Summers would not be in the
administration.  We badly need a president with the
cohones to take on the financial titans.  It is
becoming more and more apparent that Obama will not be
a two term president.  All this said and done,
Elizabeth Warren for president.

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By drbhelthi, September 21, 2010 at 10:00 am Link to this comment

Trends and the implementation of trends is of basic importance.

Blo-jobs are one thing, but “Snow Jobs” are more important, when the U.S. Constitution and the entire population of a nation is at stake.

Too many fail to comprehend the meaning of one specific, 2008-pre-election ritual that took place. The major candidates marched to the AIPAC schrine in Wash. D.C., kneeled down, and begged their support for election.

Am I the only one who gets the big picture?

Also, two years ago, Bernanke admitted that the Federal Reserve caused the 1920s depression,
http://www.brojon.org/frontpage.html
promised that it would not recur, while implementing the procedures that repeated it.

And, the U.S. Congress stalemated Dr. Ron Paul´s bill to review the Federal Reserve?  Slick Willie was not in office.  “Junior” Bush was not in office. GHWBSr was not in office.  A formal review of the “Federal Reserve” would have publicized the insider shenanigans, traceable to the “religious party” that hides behind the word, “Jew”.  WWII ended in 1945. It is now 2010.  How many millions have the Rockefeller/NAZI/Bush wars murdered?  More than the non-verified figure of “six million,” for sure.

Where is the difference between the direction of the “republican party” and the allegedly “democratic party”?  I do not see it.  All seems to be manipulated by the “Six Million Party,” with HQ at AIPAC in Wash. D.C.

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By samosamo, September 21, 2010 at 7:52 am Link to this comment

****************


I won’t even pretend to be on your pages of
‘history’ as the statement I made was ‘accelerate’,
thus implying that for decades jobs were leaving
this country and every president since who knows
when have been at the end of the pointed finger
up to o his self. And all those jobs didn’t just
‘suck ass down to mexico’. South Asia, Southeast
Asia, even the middle east and Indonesia are just
some of the places the ‘great whack’ of american
corporatism have ‘Made in xxx’. Seems to me I
can just remember the ‘Made in Japan’ label that
made so many ‘good’ americans snicker, being
amused of the ‘junk’ coming from that country in
the 1950s. So I think ignoring the responsibility
that a president has in signing, or not, bills from
congress and signing off, or not to negotiated
treaties as an act of responsibility or
irresponsibility and anyone not seeing this is
arrogantly stupid.

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Lafayette's avatar

By Lafayette, September 21, 2010 at 1:02 am Link to this comment

AN EXAMPLE OF DEFAMATION

{SS: Let me see. Who signed the North American Free Trade Agreement that accelerated the flow of jobs out of this country. Slick willie!}

This is the sort of spurious commentary that begs correction.

If the “great sucking sound” of NAFTA was jobs moving to Mexico, it was because that is where the jobs had to go. Our wage-rates, particularly, in the automotive industry are way out of line compared to world averages. Which is why the Chinese are eating our lunch (in some manufacturing sectors) and will continue to do so.

Blaming a PotUS for the consequence of an intrinsic market factor is defamatory bullshit. It is pointing the finger of blame because one is too stupid (or lazy or disinterested) to become acquainted with the historical facts that are giving our nation’s economy such a rough go at the moment.

If we want to blame someone, let’s all look in the mirror. After all, who were the consumers that went massively binging on cheap money and produced the bubble?

NB

I am no great fan of Billy-boy. But if I will point the finger of blame, I will try to do so with, at least, some cogency.

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By johncp, September 21, 2010 at 12:05 am Link to this comment

It wasn’t Bush, democrats are told, it was Clinton, and his sex and blowjobs that got us in this mess.  The rich, we’re also told, run the show, get used to it.  Except when “evil” Clinton was president.  When Clinton reigned, the rich took a break from their control of the universe, and let Clinton do what he wanted to do.  Clinton proceeded to deliberately and intentionally destroy the economy, but sneakily did it just before he escaped the presidency.  Then Bush took over, and the rich immediately returned to their total control of things, and for 8 years, forced Bush to promise not to change anything that Clinton had done, and simply allow the mess we’re in to proceed to its inevitable end.  Poor little Bush, we should have known that in 8 years, he could simply have reversed the policies that Clinton put into effect, but was forced by the rich to maintain Clinton’s policies.  You have no idea how grateful I am to Scheer, for his brilliant analysis.

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By samosamo, September 20, 2010 at 10:11 pm Link to this comment

****************


Let me see. Who signed the North American Free
Trade Agreement that accelerated the flow of
jobs out of this country. Slick willie!

Who signed the FCC Telecommuications Act of
1996 that “the deregulations have led to a
concentration of media ownership with fewer
broadcasters competing in regional markets and
the elimination of many local, independent and
alternative media outlets.” Slick willie and this
one was what has really given this country a piece
of shit for a mainstream media as in there just
being about 4 or 5 very conservative owners all
protecting the clowns and fools in charge so their
crimes and illegal actions are not reported to the
people, but just blow fluff, bullshit,
disinformation or NO information out to the
people still listening to them, and that is a fairly
large segment of the population. Yeah slick willie
really helped this country with that sign off.
Nothing like a hostile and worthless source of
information to hold up what was a democratic
government.

And if both of those are still lame executive
decisions how much help was slick willie signing
the last legislation of his presidency into law the
‘Commodity Futures Modernazation Act’ at the
behest of wendy and phil gramm, the authors and
promoters of ‘unfettered and unregulated’
financial markets, that deregulated the whole
financial bamboozled theft that is still going on.
There are plenty of people out that who are
suffering from just these 3 actions by a careless
and could care less president.

And I have a distinct impression that you haven’t
read Scheer’s book much less an equally as
important one by William Black ‘The Best Way to
Rob a Bank is to Own One’ that describes how the
savings and loan crisis was carried out and has
morphed now into the financial crises that are
now ongoing.

And he probably didn’t even have to pay for that
blowjob.

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By johncp, September 20, 2010 at 9:17 pm Link to this comment

On every single issue where these prejudiced writers, such as Samojano, Devon Noll, and now Scheer, rail against Clinton, there is, not simply, disagreement, but in my opinion, far better thought-out disagreement, or, at any rate, views that see President Clinton’s influence as, at worst, a factor, and often not a decisive one in the outcomes cited.  But these writers are out to do more that blame Clinton for his errors; all presidents make errors.  They want to make it seem, to those readers that fall for their tripe, that Clinton’s errors are really a consequence of his “evil.”  What a bunch of pathetic, hate-ridden losers these writers are.  Scheer and other Clinton haters, actually have strengthened Clinton’s image and deepened the admiration so many Americans feel toward him.  The viciousness of their blind and vengeful attacks on the former President, have so poisoned the atmosphere surrounding any legitimate effort to sanely and legitimately assess Clinton’s place in history, that few contributors to these lists, have the backbone to defend Clinton against his detractors.

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By Lafayette, September 20, 2010 at 3:02 pm Link to this comment

NECESSARY BUT INSUFFICIENT

{Sheer: Clinton betrayed the wisdom of Franklin Delano Roosevelt’s New Deal reforms that capitalism needed to be saved from its own excess in order to survive, that the free market would remain free only if it was properly regulated in the public interest. The great and terrible irony of capitalism is that if left unfettered, it inexorably engineers its own demise, through either revolution or economic collapse.}

Well put, but the argument overly fixates on the “market regulation” and not “personal modesty”. If there are victims of non-market regulation (as in the Sub-prime Mess), yes it is due to the lack of market regulation that would have constrained the excesses of predatory pricing (of mortgages) and balloon payments. But, after all, we had a Truth In Lending Act and nobody enforced it.

More so, however, there is also at fault the tragic stupidity of Americans who decided to have a try at the Golden Ring by flipping a condo and walking away with a Quick Hundred Thou. Who taught them that easy money was easy? That it was worth a try because “everybody is doing it” and “you’d better get yours whilst the getting was good”?

Markets always are a matter of exchange and transactions are mostly amongst individuals. So, it is the motivation of individuals that is central to the process. Let’s face the basic truth, we as a nation were binging on Cheap Credit (yes, fostered by an Ayn Randian Greenspan) and if we made gross errors it is necessary but insufficient to blame it on ineffective regulatory processes.

You cannot save people from themselves if they are hell-bent on perdition. Our cultural heritage has become one of self-aggrandizement, self-fulfillment, self-improvement, self-empowerment … self, self, self. As such, we forget the “us” in the human equation. We fixate on ourselves as individuals in both the market and society, but not as a collective of citizens.

There is little communal solidarity in American society, so centered are we on Individual Achievement. Therein lays the culprit—our much vaunted competitive spirit. We’ve become an overly competitive nation.

And thus the ends justify the means, which is both morally implausible and economically feasible. If you only try, we are told, unimaginable riches remain at our grasp. As if money were everything.

How does it profit us to gain the whole world, yet forfeit our moral integrity?

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By Lafayette, September 20, 2010 at 10:25 am Link to this comment

A DONE DEAL

{Sheer: By “modernizing” the economy, so the promise went, we would free powerful creative energies and create new wealth for a broad spectrum of Americans}

The facts of the matter, I suggest, are far more trite than this above. I suspect “smart” Bill Clinton could not tell the difference between the Banking Act of 1932 (which, at its inception separated Investment from Commercial Banking) and a hole in the ground. Neither could he have cared less. He may have understood the historical reason for the Act, but was convinced that its raison d’être was no longer valid. Boy, did he get that wrong.

It could be that Robert Rubin came to him with the proposal to repeal this act, perhaps with the same reasoning as in the quotation above, because Rubin came from Goldman Sachs (an investment bank) - he knew full well he’d be hightailing it back to Wall Street upon the demise of the Clinton Administration. So, he was looking to do himself and his Wall Street buddies a favor. Which he accomplished with the connivance of a Republican Congress.

One of the serious constraints of Investment Banking is the fact that the bank must have sufficient reserves in order to issue debt instruments – which constrains the total value of the debt instruments it issues/sells by the percentage-wise value of the bank’s reserves held as collateral. The bank obtains those those reserves from either its own retained profits or borrowing money. Investment Banking is a risk-prone and very lucrative business, but in fact it is Commercial Banking (which is risk-averse) that aggregates a great pile of money – that consist of your and my checking/savings accounts.

So Bobby-boy sold to Billy-boy the idea of repealing the Glass-Steagal Act (another name for the Banking Act mentioned above) allowing investment banks to merge with commercial banks – and thus getting their hands on the cash hoard that they could employ to further their risk-prone business of selling debt instruments. The debt-instruments in question are also known as Toxic Waste (subprime loans packaged and “securitized”, that is, sold as debt instruments that produce interest bearing revenues to its acquirers).

Billy-boy gobbled this financial engineering mish-mash avidly because he had another objective in mind. He would repair his marriage, mangled by his extramarital affairs, by getting Wall Street to finance Hillary’s go at the Oval Office. Thus, the deal was done.

Sounds stupidly simple? That’s the beauty of this tale. Politics is nearly always stupidly simple – just look for the money trail.

America cannot recover either its national prestige or steadfast belief in honest democratic institutions for as long as politicians have a vested-interest dominated by their need for election financing.

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By drbhelthi, September 20, 2010 at 6:35 am Link to this comment

Naming individuals who exercise guilt would extend
to quite a long list.  However, the “trend” is
important. Identifying the initiation of the
“trend”, and reversing it, is key to success.

Treating the symptoms, and taking care to not
disturb the causation, is the Rockefeller approach.
Continue the gravy-train, with me on top.
Take “Oncology” for example, with its “chemotherapy”
fraud.  Cancer patients are “cured” via
hypnosis and other methods; not by poisons
used by “Oncology,” which kill 12 times as
many healthy cells as cancer cells. And
which doesn´t harm mature cancer cells.

“The trend” toward dishonesty began when 200 NAZI
scientists were secreted into the US by NAZI
relatives and NAZI sympathizers already in the U.S.,
via “Operation Paper Clip” 1945. The trend was
amplified, when an additional 1,800 NAZI personages
were secreted into the US 1945-1948.

NAZI General Gehlin revamped the OSS into the CIA
upon directions of Allen Dulles.  Subsequently,
GHWBushSr was head of the CIA at the time JFKSr was
murdered.  GHWBSr denied that he headed the CIA
until a memorandum was produced,
twenty or so years ago, in which J. Edgar Hoover
named GHWBSr as CIA representative.

This should ring a bell very loudly for American
Patriots.

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By samosamo, September 19, 2010 at 2:17 pm Link to this comment

****************


I am into chapter 3 of Scheer’s book and it’s all too obvious that
this is just another part of the grand larceny being perpetrated
on america in its latest edition. It is a continuation of the S & L
crisis but with different devious methods and skullduggery to
benefit the criminals willing to just take what they want, money.

And Scheer’s book is a very well written, as much as I have read,
next edition to what those greedy crooked most insidious and
unscrupulous people are doing since William Black wrote ‘The
Best Way to Rob a Bank is to Own One’ detailing how that
fiinancial crisis/disaster was played out and is still playing out,
just with differing methods. Both of these books really bring to
light just how tenacious the robbers are in their greed to steal
everything and leave the rest of us with nothing.

But ‘stickup’ so far has brought light to me of 2 more of the most
horrible wicked and evil people to ever be allowed to live
considering their involvement, phil gramm and his wife wendy
gramm. With trash like these 2 being allowed to infect
government and corporate boardrooms it can be no wonder how
such a monumental disaster can be contrived and put into
action.

Wendy, for sure, could be arrested right now for her lying to
congressional committees extolling the virtues of ‘unfettered’
‘unregulated’ banking and financial shenanigans. Somewhere
here soon, I hope, these people are held accountable for their
actions, no matter how it is done.

And slick willie clinton, deserves just as much attention even as
he arrogantly traipses around trying to denounce any who try to
bring his sorry pitiful and most damaging record to the u.s. to
light when he was in office, most especially by gutting or
deregulating the Glass-Steagall Act. Slick willie, the biggest blue
dog to infect the ‘liberal’ dimocrat party.

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By SteveL, September 19, 2010 at 10:34 am Link to this comment

No doubt a lot of supid crap got passed during the Clinton administration. 
However at the end of the day unemployment was very low and kept Clinton in
office.

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By sofla, September 19, 2010 at 3:51 am Link to this comment
(Unregistered commenter)

Poor Jimmy Carter gets ignored again. Why not blame him as the ultimate culprit, because he initiated the deregulation agenda by deregulating transportation and energy pricing, and was so clearly in the pocket of David Rockefeller?

Bill Clinton did not invent the corporate purchase of the Democrats by financial interests. Jim Wright and Tony Coehlo did that job, and the Democrats were approximately as guilty as the GOP in the S&L crisis. (As Chairman of the Senate Banking Committee and VP-nominee “Lord” Lloyd Bentson told Dukakis, ‘Mike, that is not a good issue for Democrats.’)

There are too many candidates for blame in the current debacle if you want to look back into history. And that obscures rather than illuminates the more proximate causes.

Elliot Spitzer’s NY Time’s editorial piece explained the last critical act. The normally sleepy Comptroller of the Currency office took the unprecedented step of overturning state regulations and enforcement in the mortgage business. Then-NY AG Spitzer and about 47 other state attorneys general sued, but lost. This was such a disclosure of the hidden trigger for this disaster that almost immediately Spitzer was scandalized out of the governor’s office by the illegal leak of prosecutor’s findings before a grand jury.

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By John, September 18, 2010 at 1:13 pm Link to this comment
(Unregistered commenter)

Pop ups are to web sites as cockroaches are to restaurants. And just like cockroaches they drive consumers out the freaking door. I REALLY can’t be bothered. The minute you let them loose I am outta here. How screw things up with good ideas! You get to have it your way and YOU get to not be read. Really stupid and offensive marketing. We have places for people who pollute our screens with rubbish like this. Then submit the word you see below. But there IS NO word below but rather a question. WHO conjures this stuff?! What are they smoking? We call those places unemployment lines and it’s where they belong.

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By felicity, September 18, 2010 at 12:13 pm Link to this comment

The amount of sub-prime mortgages issued and embedded
in Mortgage Backed Securities (toxic paper) shot up
from $54 billion in 2000 to $508 billion at the peak
in 2005.  (The Securities, falsely top-rated, were
quickly dumped on unsuspecting investors world-wide.)

The financial service industry has begged off any
responsibility for dumping its toxic paper, instead
arguing publicly that the ‘government’ forced them to
make bad loans. Hoping against hope that this
statement would let-them-off-the-hook, what the
statement revealed is that they knowingly made bad
loans. And, I thought only children resorted to “It’s
not my fault, he made me do it.”

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By JohnMcD, September 17, 2010 at 6:49 pm Link to this comment

From Reagan to Clinton, we enjoyed a nice “boom” in
equities markets that had nothing to do with sound
policy and everything to do with the big giant bubble
of money that the Greenspan at the Federal Reserve
was printing and the immediate gratification of
otherwise unsustainable debt. 

Obviously, Bush and Bernanke put the final nail in
the coffin by running this plan on steroids instead
of letting the financial markets contract and deflate
a bit naturally (either after the tech bubble, 9-11,
2006, 2008 there were plenty of chances).  Now we’re
face to face with that original deleveraging made ten
times worse by a decade of securitized mortgages and
insane asset leverage.

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By Advocateur, September 17, 2010 at 3:03 pm Link to this comment
(Unregistered commenter)

Clinton did endorse and sign Gramm Leach Bliley, but even if he had vetoed the
bill, there was overwhelming support in Congress to overcome a veto. A broad
swath from both parties are responsible for overturning Glass Steagall.

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By Aaron Ortiz, September 17, 2010 at 10:46 am Link to this comment

On this I agree with Mr. Scheer completely, in contrast with other subjects.

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By drbhelthi, September 17, 2010 at 10:14 am Link to this comment

Perhaps we need to go back even further. Perhaps to the end of WWII, when Allen Dulles hired NAZI SS General Gehlin to revamp the OSS into the CIA.

At about the same time, 200 NAZI scientists received falsified passports and furtive entrance into the USA, via “Operation Paper Clip.” Werner von Braun has been elevated to hero status in the US, but should have stood trial with his colleagues at Nuernberg, for the starvation and illness deaths of 2,000 Polish slave-workers at the Pennemuende Rocket Works,1940-1944.

Also, there is a George H.W. Bush Sr., who was the secretive head of the CIA, when our beloved John F. Kennedy Sr. was assassinated.  Only he knows the extent of his involvement.  All others were assassinated or have otherwise died.

What has really happened to the US was documented by the shoebox full of NAZI WWII documents and pictures, provided by the last bodyguard of Adolf Hitler, LTC Otto Skorzeny. A falsified publication of his death in Madrid, 1975, was arranged by the US CIA. However, Skorzeny was ferreted into the USA, married an American lady, sired a daughter and lived rather comfortably in the USA til his death in 1999.

He stated that he and a NAZI associate assassinated Nicola Tesla in Tesla´s hotel room. Tesla invented Alternating Current, and all other electronic principles on which lasers and space-weapons are based, to include the radio, stolen by Alva Edison. Meanwhile, Tesla´s fortune was fereted into NAZI accounts by his “secretary” Georg H. Scherff Sr. of Doerlitzsch, Germany, fifty-two kilometres southeast of Leipzig.

Skorzeny stated some interesting ideas about Georg H. Scherff Jr., whom Tesla called the “little monkey.” Persons interested in the truth will find more info at this link:  http://www.proliberty.com/observer/20070405.htm

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By Devon Noll, MPA, September 17, 2010 at 9:28 am Link to this comment
(Unregistered commenter)

Thank you, Mr. Scheer, for stating so well what I have been screaming the political realm ever since the 1990s.  Bill Clinton and his wife are Corporate Animals, and our current President is badly served by their advice.  When Obama’s campaign people caved in and encouraged him to sell out to the Clinton power machine for the sake of the party, they guaranteed two things: a continuation of the horrible Clinton/GOP policies, and the continuation of a the downward spiral of America. 

The Clintons are and always have been money oriented, power happy, manipulative liars who have only one thing at the heart of every action:  their own interests.  Clinton knew that the key to wealth and power lies in Wall Street, and he was more than willing to sell-out this nation with the help of Tom DeLay for the sake of personal money and power.  Unfortunately, he succeeded and opened the door to the 8 years of the Bush/GOP machine that finished the job. 

Now all Obama can do is try to limit the damage and clean up what he can - while being advised by the very people who created the mess in the first place, and being blocked by Pelosi and Reid and the GOP in Congress from actually getting any real reform through.  As long as corporate and faux progressive Democrats control the DNC and the GOP right-wing controls that Party, we essentially have only one ruling party:  Corporate America. 

This President will never be able to create change because he sold out the people to the party.  Now if we want change that is sustainable and real, if we want Corporate America sent packing, we must abandon DC and work at the local and state levels to create new ways of living and working that allow us to move forward against the Monsantos, BPs, Wall Street, and Wal-Marts to reclaim our land, our economy, and our freedoms.

We must abandon the Clintons and their DNC to their fates, and the GOP to the insane.  We must find sane, reasonable ways to transition our communities into energy independent, food secure, economically resilient communities based on small localized businesses that will create a new national dynamic to force change in DC - either through new parties or new politicians - that will expel the lobbyists and corporate interests completely. We can only do this if we are willing to create our own change.  It will take hard work and knowledge, but we can do it.  We are Americans and we have always created our own choices.  We built this nation, and we can rebuild it, if we work together to do so.  It is time to act and act decisively - not in DC, but in our own backyards and in our own communities.

We can point fingers all day at who did what in the last 20 years or so, but the fact is that we let them do this to us because we were apathetic and lazy.  Now we need to change and we have no time left for excuses or delays.  Mr. Scheer has shown us the other face in this debacle politically, but we must look in the mirror for the ones responsible for this rise in political and economic idiocy - ourselves - and we must act to undo what we have done.  Recommit yourselves to rebuilding this nation from the ground up, literally, and we can create change in this nation.  Sit around doing nothing, and you doom yourself and the rest of us to being the corporate slaves the Clintons and the rest of Corporate DC and America think we are.  Those are our choices:  corporate slavery or freedom.  Choose now!

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By tedmurphy41, September 17, 2010 at 7:37 am Link to this comment

Why blame Clinton. It’s the System, stupid.

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By Jim Yell, September 17, 2010 at 7:00 am Link to this comment
(Unregistered commenter)

I remember quite clearly that by the time of Clinton’s first election for President, I voted for him in the complete knowledge that he was not a progressive, not a liberal and was in fact the best Republican Candidate of the two we had to chose from.

I had hoped that Hillary would be a moderating influence on him, but over the years I have come to conclusion that she is the same cloth as her husband, an opportunist ready to say or do anything to further her ambitions.

Most anyone paying attention knows that Clinton continued the attack on sane government that was the hallmark of past Republican Administrations and most successfully by Reagan. Reagan’s Administration was only a success because he had been pumped up by good media coverage. In fact without Bush and Bush/Cheney he would likely have been the worst President we ever had since U.S. Grant.

But, the idea that it was primarily Clinton who brought down the economy, no that is not true. It was the cumulative effect of Right Wing efforts to destroy responsible government and the fact that Bush/Cheney lead us into a war thru manipulation and lies and poor planning for the war and a refusal to have a War Tax for the first time in the countries life, combined with the above mentioned which created the failure of the economy. It was labor, or paying fair wages that put us here. It was over paying executives and elected officials and spending all our money on the Military-Industrial Complex that lead us to failure.

Until we bring back Usury Laws there will be no recovery, but that would only be a first step.

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By PatrickHenry, September 17, 2010 at 3:39 am Link to this comment

Signing NAFTA and repealing the Glass Steagall act were fundamental acts of stupidity by the Clinton administration which we are paying the consequences for now.

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By Carl, September 16, 2010 at 11:20 pm Link to this comment

Also, Clooney grew up in Kentucky, graduated from a Catholic High School, and has become a self-made millionaire through hard work in our free enterprise system. It will be hard to paint him as a “socialist” “far left” liberal, especially since his Republican opponent is likely to be a career politician with no business experience.

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By Carl, September 16, 2010 at 11:04 pm Link to this comment

Obama will prove worse than Clinton, and maybe even Bush. He made things worse by stopping powerful Democrats in Congress from passing reform. Obama will not even show the courage of LBJ and leave after four years.

Real Liberals and Progressives need to back a serious contender, and the best choice is George Clooney - the Arnold of the Left. He is from the working class, a great speaker, intelligent, great looking, and real. Yes, I know he says he’s not interested, but would if “drafted” by popular demand. He would trounce any Republican clown and raise a billion dollars in Hollywood money.

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By taikan, September 16, 2010 at 5:42 pm Link to this comment

Scheer finally seems to have grasped the fact that the Democrats, like the Republicans, are in bed with Wall Street, to the detriment of the general public.  The question then becomes, why does Scheer still act as an apologist for the Democrats, particularly the current President who has put Larry Summers, one of the five people that Scheer says are most culpable for the collapse, back into a position of power?

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