Since the Reagan administration, when I began taking an interest in things
financial, I have watched the steady deregulation of banks and the market. It has
been a harrowing experience for me as I strove to build a ‘nest egg’ for us, my
wife and I. She an RN and myself, an ecologist, were, save for education,
definitely not at the upper end of the middle class as far as income goes. But we
chose that life for the joys it gave us, lived fairly frugally and out of our vegetable
garden in season.

I was conservative in our investments except for a small amount I used to
speculate in an informed fashion, largely in tech stocks. Not for us the .com
bubble, a ridiculous risk for anyone. But in 2008, our nest egg lost up to 20% of
its value. Others suffered far worse.

We were sold out by both political parties, but principally by the Democratic Party
of which I was a lifelong member. The Republicans have always been the enemy
of the working class for whom they have the utmost contempt - so be it. But,
since FDR, the Democrats were supposed to represent us (but not the poor
blacks). Beginning with the Clintons and the DLC, they sold us out to the
capitalists. That is where we are now and how we got there, as Scheer has so ably
described and I have lived, year by year. We are now, roughly speaking, where
the blacks were at the advent of MLK et al. (my personal favorite is Fannie Lou
Hamer). The ball is in our court.

It’s good to see in this article that finally someone is according the politicians and government with causing this mess - they make the rules, enforce (or not) them, deregulate, don’t tax the rich, bail out the wealthy, etc. - and not just the businesses (who after all just obey the law, as crooked as it has become). Please remember that they haven’t thrown hardly thrown anyone in jail because of the meltdown because Wall Streeters didn’t break any ‘hard’ laws (deregulation by the govt took care of that) and that they made tons of money (the government made sure they didn’t get taxed like you and I). Blame and protest your government - they are the enablers.

The Economy?? It’s the System, Stupid!

“The Left” spoke up about the Patriot Act? I must have missed that.  Maybe it was just a mumble ...

I agree that Cheney and Bush are essentially thieves that backed up their cronies’ truck to the national treasury and loaded it with taxpayer cash.  I’d be interested to see numbers but I expect that all those unfunded tax breaks, nationalisations, rorts and even the lack of regulation enforcement institutionalised W and Co. is all swamped by the damage done by the banking deregulation pushed through in the Clinton years.  Who knows what would have happened if an honest adult had been minding the store when things went really wrong.  History will say that W’s administration was a child-like president and a thief of a vice-president.  Would a Gore presidency have been able to reverse things before they became too late?  I suspect not.  He as vice-president when the damage was done and needed corporate funding as much as anyone.

To his credit, I believe that Clinton has admitted his enormous mistake ... but like Greenspan it is all a bit too little and much too late.

Sure Clinton has a different view ... read his book (it’s a good read actually).  His economic justifications are that he raised taxes but removed economic constraints so he was all even with the rich (who may have disliked their taxes).  He made a big deal about economic aid to the poor should be a “hand up not a hand out” and so justified removing a lot of support for the poor and unemployed.  So, he balanced the budget ... no mean feat.

Were these policies destined to fail?  Well, his successor seemed to go out of his way to screw up economically.  He maintained or extended pain for the poor and disposessed.  He blew the budget on tax breaks and wars to an extent never seen before without having the political balls to actually cut services.  He privatised numerous government functions through rip-off no bid contracts to his vice-president’s business cronies.  But through all of this, it could be argued that the real mistake was to allow the decriminalisation of previously illegal Wall Street behaviour to continue from the Clinton era.  So while Bush ran up a few trillion dollars of government debt, Clinton’s insane banking deregulation led to far vaster sums being siphoned out of the economy into a very few private hands. 

Did the congresses during these terms make no contribution to the insanity?  Of course they did ... but it seems the congress has been largely turned into a corporate money machine long ago.  The only brakes on this process have been in the other branches of government.  Now the presidencies and the courts appear to have been taken over as well.

One can only hope that the anti-establishment feeling so prevalent in the voting public can actually be channelled into some sort of government action to slow the destruction or even reverse it ... a thin hope but perhaps the only one?

Camarcuspar and Lilith MC
I suppose you mean to say, that the relative good prosperity, including the 22,000,000 new jobs during the Clinton administration, was illusory and destined to collapse, and the following two Bush terms, and the congresses have no part to play in the downward coarse of our economy and were “incapable” of doing anything to maintain economic vibrancy; the devastation was inevitable and unstoppable, because of that dastardly Clinton?  Clinton created our ruin, singlehandedly?  Do you suppose that if Clinton were present on this list, that he might have a different take on this pressimistic views concerning his tenure?

More for johncp:  The US was the only major country standing after WWII.  Manufacturing and having babies were the memes creating a large middle class and enhancing wealth for the wealthy who shared.  By Reagan/Clinton the baby boom was flooding the market and the rest of the world had come back especially to manufacturing done at lower cost.  The free trade, open borders, global world economy meme took hold.  Immigrants flooded into the US and were welcomed-in the beginning.  The rest of the story you know.  Eventually there will be a need for local businesses and workers, but until then many, including me, think we are in third-world category in terms of working class.  The wealthy in the US have earned their reputation for poor citizenship since Reagan.

Because JohnCP, Reagan was the first president to buy Milton Friedman’s supply side theory that the key to unleashing economic growth is to ensure investors (i.e. the rich) have heaps of excess wealth to invest.  Then Clinton, economically at least, out-flanked Reagan on the right by removing support for the poor and the vestiges of legal constraints on the rich.  It could be argued that Bush W’s contribution was to directly open up government coffers to large corporations through privatisation government functions and eventually bail-outs.  This was done so badly that corporations taking on governent function proved to be ill-prepared to even approximate the much maligned government capabilities (Katrina? Mercenaries?)

Where there had been legal and moral constraints on the actions of the rich prior to Reagan, the legal restraints (which had always been under attack) were progressively removed during the Reagan-Clinton eras.  It was all a wonderful theory on paper.  Economics, however, is a social science.  When the investor class got wads of money they no longer needed great returns on their investments and so spent the money on conspicuous consumption instead.  Supply side theory has provided a figleaf of moral justification for one of the greatest rip-offs in history.

Now that the poor and middle class have been stripped of their buying power, the economy has ground to a halt due to demand side constraints, i.e. everyone is so in hock to the banks they can’t buy anything so the banks have few businesses to invest in.  (It is purely habit—and a lot of gall—that makes the bankers pay each other unworldly bonuses despite the crappy state their business is in.)  It will take a while but it looks like a painful slide towards 3rd world status is in progress.

Perhaps Scheer can unravel this conunumdrum for me.  We’re told that Reagan and Clinton did all this terrible stuff to us.  Is this intended to convey the preposterous notion that there was nothing in our economy prior to Reagan that predisposed it to the present ruin we’re facing?  What of the matter of the overwhelming control the rich have over our economy.  It may not be absolute, but it’s certainly decisive.  How does finding better leaders help us out, if the process of obtaining our leaders is, for the most part, controlled by the same rich people, that better leaders would have kept in check?  How on earth can the rich and powerful maintain their wealth and power, if they fail to control the political processes by which their wealth is secured?  If our society is, for whatever reasons, so easily deluded by propaganda, and a majority of people are so obsequious in the face of power and wealth, or so openly or secretly lustful of possessing it for themselves, how is that Reagan and Clinton come out as the culprits in all of this?  Scheer may be a splendid writer, but he’s pulling your leg.

If you were fortunate enough to have bailed out of the stock market between August 2007 until early March 2009, if you were wise enough to have limited your exposure to debt (whether mortgage, credit card or other), and if you had saved enough for your future, you’re sitting pretty right now.

If, on the other hand, you paid no attention to the beginnings of the real estate bust in the summer of 2005 and bought a McMansion, if you maxed out your credit cards and used your house as an ATM and drew down on equity until there was nothing left, if you neglected your own education for a free-for-all lifestyle of immediate gratification, then you’re screwed.

This, I’m afraid, is the current state of affairs in America. While Wall Street investment bankers securitized toxic mortgages, many Americans became so hyper-leveraged that collectively they contributed their own share to the bubble inflation; the “true believers” in the American Dream bought into the system that eventually collapsed. Now they’re foreclosed, out of work, and scrambling to figure out the rest of their lives in a dead economy. How is such a thing possible?

The metaphor of the “housing bubble” or “debt bubble” is probably correctly chosen but as a metaphor it can go only so far in describing where we are now. Once the “bubble” burst, we returned to a “new normal.” The new normal is a retraction of growth in which millions of Americans are finding themselves as though having stepped out of a time machine into a far less prosperous country. The economy has tanked. Jobs have disappeared, and all indications are, they ain’t coming back. For them, as well as for the rest of us, prosperity is a thing of the past. The engine of our economy is not humming along. It’s broken, and the fundamental elements are irreparably busted.

What happens now? This is the bad news. America will over the next five years begin to look more and more like Mexico where very few wealthy individuals rule over the rest of the population (Mexico is home to the world’s wealthiest man), where there is the thinnest veneer of a middle class (professional classes) and where 4.8% of the population lives in abject poverty (less than $2/day) and where close to 20% live at or below the poverty line. (The poverty threshold, or poverty line, is the minimum level of income deemed necessary to achieve an adequate standard of living in a given country.)

Today, in the USA, 12% of our population (greater in actual numbers than in Mexico) live at or below the poverty line, approximately the same as in Vietnam or Hungary. We are headed for a corporatist totalitarian state in which the oligarchs and corporate interests, that have already taken control of our federal government, will call the shots for the rest of us. Whatever is good for their bottom line will become national policy.

How do we reverse this deplorable state of affairs? This question is best answered with another: Where are our concerned citizens? Why aren’t they in the streets? In France, the French conduct protests to change laws that they deem as encroachments on their way of life. Here in America, instead, we watch “American Idol.” Why aren’t our universities ablaze in protest? Because student protest has been preempted by the burden of school loans, because their future “earning power” is threatened should they raise a finger in protest against higher tuition costs and fewer options.

The only folks pissed off enough to get motivated to change anything are the Tea Baggers, the proto-fascists, who are supported by wealthy oil interests. Yeats said it best: “The worst are full of passionate intensity, and the best lack all conviction.” Where are we headed? The November elections will look very much like those historically in Germany, 1933, in which the Nazis gained control of the government. What we are witnessing is the end-stage of the Republic.

The story is not over. Everyone assumed the Dems would fix that absurd Bush deal in which there is zero estate tax this year, so billions of dollars on the super-rich go untaxed.

Now we have Obama’s gang plan to extend the Bush tax cuts, only for those “poor” folks making less than $250,000, which he thinks is a typical middle class income.

So how will this unfold? Will the Dems “compromise” and extend ALL of the Bush tax cuts (meaning no more estate taxes forever) and then Obama is “forced” to sign the bill. Predictions anyone?

It WAS a “Perfect Storm”, but unforeseen? No. From the election of Ronald Reagan to the collapse in 2008 the signs of an American economic collapse have been there.  You cannot keep knocking out the under-pinnings of an economy, especially the safety nets and fire extinguishers and then claim surprise when it collapses.  Yet at EVERY step of the way the collapse could have been aborted before it ever happened.  But the spineless Dims and the corrupt Re-Thugs made sure they never performed that abortion.

While it begins with shipping manufacturing jobs overseas to break the unions in the early 80’s, and adds the magic of “deregulation” into that, the big change is the midnight clauses Phil Gram stuck into the 1999 banking bill.

In 2001, the major tax cut to the rich turned the surplus into a deficit.  The US Government had to go to the credit market to borrow enough to meet the budget.  And so it began, year after year, until finally, in 2006, the ship sprang MAJOR leaks when the sub-prime market, deregulated and out of control, collapsed.  Economists all over the media warned that this was only the first sneeze of the oncoming economic flu.

Did any of the big WS houses do ANYTHING to protect themselves and us from it? No. They did EXACTLY the opposite, running up even MORE debt and bad loans.

Yeah, there’s a lot of blame to go around, but the lion’s share goes to the GOP and its supporters because they got EXACTLY WHAT THEY WANTED, and it resulted in this.

The one good thing to come out of this mess is that
more and more citizens are realizing democracy doesn’t
come free with a birth certificate. If we want to live
in one, we have to fight. Our most dangerous enemies
are not in the Middle East, they are in business,
government and advertising-slanted “news” outlets. They
own the companies you work for.

We had a similar “con” in CA with energy deregulation.  If an objective observer reads the legislation, it will tell them exactly where “big business” plans to go.  Included are various “get out of jail” phrases like “these financial products are so new and creative they need to be exempted from state laws”.  State laws are where mortgages are regulated.  No doubt lobbyists spiked the recent regulation laws because they can game the system coming and going.

JdinMD - Some of them may have been stupid but a guy
named John Paulson wasn’t.  By shorting sub-prime
mortgages he realized in one year and one month’s
time an income of $3 billion.  Do you suppose he was
just lucky?  I don’t think so.

And of course the fact that in 2006, 30% of first
time mortgage holders couldn’t make their first
payment may have gone unnoticed because Street types
can’t read? 

And AIG really thought that the $550 billion worth of
credit default swaps, insurance, they sold all over
the world on securities backed by sub-primes would
never need to be paid when they went into default? Of
course they didn’t which is why AIG only had about
$100 billion in assets to cover. OR did AIG know that
we’d bail them out. 

The plot carefully devised by the financial service
industry was thicker than we can ever imagine.

Fine article but I don’t even see why this is news ... let alone book fodder.  Another book telling us what happened?  Another article? 

Those who were paying attention knew this was rotten when it was going on (ever since Reaganomics).  Those with a vested interest in not understanding never will.  The rest have had plenty of explanations and either get it now or will never get it; presumably because they either can’t admit to themselves they were fooled or because they are believing liars.

I disagree with ofer.  Any article which quoted Bill Black back in S&L days laid this out nearly 20 years in advance.  There have been a steady stream of people making the same points.  Few wanted to listen when the catastrophe was being hidden and delayed.

Citing Robert Sheer ~ “....a tiny elite of self-interested multimillionaires and billionaires making decisions for the rest of us. As long as we cede that power to them, we can expect to continue getting bilked.”

And now, all we hear from the sector that will not, under any circumstances suffer any adverstity, even in the midst of two wars that enrich their multifarious concerns. “Tax cut expiration will kill the recover and stifle job creation.”

Oh, they are so darned needy, aren’t they. Where is the job creation as things are. They took the booty and found a tax shelter in Leitchenstein! Show me the flippin’ (euphemism) jobs, first, up front!

Robert, that was quite a compliment just handed out

to you, but why did it take until 2010 for journalists

to see the stickup? That wouldn’t have been Izzy.