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Reports

Fiddling While Wall Street Burns

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Posted on Sep 17, 2008

By Marie Cocco

    So Alan Greenspan thinks this could be among the worst of the worst, a financial crisis that ranks as “a once-in-a-half-century, probably once-in-a-century type of event.”

    Greenspan was speaking Sunday on ABC on the eve of the stock-market plunge that followed the demise of Lehman Brothers and the sale of Merrill Lynch to Bank of America. These in turn followed the federal seizure and expected taxpayer bailout of Freddie Mac and Fannie Mae, which followed the federally engineered, taxpayer-backed rescue of Bear Stearns by JP Morgan Chase. When Greenspan says this all could become a once-in-a-century type of event, does he mean to invoke the Great Depression?

    I hope not. I want Greenspan to be wrong again—just as he was in 2005 when he said there was no speculative housing bubble but just “froth” in a few local markets.

    But the more fundamental reason I hope Greenspan is wrong is because a crisis that approaches the worst in a century would mean that millions of Americans would become homeless, starving and so desperate for help that—gasp!—we might need a new New Deal. And we can’t afford a new New Deal in good part because Greenspan in 2001 gave his approval to President Bush’s signature tax cuts. Enactment of these tax cuts was an early marker on the road to the great unraveling.

    Suddenly, everybody is talking about “risk,” as in the risk of letting venerable Wall Street institutions crumble right into New York Harbor. And all this talk about risk recalls that much-maligned political phrase of a few presidential campaigns ago, “risky scheme.”

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    That is what Al Gore called the enormous tax cuts proposed by candidate George W. Bush. Gore thought they were risky because rather than using what was then a federal budget surplus to bolster Social Security for the coming retirement of baby boomers, the tax cuts would instead lead us back into deficits and increasing debt.

    Gore wanted to put the surplus in a “lockbox”—sort of like those savings accounts that average Americans are supposed to build up for themselves, but, to the enduring consternation of sages such as Greenspan, they never seem to build. Anyway, the idea was to save for a rainy day—like for example, the cyclone Greenspan is now describing as a once-in-a-century type of event.

    So now we have had the tax cuts, we have two wars that are being financed on credit, and we have an economic downturn that is reducing tax revenues and increasing safety-net spending. We are enduring a wipeout of billions in home equity that Americans came to count on as a cash reserve as their incomes stagnated. Now the tumult on Wall Street has even the sharpest of the sharks unable to foretell what might come next.

    As a matter of political and economic necessity, Congress probably will enact a second economic stimulus package, cost unknown. The price to be paid by taxpayers for the potential bailout of Freddie Mac and Fannie Mae is still uncertain, but you can bet it is a heck of a lot more than many, many bridges to nowhere.

    Which brings us up to date. The economic “debate” the two presidential candidates are having is only slightly less idiotic than the back-and-forth in 2000 over the meaning of “risky scheme.” John McCain is laughable when he says, as he did on CNN recently, that a failure to restrain spending is “the reason our economy is in trouble today.” He talks about an economic commission such as the panel that studied the 9/11 terrorist attacks, but in truth, the White House and Congress haven’t implemented most recommendations of the 9/11 commission. And that’s without an army of financial-industry lobbyists picking apart legislation that might emerge from an economic panel.

    Barack Obama shows more promise, if only because he—like most Democrats looking in hindsight—correctly sees deregulatory zeal as a culprit. But Obama’s economic strategy simply can’t be implemented now: He wants to spend on necessary investments such as health care, but would have no money to do it. He’s not willing to impose higher taxes on anyone making less than $250,000—nor should he do so in the midst of such economic doldrums. 

    So it looks an awful lot like we will be flying blind, which, come to think of it, seems a strategy even Greenspan has fallen back upon. 
   
    Marie Cocco’s e-mail address is mariecocco(at)washpost.com.
   
    © 2008, Washington Post Writers Group


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By Folktruther, September 19, 2008 at 5:46 am Link to this comment

If the historical function of Dems are to serve the ruling class while deceiving the population that they are serving thiers, then what are the Gops for?  I’m glad you asked,Cyrena, that’s the only way to learn.

The Gops are there to serve the ruling class while pretending to serve the interests of the population.
Exactly the same thing!  That is the genius of liberal Democracies.  You can choose the leaders who are going to sell you out.  Isn’t this what Freedom and Democracy is all about?

Yes, it is.  The Gops and Dems play good cop-bad cop with the population.  The Gops selling out rural voters and the Dems selling out urban votes.  The idea is to get the population involved in the political theater of elections, wich is conceived as a kind of sports contest in the mass media.  And guess why they do that.  The mass media is owned by the ruling class too!  Just as they control the schools, univeristies and other learned bureaucracies. 

That is how they rule.  The schools Educate the young with the misconceptions that enable the mass media to deceive us when we are adults.  When we learn the specialized truths and tachniques in the learned bureaucracies, we also learn the ideological truths that ensures that they will be used in the interests of the ruling class.  And the members of the professional class who serve them.

By the time one gets to the voting booth, all one can do is vote for one’s own oppression.  If voting would change anything, it would be illegal.  As it was for African-Americans in the south and still is for minorities everywhere.  With Dem complicity.

Ever wonder why the Dems don’t attack back when they are attacked by the Gops, Cyrena?  Because that would encourage progressives to attack conservatives, and their whole raison d’etre is NEUTRALIZE the progressive population so they don’t make trouble for the ruling power structure.  So they drain the passion out of issues involving the population so that the ruling class through their lobbiests will give them money to by TV spots to delude the population to vote their asses onto the seats of public power.  Which is contolled by hidden private power.

But when power systems degenerate historically, Cyrena, as the US power has, than the whole power system gets out of whack.  The electoral farce becomes so remote from the interests of the population that those not deluded by the indoctrination of mainstream Education and Information increasingly reject the whole fraud.

The Dem hacks, activists and truthers continue to parrot the old refrain:

    WHARK! lESSER EVIL! LESSER EVIL! WHARK!

But it continues to get less effective as reality intrudes. the ruling class, as indicated by an article in the latest Time magizine now want to make Pakistan the central front of the fraudulent War on Terror.  The function of Obama is to get progressives to support it.  This puts pressure on Bush who then cannot resist pressure from the military to attack Pakistan openly with acts of war.

Then Dems like you can say—Obama didn’t do it, Bush did.  Vote Dem, that’ll make all the difference.

Of course you are quite right, the war in Pakistan has been going on for years with thousands of people killed, and hundreds of thousands of refugees.  But the mass media keeps these things hidden from the population under Freedom and Democracy so they won’t interfere.  The most effective technique of miseducation and misinforming the population is by maintaining an Educated silence about realistic power relations.

And diverting attention from the simple truth with bad arguments.  That’s your function, Cyrena, and may I say that you that do it very well.  It is a tribute to your intelligence.  That, and your malice.

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By cyrena, September 18, 2008 at 9:44 pm Link to this comment

Oh Folktruther,

Alas!! Woe is me. I forgot your main concern. PAKISTAN. Yeah, Obama has a war going in Pakistan, even though he’s just a Jr. Senator from Illinois, and hasn’t even completed a full Senate term yet. Now that is one powerful dude. Never mind that there have been US troops and specifically special ops dudes in Pakistan for nearly a decade. (Couldn’t have planned 9/11 without them) but of course it’s only because of the Jr. Senator from Illinois. (at least to hear you tell it).

But, what about the $billions$ from GW Bush to Musharraf? Humm…I don’t think Obama authorized that. Yeah, ya see, thouse BILLIONS, (now up to $25 that we know of) started up IMMEDIATELY after 9/11. Direct deposit, from your IRS payment to Musharraf’s bank account. (probably right there next to old dickie boy’s in the same ‘off shore’ environment.)

So, what to think of all of this? Is GW still a repiglican? Well, doesn’t matter. His buddy Musharraf got ousted in Pakistan, and now he’s sent in even more troops. (guess he didn’t trust the new government in Pakistan since it’s not a military dictatorship any longer) The repiglicans ONLY support foreign military DICTATORSHIPS, and of course their own. (dictatorships that is).

But, don’t worry yourself over that Pakistan issue. I’m sure GW will have it all resolved by the time Obama is inaugurated. So, don’t let yourself get worked up about that.

Wonder if he got permission from Barack to do that?

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By cyrena, September 18, 2008 at 9:26 pm Link to this comment

So folktruther, if this is the case….(and I’m sure a historian like you knows how outrageously distorted this is)

“That is what the Dems are for, to serve the interests of the ruling class while deceiving the population that they are serving theirs.”

What are repiglicans for? I mean, besides mega tax cuts for the wealthy, and…if I’m not mistaken, beginning the last three wars in the Middle East and South Asia?

Now, while you’re considering that, might it also be worth considering that well, so far, Barack Obama just hasn’t STARTED any wars, and since I’m sure you’re not claiming to be a fortune teller or anything, that might be worth some consideration in your constant rhetoric about war mongering Obama.

I mean really Folktruther….just join us in the reality of the moment, (and the last 8 years) just for a tad deviation from your constant hate-mongering on Obama. Just for say…umm, 30 minutes maybe? Surely that’s long enough for you to recall that Bush I sent troops into Iraq, and then Dick Bush II sent them into Afghanistan, and Iraq, (slam dunking on them 6 years later) and don’t forget the plan includes Iran as well. (they’ve got oil too, and Dick Halliburton has to control it ALL).

Now, last I checked, all of THESE guys were republicans. Did they change up, and I missed it?

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By Folktruther, September 18, 2008 at 7:11 pm Link to this comment

You’re quite right, Cyrena, it isn’t a new thing, especially for Dems.  Wilson after campaigning against entering the war in the 1916 election, entered it after he was elected, instituting a draft.

In 1940, after promising to keep the US out of “foreign” wars, Roosevelt manipulated one, instituting a draft.

Truman instituted the first peace time draft in US history, well in time for the Korean war.

This draft served LBJ in Vietnam, which he committed troops to after an ad accusing Goldwater of wanting war.

So when Obama called for a draft on 9/11, to fight the new war in Pakistan, he had longtime Dem precedents to go by. That is what the Dems are for, to serve the interests of the ruling class while deceiving the population that they are serving theirs.

But you are quite right, there’s nothing new about that.

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By libertarian, September 18, 2008 at 6:29 pm Link to this comment
(Unregistered commenter)

Every Dem or Progressive column or cable show I’ve seen this past week on the demon deregulation misses the core issue and its remedy. Regulated or deregulated, those at the top of both financial giants [and] governments will eventually damage the majority unless there is criminal liability. There will always be ways to play a financial house. The only useful reform is brute-force prosecution. Discussion of regulation only diverts attention from this. Lock-up mass fraud corporate perpetrators for 20-30 years and regulation will be irrelevant.

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By cyrena, September 18, 2008 at 5:33 pm Link to this comment

Folktruther:

•  “On this last 9/11, both Obama and McCain came out for a military draft.  Change you can believe in.”

A military draft certainly WOULD be a ‘change’ but it’s not a new idea…not even close. At least two representatives, (and I’ll have to verify the names for you) came out for a draft right after 9/11, when the Iraq war of choice was simmering on the front burner. (both were democrats)

Well of course the repugs howled about that. I remember my cousin, a die-hard repug without a brain cell anywhere visible, and just out of the military after 20 years, was going on and on about how the ‘dems’ wanted to reinstitute the draft. They did, specifically because they knew exactly what was going to happen. They knew that the ‘troops’ being sent of to steal oil would be less than 1% of the population, and that they would be primarily people of color and poor whites who didn’t have any other opportunities, or to escape jail time. (they may or may not have been aware that private contractors would fill in the gaps, and they we the taxpayers would foot that bill as well). *I* knew that if they’d even LOOKED like they were considering a draft to cover all of these wars of choice, there wouldn’t have BEEN any wars, because the elite and wanna- be elite would NEVER have allowed it!!! (not *MY* kids).

So, this isn’t a new thing at all…calling for a draft. Be interesting to see how fast we could get out of the affairs of the rest of the world if it meant that some of the trust fund/off-shore account babies might have to actually serve, instead of it just being ‘somebody else’s’ blood…and the same somebody elses’ over and over.

~~~~

Meantime, I ditto Felicity. There’s money available for a whole bunch of stuff, if we weren’t giving it all to the MIC to create world wide destruction.

And imagine what we could get if the wealthiest people in the nation actually started paying some taxes on the jillions of dollars.

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By Alan, September 18, 2008 at 2:33 pm Link to this comment
(Unregistered commenter)

The idea that it was possible to structure
financial instruments in such a way as to make
it almost computationally impossible to
derive the tree of fragmented positions that
constituted them is testimony to the
recklessness of the quants and to the
blindness and laxity of the regulators.

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By oldhip, September 18, 2008 at 11:10 am Link to this comment

 
I just created an explanatory posting at my blog for this site…
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By montymarket, September 18, 2008 at 10:00 am Link to this comment
(Unregistered commenter)

McCain is a Republic party principal running as a faux Independent. When the Republican party was in a majority in the Senate only two years ago, he was Chair of the Commerce Committee.  As such he wanted to:

Privatize Social Security.  Think if Lehman Brothers were running our retirement accounts!  Ask your Republic friends, which institution is more solvent today:  Wall Street scam artists or the Social Security Administration?

De-regulate. Free markets are self-correcting.  The market knows!  The free market self-adjusts! The hedge fund scam artists were paying themselves humongous salaries and bonuses by stealing from average home owners.

Free markets.  Send jobs overseas, drive Americans from their homes, pay CEO’s outrageous pay packages while stripping the US of its financial basics: the homes of its citizens.

Kick the can down the road.  Guarantee loans to rip-off artists to keep them solvent until after the election.  Then all the bills will be paid by the taxpayers.  If you can’t gut the moose one way, do it another!

Where’s the justice?

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By hippy pam, September 18, 2008 at 9:57 am Link to this comment

The “fiddling while WE BURN” has been going on for {at least} 8 years-as “bullsh*t and friends” looted the treasury and allowed decent jobs to immigrate to foreign countries.He also allowed…..foreigners to MOVE IN AND TAKE GOODS AND SERVICES THAT COULD/WOULD/SHOULD benefit AMERICAN CITIZENS.And WE ARE STILL ALLOWING “bullsh*t” to benefit his foreign friends by GIVING THEM MONEY to keep a war going…at the expence of INNOCENTS-both here and abroad…WE SHOULD BE ASHAMED OF OURSELVES-AS AMERICANS-FOR PUTTING UP WITH THIS CONDUCT FROM SOMEONE WHO IS “EMPLOYED” BY US…......

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By felicity, September 18, 2008 at 8:20 am Link to this comment

Ms Cocco - It isn’t exactly true that there’s no money on which Obama could draw to implement some of his programs.  Over 50 percent of government discretionary funds presently go to the military/industrial complex - a complex with a voracious appetite, a bottomless pit of there’s no such thing enough.

It’s about beyond time to put that bunch on a starvation diet - call it robbing Peter to pay Paul, the guy who has been on a starvation diet for far too long.

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By Folktruther, September 18, 2008 at 7:23 am Link to this comment

Obama-Biden have no money because they are groveling to the Zionist-oil-military cowboy lobby and instead of decreasing militarism, they, like McCain, are set to increase it.

On this last 9/11, both Obama and McCain came out for a military draft.  Change you can believe in.

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G.Anderson's avatar

By G.Anderson, September 18, 2008 at 6:13 am Link to this comment

There is still enough time left in the Bush administration, for W. to turn this disaster into a Great depression. Considering the mess he’s made of everything else, it’s a distinct possibility.

Still, there will be lots of money made on the market as it goes down, by the old money aristocracy in this country.

For those, who have made lots of money selling derivatives, otherwise known as Americas debt, to the rest of the old, America’s debt at this point might not look like a good investment. Despite W’s reassurances to the contrary.

Wouldn’t it be better to focus on helping American’s have decent wages, health care, ending the War in Iraq, and health care, than propping up banks that sold us into debt slavery?

Unfortuantely, there’s no money to be made helping the people meet their needs. That’s best left, to Wal Mart, and it’s manufacturer’s in China.

Down at the government mint, the printing pressess will be running day and night, pretty soon the dollar won’t be worth a dime. I guess then we’ll have to have a new kind of dollar, one designed for our own good. Called the Amero.

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By oldhip, September 17, 2008 at 11:48 pm Link to this comment

If you buy products from any of the corporations listed in the following link, (Worst Corporations,) or least make no effort to even know if you do, then you are part of the problem - Right?  Here’s the link.

If you need more information, you may find this link helpful.

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By writeon, September 17, 2008 at 11:11 pm Link to this comment
(Unregistered commenter)

The situation is now so serious for American capitalism, that is, the distinct possibility of financial meltdown and degredation spreading into the rest of the ‘real economy’ and dragging us into a depression worse and of longer duration than the Great Depression, that we have to concentrate all our efforts on stopping such a catastrophe happening; the time for apportioning blame and recriminations will have to come later, when the crisis has been averted and the situation stabilized.

It’s like we’re on the Titanic, we’ve hit the iceberg and the ship is listing as water pours in the gash along the side. It’s too late to blame the captain and the crew for incompetence and poor leadership. We’re way beyond that. Now it’s all hands to the pumps and hopefully we can save the ship, because there aren’t enough lifeboats for everyone if it goes down!

Ideally the passengers should revolt and overthrow the officers and the crew, because, frankly, we’ve lost confidence in their ability to plot the right course, however, in our current precarious situation, a bloody revolt might actually make things worse. A civil war whilst the ship is starting to tip is a risky undertaking, with an uncertain outcome.

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