Live Chat: Robert Scheer on the Economy

Let me just offer one alternative: The housing crisis is the rot at the center of our economic problems — a crisis brought about by the immensely greedy, selfish, stupid policies of Wall Street to securitize lousy loans and pretend that the lousiest of loans somehow are worthy of investment. When Obama first came in, he was faced with the problem of “what should I do with all this. What do I do with all these homes being foreclosed?” He should have then and should now embrace a policy of keeping people in their homes by preventing foreclosures, and that can only happen by empowering the bankruptcy courts to force the banks to make those deals necessary to keep people above water. But instead of being solicitous of the needs of homeowners, he has catered exclusively to the needs of the Wall Street thieves.

Fortunately, I have a new book which spells all this out — it’s called “The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.” There’s nothing in this book that Obama didn’t know when, as a candidate, he spoke at Cooper Union in ’08. He spelled it out. The mystery is why he abandoned that wisdom and embraced the Reagan and Bush policies that have proved to be so costly.

Obama can pull in Volcker and Stiglitz and Krugman and ask them. They can say it’s your job as president of the United States to give these people rein or its your job as president to deal with the pain and suffering that Wall Street has caused to be visited upon the American people. All we’ve heard from Obama in that regard is a bit of rhetoric, but certainly his actions with regard to financial reform have been tepid. And I think what we need, and I’m not a big fan of Harry Truman, but I’m old enough to remember that when Truman held big business accountable — I think we need a little of that. Why do we have these banks sitting on all this money? Why do we have these businesses not hiring? Why are they holding back? General Motors, which is now profitable, I guess in the last two quarters — why are most of their cars being made and sold in places like China? Where’s the investment in Detroit? Where are the jobs in the United States? I think it’s time he put pressure in that direction. Where are the jobs in the U.S.? I think it’s time he put pressure in that direction.

I remember when the financial deregulation was being passed in the 1990s.I was a reporter and then a columnist for the L.A. Times. I remember well that very few serious journalists were in attendance. Mostly it was representatives of the banking industry and the lobbyists. There was no pressure from the leaders of the mainstream media to in any serious way cover this fundamental revision of the American economy. And to the degree that it was covered — and this is documented in my new book — that the established media, sadly enough led by what is unquestionable our best media organization, the NYT, performed the role of cheerleaders, for a radical financial deregulation.

The vision of Ronald Reagan to effectively end FDR’s New Deal legislation, [an end] which was brought to fruition by Bill Clinton, was passed to the accompaniment of cheers from the financial writers, editorial writers and the lead TV personalities. And they bought the assurance from the owners of their news organizations and the friends of the owners that this sort of reform was long overdue. So I would say the biggest problem is that the mass media responds more to the concerns of rich, powerful investors than it does to the needs of average consumers and working people. And if you go back and look at how these issues are covered, it has only gotten worse as we’ve seen the concentration of media in fewer and fewer hands, and the L.A. Times, which I worked for, will emerge from bankruptcy, as I understand the latest reports, owned by the same investors in Wall Street, Morgan Chase, that created the problem.

As for Obama, as your question implies, he clearly is acting as if he has to stay the course. This has ruined the careers of his predecessors, whether that course involved a war that made no sense or economic policies that make no sense. I think the mark of great leadership is the ability, as Lincoln demonstrated, to say you’ve been wrong and to go another way. I think that Obama has that possibility, but if he remains wedded to the Summers/Geithner machine, I think it will not be a happy ending for him or the American public.

And on that cheerful note, why don’t we wrap it up and meet again next week?