"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises.
If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."
- Simon Johnson, The Quiet Coup
“A true opium of the people is a belief in nothingness after death - the huge solace of thinking that for our betrayals, greed, cowardice, and even murders that we are not going to be judged.”
- Czes?aw Mi?osz
As economist Simon Johnson put it so aptly, there was a 'financial coup d'etat' in the States. It was the result of a longer term and well-funded effort as documented by PBS Frontline and others.
People forget all too quickly what has happened, even things that happened less than twenty years ago. Perhaps it is easily forgotten because there are so few counterexamples of honesty and decency these days in government and business to hold up in comparison. The UK and Canada are following in lockstep, as well as the central government for Europe in Brussels.
The Clintons, along with a large group of Republican Congressmen and compliant Democrats, put a 'for sale' sign not only on the Lincoln bedroom as you may recall, but on the rest of the White House and the Capitol, and indeed, the well being of the people of the United States.
They certainly did not do it alone, as it was a bipartisan effort to overturn the protections established in the darker days of the Great Depression. But the money was good, and it was there for the taking, and with it the enormous power to threaten or reward those around them.
And it became the thing to do in Washington and New York, to partner up with big money to take the public for a wild ride, as we have not seen since the beginning of the last century. Once again capitalism was unfettered, and became the rawest, the worst kind of short sighted and self-dealing 'capitalism' that is more corrosive looting than productive asset allocating. And so the New York - Washington metroplex enthusiastically engaged in a program of fabulous gains for themselves, and longer term pain for the country.
I do not have to read Robert Scheer's account to understand it; I saw this happening with my own eyes, almost in slow motion, as one might watch the events leading up to a train wreck. The actions of the participants were deliberate, and focused solely on amassing enormous fortunes for themselves and their friends, and damn the people and the consequences.
What the Clintons did was not to invent soft graft of political contributions and gratuities, sinecure positions after public office, and ridiculously generous payment for speeches and appearances. No, what they did was take what had been reviled as the worst of politics in craven service to big corporate interests, which had been largely but not exclusively the hallmark of their political opponents who were well established as servants to the corporate interests, and make it not only acceptable for establishment liberals, but downright fashionable.
Why would the Clintons, that wonderfully privileged and intelligent couple, do such a coarse and craven thing? One might think of about $130 million reasons offhand. Is anything just that simple? And what would you do if you were offered $130 million in easy money for you and your family to make a few key decisions, to look the other way at times, while having no fear of punishment, with all your many sins forgotten, excused, and ignored by a compliant press?
Oh yes, you are an angel and would of course say no, even if the corruption was unrolled slowly, one step at a time. But what do you think that the fellow next to you would do? The ones who cut people off in traffic, makes the rules for themselves, wishing to have their own way, to have power and a place at the highest table?
Is this a system likely to be honest, just, and sustainable? Is it designed for fairness and rewarding the best and most productive behaviour?
And like the utopian efficient market hypothesis, we are expected to believe that the powerful men of Big Money are just men of civic virtue who will give millions upon millions of dollars to politicians and expect nothing but fairness and objectivity in return, even if it is to their own disadvantage as required by justice.
No wonder so many politicians have become little more than marketing projects for Big Money, like brands of toothpaste and soft drinks. Pick any flavor that you wish, but despite the appearances of difference, they are all owned by just four or five big corporate interests, as is the mainstream media. Which by the way was enabled by the Clintons overturning the Fairness Doctrine.
A number of the old hands of politics see where this is heading, and have already taken the money and run, some to hide in their studies, to try and create a new legacy for themselves, and others to move to K Street as lobbyists and get filthier rich while it lasts.
But the problem still remains, Once thoroughly corrupted, a system finds it hard to correct itself, especially if the consequences for big rewards are more of an inconvenience than punishment, if there are any serious drawbacks at all.
The American people seem to be attempting to rouse themselves, to use their right of suffrage to bring about the change, the necessary reform, that has eluded them for quite some time. Let us hope that this effort will not be squashed in the manner of other protests, such as Occupy Wall Street, have been through almost ruthless and coordinated nationwide public relations campaigns and even violence from the government and the media.
By Robert Scheer
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...
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...
Read the entire article with a link to the preceding excerpt from the book here.