Sunday, October 18, 2009

The More Things Change....

My 50th blog post! WOOHOO!

Everyone's heard the old phrase, "the more things change the more they stay the same." That seems to be the case with the financial disaster out of which this country is still trying to find its way.

Last week "Bill Moyer's Journal" on PBS had an eye-opening discussion on this topic. Bill's guests were Representative Marcy Kaptur (D-OH) and Simon Johnston, former Chief Economist with the IMF and currently at MIT Sloan School. They gave a very reasoned, intelligent assessment on the state of this country's economy. There was no screaming or jumping up and down, and no one tried to shout the other down. They didn't carry around misspelled, incomprehensible or outrageously stupid signs. It was just two thoughtful, articulate people stating some obvious and not-so-obvious facts about the economy, and what they had to say was chilling. Some of the salient points:

>> There is a massive revolving door between Washington and Wall Street that allows financial executives to rise to the highest levels of government and enjoy unprecedented access to the centers of power. Henry Paulson, formerly of Goldman Sachs and Timothy Geither, former head of the NY Federal Reserve, are the former and current Treasury Secretaries.

>> Lack of meaningful regulation left Wall Street with virtual free reign when it came to concocting exotic, high-risk financial instruments. The lure of extreme profits enticed them to take extreme risks. When the mortgage crisis brought many of them tumbling down, the taxpayers had to step in and bail them out. This resulted in the privatization of profits and the socialization of loss; that is, Wall Street kept the immense profits but unloaded the immense debt on us.

>> Bankruptcies and consolidations have reduced the number of huge powerful banks from 12 down to 4 super-banks, all of whom are lined up against any kind of financial reform.

>> Both of the guests on "Journal" agreed that the window of opportunity for meaningful financial reform in this country has passed. Nothing will be done at this point to change how Wall Street does business. In fact, they have become more entrenched in their ways. So what is going to prevent another financial melt-down from occurring in the future? Absolutely nothing.

>> The financial crisis for big banks is over. Their profits are huge again, and growing bigger all the time. They are getting ready to dole out their usual outrageous array of bonuses. It's the taxpayers, the people that gave the banks a way to save themselves and get out of near-total ruin, who are suffering in a bleak, tepid and jobless recovery, and will continue to do so for a very long time.

>> Banks have no respect for the President, and their lackeys in Congress preoccupy themselves with trivial, arcane and meaningless matters, instead of tackling the real problems behind the financial crisis. Congress should be holding hearings on the new architecture of the financial system, prudent lending, increasing savings and limited debt. They are not, nor will they anytime soon.

>> The same bankers who precipitated this financial mess on everyone, amazingly are the ones in charge of fixing it! That's like if you own a building and you hire someone to be fire marshall, and through their stupidity they burn the building down. So what do you do? You hire the same person to be fire marshall in your new building and give them a huge raise! How much sense does that make? None? Well that is exactly what is going on right now.

>> You can bet your next mortgage payment that the people who caused the mess and are now charged with cleaning it up, are covering up their own tracks and making sure they are not held responsible for anything. The FBI has only a very small number of agents investigating financial fraud and are for the most part disinterested in bringing anyone to justice.

>> There was a much smaller, but very similar situation in the savings and loan debacle of the 1980s. We, that taxpayers, are STILL making payments on the debt we assumed in that mess, and will continue to do so until the year 2013. How long are we going to be paying for this recent, much larger catastrophe? I'm guessing long after all of us are gone.

This episode of "Bill Moyer's Journal" was one of the most sobering and disheartening half-hours of television reporting I've seen in a long time. I think everyone in this country should have to watch it. The American people need to wake up to what is going on in their own country. Otherwise, their ruination will be assured.

No comments:

Post a Comment