August 9, 2010 - 12:59pm ET
Possibly one of the most depressing, yet entirely predictable, political moments in a long string of depressing moments is this summer's obsession with Muslim and Mexican bashing (with a dollop of good old fashioned white on black racism) while the real miscreants in our system carry on unmolested and their apologists insist that we must appease them or risk even worse consequences.
I’m saddened but not really surprised by Robert Rubin’s declaration that we don’t need more stimulus. It has seemed to me from early on in this crisis that Rubin and his disciples wanted to believe that this world crisis was something like the 1997-98 Asian crisis, and amenable to similar solutions.
For what the Committee to Save The World did in the Asian crisis was … not much. Some emergency loans to ease liquidity problems, some declarations that they were highly confident, a bit of interest-rate cutting; and once the panic was over, things recovered pretty much on their own.
Hence the view that fiscal stimulus was just an insurance policy, that the big thing was to stop the economy’s headlong descent, and then unemployment would come down mostly of its own accord.
It's even worse than that actually, as Krugman has laid out elsewhere. Rubin and friends have persuaded themselves that the only important government function in the economy is the care and feeding of the Wall Street banksters. After all, the whole underlying premise of his piece today is this:
A “major second stimulus” might create more uncertainty and undermine confidence, he said.
He's not talking about the confidence that comes from getting a new job after you've been unemployed for months or the good feeling a small businessman gets when he turns a profit for the first time in years. He's talking about the goddamned Masters of the Universe and corporate CEOs who need to be reassured that nobody's going to make them pay for the carnage they caused.
This goes all the way back to the 90s when Clinton famously responded to Rubin and Summers' admonitions about the deficits, with "You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?'' (Evidently, they have also persuaded themselves that the Tech Boom was a result of that decision, which is highly debatable. In any case, there isn't another boom of that magnitude likely to come along any time soon.)
When I read Rubin's piece this morning I was reminded of this post I wrote from last fall:
I was just reading this interesting piece about narcissistic personality disorder and musing about the mindset that believes it's ok to take down the world economy and then dictate the rules by which it is fixed.(Not to mention turn a profit at it!) And then I read this:
In recent days, in spite of public furor over huge bonuses paid at American International Group Inc., the administration has concluded that it needs the private sector to play a central role in fixing the economy. So over the weekend, the White House worked to tone down its Wall Street bashing and to win support from top bankers for the bailout plan announced Monday, which will rely on public-private investments to soak up toxic assets.
But weeks of searing criticism by politicians and the public had left bankers leery of working with the government. After brainstorming about what to do about that problem, the White House resolved to try to take control of the debate, according to several administration officials. In weekend television appearances, President Barack Obama and other administration officials tempered their criticisms of the financial sector.
President Obama met with members of the National Conference of State Legislature at the White House speaking adamantly about how his $787 billion dollar bailout must be used wisely and that wasteful spending will be avoided. Video courtesy of Fox News.
Meanwhile, Treasury Secretary Timothy Geithner and his colleagues worked the phones to try to line up support on Wall Street for the plan announced Monday. They told executives they don't favor using the tax code to retroactively penalize specific individuals who had received bonuses, according to people familiar with the calls. They asked officials to sign on "in pencil, not ink," and to "validate" or "express support" for the plan, these people say.
Some bankers say they turned the conversations into complaints about the antibonus crusade consuming Capitol Hill. Some have begun "slow-walking" the information previously sought by Treasury for stress-testing financial institutions, three bankers say, and considered seeking capital from hedge funds and private-equity funds so they could return federal bailout money, thereby escaping federal restrictions.
Well that certainly clears this up:
“It’s almost like they’ve got — they’ve got a bomb strapped to them and they’ve got their hand on the trigger,” President Obama said on Thursday of the banks he’s chosen to bail out. “You don’t want them to blow up. But you’ve got to kind of talk [to] them, ease that finger off the trigger.”
...The owners of America will be appeased or they will destroy everything in their wake. In another world, they would call this economic terrorism.
I don't know how else to interpret this. Wall Street, the banks and the corporate CEOs are still saying that unless the government does what it wants it to do --- austerity for average Americans so the wealthy can dine on their wasting carcasses --- they will blow whole damned thing up. I guess they figure that if the Mad Max scenario comes to pass they'll have enough money to hire one of those private armies Glenn Beck is angling for to keep the riff raff off their islands.
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