The best names in Wall Street banking have announced victory. Their
crisis is over, back to business as usual. So why isn't the Obama White
House celebrating this good news? Because this may not be a lasting
peace for the president and his lieutenants. They are left standing in
the mudhole of financial ruin, still surrounded by the failing economy
and gradually losing their control over events. The leading bankers
worked out a rare deal for themselves that essentially says to the
government in Washington "heads we win, tails you lose."
With all the talk of "green shoots" of economic recovery, America's
banks are resisting efforts to regulate them.
Now it's official. Prosperity is right around the corner. We have heard
the good news from both Wall Street and Washington. President Obama is
careful not to use those very words, since this is what Herbert Hoover
kept telling Americans during the country's ugly, post-1929 slide into
the Great Depression. But the Obama administration sees "green shoots"
sprouting all around and it offers hard evidence in the long-anticipated
results of its "stress tests" for major banks. Good news! Nobody is
insolvent.
In an editorial today
criticizing the most recent Obama team announcement on bank recovery
policy, the Wall Street Journal editorial board claimed it has
supported bank restructuring for 2 years:
You might think that having anted up $173 billion
of our own money, we taxpayers would have some leverage at AIG, now
that we own 80 percent of the shares.
The titans of Wall Street may not
have done a bang-up job of running the American financial sector over
the past few years, but would a bunch of politicians in Washington, DC,
do any better? We're probably about to find out-and to understand how
we got here, and why it suddenly doesn't seem like such a bad idea,
you've got to start at the beginning. The very beginning.
Newt Gingrich is right: "It is European
socialism transplanted to Washington." How else to describe an economy
in which the government controls the entire financial center and is now
supplying life support for the auto industry? That's on top of the
existing socialist economy run by the military-industrial complex,
which, thanks to George W. Bush, now absorbs upward of 60 percent of
the non-entitlement federal budget.
In one of the many historic excerpts from the forthcoming 100th
anniversary issue of The Progressive magazine, Socialist Norman Thomas
scoffs at Republican accusations that FDR is a "socialist." No
socialist, Thomas explains, would stage a short-term government
takeover of the banks, only to return them once they were solvent to
the same Wall Street millionaires who broke them in the first place.
Last month, in his big speech to Congress, President Obama argued
for bold steps to fix America's dysfunctional banks. "While the cost of
action will be great," he declared, "I can assure you that the cost of
inaction will be far greater, for it could result in an economy that
sputters along for not months or years, but perhaps a decade."
The news that even Alan Greenspan and Senator Chris Dodd suggest that
bank nationalization may be necessary shows how desperate the situation has become. It
has been obvious for some time that a government takeover of our banking
system--perhaps along the lines of what Norway and Sweden did in the
'90s--is the only solution. It should be done, and done quickly, before
even more bailout money is wasted.
