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TechnoratiAssigning Blame for the Economic Crisis
A government investigation into the financial crisis could promote economic reform and give Democrats a big political boost
Plans are already being made for the 2010 elections for the US Congress, and the Democrats would appear to have some advantages. They have a popular president, a six-percentage-point lead in party identification and nine points for a generic congressional ballot. Majorities of the electorate see both Barack Obama and the Democratic party as pushing for a change from the failed policies of the past. The Republicans seem divided and confused over a recovery strategy, plagued by high-level defections (such as senator Arlen Specter) and spokespeople (such as Rush Limbaugh and Dick Cheney) who seem too extreme to win over the necessary swing voters.
But the president's party almost always loses congressional seats in non-presidential-year elections. And if next year's elections reduce the Democrats' margin, it would be even more difficult to make progress on important reform legislation, such as healthcare. At the end of the day, the ability to deliver reforms that actually improve the lives of the majority of Americans will most likely determine their long-term success as a political party.
The 2010 elections will very likely be about who gets blamed for the current economic disaster. Even if the economy is recovering in the latter half of next year – and that is a big "if" – it will not feel much like an economic recovery for most Americans. The labour market will still be very weak, with unemployment projected to pass 10% and rising in the second half of next year.
Millions will have lost their homes and their jobs, and many millions more will have lost most of the equity that they had accumulated in their homes – the main source of retirement savings for most households. The party that gets blamed for the mess will be most likely to lose seats in Congress. The financial regulation overhaul announced on Wednesday by the White House contains some positive steps, but it does not address the main cause of this deep recession, which was not the regulatory structure but rather the failure of the regulators – including the Fed – to do their job.
The Democrats have a chance to defy electoral history and increase their congressional lead next year, and perhaps even push the Republican party toward the status of a permanent minority. Celinda Lake, one of the Democratic party's leading pollsters and political strategists, recently found that 71% of voters want Congress to hold investigations into the "events leading up to the Wall Street financial crisis". More importantly, the proportion is just as high among swing voters.
A congressional investigation, if done right, would probe the errors, excesses, fraud, corruption and other abuses that led to the country's worst recession since the Great Depression. There is plenty of blame to go around, but much of it would probably land on Wall Street and the country's bloated financial sector. The vastly overpaid executives, who made ever-increasing bets on the proposition that obviously over-valued house prices would continue to rise indefinitely, would come under fire.
Some of them were rewarded for their failures with high positions in government. For example, George Bush's Treasury secretary Hank Paulson, who made $164m at Goldman Sachs during the peak of the housing bubble in 2006, helping to steer the economy into an iceberg and then coming to Congress to ask for a blank cheque of $700bn to bail out his Wall Street friends.
The most important policy makers, such as former Fed chairman Alan Greenspan – who has to some degree fallen from grace – but also current chairman Ben Bernanke, might also be asked to explain how they failed to notice the biggest asset bubble in the history of the world as it swelled over a period of several years to obviously threatening proportions.
The obvious analogy to such an investigation would be the famed Pecora commission during the 1930s, as some have pointed out. It was named for its intrepid chief counsel Ferdinand Pecora, who went after the Wall Street titans of that era and helped pave the way for the nation's most important financial regulatory reforms, such as the Glass-Steagall Act of 1933.
The Democratic congressional leadership thus has a chance do something that could promote badly needed reforms, is desired by an overwhelming majority of voters and could give them a big political boost. But do they have the guts to do it? We will soon find out.
20 Comments so far
Show AllWho's to blame for the latest economic crisis'? You might as well assign blame to the 'founders' who set up our wonderful system of oligarchy. Everybody since has just played their role as an interchangeable part in the vast American economic machine. Don't blame the parts, blame the designers of the machine.
Why worry about 2010 mid-terms? They DINO DEMS can't get anything meaningful passed now. Let's face it Bill Maher is right, the GOP is a Bat shit crazy party and the DEMS. are the "new" GOP. We don't have a party representing the majority of Americans. We have two right wing parties running everything.
Well said SEAGLASS. You would have to be blind if you are still unable to see who's side Obama is really on. He's nothing more than a plastic manufactured apostle for the Coporate America who's job it is to spread their gospel and to deceive us into believing that it's in our best interest. It's good to see that there are plenty of us out there who aren't fooled by this man.
Why do we need the FED? Who actually benefitted from its creation? Why was Glass-Steagall repealed? Going back in time incrmentally and you will see a plan to take over the control of the flow of money; which the Constitution gives that power to Congress. Why is it that North Dakota is the only State owned bank in the U.S.? We have made this country into the art of the deal. Where people whom never actually contribute to our overall prosperity and longevity get rich for limited output. Yes, we need change. How do we get it. Threaten the little toga wearers with the loss of their positions or vote them out.
Assigning Blame for the Economic Crisis???
It started this time with Ronald Reagan
by overspending tax revenues so there wasn't a trickle left
for 'social' programs like education, health care and roads.
Now the two 'parties' just take turns out doing the Looting of America!
Peter Schiff nails it again: http://www.financialsense.com/fsu/editorials/schiff/2009/0619.html
The Democrats have a chance to defy electoral history and increase their congressional lead next year, and perhaps even push the Republican party toward the status of a permanent minority.
What a naive pipedream! Look at the chickenshit logrollers in the congress and the White House who call themselves Democrats. Now tell me that pack of fawning, crawling hacks is somehow going to make a difference in the lives of average Americans or somehow stop the decline of this country. LOL!
It is just so hard to believe that in this day and age people still use the words "Democrat" and "Republican" as if there is some difference between the two.
it is difficult to consider serious any article or intellect that is unable or unwilling to grasp the fact that many of our prominent systems, including our political, financial, defense, educational, law enforcement, judicial, penal, food, utility, transportation, religious, and Other (insert your own favorite hijacked American system here) systems, have been hijacked...were many years ago...sadly, many of us have been raised under the conditions described, so have difficulty accepting either the truths that they have been rasied to shun and ridicule, or the fact that they've been lied to regarding what the truth is in the first place...
This is exactly what the Dems are afraid they will be blamed with if they investigate the events of the past 8 years. Economic, Foriegn Policy, Justice, realm after realm of criminal activity, but if they dig into it they will be pilloried for partisan witch hunting and revenge.
Ironicaly, they are already being blamed for it without actualy doing it. So, what the #ell, Might as well.
From the article:
"The financial regulation overhaul...does not address the main cause of this deep recession, which was not the regulatory structure but rather the failure of the regulators – including the Fed – to do their job."
A more useful way to look at it is that, by the time the feces hit the fan, there were no effective laws left to enforce---in other words, as a result of decades of patient effort and a big steaming pile of campaign contributions, the regulators were left with virtually nothing to do.
This was in no small part due to the diligent efforts of one man: former Rep. Phil Gramm (R-TX). Long may his name be remembered.
"Do the Democrats have the guts to do it?"
I think we already know the answer to this one.
HELL NO!!!
the whole sorry theatre of pretenses in washington and wall street are nothing but a "let's look busy" play designed to distract and hope for "forgetfulness" of the American Citizen -- and hopefully it's enough to "get through" -- from the fact that the world's economic distress IS ROOTED in the American Model of Economics. PERIOD.
USA doesn't do "admission of guilt". no no no.
it's always SOME OTHER reason but NEVER
the
"american way" .....
after all if they really followed investigations to their proper conclusions -- they would NOT be JUST about "individuals" - but about the ENTIRE system itself
and would become an INDICTMENT of what General Smedley Butler said in 1933 :
"we are a nation of Predators....our foreign policies have always been geared towards gathering as much of the world's resources unto ourselves at the expense of others..the true purpose of our US armed Forces is to make the world safe for our Supernationalistic Capitalism and our Cultural and Economic Assault...it has nothing to do with Freedom, Justice and Fairness but simply to do the bidding of our Big Finance, Big Banks, Big Corporations...in short , like our WARS , we are really Racketeers of the World..I could have taught Al Capone A thing or two ...his turf was just chicago and a few other cities....my turf spanned THREE continents for our USA".
and as CIA former Economic Hitman John Perkins said a year ago in interviews: (CONFESSIONS OF AN ECONOMIC HITMAN)
"What Americans don't really realize is that -- we are Living our Lifestyles ONLY BECAUSE it is Part of a VERY, VERY VICIOUS system of exploitation that Dehumanizes and Enslaves People Everywhere".
an investigation?
BAH , humbug!!
it would delve too deeply into the heart of DARKNESS. doesn't everyone KNOW that the USA and its Economic system is THE SHINING CITY ON THE HILL?!!!
lol.
We have had a dictatorship of the corporatists for decades. It was only a matter of time before the corporatists would engage in the reckless ruthless plunder in the US that has characterized their behavior abroad for over a century. I believe it is a dictatorship even though I recognize that any individual might gain a position of influence in the US if that individual becomes an elite corporatist through hard work, aggression, the use of intelligence, deception, and ruthlessness (a little bit of luck always helps as well), because I also recognize that one can rise to a position of influence in virtually any system, including dictatorships though possibly not monarchies, through such means.
It amazes me that Americans with their faux democracy can feel morally superior to the Chinese, the Iranians, or even the North Koreans. A governmental/economic/political system is only really democratic and just to the extent that it is sensitive to and responds to the needs of the population. Though the US uses more resources than any other nation, steals from and abuses others more than any other nation, and pollutes and wastes more than any other nation, it has a miserable unhealthy population with high rates of poverty, incarceration, obesity, child mortality, and mental health issues. It intentionally abuses millions of innocents abroad and knowingly tolerates the abuse of millions in its criminal justice system at home. It is a criminal country run by what may be the most depraved and dangerous criminal class in the world, with the needs of the ordinary citizens largely unmet.
Americans must look in the mirror and recognize it is their entire value system that inevitably leads to such waste, destruction, and misery. But beholding such an ugly sight is quite distasteful, and most in the US will only overcome their reluctance to look following years of agony.
the irony to me is -- Patrick Buchanan == who in many ways exemplifies MUCH of what is detestable about the "american way" --
IS also WISE in his own way for stating certain things unflinchingly:
"WE AMERICANS - have many fine qualities.....seeing OURSELVES as OTHERS see us -- is NOT one of these".
and at least - whatever his "nativist" nonsense can be -- he also makes VERY good point:
"we didn't like it when the USSR was in our neighborhood....in cuba...so --- what are WE doing IN russia's Neighborhood?
"we should get out of this business of Empire and get out of those lands ....before they KICK US OUT of there".
and of course - its entire history is really summed up in two brilliant ways i repeat:
"OUR foreign policy has ALWAYS been geared towards gathering as much of the world's resources unto ourselves at the expense of others....the TRUE purpose of our armed forces is to make the world safe for our supernationalistic Capitalism and our Cultural and Economic Assault...We are a Nation of PRedators and Racketeers..and I was its Chief Enforcer in three continents".
GENERAL SMEDLEY BUTLER, US MARINES. 1933 speeches
and UPDATED to today:
"We are an EMPIRE -- the largest and most successful the world has ever known..and we have built this Empire through Torture, Assassinations, Mass Murder, Fomenting Insurrections and destabilising uncooperative governments and then blaming them for mismanagement, supporting friendly Dictatorships, Blackmail, overt and covert Wars, and Plain THEFT of their resources....I was part of that project of Empire Building...
"What Americans do not really understand is that we are living our lifestyles ONLY because it is PART of a VERY , VERY VICIOUS system of Exploitation that Dehumanizes and Enslaves People Everywhere"....
JOHN PERKINS..Former CIA "economic hitman". 2008/2009 interviews
"
Sioux
KIVALS: In astrology Pluto is the god of the underworld, and we often refer to criminals as underground or underworld figures.
Although questioned as to its planetary status, Pluto wields a powerful influence over mundane human events. As per its 248-year orbit it has now entered the sign that opposes our nation's Cancer sun, but the peak of this rare opposition is a few years up the road. I realized just how much this opposition signifies not an outside enemy, but rather the power and pervasiveness of the rot from within; and it's very much as you put it, that a criminal class has allocated enormous powers to itself, anesthetized our Constitution/Bill of Rights/Habeas Corpus, and used the public's money to fund its own ventures legal or otherwise. Some of these agendas further cripple the public's capacity to fight back. Out of the rot will come the requirement for healing, and the process of the phoenix attempting to rise from its own ashes may explain why so many of us have reincarnated for this rather tense Transition phase. It will present quite a show, and perhaps a massive opportunity for most of the collective to burn off old karmic debts.
By the way, this year's summer solstice accords with the new moon in Cancer. The sun and moon will both directly oppose Pluto, sort of an omen that anticipates the nation's birthday this year. Pluto can embody insidious secret forces, and is understood in my field as "the higher octave of Mars." It can be quite violent, although I think this astrological configuration is speaking metaphorically of the U.S. in terms of its current record as it conducts wars of conquest as if war is the chief product and enterprise of a viable state.
KIVALS and SIOUXROSE
those are such enlightening thoughts!! thank you!!
This author is completely deluded. The Democrats are working hard as hell to get themselves defeated in 2010 and 2012 and they just might get their wish. The Democrats are not doing what a good doctor would do. Treat the problem and not the symptom. It may hurt at first but the long term relief can be happy. Instead, the Democrats are gonna keep doing the same thing the GOP does. Shove another feel-good shortcut pill down our throats and keep up screwed.
P.S.: I'm finally happy to have met another DoD worker who shares our concerns with our work getting abused and is willing to run a business of his own and is looking for partners. Maybe if I'm lucky, I can join him and use the money to build a better small business for the community and get me the hell out of this MIC prison. I'd rather not be like either one of these parties falling for stupid shortcuts.
The Republicans seem divided and confused over a recovery strategy . . .
The crucial word is "seem". The National Socialist American Swindlers' and Beerhall Brawlers' Party doesn't have to do anything but wait for the cowardly, duplicitous, milktoastian "policies" of the Obysmal Administration to yield cowardly, duplicitous, milktoastian results. The more Americans feel they are sewn inside heavy woolen blankets, sweating and suffocating from the laissez faire capitalism Obysmal is doing nothing to stop, the more the lazy, gullible, uninformed American majority will be prepared to vote back in to power the very people who first sewed them inside those blankets. This is utterly insane but that's the United States in its unstopable decline.
Ha Ha Ha Ha Ha.....It always amazes me that people can think that if the Dems just had more power the promised land will emerge. We're now 5 months older and deeper in debt. (apologies to J. Cash)
The gov't has been playing smoke and mirrors with economic problems for decades. This is the latest. They try to "promote" growth and it winds up in a mess (S&L debacle anyone?) and then they do more damage trying to correct the problems they created. The elite has been scared since 1945 that if they didn't keep "pumping it up" we'd have 1933 all over again. On the other side they have been busy dismantling structures from the 30's that actually worked.
The Fed has kept interest rates artificially low.
In the 90's Congress lowered capital gains taxes without comparable cuts to taxes on other unearned income. This encouraged more money going into the stock market and encouraged companies to cut dividends and promise more capital gains. The Fed kept interest rates artificially low which encouraged speculation. Drum roll...market crash 2000
Law and rule changes to protect Wall St from scrutiny. More low interest rates, encouraging people to borrow and spend which is how they suckered the third world. Now its us.
Now more of the same. Who to trust? The Dems and R's in Congress who voted against the war funding and who twice voted against the TARP; in both cases in spite of extraordinary pressure from leadership. So we start with a core of 60-70 with integrity of some sort who will be attacked in primaries in 2010.