November 17, 2008
The debate concerning a possible bailout of the “big three” automakers (General Motors, Ford and Daimler Chrysler) has now reached the House of Representatives. House Minority Leader, John Boehner (Republican from Ohio) has voiced his opposition to this latest bailout, indicating that it will not receive much support from Congressional Republicans.
In the words of Yogi Berra, we are experiencing “déjà vu all over again”. This process started with the plan of Treasury Secretary Henry Paulson, to bail out banks and other financial intuitions holding mortgages of questionable value, at a price to the taxpayers in excess of $700 billion. Back on September 22, when that bailout bill (now known as TARP) was being considered, Jackie Kucinich and Alexander Bolton wrote an article for TheHill.com, discussing Republican opposition to this measure. Their article included a prophetic remark by Republican Congressman Cliff Stearns of Florida:
“Bailout after bailout is not a strategy,” said Stearns, who said that taxpayers could be left with a huge bill.
Yet, “bailout after bailout” is exactly where we are now. On November 15, T-Bone Pickings appeared on NBC’s Meet the Press. Tom Brokaw asked T-Bone Pickings for his opinion on the proposed “Big Three Bailout”. The response was:
I wonder what you’re going to do about the next industry. Is it going to be the airlines or what if Toyota and Honda want some help, too? I don’t know. I don’t know where it stops.
Once again, we are presented with the need to bail out yet another American industry considered “too big to fail”. However, this time, we are not being asked to save an entire industry, just a few players who fought like hell, resisting every change from rear-view mirrors, to fuel injection, seat belts, catalytic converters, air bags and most recently, hybrid technology. Later on Meet the Press, we heard the BBC’s Katty Kay quote a rhetorical question from unidentified “smart economists” that included the magic word:
Can it withstand the shock to the economy if GM were to go?
Later on the CBS program, Face The Nation, Massachusetts Congressman Barney Frank, Chairman of the House Financial Services Committee, used similar logic to that expressed by Katty Kay, when he stated:
When you talk about the negative shock that would result from bankruptcies of these companies, right now …
The magic word “shock” is once again playing an important role for the advocates of this newest rescue package. I was immediately compelled to re-read my posting from September 22, concerning the introduction of the Paulson bailout plan, entitled: “Here We Go Again”. At that time, I discussed Naomi Klein’s 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism. Klein’s book explained how unpopular laws were enacted in a number of countries around the world, as a result of shock from disasters or upheavals. She went on to suggest that some of these events were deliberately orchestrated with the intent of passing repugnant laws in the wake of crisis. She made an analogy to shock therapy, wherein the patient’s mind is electrically reformatted to become a “blank slate”. Klein described how advocates of “the shock doctrine” seek a cataclysmic destruction of economic order to create their own “blank slate” upon which to create their vision of a “free market economy”. She described the 2003 Iraq war as the most thorough utilization of the shock doctrine in history. Remember that this book was released a year before the crises we are going through now.
Ms. Klein’s article, “In Praise of a Rocky Transition” appeared in the December 1, 2008 issue of The Nation. She discussed Washington’s handling of the Wall Street bailout, characterizing it as “borderline criminal”. Would the financial rescue legislation (TARP) have passed if Congress and the public had been advised that the Federal Reserve had already fed a number of unnamed financial institutions two trillion dollars in emergency loans? Naomi Klein expressed the need for the Obama Administration to stick with its mantra of “Change You Can Believe In” as opposed to any perceived need to soothe the financial markets:
There is no way to reconcile the public’s vote for change with the market’s foot-stomping for more of the same. Any and all moves to change course will be met with short-term market shocks. The good news is that once it is clear that the new rules will be applied across the board and with fairness, the market will stabilize and adjust. Furthermore, the timing for this turbulence has never been better. Over the past three months, we’ve been shocked so frequently that market stability would come as more of a surprise. That gives Obama a window to disregard the calls for a seamless transition and do the hard stuff first. Few will be able to blame him for a crisis that clearly predates him, or fault him for honoring the clearly expressed wishes of the electorate. The longer he waits, however, the more memories fade.
When transferring power from a functional, trustworthy regime, everyone favors a smooth transition. When exiting an era marked by criminality and bankrupt ideology, a little rockiness at the start would be a very good sign.
The Obama Administration would be wise to heed Ms. Klein’s suggestions. It would also help to seriously consider the concerns of Republicans such as John Boehner, who is apparently not anxious to feed America another “crap sandwich”.
Defending Reagan
June 4, 2009
In case you’ve wondered whether Nobel laureates ever emit brain farts, Paul Krugman answered that question in the May 31 edition of The New York Times. His column of that date targeted former President Ronald Reagan for causing our current economic crisis:
I was never a big fan of Ronald Reagan. My reaction to his nomination as the Republican Presidential candidate in 1980, conjured up James Coburn’s sarcastic line from the movie In Like Flint: “An actor for President!” Reagan’s legacy was exaggerated — which is why the book, Tear Down This Myth by Will Bunch, is available on this site, under the “Featured Books” section on the left side of this page. I never believed that Reagan deserved all the credit he was given for the collapse of the former Soviet Union. In my opinion, that distinction belongs to Lech Walesa, leader of Solidarity (the former Soviet bloc’s first independent trade union) and his old buddy, Karol Wojtyla, who later became Pope John Paul II. In fact, former Soviet leader Mikhail Gorbachev admitted that the demise of the Iron Curtain would have been impossible without John Paul II.
Another literary deflation of that aspect of the Reagan legend can be found in The Rebellion of Ronald Reagan: A History of the End of the Cold War by James Mann. In his review of that book for The Washington Post, Ronald Steel noted how James Mann addressed the claim that Reagan broke up the Soviet Union:
Despite my own feelings about the Reagan legacy, upon reading Paul Krugman’s attempt to blame Ronald Reagan for the economic meltdown, I immediately rejected that idea. What became interesting was that in the aftermath of that article, commentators from “left-leaning” news sources voiced objections to the piece. For example, William Greider is the national affairs correspondent for The Nation. On his own blog, Greider wrote an essay entitled: “Krugman Gets His History Wrong”. While upbraiding Krugman, Mr. Greider took care to note the complicity of the Democrats in causing the current economic crisis:
Robert Scheer is the editor of Truthdig. The columns he writes for Truthdig regularly appear in The Nation. (He is famous for getting Jimmy Carter to admit for Playboy magazine, that Carter often “lusts in his heart for other women”.) Mr. Scheer’s reaction to Krugman’s vilification of Reagan as the saboteur of the economy includes such words as “disingenuous” and “perverse”. Beyond that, Sheer lays blame for this crisis where it properly belongs:
Thank goodness Eliot “Socks” Spitzer is still around, writing for Slate. His most recent article about the economy not only provides an accurate assessment of the cause of the problem — it also suggests some solutions:
(By the way: An “RFP” is a Request for Proposals, or bids, on a government project — just in case you were thinking it might mean “request for prostitutes”.)
I have always been a fan of Socks Spitzer. His personal story underscores the simple truth that all of us, regardless of our accomplishments, are only human and we all make mistakes — even Nobel Prize winners such as Paul Krugman.