Will We in the Middle Class Never Learn?

Joe Nocera’s New York Times op-ed of June 17, 2011, “The Banking Miracle”, makes me wonder why it’s so hard for some people to accept what history has to tell us?

America’s economic greatness is measured by its middle class, not the wealthy. We seem to be doomed without a vibrant, optimistic, and prospering middle class that has the money to spend on the goods and services that the economy produces. An irony in all of this is that we in the middle class are partly to blame. We are so caught up in striving to be wealthy – or at least occasionally feel like we can live a little of our lives as if we were – that we can be our own worst enemies when it comes to racking up personal debt. The difference between us and the bankers, however, is that our debts are our own and, as we should have learned from history and are so painfully learning again, so are Wall Street’s.

We also become our own worst enemies when we start believing and supporting the fallacy of trickle down economics. History proves that model doesn’t work. Correction. That model works perfectly well for the very wealthy. It’s a superb model for widening the wealth gap and concentrating wealth in fewer and fewer hands.

So I continuously wonder how many more times will it take before intelligent individuals look at history, do the math, and accept that the rich consider the rest of us to be little more than economic chattel; property, as it were, to be bought and sold for the benefit of the uber-rich and powerful? By supporting failed economic models and legislative policies that benefit the wealthy over the middle class, we are doing little more than engaging in wishful thinking while clinging to a blind faith that by prostrating ourselves at the feet of the wealthy we might some day be invited to a seat at their table. Even without such an invitation, some of us cling to an even more dangerous and failed belief that what’s needed now is to remove any last bit of regulation and to put our full faith and trust in the hands of wealthy capitalists and bankers. These are the very people who not only have caused the last two great economic collapses, they have mastered the art of duping an uninformed and blissfully ignorant portion of the population into believing that without them we will have even fewer opportunities to live a life that has any hope, dignity, or comfort at all.

IMHO, those of us in the middle class who believe these fairy tales do ourselves and our fellow citizens a grave injustice by thinking that the best a free market system has to offer is whatever scraps the richest among us care to share from their plates.

Economic collapses aren’t and never have been caused by unions, the middle class, the poor, or illegal immigrants. Men from places like Goldman Sachs, JP Morgan, and other big houses on Wall Street have been at the root of our economic collapses. They’ve never really been the catalyst of economic growth and prosperity, either. They’ve never built a single car, computer, or line of software code. They don’t build buildings and they don’t grow food. They don’t mine minerals and they don’t teach our kids in schools or deliver health care. To be sure, they play a role as middle men in making the financing possible to do those things. They ostensibly provide the supposed financial expertise to evaluate the risk-reward equation. They have the contacts to be able to put monied interests together with those who need the investment capital. So at the end of the day, what are they? They are the hosts of a multi-trillion dollar Match Game for which they are paid astronomical sums and for which we are supposed to be grateful for their parts in the “jobs creation” equation.

Here’s the rub. When their bets win, they reap the rewards in terms of massive personal wealth which never really trickles down very far, if at all. Good for them. Our system is supposed to reward intelligence and achievement, and I’m all for that. But what happens when there are no rules in place and their gambles go south? Who suffers? Who has to pay for those bad bets?

History cannot be denied. We know by looking back that when there are either too few or no borders, boundaries, or rules by which people – including capitalists – must play, bad things tend to happen. Call it a sad reality of human nature. Call it whatever you like. The reality cannot be denied. The concentration of wealth – and the unregulated power that goes with it – is what was at the root of the Great Depression and the Great Recession. And while the post-WWII prosperity this country enjoyed for the latter half of the 20th century is not completely the result of Glass-Steagall, the undeniable truths are that the bill existed until Reagan and Greenspan successfully vilified government and financial regulation, and Clinton signed a GOP piece of legislation into law that the Republicans had wanted since the 30s to reverse Glass-Steagall known as Gramm-Leach-Bliley.

And where do we find ourselves again and as a result? In an economy that widens the wealth gap, divides us on ideologies to the point where people stop talking to each other, and where, saddest of all, facts no longer matter.

Know what else cannot be denied? It’s who pays for the *unregulated* bets that Wall Street makes and loses. Bets that we’re now learning that Wall Street was making both ways by continuing to sell unregulated securities like mortgage backed securities and collateralized debt obligations even while they bet against them with credit default swaps? I can tell who didn’t pay for those bad bets; the Wall Streeters who made them and who, despite the collapse, continue to make historic bonuses instead of being fired or going to jail. Whatever happened to accountability? Whatever happened to paying for one’s mistakes? Whatever happened to business ethics?

So I have to ask, “Is the desire to regulate really socialism, and what is it called when an economic system privatizes all the gains and socializes all the losses?”

Are we witnessing a perversion of capitalism? Is the erosion of the middle class and vilification of the poor what happens when a wealthy and powerful oligarchy wields ever more unchecked and unregulated power, reaps all the rewards, and passes all of their losses onto us?

Is what we are witnessing really the truest expression of capitalism? Is the ultimate manifestation of our system really the plutocracy we are seeing now; a system where the rich few tell all the rest of us what to think and what’s good for us and, out of shear fear and panic, we believe them?

Are we really going to become a society in which social programs are seen as wasteful and frivolous; where the availability of medical science and technology that can improve and save lives is reduced to an economic ROI calculation; where average people who have played by the rules and worked hard all their lives become indigent in their old age; and where we gladly pursue and support economic and political policies that produce short term gains for a few with no regard for long term pains for the many?

Are we that blind? Are we that cold? Have we really lost our intelligence and our humanity at the same time?

What happens next? Do we continue to allow our system to devolve into a kleptocracy where government is replaced by capitalism, ruled completely by and for the exclusive and sole benefit of the richest among us, and where we finally and completely see them steal any lingering shreds of dignity and paltry wealth we have left?

It just seems to me that we are hurtling toward a doom that comes only from a completely unregulated capitalist system – at least as capitalism is being practiced today in America. IMHO, we have some people within the middle class who support the idea of less regulation, who refuse to learn from history, and who won’t face reality to partially thank for it.

If we were united in the middle class and in our demands for fairness, equality, and sensible rules to protect the economy as a whole, I could see us creating the environment for real recovery and prosperity just as was the case during that period in the 20th century when the wealth gap wasn’t so wide and legislation like Glass-Steagall kept people from making fortunes by knowingly making bets that only paid the dividends and never saddled them with the losses.

Related Sources
Rampell, Catherine. (June 17, 2011). For Want of a Word, Arizona’s Jobless Lose Checks. New York Times. Retrieved from http://www.nytimes.com/2011/06/18/business/18benefits.html

Howard, John. (June 2, 2011). Goldman Hit With Subpoena Over MBS Antics. Law360.com Retrieved from http://www.law360.com/topnews/articles/248863

The Daily Show: Exclusive – William Cohan Interview Parts 1 and 2 (April 28, 2011). Retrieved from
http://www.thedailyshow.com/watch/thu-april-28-2011/exclusive—william-cohan-extended-interview-pt–1
http://www.thedailyshow.com/watch/thu-april-28-2011/exclusive—william-cohan-extended-interview-pt–2

—– Original Message —–

Sent: Saturday, June 18, 2011 7:15:29 AM
Subject: The Banking Miracle

The president of the American Bankers Association was railing against excessive regulation in a speech at the Waldorf Astoria. The banking reform bill, he complained, “would destroy a substantial part of our bond-distributing machinery.” He added, “Can anyone expect that a step of this kind will improve the quality of our long-term investments?”

Modern echoes, for sure. But I read about the speech in a Jan. 27, 1933, article culled from the wonderful archives of The American Banker, the bankers’ bible now celebrating its 175th birthday. The speaker, one Francis H. Sisson, was complaining about an early version of the Glass-Steagall Act, the most famous of all Depression-era bank laws, and the one that, in retrospect, probably did the most good. Less than six months after Sisson’s speech, President Franklin Roosevelt signed it into law.

From my vantage point here in 2011, Glass-Steagall seems miraculous. It was amazingly radical, not just for its time, but for any time; it didn’t so much reform banking as upend it. Most notably, it ordered banks to get out of the securities business. As Sisson complained: “The effect of the proposed banking reform is to renounce investment banking rather than regulate it.” Because investment banking was then the chief activity of the big banks, this was a very big deal.

Glass-Steagall also created the Federal Deposit Insurance Corporation, which insured customer deposits for the first time, and outlawed branch banking by national banks, among other things. It is impossible to imagine anything like it passing today; although the modern reform bill, Dodd-Frank, surely does some good, it’s not even comparable.

I’d long wondered how Senator Carter Glass, the powerful Virginia Democrat, and his House counterpart, the Alabama congressman Henry Steagall, managed to get it passed. What were the politics like? What did they fight over? Why didn’t people like Sisson have better luck pushing back against it, the way bank lobbyists do today? So I asked the editors at American Banker if they would send me some articles from the era that would shed some light on the question. Happily, they obliged.

The first thing I realized is that all the horse-trading over the bill’s provision was done by Democrats. The Republicans, having been badly defeated in the 1932 election, had no ability to block it or even amend it. For instance, Republicans tended to view the creation of deposit insurance as “socialism.” (Sound familiar?) But it didn’t matter: Steagall cared deeply about deposit insurance. Many community bankers — as strong a force back then as today — also supported the idea because they believed it would renew customers’ faith in the banks, and bring back deposits. (This turned out to be true.) Glass, though skeptical, went along so he could get things he cared about, mainly a stronger Federal Reserve with more power over the banks.

The second thing I realized was that, the Sisson speech notwithstanding, there was surprisingly little controversy over what we now think of as the law’s primary achievement: splitting commercial and investment banking. The fights were all over issues that seem inconsequential by today’s lights. It’s as if the notion of breaking the banking business into two was always a foregone conclusion.

And, for the most part, it was. Partly, this was because, unlike today, bank failures in the 1930s were often ruinous to customers. So reform was more pressing. But it was also because, for the entire time the legislation was under consideration, the Pecora hearings were going on — in which Ferdinand Pecora, the flamboyant chief counsel of the Senate Banking Committee, dragged one well-known banker after another before the committee and grilled them mercilessly, exposing how they had abused their investment banking roles, sometimes to the point of criminality. The Pecora hearings serve as a steady drumbeat in the American Banker articles.

Those hearings infuriated the country, and made it unthinkable that banks would continue to be allowed to sell securities. In fact, some banks, seeing which way the wind was blowing, applauded: “The spirit of speculation should be eradicated from the management of commercial banks,” declared Winthrop Aldrich, the chairman of Chase National Bank, according to Michael Perino, Pecora’s biographer. Ironically, Glass loathed the Pecora hearings, deriding them as “a circus, and the only thing lacking now are peanuts and colored lemonade.” But the hearings made his bill — which had been filibustered by Huey Long just 18 months earlier — not just possible but inevitable.

How inevitable? Charles Geisst, a finance professor at Manhattan College and an expert on the law, says that the House and Senate didn’t even bother with a roll-call vote for final passage. This seminal piece of legislation, which helped keep the banks out of trouble for the next 70-plus years, flew through on a voice vote. On Friday, June 16, 1933, when Roosevelt signed it into law, The American Banker gave the news all of three paragraphs. There was nothing left to say.

Joe Nocera

Advertisements

A Condensed History and Plea for a Better Future


Dateline: October 29, 1929

U.S. stock market crashes. That wouldn’t have been such a big deal for most Americans in 1929 except that unregulated banks had invested their depositor’s funds into the stock market, too, and without having to tell anyone what they were doing. When the stock market tanked and there no buyers, the banks couldn’t sell their holdings either. Some had to close. They no longer had the one thing a bank is supposed to have – money.

Remember, this is an unregulated industry and there was no such thing as the FDIC and deposit insurance. That didn’t come along until 1933 (http://www.fdic.gov/about/learn/learning/why/index.html)

Panic about being able to get to one’s money, of course, causes the “run” on the banks. Bankers have no money. They lost it all. Oops. Sorry about that.

No money in banks also means no credit for businesses to operate, either. Businesses, naturally, start to worry about preserving whatever remains of their capital so they let workers go. People don’t have work so they have no income. Remember, this is before unemployment insurance or any sort of government welfare programs, too. People literally have nothing. No money in the bank and no one working means no one is buying anything, either, so there’s no reason for businesses to produce much in the way of goods and services. It certainly doesn’t mean there will be any growth and rehiring any time soon. The spiral downward has started, and it’s adios amigos to everyone.

Ain’t unregulated, unfettered capitalism grand?

And with sincere apologies to some of you, that stupid fucking Russian cunt had the balls to write a few pieces of fiction less than 30 years later and some people like Alan Greenspan either came to believe it was a new religion, suffered severe amnesia about what had happened and why a few decades earlier, simply never bothered to study history at all, or more to what I believe saw then and now that deregulation is the surest way to become filthy rich at expense of ordinary people.

Back to the 30s. So, the federal government creates programs to put people back to work – work that actually benefits society as a whole. My father worked in the CCC program. He and many other young men from PA took care of parts of the Appalachian Trail. So what, you might say. What did that really do for society? Ok. Forget the A.T. Ever hear of the TVA, Triborough Bridge, the Bay Bridge, or Grand Coulee Dam? There’s a good chance something where you live that serves you, your neighbors, and the common good – a school, a hospital, or a highway, for example – was built by people employed by BOTH private businesses and the government as a result of the federal government and deficit spending to fund work programs. (See http://americanhistory.about.com/od/greatdepression/tp/new_deal_programs.htm and http://www.pbs.org/wnet/blueprintamerica/reports/the-new-new-deal/public-works-administration/693/)

Let’s speed things up a bit. This is getting pretty long.

Lawmakers and citizens alike come to realize that businesses and especially banks are either too stupid or too greedy or both to be completely trusted to regulate themselves. Glass-Steagall is passed in 1932. The “Truth in Securities Act” is passed in 1933 and the SEC and a bunch of other laws are passed beginning in 1934. Banks, at least, are safe and some rules are in place to regulate the financial services industry.

Now it’s 1999. The Gramm-Leach-Bliley Act, a GOP disaster euphemistically referred to as the Financial Services Modernization Act (reminds me the so-called “Patriot Act”. We should always get very suspicious of legislation given names that sound like sugar coating or the titles of Mel Gibson movies) effectively repeals Glass-Steagall.

Only a few short years later we find ourselves once again in an economy where too little regulation and oversight exists, thanks mostly to Greenspan, the GOP, and weak-kneed Dems.

W drives the final nails into the coffin up by giving away the federal surplus to the rich, invading 2 countries off the books based on total lies (except for the fact that Afghanistan was harboring bin Laden and he proceeded to fuck that up totally by invading Iraq) and running up the biggest debt since – you guessed it – that other GOP nitwit, Reagan. The financial service sector, who had been merrily creating so-called investments out of highly speculative debt, and the real cold-blooded capitalists who were making even more billions on derivatives tied to that shaky debt, have been doing so without regulation or oversight.

When the bubble bursts ON W’s WATCH, who pays? We the taxpayers do.

So I get the tea party anger. Honestly, I do. But the anger, frustration, and demand for change needs to be directed where it belongs; at deregulation, failed GOP economic and fiscal polices dating back to Reagan, and the disaster created that forced Bush to have to put TARP in place for Obama to have to accept and implement. Wake up, tea baggers and you Obama-haters. Have you just conveniently forgotten or chosen to ignore how we got here?

Now I can’t believe I’m going to say this, but the more I read and listen to people a lot smarter than I the more convinced I am that TARP had to be done to save the economy and that, perhaps, the biggest mistake being made in DC is that the feds are not spending enough.

The parallels all seem to be there to the 1930s. Some experts say that FDR was too concerned about fiscal restraint in the beginning. Had he done more, they say, the Depression may not have lasted as long or required WWII to really pull us out of it. (I’m sorry that I can’t find a reference to that and don’t have time to keep searching right now as we’re going to a grad party. Maybe someone else can find something on it. I only remember hearing it or reading it somewhere; maybe last Sunday on one of the news programs.)

There are people out there a lot smarter than I who can explain all of this a million times better. Here’s one…..

http://robertreich.org/post/719313692/my-father-and-alan-greenspan

What got me going on this today was an article in today’s NYT. http://www.nytimes.com/2010/07/11/us/politics/11tarp.html?_r=1&th&emc=th

It’s proof to me that Americans really aren’t very well-informed. Candidates for public office are probably the dumbest of the lot. Trying to make hay on who voted for TARP is like blaming the iceberg for the sinking of the Titanic (the iceberg didn’t do anything). Captain W and his administration steered us into that iceberg. In case you haven’t noticed, they and their cronies are long gone in their yachts for life boats.

How refreshing would it be for politicians to stand up to the STYLE OVER SUBSTANCE HYSTERIA IN THE MEDIA and actually educate the voters on what really caused the bottom to drop out of the economy and the fact that….gulp….there was no other choice but to go with W’s bailout. I mean, really. What alternative was there?

The real objective ought to be what comes next to keep this from happening……AGAIN!

Reinventing financial regulation

http://www.washingtonpost.com/wp-dyn/content/graphic/2010/05/20/GR2010052004992.html

I’m glad to see a return to some degree of sanity.

How many more times will we fall for the lies and deceptions of so-called free markets and deregulation before we learn the lesson?

Eff the Gramm-Leach-Bliley act and all the harm it and Randians everywhere have done to our great country, our economy and our once great society. How much more proof do we ordinary citizens need that the people with money and power can never, ever, ever be trusted to do what’s right for anyone but themselves?

Markets only work for everyone when there are some rules that enforce fairness and honesty.

One Person’s Perspective on the Federal Debt as a % of GDP


What’s been the history of the Federal debt, what’s been happening over time, and who’s been in power when it happened?

Initial searches weren’t very efficient and it was hard to find a reasonable summary. Here’s one of them: http://zfacts.com/p/318.html. The web site owner claims to be an economist who does this in his spare time. Take it for what it’s worth.

Ever the skeptic, I decided to check further and to account for Congress and the role they play. I decided to create my own chart. It’s attached. The Sources at the bottom include a link to the actual Federal debt tables used to generate the underlying line graph.

Conclusions? Here are mine.
1. Federal debt as a % of GDP went through the roof due to WWII

2. Federal debt marked a steady decline after WWII regardless of who was in the White House and through 35 years of a mostly Democratically-controlled Congress until…….

3. Reagan, a terrific actor (which some mistake for intelligence and oratory skills) and famous co-star to trained monkeys, got elected…yes, I hate the stupid f***…
AND Republicans took control of the Senate

This next point is, IMHO, probably the single most important fact to remember about all of this.

4. The Republican-controlled 106th Congress takes Ronny’s “smaller government” religion to its fatal extreme by passing the Gramm-Leach-Bliley Act in November of 1999 which is signed into law by another RWMF and career politician, Bill Clinton.

For those who need a little history review, GLB repealed many of the regulatory safeguards which had been put into place by the Glass-Steagall Act of 1933 which was the federal government’s response to the unfettered and unregulated bankers who caused the * FIRST * Great Depression.

Go back further (http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html) and understand how Glass-Steagall was coming under serious attack during Reagan’s administration in 1986-1987….at the same time a former J.P. Morgan director and life-long disciple of Ayn Rand, Alan Greenspan, was being made Fed Chairman.

“In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities.”

Do you see those words, “mortgage-backed securities”?

5. The upward trend continued on Bush 41’s watch and with a Democratically controlled Congress (Dems can be such pussies…or are they just RWMFs of a different stripe? Both, I’d say.)

6. Yes, Clinton was in some ways the benefactor of a booming economy and, yes, some credit for reducing the Federal debt has to go to a Republican Congress
(In case anyone would like a quick primer on how the Federal budgeting process actually works, the roles various branches and departments play, etc., see http://useconomy.about.com/od/fiscalpolicy/p/Who_budget.htm)

7. Finally, it was without a single shred of doubt in my mind or any possibility for any sort of fact-based denial that a Republican-controlled Congress and a half-witted Republican son of a Texas oilman is who put us on this disastrous financial path.

The list of fiscal failures since 2001 is long, but we can start with cut taxes that primarily benefit the wealthiest Americans while waging 2 wars off the books. Add to that, the bottom dropping out of an unregulated financial services sector based too heavily on an overly-speculated real estate market that had so much credit and investment capital tied to it and what did those geniuses think would happen? It leads to a reality in which Wall Street and RWMFs everywhere get all the reward with none of the risk and we taxpayers are left to bail out the whole friggin’ mess….

My point is the current pathetic state of our economy and the federal budget is something that began long before Obama came into office, before voters turned Congress back to Dems, and really began when Rs were in charge and is rooted in the desire of RWMFs everywhere to deregulate and get rich.

I have no problem with fiscal responsibility, but to think that a president and Congress can fix the mess of previous administrations overnight – or even in a single year – just isn’t realistic. And I don’t think we’d be in this mess if the justifiable and now obviously needed regulations and oversights of the financial services industry had not been repealed.

If anyone has a better plan than what is being done now, I’d like to hear it. Was allowing all the TARP recipients, GM, and any other recipients of federal money to fail the better plan? In a perfect Randian world, I guess the answer would be, “Yes.”

Additional Sources
http://www.gpoaccess.gov/usbudget/fy10/hist.html
http://online.wsj.com/article/SB122156561931242905.html
http://www.reuters.com/article/idUSTRE60U09L20100131
http://www.factcheck.org/2010/02/the-big-bank-bailout-bill/
http://topics.nytimes.com/topics/reference/timestopics/subjects/g/glass_steagall_act_1933/index.html
http://www.taxpolicycenter.org/briefing-book/background/bush-tax-cuts/ignore.cfm

Don’t Blame the Borrower – How a Republican Congress Helped to Create the Current Economic Crash and Continues to Erode the Middle Class

As I see it, the reality is that our current economic problems stem directly from deregulated financial markets. We can thank Alan Greenspan, appointed by Reagan, and the pro-business, deregulatory belief system of the Republican party for that.

YOU CAN’T BLAME ME FOR ASKING
Let’s start with the mortgage crises since that seems to be something most people can agree is at the root of our current economic problems. The notion that we should blame the person applying for a mortgage that they can’t afford versus the people and systems that are supposed to screen applicants and then say, “No” is just silly, but that seems to be the position of social and fiscal conservatives.

Let’s see where the argument for blaming the applicant takes us……

  1. Let’s say I go to a bank or lender and apply for a mortgage suspecting – or even knowing – I can’t pay it back.
  2. The bank decides not to check me out and deny my application. Why? They know they won’t be holding my loan very long. Why not? Because they don’t have to and aren’t motivated to thanks to the Gramm-Leach-Bliley Act, a law passed in 1999 while Clinton was president but Congress was controlled by Republicans. Remember that it is, after all, Congress who makes law, not presidents. GLBA was authored by Republican Senator Phil Gramm and Republican Representative Jim Leach, with contributions from Republican Rep and House Commerce Committee Chairman, Tom Bliley. It effectively removed regulations on banks created in 1933 by the Glass-Steagall Act which, itself, was a response to conditions not at all unlike today that caused the Great Depression – an unregulated financial services industry.
  3. Because sufficient regulations no longer exist thanks to the GLBA, lenders of all kinds – including banks – can now package and sell my loan with thousands of others to someone else and wash their hands of the initial risk of lending me money. No reason to deny my application if they aren’t worried about me paying it back – that’s someone else’s worry now.

So what should we expect will happen? No one will deny my loan application because there’s money to be made quickly by writing the loan and selling the now infamously “toxic asset” to someone else. Well, here’s what will and did seem to happen…

  1. I and lots of people will get mortgages we don’t qualify for
  2. The re-packaged investments will be sold to someone else
  3. Those packaged securities will become worthless because not enough people can pay them back, and
  4. The financial services companies who used to be regulate banks but who no longer fall under enough regulation and scrutiny will go crying to the very same government who stopped regulating them in the first place to now bail them out.

The Rich make and pass laws to benefit the Rich, and when things go bad we as citizens pay for it through weaker markets and inflated government debt. If we were real Capitalist, we’d let them all fail just like Bear Stearns and Leahman Brothers, but that would create complete anarchy…..actually, it would mean a lot of rich people would lose a lot of money, and that will NEVER happen.

So if you’re blaming Clinton for perpetuating the idea of broader home ownership as the reason for our current problems, you really need to look at the simple truth of the matter.

If you’re somehow trying to make a connection between broader home ownership and too many unqualified loan applicants, then you really have to blame GLBA and greed for that. Home ownership is still a great idea for our society, but deregulating the lenders and blaming the borrower doesn’t make sense.

RICH REPUBLICANS AND THE MIDDLE CLASS
Plain and simple, the current economic problems can be traced back to when Republicans had a Congressional majority and could create laws that allowed their supporters and constituents in big business and especially big finance to maximize return and minimize risk. As a result of GLBA, their big money supporters were able to create Bank of America, Citigroup, and J.P. Morgan Chase.

Pretty soon, financial markets were a free-for-all, just as they had been before the Great Depression. Firms that had once been regulated so that they wouldn’t fail were now buying and selling every imaginable type of security without rules, including mortgages that never would have been approved to begin with which are now re-packaged as some kind of investment vehicle.

The American Middle Class once again allowed themselves to be duped by the wealthy and powerful. It’s not the borrowers fault if they are lent money they can’t repay. The lender is supposed to say, “No” if they know the only way they make money is if the borrower pays them back. The lack of regulation allowed – hell, encouraged – those loans to written and then sold off as investments so that the rich could get richer off of the transaction without any regard for the borrower or the affects that so much failed lending could have on everyone and the economy.

The lack of regulation on the banking industry is the classic fox in charge of the hen house. It’s easy to see that a few very smart and very rich people understood how to make a great deal of money out of the house of cards that was the real estate bubble.

THE FATHER OF SMALLER GOVERNMENT
The lack of regulation actually brings us to Mr. Smaller Government himself, Ronald Reagan, and his fed chairman, Mr. Greenspan, who convinced us that smaller was better. No need to regulate banks as had been done since the Depression and the Glass-Steagall Act of 1933. This is America, land of free markets! Let the markets decide! (Translation: Let Rich Republicans Decide)

Yes, this is America and so that means we have only ourselves to blame or thank for who we elect, the markets we create, and the consequences of our decisions. So if anyone is going to go back and blame Clinton for wanting more people to own homes, we must go back just a little further to Ronald Reagan.

Reagan ballooned the federal deficit to it’s largest amounts ever (to that point in time) after getting elected on the “government’s not the answer to the problem, government is the problem” fable. Clinton left office with a federal surplus which W proceeded to totally squander by giving it to the rich in the form of tax cuts. Remember, too, the invasion of Afghanistan and Iraq have never been accounted for in the federal budget. The piper isn’t even close to being paid when it comes to the federal deficit.

So who really is the party of fiscal responsibility? Make no mistake, Republicans talk a grass-roots, family values game but that’s a ruse intended – and seemingly working extremely well – to convince middle America that they are the Republican party core. Wrong. The wealthy is the real Republican party core. The religious-right, pro-life, Creationist, white-bread American is just the uniformed and ill-advised pawn in their game. They are easily convinced that so-called tax-and-spend liberals, job-stealing illegal immigrants, and unfair (meaning unregulated) foreign markets and labor practices are to blame for our troubles.

We only have ourselves to blame.

A FINAL THOUGHT ON CONSUMERISM, FOREIGN LABOR, AND OUR ECONOMY
When it comes to foreign and domestic markets and labor, we only need to look in the mirror. Consider the goods and services we consume, how that affects the economy, and what it means to domestic and overseas markets and societies, including China.

Any business is in business to do something profitably. Businesses who outsource everything possible to overseas markets like China do so in order to lower operating expenses and maximize profits on the goods and services they sell and we buy from them.

Hey, we don’t want government to tell them or us what we can and can’t do, right? No need to regulate business, right? This is America, land of the free and free markets! Let us as producers and consumers drive the market!

So if we as consumers….

  1. weren’t always encouraging businesses to lower costs by constantly demanding and buying cheaper and cheaper goods (the WalMart affect)
  2. were more willing to elect leaders who put the needs of the American middle class worker ahead of the corner office CEO maybe with proper tariffing and changes to NAFTA – George H.W. Bush’s baby, by the way, and
  3. stopped believing red herrings like illegal aliens taking all of the good paying jobs (yeah, like picking vegetables and raking lawns) thrown at us by right-wing news sources like Fox, Rush Limbaugh, Michael Savage and Quinn and Rose as the cause of our economic problems,then maybe we wouldn’t be in such a mess.

In a democracy, we have some power by virtue of our ballot. So long as we allow ourselves to be fooled into thinking that the Republican party in this day and age is anything but a party of the rich, we’ll keep going through cycles where they come to power every so often, make changes that only benefit the rich like deregulating markets and cutting taxes for the wealthy under the total lie of Reagan’s failed “smaller government” and “trickle-down economics” theories, and we’ll be stuck once again holding the short end of the stick.

It really is something to see – middle class Americans somehow thinking that Republicans are in our corner. I don’t get it. The past 3 Republican administrations – Reagan, Bush 41, and especially the last 8 years under W have proved that to me. Look at how W took Reagan’s failed philosophies – and the deficit – to heights unimaginable. When were we last really prospering? Wasn’t it under Clinton?

For now it seems the majority of Americans have awoken from the nightmare of Republican dogma and are at least willing to try something different. After all, you know the definition of insanity, right? – doing the same thing over and over and expecting different results.