Rob Johnson Explains Crony Capitalism (VIDEO)

In a new series of videos featured on the Real News Network, HuffPost blogger Rob Johnson offers his critique of the government's response to the financial crisis.

In an interview with Real News senior editor Paul Jay, Johnson disputes the premises of the bailout, asserting that President Obama should have saved the functions of the banks by essentially nationalizing them instead of pumping money into them.

Among other measures, he argues that to get financial regulatory reform through Congress, it may be necessary to overhaul campaign finance reform to prevent banks from applying undue influence on lawmakers. What's missing from the current bills in Congress is overhauling the credit rating agencies, says Johnson, who argues that their role should be taken over by public utilities.

Johnson also highlights the lack of real reform of derivatives trading, which he calls the "San Andreas Fault" of the current financial system, arguing that they need to be traded on exchanges. And he criticizes the trend on Wall Street to make finance more complicated, such as the creation of derivatives instruments, saying that they come at a huge price because it limits competition in the banking sector.

He discusses his role as the new executive director of INET, the Institute for New Economic Thinking, which he's creating together with legendary financier George Soros.

WATCH Part 1, "Crony capitalism unchanged":

WATCH Part 2, "Wall St: More complicated, more profitable":

WATCH Part 3, "Obama had a choice":

Comments

[notb observer]

12:59 PM on 01/02/2010

Finally found it !

Anyone looking for the mysteriously absent Part 4 in this interview series, see the link below. In this segment, Johnson describes what kind of legislation would be required to keep another crash like the one last year from happening again.

"The crash can happen again Pt4"

http://www.youtube.com/watch?v=mHjIuq07rxA&feature=channel

[breakingpoint]

01:17 AM on 01/02/2010

The Real News always has interesting guests
http://www.youtube.com/user/TheRealNews

[realitytrumpsbull]

07:10 PM on 01/01/2010

Payola-rola politics. Much as the insurance industry just wrote their own regulatory/reform legislation, and had it signed, the folks on Wall St. have long been in the business of assuring a comfortable and lucrative working environment for themselves. Can't have things like restrictions on real estate speculation, predatory lending, or anything else that might cramp your style, and Bush was their golden boy, getting people to invest their life savings in the whole thing, and at the peak, the DOW went to 14,000 or so. Then, flame-out. Failure economic engine restart, flat spin, descending, descending, until finally, BAIL OUT! BAIL OUT! So, changing pilots in mid-air, now the financial industry is parachuting gently back to earth, texting and placing stock trades, and all's well. For now.

[lazercat2008]

06:33 PM on 01/01/2010

Lieberman 2008

Securities & Investment $3,002,575 $2,897,075 $105,500
Lawyers/Law Firms $2,969,471 $2,824,629 $144,842
Real Estate $2,545,477 $2,474,270 $71,207
Retired $1,783,262 $1,783,262 $0
Pro-Israel $1,438,440 $1,264,097 $174,343

[lazercat2008]

06:30 PM on 01/01/2010

Go to Open Secrets and find out exactly who is giving your representative money. Which PACs are paying for their clothes. What organizations and people are making those horribly untruthful commercials (501 527 non profits).

[Geovan]

05:55 PM on 01/01/2010

A regulatory agency responsible for ratings would work only if it was not fee funded, as the agency managers would cater to revenue sources. Co-funding by Social Security Agency and the Pension Benefit Guaranty Corporation makes sense, as private pension funds success is determined by accurate information and their failures become government burdens.

[iceage7]

05:49 PM on 01/01/2010

Theonly way to get CFR is to have an informed citzizenry. How many voters know where their candidates get their money from?

[happytroll09]

05:36 PM on 01/01/2010

Well done HP---you started the year with some pretty awesome postings. Keep it up.

[alumcreek]

04:47 PM on 01/01/2010

The only way to save this nation from becoming a banana republic is through election financing via taxes. So long as we permit America's richest to bribe politicians and legislators we will sink into serfdom where the bottom 90% will be the servants of the top 10%. Few politicans will say no to a lobbyist who can raise a quick $50,000 or more if you just vote his way. In fact lobbyists write much legislation so as to reflect the needs and desires of their clients to have an unfair advantage in dealing with the public.

Does anyone ever bribe a politician to do what is good for the nation? I know that many bribe them to do what is harmful to the citizenry.

[novoorganum]

04:45 PM on 01/01/2010

“Daily dose of Chomsky:

“Popular struggles have won a great many rights, but concentrated power and privilege clings to the Madisonian conception in ways that vary as society changes. By World War I, business leaders and elite intellectuals recognized that the population had won so many rights that they could not be controlled by force, so it would be necessary to turn to control of attitudes and opinions. Those are the years when the huge public relations industry emerged -- in the freest countries of the world, Britain and United States, where the problem was most acute. The industry was devoted to what Walter Lippmann approvingly called "a new art in the practice of democracy," the "manufacture of consent" -- the "engineering of consent" in the phrase of his contemporary Edward Bernays, one of the founders of the public relations industry. Both Lippmann and Bernays took part in Wilson's state propaganda organization, the Committee on Public Information, created to drive a pacifist population to jingoist fanaticism and hatred of all things German. It succeeded brilliantly. The same techniques, it was hoped, would ensure that the "intelligent minorities" would rule, undisturbed by "the trampling and the roar of a bewildered herd," the general public, "ignorant and meddlesome outsiders" whose "function" is to be "spectators," not "participa­­­­­nts." This was a central theme of the highly regarded "progressive essays on democracy" by the leading public intellectual of the twentieth century (Lippmann), whose thinking captures well the perceptions of progressive intellectual opinion."

Noam Chomsky”

[sposton]

07:01 PM on 01/01/2010

Yes, they have been ruling but all possible standards they have failed miserably at every turn.

Harold Ickes, Secretary of the Interior under FDR wrote on January 8, 1938:

"Eight years ago America’s 60 families had held in their hands, since the close of the World War, complete dominion over the economic and political life of the country. They had lulled the American people into the conviction that if the people would grant conditions in which these 60 families would have confidence that they would do as they pleased, the 60 families would put capital to work; enterprise would boom, wages would rise, stocks would soar and there would be two cars in every garage.

The people gave the 60 families this confidence; gave the 60 families this trust in their benevolent despotism—in short, gave the sixty families then what they ask for today, and what happened? Out of their divinely claimed genius as managers of private enterprise the 60 families promptly led the American people into the worst peacetime catastrophe ever known."

http://www.progressive.org/wx041409.html

What has changed since then? Things have gotten worse!

[Wombaticus]

11:51 AM on 01/02/2010

The 'trust us, rules just slow us down' philosophy remains the same tho. Only the ability to do more damage has increased, making the situation worse.

[Blutodog]

04:31 PM on 01/01/2010

The whole topic of whats called Regulatory Capture needs a real close look. Its not just buying Pols that is the only problem, although its a big part of the problem. Its alos the revolving door between people who work on regulatory commissions and depts in the Gov't and the companies they administer thats a huge problem. the SEC is a prime example of this problem. Many other agencies though are also neutered by this doorway for graft and corruption. It goes like this your put on a particuliar Commission or baord and then a lobbyist comes to u from a Company your reviewing and lets u know that a great job is waiting for u or a great future in that Industry wink wink nod nod if only u see ur way on an issue . In this manner the Gov'ts various regulatory bodies are compromised. many times it works this way more directly with a lobbyist telling a Congresscritter who they'd like to see on a board etc. its just a recommendation of course..with the add caveat that if it doesn't happen your campaign contribution will be half of it was last election cycle. The ways the Corps. get their way are as endless as the there are ways for scammers to scam and most of these Congresscritters are scammers themselves. The whole rotten system is so throughly corrupt now its almost beyond reform. In fact reform now itself is a code word for BIG opportunity ahead.

[thnk4selfagain]

04:25 PM on 01/01/2010

Part 2 of interview with Johnson: "forbearance" policy that Obama admin pursued with regard to bailouts is indistinguishable from"corruption."

Absolutely. Yet the public is not angrily concerned with the *perception* of wealth transferral without benefits only; it is preoccupied by the knowledge that the Pres did not fix the problems and that this is a cycle of privation that will continue. The Obama admin took the *easy way out* and the MC, working class, 99% of Americans will be victimized by it for a long while.

[notb observer]

03:30 PM on 01/01/2010

I was thinking about some of the points raised in the interviews. There were a few propositions that caught my attention relating to the Obama Administration's reaction to the mess.
First, the question of whether the bailout was really nothing more than payback for the money Wall Street pumped into his campaign. Was that the reason the Administration decided to go the route of "forebearance" rather than letting these institutions collapse, or as was also suggested, was the Administration worried that actually opening the can of worms would expose the immensity of the scam and then simply annihilate the economy once people realized that our entire systems was a computer generated illusion ?
That's a difficult call to make, but let's for a moment assume the best, and say that the Administration was worried about the effect of exposing the scale of the problem. Wouldn't this have been the impetus then for real reform and regulations ?? In other words, we'll bail them out and keep people from finding out how bad it is, but now that we know the problem is massive and systemic, we will also enact legislation so that it never happens again...
Since there hasn't been any real reform and legislation and are unlikely to see any in the coming year, I have to assume the worst.

[sposton]

07:03 PM on 01/01/2010

Logical thinking at work.

[CentralVA]

03:25 PM on 01/01/2010

Very smart and insightful analysis. The good news is that Americans across the political spectrum understand the danger of crony capitalism, and are pressuring both major political parties to clean up their acts. It will be interesting to see if this populist outrage has lasting effects.

[sposton]

07:05 PM on 01/01/2010

Whatever the outrage, it is being effectively channeled away into meaningless and harmless form. Kleptocracy is still getting its way.

[Lisa Ryder]

02:39 PM on 01/01/2010

Capitalism hates free markets!

[Blutodog]

04:36 PM on 01/01/2010

I agree. Read Marx on monopolies. Capitalism has a built in tendency toward monopoly. Today we are seeing the flip side of the trust busting era in the beginning of the 20th century. Both parties are captives of the big trusts or monopolies of today.