Thanks to both the focus on health care and the storm over President Obama's comments on Henry Louis Gates, few bothered to note a deeply troubling moment during last month's White House press conference in which the president displayed genuine stupidity, willful ignorance, intelligence-insulting dishonesty -- or some combination of all three (I bring this up now, because it's the very same argument we're going to hear from supporters of Ben Bernanke in his renomination process). Referring to the recent news that banks like Goldman Sachs reported big profits, he said:
"What you're seeing is that banks are starting to make profits again. Some of them have paid back the TARP money that they received, the bank bailout money that they received. And we expect more of them to pay this back. That's a good thing...And we also think it's a good thing that they're profitable again, because if they're profitable that means that they have reserves in place and they can lend. And this is America, so if you're profitable in the free market system then you benefit." (emphasis added)
Yeah, sure -- economically speaking, it's a great thing when a business makes a product or delivers a service and is able to make a profit from that endeavor in a free, unsubsidized market. However, that's not what's going on in the financial industry...at all.
As Matt Taibbi noted a full week before Obama's press conference, "this is not free-market earnings but an almost pure state subsidy." In a TrueSlant article that followed his original Rolling Stone gem, he breaks down all the subsidies and handouts the financial industry engineered for itself outside of just the TARP bailout. He concludes:
One of the most hilarious lies that has been spread about Goldman of late is that, since it repaid its TARP money, it's now free and clear of any obligation to the government -- as if that was the only handout Goldman got in the last year. Goldman last year made your average AFDC mom on food stamps look like an entrepreneur...
Taken altogether, what all of this means is that Goldman's profit announcement is a giant "fuck you" to the rest of the country. It is a statement of supreme privilege, an announcement that it feels no shame in taking subsidies and funneling them directly into their pockets, and moreover feels no fear of any public response. It knows that it's untouchable and it's not going to change its behavior for anyone. And it doesn't matter who knows it.
So in light of the evidence Taibbi lays out -- evidence that has been reported in the business press for the last many months -- it's clear President Obama's claim that the big banks are back to being "profitable in the free market system" is stupid, willfully ignorant, or dishonest, because they're quite obviously operating inside the opposite of a "free market system." Their profits are a direct taxpayer subsidy.
Is that a "good thing?" Well, I guess it's a "good thing" that after all the subsidies, the banks didn't report more losses. However, I'd prefer the phrase "the absolute least that should have happened" to "good thing." Why? Because the idea that they did something right or smart or brilliant or moral or newly responsible by generating their recent profits is absurd.
Had they been given so much taxpayer cash and not reported a profit -- that would have been an embarrassment. Put another way, there was almost no possible way for the banks to report anything other than profits when they were the recipients of so much taxpayer cash. The president praising them for being "profitable in a free market system" is like him signing legislation transferring $1 million from the U.S. Treasury into my bank account, and then a month later, sending me a letter of commendation for having mustered the brilliance and hard work to earn $1 million.
OK, fine, you get that this isn't a free market. But you're still wondering about motive. Why would Obama go on national television and tell the American public that big bank profits are a "good thing" like any other endeavor that is "profitable in the free market system?" What motive might he have? I'd guess defending Wall Street and the ongoing subsidies/bailouts.
Remember, Obama is the guy who raised more campaign cash from Wall Street than any other candidate in American history -- and he was the guy who played a pivotal role in passing the bailouts in the first place. And while, sure, it's seems like a positive that Obama wants financial "reform," we don't really know what "reform" means. It could mean nothing -- or, based on administration proposals to actually put more power into the very secretive agency that allowed the mess to happen, it could mean an even worse regulatory system.
So it's entirely possible -- if not probable -- that Obama is just doing his part to tamp down popular anger at financial firms and the bailouts so as to help prevent any kind of serious regulatory reform and/or political backlash against Wall Street. I mean, the guy is a smart guy -- he of all people knows that the banks are not earnestly generating profit in a "free market." The fact that he can't even bring himself to acknowledge that and provide some straight-talk to the American people about such an obvious reality suggests an ulterior motive.
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It is time to get "real" and handle the truth: The Financial and Economic systems
we all have been living in, with different levels of success don't work, and trying to
maintain them under the fallacy that people can't live without Wall St is a lie for which
President Obama should be ashamed to perpetuate, not only because he is a smart
man but because he has been using his popularity to maintain the status quo.
At least Bush had the excuse of not being the smartest guy in the room and being
part of one of the most retrograde political organizations in the world but Obama?
I doubt people would be that lenient and I won't blame them because if he failed,
it will be a big blow to the meme that educated and liberal people make are better
rulers.
I have not seen anything to convince me that the Obama Administration is not working on regulation for the financial industry. I suspect that there is much contention and expect to see more proposal over the next few months.
Another thing I have observed and don't quite understand is the Republican party always acts and talks like taxpayer money belongs to them exclusively and poor people or things that go for ordinary people are unfair uses of that money, but giving it to the wealthy for their interests and just for plain cash to spend how they want is totally acceptable. This is especially true with the bankers bailout. These people have hurt Americans with the credit card industry. The credit card industry is a scam where the rules change as soon as you sign on and it's legal. They scammed Americans by giving them home loans with time bombs attached. This industry should have been relieved of all its major players if they couldn't survive without the bailout.
There is so much payoff money sloshing around Washington that it has drowned anything resembling a free market economy. We are all aware by now that the tyrannosaurs of Wall Street, corporate America and their lobbyists write the laws that rule us all and that the legislation that flushes out of Congress is intentionally written to benefit a very small wealthy minority.
These voracious dinosaurs surely must give their stamp of approval before a treasury secretary or a Fed chairman can be appointed. The system is manipulated and controlled from the outset by the tyrannosaurs and they profit enormously by their grip on government.
We may get to change our rulers every few years by elections rigged largely through payoff money but we can’t claim to be anything corresponding to a democracy controlled by the will of the majority.
Obama was the last great hope. I fear he has morphed into the Tyrannosaur-in-Chief.
(By the way, it is possible for us all to stop using the euphemism “campaign contribution” for payoff money and start calling payoff money exactly what it is – payoff money).
The problem with all of this (TARP, bailouts, etc.) is that all the excessive, reckless behaviour will continue unabated - from the same cast of criminals. Not much change there.
I disagree with many of you that we "avoided" the next Great Depression. It was simply postponed.
My hope was that Obama did what he had to do in the short term just to pull the economy out of its nosedive but would soon come back and institute the serious regulations needed to prevent a repeat. The short term required throwing a LOT of money into the system very quickly. Doing that did stop the free fall, Of course, it also generated a lot of perceived waste. That is the price of 30 years of "free market" folly.
The really bad part is that there does not appear to be any serious follow up by the administration to insure that this lunacy isn't repeated. Not a single person in the Obama administration has demanded any tough re-regulation. No one has addressed the problem of down-sizing "too big to fail" institutions. These issues needed to be addressed while the crisis was upon us--and the motivation to fix the problems was high. Instead, it is business as usual, not change anyone can believe in.
It's all a chimera. The toxic paper is still on the books, lending is still not occurring as it should, and the too-big-to-fails are encouraged to grow by the gov't into monopolies. Obama's admin got suckered into a conflict of interest scheme, they can't and won't get our money back (Geithner wants it for perpetuity). And regulation is impossible when the gov't aim is above all support Wall Street, for it has demonstrated that it can destroy this country overnight.
At a town hall here on tuesday, somebody asked congressman Randy Neugebauer how he could vote FOR government subsidies for agriculture, but NOT for people's healthcare. He gave some irrate, rambling answer about the two not being at all similar. I guess they are FOR government handouts when the recipient is big business, but AGAINST them when they are for mere taxpayers. Go figure. I can't believe people actually vote for these nimrods.
Big Business is too big to fail, and obviously the "little" people aren't.
We vote for these nimrods because we have been taught that if we go vote every so often like the Constitution provides for , Everything will turn out allright. It's like having a choice between e-coli and food poisning but you must vote.
Or... Watch everything crumble and our finiancial system fall apart.
Since neither sound like an attractive choice, I would have to say that our policy should be Stick To The Truth. Once you face reality, We are Broke. The Banks are Broke .
Ronnald Raygun's gold mine didn't pan out.
Now we can start to correct the problem. Kinda like when the Empreaur heard the little boy say " Look !The empreaur is naked "
We are being ask to finiance a Debt for Profit system , when we should be working on a Production for profit system.
Jokes aside, you make very good points which should be obvious to anyone. The taxpayer is being fleeced. It's the same old same old creaming voters are getting used to as the norm.
Financial regulation reform? Yeah right, with the Fed supervising it all we can be sure only what Wall Street agrees to will be "reformed". It's a bit like consulting with the Mafia before implementing organized crime legislation.
Then he should add that this proves that the "free market" does not work and it never has. The financial system failed and without massive government intervention, we would be dead in the water.
The right wing pushed through every sort of deregulation and the result has been a catastrophe. Too bad Obama is going to let them get away with it so it can happen again.
I am of the opinion that the DLCers are pretty much right wingers. At the very least they are the less Right(-er) side of the Corporatist Party.
So the DLC/GOP combo of the "Right Wing" pushed those deregulations through. And the token "Liberals" didn't get a say in the decision.
And deregulation isnt the problem - its OVER-regulation. Remember Regan was the one who said that companies who failed, failed. His adviser, Milton Friedman would have been absolutely against the bailouts. What caused the mess was the govt backing the bad loans - taking away ALL risk from the lenders and leveragers so they could keep giving loans and selling more and more mortgages with no risk, since it wasn't their own money. Now, when everything blows up,., we STILL don't let them learn a lesson -- we actually reward them (while the companies smart enough to stay away from the junk loans now must compete with better funded competitors).
The system is rigged. Getting it unrigged is going to require that progressives keep up the pressure for reform when the system is no longer in crisis. And I mean through several election cycles.
The thing is, if we aren't well out of this crash by 2012, there's a good chance that the Democrats (and by extension, progressives) will lose all control of the dialogue.
The question is - how do you tell which Obama is?
a bought-and-paid-for insider perpetuating a rigged game?
or a really smart and stealthy honorable man (and, fingers crossed, a true progressive) biding his time for the chance to pursue real and lasting improvements within a completely rigged system?
Considering the amount of time he spends echoing the right-wing framing of issues, I know which one I believe. And btw, I traveled many miles and knocked on doors for Obama last year. Follow the money.
Again, if not now - majority in both houses, filibuster-proof Senate - when?