'The Politics of Terror' Strikes the Economy

After seven years of the Politics of Terror, and with only three months left to go, they decided to make one last play for power. The original bailout plan presented by Hank Paulson was to be the final Shock Doctrine maneuver of the Bush/Cheney Presidency. As with 9/11, the Administration tried to exploit a tragic situation for their own ends. And this five-day stock market plunge shows that, as with 9/11, they've made a grave situation even worse.

A groundswell of public resistance forced the Paulson team to cut back on its initial demands for unbridled power, but the fear generated by their initial pitch to Congress may have caused world markets to drop more steeply and more severely than they might have otherwise. From today's Wall Street Journal:

Strategist Jim Paulsen, of Wells Capital Management in Minneapolis, said the fear that has gripped the market in recent days may be an unintended, self-fulfilling consequence of recent efforts in Washington to pass a $700 billion rescue of firms saddled with soured credit bets.

"To sell the bailout to the public, everyone from the President on down had to go out and tell people how bad everything was, that the world was coming to an end," said Mr. Paulsen. "Ever since, people's expectations about the economy have gotten worse and worse and worse, and their reaction to each new action to fix the problems has gotten worse and worse and worse."

Jim Paulsen is probably right. The scare tactics used by the Administration to push their bailout plan created a wave of fear, and fear can quickly turn into panic.

The Administration didn't create this economic meltdown. The underlying weaknesses in our economy are the result of overly loose rules and regulations promoted by both parties over a period of years. But that lax, get-rich-quick attitude reached a fever pitch under Bush and Cheney.

Lobbyists were no longer just cozy insiders able to shape policy. They became the ones who wrote policy. They became the decisions makers. They went from peddling influence to becoming the ones who could be influenced. And John McCain's lobbyist-ridden campaign shows that his Presidency would promise more of the same.

The simple truth is this: We have all been riding the Exxon Valdez for eight years, and McCain has done nothing but say 'aye-aye' to the drunken skipper.

There's a bitter parallel here between the way Paulson et al. used a real crisis last month and the way this Administration used the real threat of terrorism to invade Iraq. In both cases there was a genuine and grave underlying problem. In both cases, they tried to turn their problem to their own advantage. And in both cases things went even more terribly wrong as a result. (There were 14,499 terror attacks in 2007, according to government sources, up from 208 in 2003. The war in Iraq accounts for most of the increase.)

Don't get me wrong: I'm not claiming special knowledge about the mechanics of this downturn. Nobody knows the full extent of the damage, or what it will take to fix it. There would have been an 'correction' (harsh word, that) under either party. The problem reaches far beyond "liquidity." A lot of people borrowed money with loans based on unreal housing prices. In other words, these loans used imaginary collateral.

But the greed and irresponsibility during these last eight years has been unprecedented. Hank Paulson's original plan - no oversight, no questions, reports if and when we want - represented a last wild reach for the brass ring. It was a desperate grasp for taxpayer resources, an attempt to transfer wealth from public coffers into private hands without adult supervision. The amended bailout plan contained enough controls that it should probably have been enacted. But it's a beginning, not a solution, as the last five days have shown.

Now John McCain has almost offhandedly announced a plan to buy up bad mortgage loans. That's yet another attempt at massive wealth transfer from public to private hands. A vast network of campaign-contributing exploiters enriched themselves by riding the greatest boom since Florida land in the 1920's or Dutch tulips in the 1630s. They can look forward to being rescued from the consequences of their actions should McCain and Palin be elected.

The media can talk about "that one" all they want. I didn't hear any racism in that phrase. Lots of older people use that colloquialism when they're angry. "I think every young person ought to get a higher education," a grandparent might say at the dinner table, "but that one would rather play the guitar in some nightclub." Phrasing isn't important. What's important is that this election represents another attempt by the reigning Powers That Be to continue their policies of plunder and manipulation.

It won't be easy to manage our way through this crisis. It will take leadership, and a U.S. government that is trusted at home and abroad to make reasonably sound judgments without the excessive influence of lobbyists and radical free-market ideologues.

John McCain can wander the stage of every town hall in the nation, staring into the darkness beyond the footlights and gesticulating at shapes real or imagined. That won't change the essential truth that should decide this campaign: The future of the world economy is at stake. That's The One we should be talking about.

RJ Eskow blogs when he can at:

A Night Light
The Sentinel Effect: Healthcare Blog
Future-While-U-Wait
RJ Eskow at the Huffingt

Comments

[tompoe]

September 19, 2008, the day Paulson headed out to gather Bush's going away present to his cronies, also marks the day the Republican Party admitted they are the Party of Corporate Welfare. America does not tolerate corporate welfare. Next time you meet a Republican, make sure you remind them they belong to the Party of Corporate Welfare, and America does not tolerate corporate welfare. One good thing that comes out of this mess, is the elimination of the Republican Party as a major political party in our democracy. Maybe we can look forward to multiple candidates, debates that include all candidates, and democracy that works for the People, not the corporate welfare.

[SamThornton]

In a kind of confirmation, I notice that this morning (October 10), when Pres. Bush popped out of his house and addressed the nation about his financial crisis, the market stood at -118. Now, shortly thereafter, it stands at -349, on its way south again. Way to go, Georgie!

[rednecka2z]

Don't know how you get to blog in this paper but you sure have my support. I am so tired of reading the stuff spoon fed to our children by the Socialistic organization called National Education Association. Anyone can research the origin and find it was formed in the depression era by what was referred to as "Card Carrying Communist" some were some were not but the Socialistic Move was ingrained in their belief system. It has taken four maybe five generations to totally denominate our education system but they in fact got it done. Keep up the good work.

[rainbowblue]

Here's the thing, both Republicans AND Democrats have been using the "politics of terror" when it comes the economy. There are Democrats that want roll out massive change that, I would argue, about half of the country doesn't want. Just because I agree with their plans for the most part doesn't mean that their tactics are any less based on fear.

Right now I have a hard time wanting to get political. I'm looking at a possibility of not being able to go to grad school next year, because I don't know if I would be able to get student loans. If I can't go to grad school, I don't know what I'm going to do.

Let's face it, both candidates don't know much about the issues (THERE IS NO SUCH THING AS CLEAN COAL!!) and the fake issues, such as the "politics of fear" are just used a distraction. Why did we choose two people who have no positive record on economic issues?

[knowBuddhaU]

Wow, great piece. The evidence from the hateful McCain-Palin rallies is incontrovertible and compelling. "Ideas have consequences," Naomi Klein recently quoted Rumsfeld as admiringly saying about Friedman.

"Do as I say or suffer immeasurably until you do! And never ever ask questions."

This is feudalism, not democracy.

During Medieval times in Europe, "public authority broke down, traditional institutions were unable to maintain order, and private castles were built. During this so-called feudal anarchy, private relationships were established among the nobility in which weaker nobles attached themselves to stronger ones." "...[B]ased on the relation between lords and the peasants who worked their own land and that of the lord...Feudalism was therefore a means to restore social order or at least limit the excesses that resulted from the collapse of public authority." (Source: Encyc. Britt. Std. Ed. 2008)

It's all about the transfer of the Commons into private hands in the context of a holy war. Society was conceived as God's plantation, with the nobles as his landlords. To challenge political authority is now equally conflated, by those on the right, with challenging the throne of Heaven.

Our present overlords are absolute divine right monarchists, throwbacks to the Middle Ages. They rule by putting the "fear of god" into "subjects" and conflating their authority with God's.

[AndrewInToronto]

"...used a real crisis last month and the way this Administration used the real threat of terrorism to invade Iraq." Having begun to read "The Shock Doctrine" last night, this approach has taken on a new immediacy.

That which came to me this morning which was somewhat reassuring is that while Congress has mandated an economic bailout, it is not mandatory while being staged. Both seem to undercut the initial fear which Paulson and Bush induced and which, like you have said, could turn into panic.

[jeanrenoir]

The laziness, ignorance, and anti-intellectualism of the white American masses have finally come home to roost with a vengeance. It's these imbeciles who elected Bush not once, but twice, because they'd like to drink BEER with him. God is not mocked. You reap what you sow, even though the lazy coplacent, drunken, medicated American white masses have been too out of touch with reality or traditional human wisdom to "get" it. The stupid voters have almost destroyed our country through Bush's catastrophic incompetence, asleep at the tiller like them, at home and abroad.

[rednecka2z]

what is wrong with this country is educated idots who think everyone else is stupid. Anyone who trys to show the lack of ethics on the democratic side of this campaign is instantly a racist. I know a racist when I see one and a person doesn't go to a radical church, bring up their children in that environment, & associate with people of that culture and not conform to the ideal. I readily admit to being a redneck (I slap it every morning just to make sure) but a rasist i am not! I do not subscribe to the Idea one must be Politicaly Correct. I don't hold up my finger to see which way the wind is blowing before I take an intellegent position. Too bad yu can't.

[knowBuddhaU]

Did you read your first sentence before writing the last?

[rednecka2z]

You can talk about lazy. That is the reason I have worked my whole life to have my hard earned money handed to truely LAZY people in the form of Socialistic Welfair. That is also the reason I cannot get emergency Medical Attention for an injury(47 stiches) because the waiting room was full of LAZY people with sniffles. The same reason the unemployeed rolls contains a major majority of white.

[Dap]

Dear Brother RJ,

The Republicans used to give the Democrats hell for throwing money at our social problems, saying that they're throwing good money after bad, and what is the Republicans first response ( but on a much greater scale) throw huge sums of money at the problem, especially before they even know what the nature of the problem was/is. Go figure? Can you say "KARMA?" It's biting'em on the arse.

The points you raise about causing a panic is well taken, stop-on in fact, and you are correct again that trying to use this tragic incident to make another power grab was anything other than "Country First".
And what was to be expected, when electing a sociopath to the office of the Presidency? Agape