The Real Criminals are Neither Lynndie England nor the AIG Traders

Whenever a politician or commentator bloviates about the brokers at AIG who are getting bonuses, we should all be remembering Lynndie England and Charles Granger. AIG brokers are to the financial meltdown what England was to the Iraq war.

Certainly she did things that were deplorable. But she thought they were legal (England, operating under orders to "soften up terrorists," even thought she was helping defend our nation). And to the extent that John Yoo's memos were law, arguably her actions were legal (although the Bushies never wanted it tested, so threw them to the wolves).

But the important point is that the real criminals of the Iraq War were not those like Lynndie England: they were George W. Bush, Dick Cheney, and Donald Rumsfeld (and their neocon buddies).

Like Lynndie England, the brokers at AIG are the small fish. Sure they shouldn't have been doing what they did, and it's insane that they were compensated the way they were. And even worse is the fact that those compensation packages were worked out in September and October of last year by the Bush administration, and that that convenient little fact is almost always ignored by politicians and commentators in their faux populist outrage.

But the real criminals of the AIG mess - and the entire financial meltdown that was set up between 1999 and 2006 and crashed starting in 2007 - were Grover Norquist, Phil and Wendy Graham, Tom Delay, and, sadly, Bill Clinton.

The philosophy that it's possible to bomb people into democracy and torture them into being on our side drove the Bushies. It was wrong, flawed, and frankly insane, and we're paying a huge price for it.

Similarly, the philosophy that playing the game of business and investment without rules (the technical term is Laissez-faire Capitalism) has driven our government since the election of Ronald Reagan, and went on steroids during the last two years of the Clinton administration and throughout the Bush administration. It's equally wrong, flawed, and insane, and we're paying a multi-trillion dollar price for it not unlike we are for the war.

The intellectual forefathers and mothers of the insane conservative economic policies that have brought us to where we are include Ludwig Von Mises, Freidrich Von Hayeck, Milton Friedman, Alan Greenspan, Tom Freidman, Robert Rubin, Larry Summers, and Ayn Rand. Phil and Wendy Gramm pushed through the Gramm/Leach/Bliley Act (which allowed banks to get into the gambling business) and the Commodity Futures Moderinization Act (also known as "the Enron Loophole"), and Bill Clinton merrily signed them into law.

But just as it's inconvenient to hold the defense contractors and the senior politicians responsible for the Iraq debacle, and instead blame it on Lynndie England, our sound-bite corporate media prefer to focus on a few IAG traders, instead of the people who made what they did both possible and legal.

Instead of passing a 90 percent tax that is limited to the traders, let's be realistic. Ever since Ronald Reagan rolled back the top marginal income tax rate on millionaires and billionaires from 74 percent to 29 percent, our government has been disastrously in debt, sliding deeper each and every year (the so-called "Clinton surplus" was a mirage created with phony numbers, although it was still a hell of a lot better than what we have now).

David Stockman bragged, back during the Reagan administration, that the goal of Republicans was to rack up such a huge federal debt that Democrats would never be able to push forward the "socialist" programs that Americans want, like stable Social Security and single-payer national health care. He called it "starving the beast." Grover Norquist suggested it would force government to become so small it could be "drowned in a bathtub," leaving the corporations in charge. George W. Bush actually, finally, made it happen.

Thus here we are, ten-plus trillion dollars in debt, and trying to blame our problems on Lynndie England and a few traders at AIG.

Let's call out and name the real criminals, and get about the simple and straightforward solutions of putting our country back together.

Roll back the Reagan tax cuts that have done so much damage over the past 28 years. Pull out of insane trade agreements. Re-regulate banks so they're functionally public utilities again. Give oversight to the SEC on all forms of speculative investment and bring back the .25 percent STET tax on each unit of investment vehicle traded.

None of this is rocket science. From 1937 until Ronald Reagan began his wrecking-ball efforts at the stability and solidity of our nation's economy, we didn't have a single bank panic. Reagan dropped income tax rates and the almost immediate result was a bubble and crash in the stock market followed by the S&L crisis, which has been repeated over and over again with startling regularity ever since (just as they were during the 150 years preceding Roosevelt putting into place the regulatory structures and high marginal income tax rates of the New Deal that stabilized us).

Republican President Dwight D. Eisenhower embraced a 91 percent top marginal tax rate on millionaires and billionaires and strong regulation of banks, including the STET tax, and the nation prospered.

It's time to return to sanity and quit swatting at the little guys, while the real criminals and thieves walk away with our nation and our wealth.

Thom can be heard daily on his radio show 12pm - 3pm ET visit www.thomhartmann.com to stream live or find a station near you.

Comments

[eomonroe00]

can someone explain to me the top tax rate being 90%, i mean i am all for taxing the rich more, but 90%? i am as progressive as they come but i dont get the 90%, it seems crazy high, can some explain it please,
thanks

[Kenny Kinlund]

http://mises.org/story/3404

'Our' refutation....

[Garoad]

Glad to see the mindless defenses of the errors here seem to have stopped. Read Meltdown by Tom Woods for the accurate version of the crisis that both parties have engineered for us. (Dems blame the Repubs, but they're both to blame.)

[Peabodies]

I agree with "elt" and philistine that "this guy" makes sense. That's why I listen to Thom Hartmann every day. Maybe dgm and ztn and kenny and Presto and Jay (who may all be the same person) should give it a try. You wouldn't use the invectives you do if you were to LISTEN to him.

[dgm885]

This article is the height of crass ignorance.

You really don't know what your talking about. The characterization of Hayek, Friedman and others is so off-base its laughable. Do you really lump these people in with the likes of George Bush...or any other politician?

Imagine a world without capitalism and try to provide one example of the successful application of collectivism. Many of the ills you are fretting over were actually caused by policies of "control" and "regulation."

Let's not lump politics in with economics. Your social agenda is blinding you to the truth.

[Peabodies]

No, dgm, it is YOUR social agenda that is blinding you to the truth. Thom Hartmann has it right, and that is why dgms come out in force to denigrate him and SQUASH his ideas lest they catch on! News for you, dgm, they are catching on. Your side has done enough harm to the US and the world, so that it's plain to see, by everyone.

[Garoad]

What makes you so sure about your own social agenda? You don't know what dgm's "social agenda" is. Just that it's different from Bush's. Is that so bad?

Well Friedman I don't care about, really...meh.

This is not about politics, it's about correct information. You're not qualified to criticize Mises or Hayek until after you've read some of their work, or AT LEAST have a basic understanding. Clearly some here haven't.

[ztn]

This is just terrible.

Are you still reading these comments, Thom? I hope you are. Because the people trying to set you straight on Hayek and Mises and classical liberalism are 100% correct.

It's not murky or subject to interpretation. You are so wrong that it kind of makes you look bad.

Look them up. Read about them. You couldn't be any more wrong.

I'm still shaking my head. wow.

What's next? That Berlin is the Capital of France?

[Peabodies]

No, ztn, it is YOUR social agenda that is blinding you to the truth. Thom Hartmann has it right, and that is why the ztns come out in force to denigrate him and SQUASH his ideas lest they catch on! News for you, ztn, they are catching on. Your side has done enough harm to the US and the world, so that it's plain to see, by everyone.

[Garoad]

Wow... are you serious? Oh no...

I few simple google searches on Mises/Hayek or a visit to www.mises.org would show you how wrong and silly this all looks. You should try it, I mean you're already in front of a computer...

For example, do you actually think they would support the wars we are in now? Not a chance. Not even Afghan- so much for Democrats and "anti-war".

[dewind]

"Journalism is the profession of writing or communicating, formally employed by publications and broadcasters, for the benefit of a particular community of people. The writer or journalist is expected to use facts to describe events, ideas, or issues that are relevant to the public. ..."

You, sir, are not a journalist. Hayek and Mises are classical liberals who rejected the conservati­ve/utilita­rian economics that you are so harshly criticizing. Keynsian economics has been masked as free market for sometime now; but I would expect a journalist to dissect the the illusion by doing his or her's do diligence.

[dewind]

"due dilligence" :) Gah

[Garoad]

The only thing discredited now is not Mises/Hayek and the Austrian school--it's the Keynesian "government stimulus" policies that BOTH parties are utilizing, with failing results.

[Peabodies]

dewind, please apply my comments to "dgm" and "ztn" to "dewind".

[PrestoPundit]

Thom -- "Freidrich Von Hayeck" (heh) _opposed_ Reagan's "supply side economics" and Reagan's tax cuts funded by borrowing.

It's a fact. And you don't know what you are talking about.

[Patrick McLean]

Oh Thom, I understand that you are upset. We all are. But you can't really expect to create positive change without an intellectual framework. And if such a framework is going to stand up, it requires intellectual integrity. And part of that requires being familiar with the ideas you purport to disagree with. That's how you find out whether or not you disagree with them. It's pretty obvious that you have no familiarity whatsoever with Mises or Hayek. Their theories not only predicted what we're going through as an inevitable consequence of GOVERNMENT INTERVENTION in the market, but they called it just after the turn of the century. There's a lot a stake these days. It doesn't seem unreasonable to ask you to broaden your education a little bit.

[Jive Dadson]

Wow, Patrick. You've been reading How to Win Friends and Influence Socialists, haven't you? Very diplomatic. Very diplomatic. But true.

[Peabodies]

Geez, add Presto and Patrick to the dgms and ztns ... Thom Hartmann MUST really be a threat!

[TEW2009]

Thom, you're killing us here. You've never read a word of Mises and Hayek. I guarantee that. Hayek WON THE NOBEL PRIZE for his theory of the boom-bust cycle that corresponds EXACTLY to what we're living through. Maybe that's why his followers were practically the only ones to see the bust coming.

Oh, and how is central bank manipulation of money and interest rates "the free market"?

Two things I know for sure. #1, you've never read Mises or Hayek, as I said above. And #2, you will never, ever give us an answer to that question.

[Kenny Kinlund]

Or as Tom Woods asks:

When Greenspan flooded the economy with newly created money and brought interest rates down to destructively low levels, thereby distorting entrepreneurial calculation as well as consumers' home-purchasing decisions, was that the fault of the free market?

When Alan Greenspan bailed out Long Term Capital Management in 1998, was that a "free market" phenomenon? Do you think he thereby encouraged more or less risk taking among other major market actors?

The Financial Times spoke in 2000, in the wake of the dot-com boom, of an increasing concern that the so-called "Greenspan put" was injecting into the economy "a destructive tendency toward excessively risky investment supported by hopes that the Fed will help if things go bad." "All the insane dot-com investment we've seen, all this destruction of capital, all the crazy excesses of the past few years wouldn't have happened without the easy credit accommodated by the Fed," added financial consultant Michael Belkin.
Did the free market cause that?

No answers, only more rhetoric.....

[kujo76]

Mr. Hartmann, you've torpedoed your entire article by including Mises and Hayek among the forefathers of the neoconservative movement. Mises and Hayek are the forefathers of the economists that predicted this financial collapse and have real answers as to how collapses like this one, the meltdown of the Bretton Woods agreement, and the first depression could have been avoided.

[Kenny Kinlund]

I think all he did was google 'free market' and listed every major economist he saw.... of course no thought processes were engaged throughout the entire article.

[Peabodies]

and kenny and kujo to dgm, ztn, Patrick and Presto ... Thom, keep writing!

[Col Sanders]

"The intellectual forefathers and mothers of the insane conservative economic policies that have brought us to where we are include Ludwig Von Mises, Freidrich Von Hayeck(sic)..."

You must be joking. Either that or you've never read anything by Mises or Hayek.

If you're stupid enough to put this in the article I'm not sure anything else you say is worth reading or arguing about.

[Peabodies]

Col Sanders, have you ever listened to Thom Hartmann on the radio? Guess not.

[aarrob]

The author should really spend more effort researching if he's going to drop names in a story like this. For instance, it would take an hour or less of research to discover that Mises and Hayek were absolutely against the economic policies that have brought us to this point. In fact, the theories of Mises and Hayek proclaimed that we would end up where we are if we DO continue following the economic policies we've been operating under.

[Mike555]

Funny that one of the very few people to predict this mess (Peter Schiff, in his book Crash Proof), did so by an explicit application of the Mises/Hayek business cycle theory!

[Kenny Kinlund]

And how all the people in charge now were telling us that 'everything's fine' and 'we can only get richer' and how at the end of WWII when the government finally laxed some of it's new deal policies the Keynesians were shouting about how the worlds gonna end and how the great depression would 'come back' (it never went away, at least at that point) and how we proceeded to witness one of the greatest economic booms in this nations history.

If one group of people is ALWAYS WRONG and another group is ALWAYS RIGHT then by what logic do you put the wrong group in the mainstream and tout them as heroes and geniuses and slander the group that's always been correct.

[Lt]

This guy makes sense