Like the Wicked Witch of the West our economy has melted into a big pile of steaming goo.  And like Oz, there are good witches and bad witches;  there are good laws and bad laws, good economists and bad economists, good journalists and bad ones.

Today a feast of good wise ones are talking about the terrible disappointment of the hiring of Larry Summers who was one of the architects of the deregulation that  led to the economic meltdown.  Naomi Klein, Michael Hudson and Robert Kuttner join Amy Goodman in discussing Obama's choices for his economic team.

 Klein worries that this will be like Russia in that we created a kleptocracy decades ago and continue to help it survive.  Michael Hudson is worried that we will keep the oligarchs, the kleptocrats in power. Will the capital gains tax be raised or will it be only the income tax that gets raised? Will pumping money into the infrastructure and mass transit make these same aristocrats wealthy by  their owning the real estate that will be sold to make way for the new mass transit projects?  http://www.democracynow.org/2008/11/25/naomi_klein_robert_kuttner_and_michael


Kuttner is the most optimistic of the three. 

I think even Larry Summers, because he is such an opportunist, has lately been calling for very large stimulus package, has been calling for tighter regulation of banks. Now you have no way of knowing whether that is sincere or whether it is posturing, but I think Summers is smart enough to recognize that partly because of its own policies, things are in such disastrous shape, different policies indicated whether he can be the instrument of change is an open question.

But even Kuttner is worried that the financial and debt system and the finance guys will remain in place and in power and make money from the huge stimulus package proposed.  Hudson agrees.

In London when they built the tube extension to their financial district of the loop, they created 13 billion pounds worth of increased in real estate value. The tube itself cost only $8 billion. They left this $13 billion real estate value in the hands of the private landlords. Same thing in Chicago in the US. It can be a very heavy investment in mass transportation here. This is going to create enormous real-estate values. The tax system, leaves these in private hands.

Hudson speculates that a feeding frenzy could happen here and truly be the tsunami of disaster capitalism.  Hudson is just back from Berlin and the Europeans are hoping that Obama is like Gorbachov, a closet social democrat.  But Hudson fears he acts more like Yeltsin.  Summers brought down democracy in Lithuania by using the economic shock doctrine Naomi Klein writes about in her book "The Shock Doctrine: The Rise of Disaster Capitalism".  From Lithuania, he moved on to destroy democracy in Russia and helped create the oligarchy that exists today.  So both Hudson and Klein are worried about what happened in Russia happening here.

Amy Goodman  moves on to discuss the auto industry.  She asks why aren't these wunderkind  pushing congress to regulate the salaries of CEOs or fire the whole bunch of them?   Naomi Klein answers her in her usual style of railing against injustice with fire and with facts.  She never becomes shrill but you can see that even she is beginning to lose her cool with what is clearly the manifestation of "The Shock Doctrine".  She says:

When exactly is the Re-regulation going to happen? This is the moment of high leverage. It is not just about firing the boss and seats on the board, it is about we regulating exactly what Larry Summers and Tim Geithner de-regulated under the Clinton administration. The real question is do these people have the humility to fix their own mistakes? My question is his Larry Summers' ego too big to fail? These guys should not be promoted at this point. Their reputations should really be destroyed by their own track records.

All these people are constantly talking about how brilliant they are despite the dismal track record in this country and other countries in which they have meddled including South Korea and Russia.

Klein says that it basically about the left's dishonesty during the election.  They pretended the failures of the financial system were only in the last 8 years.  But this has been long time a coming.

we have not been honest about the legacy of the Clinton years. So much misinformation was spread during the election campaign, because it was a nice message to present the nineties as these wonder years in contrast to the Bush years. That is exactly what created the situation where you could have Summers been presented as the wise man instead of going down with Alan Greenspan. When Alan Greenspan reputation was raked over the coals, it should have Rubin and Summers along side him.

She warns that we will be in for a world of trouble if we keep being dishonest about when all of this began and who the real culprits are.  This is not like 1932.  There were real social and labor movements who were powerful enough to scare the elite in to going along with Roosevelt's compromises in order to save capitalism.   There are too many "fans" of Obama and not enough powerful countervailing powers to help guide him in a truly progressive way out of this crisis.

But thanks at least to these brave people who are swimming upstream in the sewage  that these frat boys of Wall Street have let loose on all of us.