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Brooksley Born Should Be A Household Name...Why Isn't She?
It is amazing how much there is going on out there in the world that gets missed. Or at least I miss it. Is it that way with everyone? And I'm even TRYING HARD to pay attention now. I wonder how much slips by those who aren't.
Do you know who Brooksley Born is?
In March of this year she won the "Profiles in Courage" award for her work on behalf of the taxpayers in 1998-1999, in spite of fierce opposition from the Federal Reserve, the Department of Treasury, and the Securities and Exchange Commission, in calling for new regulations and disclosures that would bring more transparency and stability to the complex financial transactions now infamously known as derivatives and swaps. (Paraphrased from Caroline Kennedy's remarks when presenting the award.)
In light of the foxes who have been put in charge of the hen house after the financial institutions drove us to the brink of financial disaster, how little, if anything, has been accomplished in setting up regulations that will keep it from happening again, and the cavalier attitudes of those on Wall St. who are continuing their shameful behavior, we should all be in an uproar.
I realize that health care reform is taking top priority right now in most people's minds, and we should all be working for that. But all the hard work on insurance reform will be for naught if the lobbyists are able to keep us distracted from the biggest danger that is facing us today: the perilous financial situation our country is in, and the seeming lack of awareness of this fact by those who we trust with our financial well-being. Banking regulations are not sexy like health care reform. And they are more difficult to understand. But they are critical.
Why do I bring this up now?
PBS did a special called "The Warning" that outlines how we got to where we are, in layman's terms, not from the perspective of the financial instruments themselves, but showing how our esteemed leaders aided and abetted the greedy Wall St. tycoons in their efforts to fleece America.
In it, they show how Brooksley Born, the then chair of the Commodity Futures Trading Commission (CFTC), became concerned about the lack of transparency and inadequate regulation of the financial instruments that ultimately caused the near collapse of the global financial markets. She took the battle to House where she was shut down by the likes of Alan Greenspan, Larry Sommers and Robert Rubin, who succeeded in stripping her agency of all regulatory authority over derivatives.
As a result of their refusal to heed her warnings, the country was subjected to what she called "her worst nightmare." And thanks to lobbyists, the threat to our country's well-being remains, with no promise of re-regulation in sight.
Please make time to watch this show. It is so interesting that it will be a fast moving hour, and open your eyes to a problem far more fundamental than health care.
I am anxious to hear your observations.
Do you know who Brooksley Born is?
In March of this year she won the "Profiles in Courage" award for her work on behalf of the taxpayers in 1998-1999, in spite of fierce opposition from the Federal Reserve, the Department of Treasury, and the Securities and Exchange Commission, in calling for new regulations and disclosures that would bring more transparency and stability to the complex financial transactions now infamously known as derivatives and swaps. (Paraphrased from Caroline Kennedy's remarks when presenting the award.)
In light of the foxes who have been put in charge of the hen house after the financial institutions drove us to the brink of financial disaster, how little, if anything, has been accomplished in setting up regulations that will keep it from happening again, and the cavalier attitudes of those on Wall St. who are continuing their shameful behavior, we should all be in an uproar.
I realize that health care reform is taking top priority right now in most people's minds, and we should all be working for that. But all the hard work on insurance reform will be for naught if the lobbyists are able to keep us distracted from the biggest danger that is facing us today: the perilous financial situation our country is in, and the seeming lack of awareness of this fact by those who we trust with our financial well-being. Banking regulations are not sexy like health care reform. And they are more difficult to understand. But they are critical.
Why do I bring this up now?
PBS did a special called "The Warning" that outlines how we got to where we are, in layman's terms, not from the perspective of the financial instruments themselves, but showing how our esteemed leaders aided and abetted the greedy Wall St. tycoons in their efforts to fleece America.
In it, they show how Brooksley Born, the then chair of the Commodity Futures Trading Commission (CFTC), became concerned about the lack of transparency and inadequate regulation of the financial instruments that ultimately caused the near collapse of the global financial markets. She took the battle to House where she was shut down by the likes of Alan Greenspan, Larry Sommers and Robert Rubin, who succeeded in stripping her agency of all regulatory authority over derivatives.
As a result of their refusal to heed her warnings, the country was subjected to what she called "her worst nightmare." And thanks to lobbyists, the threat to our country's well-being remains, with no promise of re-regulation in sight.
Please make time to watch this show. It is so interesting that it will be a fast moving hour, and open your eyes to a problem far more fundamental than health care.
I am anxious to hear your observations.
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Brooksley Born accurately warned of the dangers of the deregulated derivatives market and took steps to regulate it. She was dissed for her efforts by Bill Clinton's economic team, including Larry Summers, Alan Greenspan, Arthur Levitt and Robert Rubin.
When Long Term Capital Management tanked and was bailed out in 1998 it became clear that Born's warning was exactly right.
So, Summers, Levitt, Rubin and Greenspan gutted her agency.
Thank you, stillidealistic, for this post and for providing the link to this excellent Frontline documentary. Highly rec'd.
October 25, 2009 7:10 PM | Reply | Permalink
Did you know about this at the time, Red? I was shocked by the info presented, and I'm wondering if everyone else knew it all along.
October 25, 2009 7:25 PM | Reply | Permalink
Not at the time, stilli, more recently. At the time, I didn't realize that derivatives were side bets at the craps table, or that they would someday rule the financial world.
At the time I was busy being appalled by the Gramm-Leach-Bliley Act which worked its way to passage near the end of Clinton's term, and astounded when he signed it.
It was astonishing to me (I'm running out of adjectives denoting wonderment), coming so soon on the heels of the $150 billion savings & loan meltdown, which was caused by deregulation of the S&L industry, that Congress would deregulate banks, throwing over everything we learned in the Depression and opening the door for graft, greed, fraud and risk on an unimaginable scale. Almost everyone in Congress and in the administration at that time had lived through the S&L mess. Either they learned nothing or were paid well for pretending they'd learned nothing.
The Brooksley Born story is a leitmotif from that era. Frontline told her story powerfully.
October 25, 2009 11:19 PM | Reply | Permalink
I'll tell you, there is sure bipartisan blame for this last meltdown...what the hell were they all thinking? And why aren't they RACING at mock speed to fix it now?????
October 25, 2009 11:54 PM | Reply | Permalink
Well, take a look at the current president's economic team:
Treasury Sec'y Geithner, the failed New York bank regulator who is a protege of Summers and Greenspan.
Summers himself, now chair of the Council of Economic Advisors.
Fed Chair Bernanke, who worked side by side with Greenspan at the Fed from 2002 on, promoting the housing bubble.
The connections go much deeper than just these three. For example here's a link to an interesting article, itself full of links to other sources, that illustrates the extent of the Goldman Sachs intrusion into our government:
http://tinyurl.com/yfc52q7
We're primarily concerned about what's happening in America, of course, but Goldman Sachs has no such parochial point of view. They're citizens of the world, you see, and this might amaze you:
http://tinyurl.com/5n8ygl
We've worn out Einstein's observation that insanity is "doing the same thing over and over again and expecting different results." But we wouldn't have to say it so often if we'd just stop doing it.
October 26, 2009 12:30 AM | Reply | Permalink
But that is my big question...WHY??? I have a lot of faith in the President, but in this area particularly, he seems to have made a HUGE mistake in appointing these people. I'd like an explanation!
Is it that hiring a thief is the best way to "thiefproof"? if that is the case, why is Geithner against reinstating Glass/Stengall?
I want to understand, but my mind goes tilt when I try to make sense of it...
I think we are at serious risk here, but if people like Brooksley Born can't make them listen, what hope do the rest of us have?
How do you begin to make the kind of noise necessary?
October 26, 2009 12:42 AM | Reply | Permalink
Arianna Huffington posted a good summary of Larry Summer's career...
Does it tell you anything about the nauseating hypocrite Barack Obama that he picked Larry Summers as his chief economic advisor?
October 26, 2009 12:44 AM | Reply | Permalink
Veg, we agree on little, and just on principle I am tempted to defend him, but I am unable to defend this.
I am sick with concern over it, it has really knocked me for a loop that these appointments have been made with out an explanation as to why in the world you would appoint the very people who caused the problem to be in charge now. "Nauseating Hypocrite" makes me want to punch you, BUT, I'm sick to my stomach and I can't say it is not hypocritical...so here we are.
Score one for the veg...
October 26, 2009 1:02 AM | Reply | Permalink
Thanks, stillidealistic.
One of the strangest aspects of appointing Summers was that Obama could have sold us out to the financial services industry without being so obvious about it.
There's something weirdly in your face about picking the poster-boy for Gramm-Leach-Bliley and the CFMA as your chief economic advisor.
Why would Obama pick Summers, when he could have picked any number of other weasels with the same agenda but without their fingerprints all over at least two disastrous bills?
I don't know.
October 26, 2009 6:17 AM | Reply | Permalink
On Bill Moyers Journal last week, or the week before, Simon Johnson mentioned Louis the XIV syndrome; the people like a
the charming and affable Loius so well that they could not believe that so much evil being done in is name could be known to Louis. "We have to tell Louis"; "if only Louis knew this" and so on. (Johnson shrugs mildly...)
His point, of course, was that by now Obama must know. And we have to stop pretending that he appointed Summers and Geithner and seems to have a love affair with all Chicago Boys laissez-faire economists.
Hey, Clinton did, and the economy was booming under Clinton! And he signed the Commodity Futures Modernization Act; a direct stick-in-the-eye to Brooksley Born, et.al.
October 26, 2009 8:04 AM | Reply | Permalink
Yeah, well, Arianna (a millionaire who has never done one goddamn thing to help the unprivileged) was one of the biggest Kool-Aid huffers on the left during the primaries. Anything to criticize the Clintons, and she's on it, baby!
And that's just about the only thing she's consistent about, besides self-promotion.
October 26, 2009 10:00 AM | Reply | Permalink
I think they are racing at mock speed. Unfortunately it is only "mock" speed. I suppose there is ZERO chance of anyone publicly apologizing for supporting that deregulation. Why Summers' job description does not include cleaning toilets at the fed building....
October 26, 2009 12:36 PM | Reply | Permalink
Alan Greenspan did say he was sorry, but that and 50 cents will get you a cup of lousy coffee. "Sorry" just isn't enough when so many people's lives and the very foundation of our country's financial security have been rocked. Humiliation and loss of reputation are a start, but I'd like to see Greenspan spend the rest of his life making restitution in the form of doing every thing he can to restore what he undid. At the very least he should be doing major mea culpas (I sure hope he has apologized to Brooksley Born!) in congressional hearings and begging them to reinstate the regulations he tore down.
October 26, 2009 12:51 PM | Reply | Permalink
I understand the sentiment, but it'd be real nice if Alan Greenspan never, ever, got near the controls again, not even to make amends.
October 26, 2009 6:38 PM | Reply | Permalink
Stilli: Thanks for posting the link to "The Warning." I had a Post-It next to the television to remind myself to watch it on Tuesday night and still managed to miss it.
Re: "I was shocked by the info presented, and I'm wondering if everyone else knew it all along." I haven't yet seen the story, but can guess at what you're referring to and am fairly certain that it would be impossible to NOT know. Can anyone say "orchestrated"? Have an archived TPM blog up on this one ("While You Were Sleeping").
From a peon's perspective within the mortgage industry during the onslaught of the mortgage fraud free-for-all, I eventually took notice of some disturbing writing on the wall after a two year stint with Wells Fargo Home Equity (2002 -2004), though did not know of the undoing of the Glass-Steagall Act (see also Gramm-Leach-Bliley Act) until the economy began to unravel and happened to come upon this factoid online (years after leaving the sweatshop). Realizing that your employer is fleecing consumers by unethical and even illegal means is one thing, but translating that into total economic collapse was beyond my ken. Note also the 2005 revision of the bankruptcy laws. Coincidental? I think not.
October 25, 2009 7:53 PM | Reply | Permalink
You know the repubs claim a meritocracy.
THAT IS WHAT AMERICA IS ALL ABOUT.
And repubs scream about results all the time. The economy is not saved yet, people are still unemployed. Therefore Obama is a failure after 9 months in office.
We should have some way of rewarding those who predict these goddamn things.
Oh, sorry sir, you predicted that we would be greeted as heroes in Iraq. Well, your results were a bit off, so YOU ARE FIRED.
Oh sorry sir, you predicted that if the capitalists were just left to their own devices, America would grow at a pace yet unknown.
Well your results were a bit off, so YOU ARE FIRED.
Oh sorry sir, you predicted that if we just let the capitalists alone to make sure our country was number one in health care, we would all be a healthier nation. Well your results were a bit off, SO YOU ARE FIRED.
October 25, 2009 7:55 PM | Reply | Permalink
Arthur, if you missed the show, please be sure to watch it. You will REALLY enjoy it, and I can only imagine the post it will inspire you to write! It will piss you off, I guarantee it.
October 25, 2009 8:00 PM | Reply | Permalink
Just read Robert Reich's piece...
http://tpmcafe.talkingpointsmemo.com/talk/blogs/robert_reich/2009/10/too-big-to-fail-why-the-big-ba.php#comment-3646913
This Frontline show is good background for better understanding Reich's post.
October 25, 2009 8:14 PM | Reply | Permalink
The Washington Post did an in-depth article on Born last May, which is how I knew about her, Stilli.
Credit Crisis Cassandra: Brooksley Born's Unheeded Warning Is a Rueful Echo 10 Years On
I'll watch "The Warning" later. Right now I'm losing a small race against time. :-)
October 25, 2009 8:34 PM | Reply | Permalink
Thanks, shelly...great article. Wish I had seen it then.
October 25, 2009 8:55 PM | Reply | Permalink
Stilli:
I am constantly amazed at your ability to read and watch everything, yet focus in on the exact program, article or link that is relevant to what we need to know. Thank you.
Even though what you focus on often makes me sick.
We need to know.
October 25, 2009 9:32 PM | Reply | Permalink
ww, the there are several things that have me really pissed off about this. First, is that this financial crisis was avoidable. But greed got in the way of reason. Plus, Greenspan thinking that fraud was no big deal just has me shaking my head.
Second, the obvious bias against her because she is a woman...their comments about her were just demeaning.
And third, probably most importantly is that our esteemed leaders don't seem to have learned anything from this. The foxes guarding the henhouse don't seem to want Glass/Stengall or anything remotely approaching it to be enacted, so for all intents and purposes we may have to do it all over again, except from a significantly weaker financial position.
Yet another thing I find disturbing about Obama's support for Geithner/Sommers...Why are we going to back to the Clinton Administration for people that helped screw things up back then? I don't get it.
October 25, 2009 9:52 PM | Reply | Permalink
Unfortunately, we're probably going "back to the Clinton Administration for people that helped screw things up back then" for the same reason Clinton did.
That's where the money is.
October 25, 2009 11:23 PM | Reply | Permalink
Probably not totally avoidable. Even with regs, you need investigators, and lots of them. And the will to police things. There will always be fraudsters, and not enough cops to keep up with them. Marci Kaptur brings up how few resources there are, and how little money is budgeted for all the depts. that could enforce even existing regs.
Bring back Elliot Spitzer!!!!
October 26, 2009 9:20 AM | Reply | Permalink
http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000
October 25, 2009 9:36 PM | Reply | Permalink
This is the law that was passed in 2000, a la Phil Gramm, Texas, that essentially prohibited the CDFs from regulation, EVEN BY the STATES. Democrat Bill Clinto signed it into law. It is a hijacking, but bi-partisan in so many ways.
October 25, 2009 10:47 PM | Reply | Permalink
Dylan Ratigan has been aces on critiquing the lack of re-regulation, and covered The Warning. And Maria Cantwell is on the case.
I have posted these links several times.
http://www.msnbc.msn.com/id/31510813/#33448827
October 25, 2009 10:24 PM | Reply | Permalink
And this is Bill MOyers journal, Marci Kaptur (D-OH) and Simon JOhnson, former chief economist of the IMF.
http://video.pbs.org/video/1290388692/chapter/1/
Many women rule on this; in answer to your question, 'Why aren't these household names?': they are women, and not enough people are paying attention to those who have their hair on fire about it all.
American Prospect (Robert Kuttner's magazine):
Whose leading the fight against regulation?
http://www.prospect.org/cs/articles?article=whos_leading_the_fight_against_consumer_financial_regulation
October 25, 2009 10:41 PM | Reply | Permalink
You are right on top of this Wendy, thanks for all the links...will follow up.
October 25, 2009 10:49 PM | Reply | Permalink
Welcome. I'm sick over it like many others. Three viewings of The Warning, and three of Kaptur-Johnson on Moyers.
What really made my blood boil was Greenspan saying at the hearings, during Waxman's questioning: "I said I was sorry." ('Well, yes I was wrong, but for forty years I wasn't wrong.')
Jump, you fuckers!
October 25, 2009 11:31 PM | Reply | Permalink
My personal favorite was "the marketplace will take care of fraud, we don't need to worry about it." HUH?
October 25, 2009 11:56 PM | Reply | Permalink
How'd that work out fo US, Mr. Greenspan? By the way, how are yuou still showing your face, and bloviating about breaking up too big to fail banks, but dissing re-regulating????
October 26, 2009 11:59 AM | Reply | Permalink
Another nomination for the pantheon of women who "rule on this" – our old friend Elizabeth Warren.
October 25, 2009 11:37 PM | Reply | Permalink
Warren is another Born; she is being de-legitimized by some asshat on the Ratigan clip above. She has been trying against all odds to claw back the original protocols of her Consumer Financial Protection Agency; it has been watered down in so many key ways.
Here's Michael Moore interviewing her:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x6838878
October 26, 2009 8:11 AM | Reply | Permalink
Several people have mentioned that they don't have fast enough download speeds to watch the video, so I went in search for a transcript. I wasn't able to find one, but if you go to the link, click on the site map, then readings/links, there is lots of information that went into the show.
This is serious stuff, and we need to be up to speed on what occurred. I haven't a clue yet what to do with the knowledge, but the Obama administration will be getting an "earfull" from me.
Of anything Obama has done since the beginning of his term, hiring those crooks to oversee the finances of this country has got to be seemingly the worst, at least on the surface, and I'd like to know WHY? What possible justification can there be for this?
October 26, 2009 1:15 AM | Reply | Permalink
Here's the transcript for Frontline 'Inside the Meltdown.' It chronicles the issue from just before the time Bear Sterns melted down, and the antics of Paulson and Bernanke, et.al. and the big meeting with Congressional leaders.
The Frontline site says the the transcript of 'The Warning' won't be availabel until friday. Meanwhile, here is an interview they have up with Born.
http://www.pbs.org/wgbh/pages/frontline/warning/interviews/born.html
If you click the back arrow, you can access interviews with some of the others who were on with her.
October 26, 2009 8:20 AM | Reply | Permalink
If you want more on credit default swaps, and how Phil Gramm made sure these trillions in false security blanket insurance policies were never regulated in late 2000 you can read David Corn's article from the summer of 2008 here:
http://www.motherjones.com/politics/2008/05/foreclosure-phil
October 26, 2009 9:17 AM | Reply | Permalink
stilli, first, I just have to mention how excellent this post is. By that I mean it's clear, sharp, tough, interesting, well-structured and well-written. With some adaptation it could be published as an editorial in the LA Times.
Second, just thanks for bringing the issue front and center, where it should be.
Third, I'll add this supplemental essay by Dean Baker from 2008 to the thread, which spotlights the efforts of Brooksley Born and Sheila Bair:
[snip]
All I can suggest is to stand by the people doing good and fiercely criticize anyone doing anything less than good, including Democrats and including Obama. After all, it's your hard-earned money being handed directly to the very millionaires who fucked up the economy unlike anything we have ever witnessed. Never forget that. What we are experiencing is unprecedented because it was totally avoidable.
October 26, 2009 9:47 AM | Reply | Permalink
Blow, thank you so much for your generous comments and the supplemental article. I had planned to do another post in a few days hitting a little harder on the topic of it being women who have been acting more responsibly in this area. I may still. This issue has riled me up, as you can tell.
So many people, hurt so badly...and it didn't HAVE to happen. It just fries my gizzard. (sorry Bwak!)
October 26, 2009 10:02 AM | Reply | Permalink
It is time we stopped calling what these people did a mistake. It was robbery. We wuz robbed!!!
October 26, 2009 2:17 PM | Reply | Permalink
We were, Zap, for all intents and purposes, we were. Fortunately, we have been able to recover, due to my husband's diligence. But PERS (who holds our pension) has not, and I'm sure there are many, many people, as well as other entities, who have not, and may not, before the next crisis hits. And there WILL be another if these people are not reined in. Simply the issuance of huge bonuses again, a year after the meltdown, and before we taxpayers have been repaid for our generosity in keeping them afloat, shows their contempt for the people from whom they derive their wealth.
October 26, 2009 2:46 PM | Reply | Permalink
Hi Stilli,
I'm not one to hold back on criticism of the Obama administration's handling of the financial sector. But today's NYT reports on some pretty serious noises coming out of the administration on reform. The resolution authority and the living wills are really solid ideas.
http://www.nytimes.com/2009/10/26/business/economy/26big.html?_r=2&ref=politics
October 26, 2009 11:15 AM | Reply | Permalink
Thanks for this Obbie...It's good to know they are addressing it. Now it will be interesting to see if they have balls enough to override the lobbyists.
I remember way back when hearing the financial industry squawk about how expensive and unnecessary Glass/Steagall was. Now, as it turns out, it was MUCH less expensive than letting the industry run wild.
I have to admit I was not doing my homework when Geithner's confirmation hearings were going on. At that point, I pretty much wanted Obama to get the people he thought were best able to help him lead.
Now I really want to understand his reasoning... If anyone knows of an article/articles addressing this specific issue, I'd appreciate a link. I'm trying to squeeze in time to do the research myself, but there's no point in reinventing the wheel if someone already has the info at their fingertips.
Thanks!
October 26, 2009 11:35 AM | Reply | Permalink
No links regarding your question, sorry.
If I'm going to speculate, I think Geithner and Summers were just the default choices because they were regarded as 'safe hands' and establishment names. The market (i.e. the banks) would have freaked out if less bank-friendly people like Stiglitz, Simon Johnson, or Volcker were given a significant role in the administration.
I try to stay open-minded about what they're doing, and up until reading this NYT piece I was pretty negative.
THe big problem, imo, is Barney Frank (heading the banking committee). He's come out against the consumer protections agency and derivatives reform, which is a bad sign...
Hope I'm wrong about him.
October 26, 2009 11:59 AM | Reply | Permalink
Hi, Obey, thanks for the link. My guess is that Moyers stories and the Frontline piece have helped make them a bit nervous about really weak, nibbling around the edges regulations. Even MSM are starting to pick up on populous anger about it all. We'll see, is right.
October 26, 2009 12:05 PM | Reply | Permalink
Think you're right Wendy. It's been heartening to see how popular sentiment can still light a fire under these guys. I can be too cynical sometimes...
October 26, 2009 12:21 PM | Reply | Permalink
Obama could certainly have put others on his advisory committee. Look what happened to Volker. Say if Stiglitz and Kuttner or Simon Johnson had been there, maybe they could have told King Louis a thing or two!
BTW, your comments on my reform blog, and richard's were so well-thought. I got waylaid by a small emergency and couldn't get back until it got taken down. I just looked at it again, and i saw you had questions about 'dots' somewhere. Did you get it figured out? If not, i can try to answer, or we can wait and ask kgb999.
Also BTW, the end-user loopholes on the derivatives reform seems counter-productive to many of the experts, but the banking lobbies and chamber of commerce are lobbying hard to keep them.
October 26, 2009 1:12 PM | Reply | Permalink
About the advisory committee - sure! He's got that M-Fer Feldstein in there fer Chrissakes. I was just trying to EXPLAIN the possible reasoning, not JUSTIFY it...
As for my 'dots' interrogation - I'll come back to you on it when I post a photo next. Otherwise will just forget in the meantime.
I was a bit rushed in my comments to Richard. His remarks are always great. Another of my favorites around here on the financial stuff is Ellen - though she doesn't seem to agree with me on the 'core' nature of derivatives reform... And, yeah, that loophole makes a mockery of the proposed legislation.
October 26, 2009 1:37 PM | Reply | Permalink
I can almost understand your comments; Ellen's are utterly Greek to me. You make the attempt to talk to us economic-neophytes as though we might be able to get it. I appreciate that, Obey-wan.
October 26, 2009 2:04 PM | Reply | Permalink
Well, Nate Silver gives the liberal blogosphere partial credit for keeping the public option alive...maybe a lot of noise from us on financial "re" regulation will get it on the front burner, once health care reform requires less attention...or can we walk and chew gum at the same time?
October 26, 2009 12:42 PM | Reply | Permalink
And it may be that whatever minimalist version of a public option might pass will be pretty ineffective, and not help but 11 million people. Maybe if it works well it can grow, but I 'ave me doubts, as they say.
October 26, 2009 2:07 PM | Reply | Permalink
Maybe because I'm older, and paid more attention, I know about derivatives. "60 Minutes" did a piece at least 10 years ago on numerous municipalities and pension funds and school systems that went broke buying derivatives. It was clear that derivatives were nothing more than being suckered into making a bet in a casino. How people are so unaware of this is amazing to me. But it's obvious that Congress, the SEC, and any other institutions that are supposed to be looking out for American citizens, aren't doing their jobs--probably because they are too busy taking part in the looting.
October 26, 2009 11:28 AM | Reply | Permalink
Excellent article Stilli. Now that the public is a little more up to speed on healthcare, maybe some attention will finally be paid to this issue--time to tee it up! Thanks for this.
October 26, 2009 11:52 AM | Reply | Permalink
Very good article.
Saw "The Warning" and Brooksley Born, and was left both saddened and angry at the 4 horsemen of the Apocalypse (Larry Summers, Alan Greenspan, Arthur Levitt and Robert Rubin.) I was also heartened by the integrity of this noble woman. Class all the way around.
Obama should dump Summers and Geitner, and nominate Born for Treasury.
October 26, 2009 3:55 PM | Reply | Permalink
I didn't know of Brooksley Born in particular at the time. I have become aware of her story in the last 2 years or so. I will look out for this show. I did, however, know of the rise of derivatives since the late 90's, and their threat to the monetary system. It is a sad tribute to the economic illiteracy of our policy-making elite (with a hugh dollop of outright malfeasance thrown in) that they permitted and abetted the rise of derivatives and the repeal of Glass-Steagall.
It is heartening that there is a certain momentum now for re-instating Glass-Steagall and strong derivatives regulation. We must recognize, however, that the present post-Bretton Woods monetary system is beyond mere reform. It is completely bankrupt. Without outlawing derivatives and wiping them off the books thru bankruptcy reorganization, the monetarist empire will continue to suck the vast majority of the world's (sovereign govt's and private money) capital into a black hole of bailouts, to attempt to roll over the $quadrillion+ unpayable debts.
What will result from continuing on with this madness is something akin to the collapse of the House of Bardi in the 14th century, and the resultant collapse of living standards, the black death and the wiping out of about 1/3 of the parishes in Europe. This time it will be global and uglier.
We must now bury monetarism forever and replace it with a new global credit system. China's US Treasury holdings, which look more worthless by the day, are currently being monetarized in the form of investments in Russia for high-speed rail, nuclear plants and other infrastructure projects. Similarly they are lending billions to ASEAN nations without IMF monetarist austerity conditionalities. We should be joining with China, Russia and India, and others who want to join, to enter into long-term treaty arrangements to facilitate the creation of a new, fair and equitable development orientated monetary system.
The US must return to FDR's post-war vision of a global system based on the elimination of colonialism, and growth and development based on the American System of Political Economy, as developed by Hamilton, Carey, Lidzt and implemented by Lincoln and FDR. A Dirigist system of credit for investment in real physical production of wealth. The era of empires in human history, which are always based on the usoreous rapcity of central banking/monetarist systems, must end now, or we face a new global dark age.
October 26, 2009 4:19 PM | Reply | Permalink
There is a link to watch the show on your computer in the main post. If your connection speed is too slow, Wendy said a transcript will be available at PBS on Fri.
October 26, 2009 4:25 PM | Reply | Permalink
TY
October 26, 2009 4:40 PM | Reply | Permalink
I sincerely wish I could understand your comment; it is beyond me. I will cut it out and paste it somewhere for re-reading.
October 26, 2009 5:31 PM | Reply | Permalink
To further elucidate -
The world has far too many speculators, and not nearly enough machine tool operators. We need producers, not parasites, if we are to reverse the collapse into a new Dark Age.
At this late stage, anyone who is fixated on money is missing the point. The global monetary system is dead, and the attempts to revive it through hyperinflationary money-pumping are destroying not only the value of the dollar, but the chain of production upon which human life depends.
It is this chain of production, which is of immediate, crucial concern. As the productive base of the world collapses in the wake of the monetary collapse, the level of population that economy can support — Relative Potential Population Density — falls with it. When that potential falls below the level of the existing population, as it has, people begin to die.
The only way to stop this genocide is to launch a global emergency recovery program, one based on rebuilding the world's productive capacity. That means shut down the parasites, restore financial sanity, and recommitting humanity to scientific and technological progress. It means a return to the American System not only for the United States, but for the world as a whole.
The world is falling apart, and the level of suffering of the people of the planet is growing rapidly. The shrinking of the machine tool sector is a harbinger of further collapse, reflecting yet another downshift in manufacturing overall. It is similar in effect to the cutbacks in world shipping, especially the decline in raw materials and semi-finished products. The whole world economy is winding down, and the result will be measured not only in declining levels of goods and services, but in the loss of jobs, the loss of human potential, and in death. A disaster of world-historic proportions is playing out before our eyes.
If we are to survive, we must change the way we approach our work. White-collar jobs, which became all the rage during the rise of the post-industrial society, are for the most part not productive, in the economic sense. We have far too high a percentage of our population employed as lawyers, financiers, clerks, and paper-pushers, and far too low a percentage employed in building infrastructure, manufacturing, and the like. What we need is more blue-collar workers, who know how to build things, who know how to make the machinery of civilization work. We need more scientists and engineers, to discover new physical principles and turn those discoveries into technologies to benefit all of mankind. We need to return to working for a living, instead of manipulating money and shuffling papers.
In these circumstances, the only subject worth discussing is the physical-economic collapse, its implications, and what can be done to reverse it.
That solution begins by admitting that the financialization and globalization of the planet has not only been a failure, but is the disease which must be eradicated if we are to survive. We must return to the principles upon which the United States was founded, which represented then — and still do today — the high-water mark of Western civilization. The concept that all men are created equal, that all men are born with the right to life, liberty, and the pursuit of happiness, that the role of government should be to protect the general welfare of all the people, rather than some self-appointed elite.
The U.S. was founded as the antidote to then disease of oligarchism which infects much of the world today, including many within its own ranks. We in the U.S. must return to that conception, so that we may lead the world away from a new Dark Age and into a new Renaissance. We have it within us, as part of our culture, and it tends to surface in times of crisis. We must draw upon the strength it provides, to see us through these dark times.
The arguments of the empire's financiers is that we must save them, in order to save ourselves. This is plantation economics. We do not live off the crumbs from the tables of the elite; it is they who are living off of us. No more. We need production, not parasites.
October 26, 2009 5:50 PM | Reply | Permalink
Thank you, Still. Thank you, Wendy. Thank you, Obey. Thank you everyone that contributed to this post. I've bookmarked it and will be coming back to it over the next few days to read the links.
Thank you especially for the link to the transcripts!!!
October 26, 2009 4:40 PM | Reply | Permalink
Great blog stilli.
Yet another stark indictment of congress, our regulatory agencies and Wall Street. Over a year has gone by and not one thing has been done to examine and address the root causes of the financial meltdown.
This is corruption plain and simple.
October 26, 2009 5:01 PM | Reply | Permalink
And we thought they could do nothing in a bipartisan way!
October 26, 2009 5:08 PM | Reply | Permalink
You're right. They do nothing, except of course screw up. I have a distinct feeling of deja vu with this relative to Brooksley Born. I watched it twice this afternoon. Great show. Really well done. I had quit more than one company (including our government) over the years because I felt they were screwing up big time. My sense was confirmed. Every time. The thing is no matter how well intended and how carefully phrased, people at the bottom or without power just cannot tell people at the top they are screwing up. Any expectation it will produce the desired result is just dumb. The stars and everything else have to be in perfect alignment for this to work out. It's like hitting the lottery when the jackpot gets over $100 million with having bought only one ticket. And this was aptly conveyed in the Frontline show by demonstrating Brooksley Born had no chance. And you and I and everyone else who actually works for a living are in that same sinking ass boat telling the captain we got a leak. But he's eight decks above us, snug and dry and has no clue.
October 26, 2009 6:17 PM | Reply | Permalink
Thanks for all the additional info guys. I'm going to watch it again tonight with the benefit of all the links you provided.
I'm going to venture a guess that we haven't seen the end of this.
October 26, 2009 6:32 PM | Reply | Permalink
http://sentinelradio.wordpress.com/2009/10/25/the-warning-this-is-a-must-see-video-in-order-to-understand-who-destroyed-the-economy/
October 27, 2009 6:39 PM | Reply | Permalink