More heavy criticism of Obama’s economic plan

Obama's economic plan is receiving heavy criticism from distinguished economists, including Joseph Stiglitz, James Galbraith, Paul Krugman and many critics from Europe . Many of the critics believe that Tim Geithner and Henry Paulson are far too beholden to Wall Street and the financial sector. The fear is that the toxic debt (much of it based on fraudulent mortgage-backed securities enabled by Wall Street fraud) is being lifted from the banks and dumped onto the U.S. taxpayers because the Obama plan is making the FDIC ultimately responsible. I'm not an economist, but based on these criticisms, this fear seems well-founded. I don't see any reason for Geithner or Paulson to be going to bat for the taxpayers. Most of their friends live on Wall Street. At this same link, you'll see the Nation's view that we need an outsider to clean up this mess. Writer Katina vanden Heuvel even recommend Eliot Spitzer as one of the few people aggressive enough to take on Wall Street before it was a trendy idea. Frankly, I like that idea, based on her stroll down memory lane (pre-Ashley Dupre):

Spitzer took on Wall Street's metastasizing corruption before the meltdown. He defended consumers' and taxpayers' rights. He speaks with passion and clarity about what went wrong and what needs to be done to restore integrity to our system. He is chastened by personal scandal, yet untouched by complicity in Wall Street's public scandals which have obliterated peoples' savings and devastated our country.

What does Spitzer have to say about the economic crisis? That the crisis was not caused by the lack of necessary laws. Rather, the crisis was caused by the lack of good judgment and lack of tenacity to defend the public interest. These things, says Spitzer, cannot be legislated:

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The value of public anger

Glenn Greenwald finds virtue in public anger:

[The] anti-anger consensus among our political elites is exactly wrong. The public rage we're finally seeing is long, long overdue, and appears to be the only force with both the ability and will to impose meaningful checks on continued kleptocratic pillaging and deep-seated corruption in virtually every branch of our establishment institutions. The worst possible thing that could happen now is for this collective rage to subside and for the public to return to its long-standing state of blissful ignorance over what the establishment is actually doing . . .

It's a universal dynamic that elites want to keep the masses in a state of silent, disengaged submission, all the better if the masses stay convinced that the elites have their best interests at heart and their welfare is therefore advanced by allowing elites -- the Experts -- to work in peace on our pressing problems, undisrupted and "undistracted" by the need to placate primitive public sentiments.

Consider that it is now well established that emotions are not incompatible with rationality.

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Educational Ruins

Anyone who has actually visited and studied ruins knows that they are created from orderly structures by a particular combination of forces. First comes neglect, when people either lose appreciation for the value of the thing and stop maintaining it, or they simply abandon it. Next comes vandalism, when people actively damage the structure to scavenge materials and souvenirs, to leave their own mark, or to intentionally destroy it. The latter is usually for religious reasons, as in purging earlier figureheads like Hatshepsut, Trotsky or the Bamiyan Buddhas. But this post is about an institutional edifice. Education in the United States is falling into ruins. Sure, it still is funded in a nominal sort of way. But people have forgotten its value. They even vote against tax increases necessary to maintain current standards. Schools are closing; one K-12 building in my neighborhood is now condos. My Junior High school was razed for a housing development. Pharyngula points out how the University of Florida is now planning to shut down its geology department as a cost cutting measure. Geology is the science that gave Darwin the leg up to understand how natural selection works before anyone else. Geology and its understanding affects meteorology, biology, sociology, history, exo-planetary studies, and more. Florida is one of the states in which regular attempts are made to insert Creationism into school itineraries. And geology is the biggest stumbling block to accepting a Young Earth. But I hope that is not their underlying reason. It is simple neglect of education in general. But there is a strong vanadlism movement afoot in this country. Anti-science forces are working hard to put non-scientific ideas into science classes. Texas is a recurring battleground as school administrators attempt to keep up education credentials in spite of the onslaught. Recently, a doomed law is running the gauntlet in the Texas legislature to allow unaccreditable private schools to offer advanced degrees. See Hank's A Master’s in Creationism. If that seemed too harsh, try Pharyngula's If you fail an IQ test in Texas, do they automatically put you in the legislature? Hank is Australian. Yet he cares about how this sort of behavior is making the United States seem ever goofier. To let our once-admirable education system crumble is a step backwards for the world.

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Matt Tabbi’s take on the economic meltdown

I've long-admired Matt Tabbi's thought-process and writing style. This week at Rolling Stone, Tabbi weighs in on what he thinks is really going down in Washington DC and on Wall Street:

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations. The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess . . . .

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

In the process of writing this article, Tabbi shows no mercy for AIG or any other company dabbling in CDO's (collateralized-debt obligations) or CDS's (credit-default swaps). This feels right to me: Showing no mercy to those who dabbled in speculative financial instruments as if they were conservative investments. After all, those financial "gurus" who made these decisions were highly educated people with legions of financial and accounting experts working for them. They should have known better. They have no excuses. Nor does the federal government have excuses. Case in point: Who was regulating AIG? One inept guy.

Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer!

I don't know enough about economics to really weigh in on this crisis. I am highly suspicious about the need for these "bailouts," however. I do know that this money is already gone and that there is almost no accountability for the money we've paid out. I do know that the government has almost no hope of tracing the use of the trillions it is spraying out, almost all of it to proven irresponsible politically-connected financial bigshots. And I do know enough to understand that far too many prominent economists are looking and acting bewildered. I also suspect that many Wall Street power brokers, the same ones that got us into this mess, are still in charge. I know enough to understand that many people who seem to be well-positioned to understand this mess are looking clueless. I hope I'm wrong in all my assumptions.

Continue ReadingMatt Tabbi’s take on the economic meltdown