Wednesday, June 17, 2009

Gee, I remember when the financial market was was a little over ten years ago, and Lawrence Summers presided

Really good piece by Robert Scheer entitled "Obama's Money Men Finally Get It" outlines the irony of the current rehabilitation of regulation by Summers et. al.

"What irony that Summers, who as Bill Clinton's treasury secretary pushed through legislation guaranteeing "legal certainty for Swap Agreements" and banning the regulation of securitized mortgage debt, should now admit that "securitization led to an erosion of lending standards, resulting in market failure that fed the housing boom and deepened the housing bust.""


Scheer has been good in pointing out that it wasn't Reagan but Clinton who really got us into this mess, even though the Gipper set the stage. Clinton echoed Margaret Thatcher in office by saying, essentially, that there was no alternative to deregulated capitalism and that the age of big government was over, that market based reforms to things like welfare were required and that unions would have to accept marginalization in a globalized world. Now the wisdom of all of this is coming home to roost. And it only took ten years.

Stranger still, the idea that none of the potential pitfalls of deregulation and market based reforms of government programs would be mitigated by the rise of internet related businesses and information technology, is not even remotely suggested anymore. Those union members who were thrown out of their jobs because their company moved to Mexico were going to become "knowledge workers", darn it, and they would earn a salary higher than what they had gotten at their old jobs.

Such talk is missing in action. Robert Reich, Clinton's labor secretary, and a big proponent of the knowledge worker idea, has since reinvented himself as a social democrat, started The American Prospect magazine, and has quietly let all of the concepts contained in his garishly titled book "The Work of Nations" slip away into the dark, the better that nobody notice.

I'm deriving a lot of schadenfreuden pleasure from all of these turns of events because as a young radical I followed the deregulation of Citigroup, listening to Pacifica news programs dealing with it, and now, well, you know it's nice to be right.

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