March 23, 2009
Obama Is Presented With a Choice

As usual William Greider is looking ahead, so he’ll probably be discounted by those still fooling themselves about the present.

Something fundamental has been altered in American politics. Encouraged by Obama’s message of hope, agitated by darkening economic prospects, many people have thrown off sullen passivity and are trying to reclaim their role as citizens. This disturbs the routines of Washington but has great potential for restoring a functioning democracy. Timely intervention by the people could save the country from some truly bad ideas now circulating in Washington and on Wall Street. Ideas that could lead to the creation of a corporate state, legitimized by government and financed by everyone else. Once people understand the concept, expect a lot more outrage.

Public anger is likely to be a recurring episode, because the president has budgeted another $750 billion to rescue the financial system from its troubles. If Congress gives him the money, people will be watching where it goes. Obama is vulnerable to the blowback. In his address to Congress last month, he promised, “This is not about helping banks, it’s about helping people.” The first half of his statement is demonstrably not true, as people see for themselves and as bankers parade their arrogant excess. The second half is merely wishful.

Realistically, says the author of the definitive history of the Federal Reserve (Secrets of the Temple: How the Federal Reserve Runs the Country), we need a fundamental shift in the relationship between the country’s politics, at least nominally democratic, and its finances, more or less explicitly plutocratic. The central theme of American life is concentration of wealth; it explains nearly every government action.

If people and the president do not stand up for just solutions, politics as usual will prevail. Congressional leaders are once again rushing to enact hasty “reforms” that might get the financial monkey off their back, but will permanently damage our democracy. Elite opinion wants to empower the Federal Reserve to act as the “super-cop” protecting the financial system against systemic risk in the future. This idea is another instance of rewarding failure. The Fed was blind to the systemic risk accumulating during the past two decades and it failed utterly to head off the excesses — the explosion of debt and Wall Street’s fraudulent valuations. The central bank, in fact, with its erratic monetary policy, was a central source of what destabilized the economy.

Why would politicians make this cloistered and unaccountable institution more powerful, when the Fed has been derelict in its historical obligation to protect the “safety and soundness” of the system? Reforms ought to head the opposite way — forcing the Fed into daylight and the same regular order required of government agencies.


Posted by Chuck Dupree at March 23, 2009 01:36 AM
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It is a question of who runs this country, the owners or the citizens.

Posted by: Mahakal on March 23, 2009 2:57 AM

the way I see it is that Obama was given circumstances both economic and political that were underwater and before he can effect the change he campaigned on he needs to get back to the surface and start getting some oxygen into his and the country's lungs. Once he has time to rest and recover from the ferocious fight for life that he has been through he will have time to set the agenda for change built upon populace values and control of goverment and what it is supposed to do.

Posted by: lahru on March 23, 2009 7:48 PM

IMHO, a "time to rest and recover" will never come in political life. That would require a coöperative opposition…

Posted by: Chuck Dupree on March 23, 2009 11:24 PM
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