Mark Doty will be reading at the South Brunswick Library poetry series (which I organize) on Sunday at 2 p.m. He is a wonderful poet, so come on out.
If you need any incentive, here is my e-mail interview with him, which ran today in the Post.
Dispatches, on the legalized criminality that plagues not just Wall Street but American capitalism, can be found here.
ABC this morning discussed a poll that shows some difficulties facing Democrats as they head into the November elections. The numbers show a real anger at incumbents, meaning we could see some seats flip, though it still appears unlikely that either house will flip parties.
Something else caught my eye, however. It was this bit of information:
In another vulnerability for the president, Americans by 56-40 percent said they preferred smaller government with fewer services — almost exactly the average the past 26 years — but by a vast 77-15 percent thought Obama prefers the opposite, larger government with more services. That, plus concerns about the deficit, seem ripe for a 2010 campaign theme for the Republican Party.
People say they want/prefer smaller government. As ABC points out, the numbers have remained pretty consistent since the Reagan administration.
This is not news, nor is it particularly enlightening. Americans are inundated with anti-government rhetoric, and not just from Fox News. They get it from the mainstream stations, as well, it seems anticlimactic that Americans would say they dislike government. As always, the definition of small government is left unstated, as is the impact that shrinking government and cutting services would have on the lives they live.
People want smaller government, but what they really mean is they want it for others and not necessarily for themselves.
Middle class taxpayers want welfare curtailed but yell when their mortgage deductions are cut.
We hate regulations, but when the government fails to ensure that hte hamburger bought at the local store is tainted with e coli, we should loudly and demand action.
We want good schools, well-stocked libraries, police departments with enough manpower to keep us safe. We want roads without potholes, bridges that do not collapse, working traffic lights. We want a safety net when we fall on tough times (though we prefer that it not stretch too far or cover too many people we don’t like).
The Tea Party right now lives the contradiction. This motley collection of angry white folks has been protesting the alleged growth of government under the Obama administration, calling the president a socialist, a communist, a fascist, Stalin, Hitler (as if these terms were interchangeable). But think about what they also say: “Keep government out of my Medicare.”
Just as interestingly, we have the Arizona immigration law, which has support from the Tea Partiers (or most of them), even though it expands police power in the state — and they support harsh restrictions on the border, another expansion of police power.
But that expansion is OK, because the people at the target end of the expansion, are the dark ones, the ones who do not speak English.
As I said, Americans want smaller government — but only on our terms.
Send me an e-mail.
“The Goldman folks have no soul, selling crap as gold and claiming no responsibility.”
— my Tweet on the Goldman hearings from earlier today
The few moments of today’s Senate hearing on financial reforms and the role Goldman Sachs played was, to say the least, surreal. Goldman officials appeared defiant, which just underscores the need to rein in an industry that no longer has much to do with creating economic security for the country.
My column this week, which should go live tomorrow, talks about the gutting of the regulatory system across the corporate world — not just finance, but mining, air safety, consumer goods, food and drugs — and how it has allowed big business to function as if it was the Cosa Nostra, acting with impunity.
It is easy to blame George W. Bush for this. His administration was probably more aggressive than any before in dismantling the regulatory edifice. But that only tells a small part of the story. Every presidential administration beginning with Jimmy Carter’s in the late 1970s has stripped away some portion of the regulatory apparatus, so each bears some responsibility for the mess we now find ourselves in.
But blame only goes so far. It is time to reverse the trend, to protect average Americans from the predatory nature of international business — and the only way we can do this is via strong regulations designed to level the playing field, to keep business honest. I don’t say this lightly — I am generally skeptical of large concentrations of power, but I have a greater fear at the moment of unchecked corporate power.
We used to understand this — Teddy Roosevelt busted the trusts and even Dwight Eisenhower warned against the growing military-industrial complex. Barack Obama told us he understood, as well, but it has become clear that he is not interested in challenging the status quo anymore than anyone else working in Washington or any of the state capitals.
If we hope to safe our environment, our economy, our democracy, we need to stop paying lip sevice to the legalized crime that occurs on Wall Street everyday and do something about it.
Gretchen Morgenson, writing in the Business section of today’s New York Times, offers a fairly straightforward and succinct explanation of why the financial reforms being proposed in Congress are likely to fail.
The reforms, she says, “would do little to cure the epidemic unleashed on American taxpayers by the lords of finance and their bailout partners.
The central problem is that neither the Senate nor House bills would chop down big banks to a more manageable and less threatening size. The bills also don’t eliminate the prospect of future bailouts of interconnected and powerful companies.
The issue, ultimately, is size. For any financial reform proposal to be more than a Band-Aid, it needs to address the problems of banks growing so big that their failure becomes dangerous for the economy as a whole. They either need to be broken into smaller, less threatening institutions or have their ability to “leverage” limited. (Leverage is the use of debt to supplement an investment and boost its apparent profitibility.)
Such is the view of Richard W. Fisher, president of the Federal Reserve Bank of Dallas.
“The social costs associated with these big financial institutions are much greater than any benefits they may provide,” Mr. Fisher said in an interview last week. “We need to find some international convention to limit their size.”
Limiting their leverage is another way to begin defanging these monsters, Mr. Fisher said. But he concedes that there is little will to do either. “It takes an enormous amount of political courage to say we are going to limit size and limit leverage,” he said. “But to me it makes the ultimate sense. The misuse of leverage is always the root cause of every financial crisis.”
And yet, the financial fixes being proposed failed to address either problem. Miles Mogulescu, writing on Huffington Post, calls the chief proposal a “a moderately helpful financial reform bill” that should “address some of the problems of the banking system that led to the financial crisis and the bailouts,” but one that “may be Too Weak to Succeed by allowing the megabanks to remain Too Big to Fail, thus insuring that the next cycle of boom, bust and bailout remains baked into the system.”
Ouch.
He is urging support of an amendment to the reform bill, one designed to cut to the chase on the issue and force the dismantling of the largest financial institutions. (Petition can be found here.)
Senators Sherrod Brown and Ted Kaufman have introduced the “Safe Banking Act” which would put a hard cap of 3% of Gross Domestic Product on the assets of all bank holding companies. This would mean that that 6 largest banks which now hold assets exceeding 60% of GDP — Citigroup, Bank of America, Wells Fargo, JP Morgan Chase, Morgan Stanley, and Goldman Sachs — would be broken up into smaller banks that would be Small Enough to Fail. This is what Teddy Roosevelt did in 1911 when he broke up the Standard Oil trust.
The Roosevelt precedent is important, because it should insulate the amendment from the inevitable attacks on its consitutionality and Americanness — the chief critical approach used by the pro-business crowd these days. Unlike the Dodd bill and the various compromises being worked out between Democrats and Republicans with the blessing of the White House, the Brown-Kaufman amendment actually goes to the heart of the crisis that left us mired in our current economic mess and nearly pushed us off the precipice. To tinker around the edges while leaving the general outlines of our dysfunctional financial system in place is dangerously foolish.
Congress, as Morgenson says, needs to do more than pass “financial regulations that do not eliminate the heads-bankers-win, tails-taxpayers-lose mentality that has driven most of the bailouts during this sorry episode.”
Companies that are too mighty to fail must be broken up. And incentives in the nation’s regulatory system that reward size with subsidies should not be enshrined into law. They should be eliminated.
Only then will America be safe from toxic banking practices and the burdensome rescues they require.
