In a dress rehearsal for this November's mid-term election, Democrats and Republicans vied last week for who could denounce the banks and blame the other party the most for the giveaways to Wall Street that have swollen the public debt since September 2008, pushing the federal budget into deficit and the economy into a slump.
Obama strong-armed Democratic senators to re-appoint Ben Bernanke as Federal Reserve Chairman. The $13 trillion giveaway is the latest transformation of American democracy into Oligarchy. People might not like it, but Main Street simply cannot prosper without creating hundreds of Wall Street billionaires who must increase their bonuses and capital gains by quadrupling bank stock prices. Not to worry, it's all to get credit flowing again, at 30% for credit card users.
The rationale is that unless the government gives the large financial institutions what they want and saves them from taking a loss, their "incentive" to protect the economy from devastation will be gone.
In Bernanke's world, the more regulation there is, the more consumers will have to pay. Could George Bush have gotten away with it? Democrats have a friendlier and more compassionate face, but the substance remains the same.
Overshadowed by Obama's evening speech, Messrs. Geithner and Paulson avoided the Washington ploy of saying that they couldn't recall anything about their giveaways. The past and present Treasury Secretaries brazened it out. Using the Plausible Deniability defense, they claimed that they weren't even in the loop when it came to paying AIG enough to turn around and pay Goldman Sachs and other arbitrageurs 100 cents on the dollar for securities worth about a fifth as much. When there was no way to dodge, they frankly admitted what had happened, providing helpful pieties to the effect that it is the job of Congress to change the law to make sure nothing like this happens again. The government's wheeler-dealer insiders have been changing their story again and again not usually a sign of truthfulness.
Geithner closed his own comments by saying, "if you are outraged by what happened with A.I.G., then you should be deeply committed to financial reform." This is rhetorical judo. The financial system in question is not the economy at large. It was A.I.G.'s carefully segregated bookies' account for wealthy hedge fund gambles and Wall Street speculations that should have had little to do with the "real" economy at all.
excerpted from Michael Hudson
Bottom Line you cannot actually be Populist when you support people like Bernanke and Geithner.
