Sun May 13, 2012, 11:05 AM
midnight (23,435 posts)
"Orthodoxy dies hard." "Rejecting austerity is only a first step."
This is a very persuasive piece on dispelling the cheerleaders for privitization.
"It was a tempting conclusion. Putting Wall Street and financial speculators at the center of the universe had generated an economic supernova, and everyone seemed to get the message. Everyone except Big Money, which never received the obituary notice. After some minor tweaking of Wall Street practices, some bailouts of enterprises deemed too big to fail, and the injection of some stimulus spending to arrest the free fall, Washington continued with business as usual. The Obama administration, like the Clinton administration before it, discovered the immense power of the bond market. The IMF and the World Bank, meanwhile, didn’t fundamentally change their policies. And the European Union, led by tight-fisted Germany, continued to back austerity. All the major economic actors held to the old orthodoxy even though it flew in the face of common sense and common decency (though not in the face of the bottom line).
Wall Street’s continued irrational exuberance, its lavishing of bonuses on its elite, and its pushback against even the most modest of regulations all suggest that the old Ptolemaic system – with Wall Street and the Washington Consensus still at the center of the universe – had not yet given way to a Copernican revolution that displaces these powerful institutions from their privileged position. Such revolutions, of course, are not made in a day. Remember: Ptolemy’s system, with the earth at the center of all things, reigned for 1,300 years even as it grew inordinately complex to explain new astronomical observations. A century after the publication of the great Pole’s theory of heliocentrism, Galileo still ran afoul of church authorities for his Copernican leanings. Orthodoxy dies hard.
As a first sally against the prevailing orthodoxy of neo-liberalism, today’s economic Copernicans have taken aim at austerity. It’s a fat target: belt-tightening, after all, is not only unpopular but unsound. Paul Krugman marshals the economic evidence in the latest New York Review of Books, concluding that the “chances of a real turn in policy, away from the austerity mania of the last few years and toward a renewed focus on job creation, are much better than conventional wisdom would have you believe.”
Nowhere is that clearer than in Europe. There, the case for austerity, explains Washington Post columnist Harold Meyerson, “was that once governments began slashing their spending and deficits, markets would reward them by investing in their presumably more productive economies. But the reverse has happened. As Greece, Ireland, Portugal and Spain have cut their budgets, investors have grown less willing to buy their bonds. By plunging themselves deeper into recession, these nations have convinced investors not that they’re fiscally virtuous but that they won’t become economically viable for many more years.”http://truth-out.org/opinion/item/9091-waiting-for-copernicus-moving-beyond-wall-street-centric-economics
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"Orthodoxy dies hard." "Rejecting austerity is only a first step." (Original post)
Response to midnight (Original post)
Mon May 14, 2012, 12:39 AM
midnight (23,435 posts)
1. Love Jamie Diamonds suggestion this week that there is a need for business and Govt. to
collaborate. No more of move out of the way and trust us now... Now that another 2 billion is missing.... I have a suggestion- Reinstate Glass Steagall
Jamie Dimon, the CEO of JPMorgan Chase said on Sunday's “Meet the Press” that his bank's massive $2 billion lost bet, which was revealed last week, has given financial regulators more ammunition to tighten banking rules.
“Yes, absolutely,” he said. “This is a very unfortunate and inopportune time to have this kind of mistake.”
Forget Dodd-Frank: Reinstate Glass Steagall
I can only imagine what a stampede of bison must have sounded like in the early 1800s. I assume it started as a barely audible rumble… maybe nothing more than a faint vibration. One thing is clear though. It was a sound that no one on the plains wanted to hear.
Numbering in the millions, each animal weighed 900-2000 pounds. In a herd, their modest initial sound would slowly crescendo from that low rumble to the sound of a fleet of 747s taking off in unison. Any man, other animals, or infirm structures would eventually be crushed like ants. The same could be said of the gradual roll-back in safeguards, safety nets, or any other mechanism that was put in place after the most cataclysmic economic event of the 20th century…The Worldwide Great Depression of the 1930s.
The call for the return of the Glass-Steagall Act of 1933 has had a similar beginning, and if the U.S. has any hope of reconstructing itself into the economic juggernaut of post-WWII super-power it once was, rather than the weak, debtor-nation super-poser as it is now, Congress has to quit screwing around playing hyper-partisan games and bring it back. Otherwise known as the Banking Act of 1933, Glass-Steagall was one of the foundations of banking reforms after the collapse that led to the brutal Great Depression. Inasmuch as it was the longest, most widespread, and deepest depression of the modern era, it is the most used example of how the 21stcentury economy can descend into similar chaos. Some of the most devastating effects of the Great Depression were:
Source: HgTransEcon (http://s.tt/16FPP)