Since the bankruptcy of Lehman Bros. in October of 2008, we’ve been subjected to one shock after another and most of us have tuned out and focused on survival in a grim jobs market. That is understandable behavior, even if it is a bit unproductive, because, as the election season ramps up, Americans are at a loss to understand what is going on and cannot make a wise decision about whom to vote for.
It is becoming more and more clear to me that there is a theme running through all of these events. I found an article on Michael Hudson’s website that ties many phenomena together, in a readable manner. The article is long and there is a discussion of economics, but it is still readable for the economically challenged, which includes most of us. The explanation for why Obama is spineless is in this article, as is the explanation for the gutting of Social Security and Medicare.
I’m posting a few snippets from the article to lure you to the website to read the entire essay:
“The Obama administration raised the financial sector’s bailout to $13 trillion. This has vastly increased the government debt. And now, Mr. Obama wants to bring it back down by cutting back Social Security, Medicare, Medicaid and other social spending – to transfer wealth and income to the top of the economic pyramid. At the start of his administration he appointed a Deficit Reduction Commission led by advocates of cutting back Social Security and Medicare: Republican Senator Alan Simpson (McCain’s economic advisor!) and Clinton chief of staff Erskine Bowles, representing the right-wing Democratic Leadership Committee cite above. The aim of this commission was to give Mr. Obama an “experts’ report” supporting the diametric opposite of the liberal constituency that voted for him.”
“Ms. Bair said that that when she opposed giveaways to banks, Obama’s officials would say that there would be a meltdown if they didn’t save Citibank, AIG and other financial institutions that had acted recklessly. She pointed out that the FDIC had successfully wound down Washington Mutual and other insolvent institutions. This was the FDIC’s business, after all. Even Citibank had enough assets to cover insured depositors. The problem was its gambles on derivatives and junk mortgages. The government could have taken it over and made normal insured depositors whole. But there weren’t enough assets in Citibank and AIG to pay the gamblers and the big players. She complained that in every case she was told the big gambling institutions – basically, the nation’s wealthiest one percent – couldn’t lose a penny.”
I hope these teasers intrigue you enough to go to Michael Hudson’s website and read this essay.