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March 15, 2012


Jeff Shattuck

Goldman Sachs exemplifies why Obama has disappointed me so much. As you rightly point out, all that needed to be done after 2008 was to reinstate Glass Steagall, the law that separated brokerage from banking (as well as S&L!). But no, Obama pushed for a totally incomprehensible set of regulations that have only made things worse, in my opinion. Further, he (or Bush, what's the difference, really?) let Goldman become a bank holding company which means it can borrow through the Fed discount window. It's all just so appalling I've given up any hope. The Federal Reserve has won, it now totally controls things and is in the clutches of The Executive Branch and so is making decisions about finance that are politically motivated. No wonder our debt has risen so fast these past few years. The single thing any politician wants to have (after POWER) is the ability to spend whatever he wants. Obama has that. To quote Hunter S. Thompson, "We're doomed."


Well, given that as you well know, I consider Obama to be a good man and a very good president, I agree that he should have acted quickly and reinstated Glass Steagall when he had control of both houses. Once that was lost any attempt to do so would have been totally blocked by a Republican party that is now ideologically against anything he proposes - even what were once their own ideas!

Hopefully if Obama is returned for four more years and regains control of the currently pointless, leaderless and self-destructive House of Representatives (and gets a super-majority in the Senate) the administration can enact more positive controls and generally improve the state of legislation. And we can stop all this pointless fucking blathering about birth control and abortion - issues we'd thought we'd gotten past years ago.

As liberal as I am, I actually wish the Republican party would put its house in order - we need at least two functioning, thinking political parties and right now we have only one. And that being the case it is bound to appear weak and indecisive at times. Why bang your head against a brick wall you know will never collapse? How can you govern when every decision has to be filibuster proof and require 60 votes not a simple majority?

I believe - as Paul Krugman does - that austerity as being tried in Europe is a path to disaster (pretty much proven already). Yes, Obama wants to spend but on the right things - infrastructure, reforming but protecting vital social services. The auto industry bail out (initiated by Bush) has been a great success. The only reason the bank bail-out has not been is their willingness to return to every bad habit that caused the problem in the first place. If the leaders of the banks actually deserved that description they would be rapidly reforming from within by choice. But their absolute, unnerving greed and blindness have prevented that from happening. Regulation can be lessened when people show themselves able to practically and morally regulate themselves. The Wall Street Wankers, sorry Bankers, have shown neither the desire nor the ability to do that.

Oh and as for the difference between Bush and Obama - Obama's brain remains in his own body! The perfect president? No. More than the village idiot? Yes. A single Republican candidate capable of replacing him right now? Absolutely not. Unless we want nuclear war, a total failure of the social safety net in this country, a return to isolationist policies, millions of Americans dropping below the poverty line and basically no decent schools for your girls when they get to that age.

Incidentally, those girls are why you can never actually agree with Hunter. Or, for now at least, vote Republican.

Jeff Shattuck

Dave, very true point about Hunter S. And about Bush not being Obama, I shouldn't have been so glib.

As you can imagine, I'm no fan of Krugman and believe that austerity has its place. One of the things about Keynes that people tend to forget is that he advocated for government to save during good times and spend during bad. To just spend all the time and then spend more when times turn tough seems intuitively wrong to me. Further, I don't believe infrastructure has the same transformative value it once did. Take the highway system: when we had none, building one was a a big deal (although not as big as people might think, trains were already doing a good job). Nowadays, what could we build that would be transformative? I really don't know. We could modernize air traffic control, build a few highs-peed trains, but these would be drops in the bucket. Far better would be to create an environment in which people felt inclined to take a chance, place a bet, risk something. Instead, we're moving in the opposite direction by making law so complex no one knows what's legal and what's not, a terrible environment for risk (you don't know you're being risky!). Anyway, the Republicans don't have the answers, nor do the Democrats. But history does. Free markets governed by clear laws do best if your goal is to raise the standard of living. Hayek figured this out eons ago and to my knowledge has not been shown to be remotely wrong. In fact, I'm reading his book now -- Road to Serfdom. I'm also reading Knowledge and the Wealth of Nations, which is by a different author and talks about "increasing returns" and the role of knowledge in creating them. Good stuff, but wonky, I fully admit.


Jeff - if you lived in either New Mexico, as I do now, or in New York City, as I used to, you would have absolutely no doubt that infrastructure is key.

Some of it is building stuff for the first time - getting high speed Internet services to parts of the country that the ISPs and phone companies consider unprofitable. I am still blown away by the fact that my cell phone worked better in the middle of the Serengeti than it does in Santa Fe! We are being left behind because these companies only follow the money not the need.

Second, we have 200 hundred + year old infrastructure - bridges, highways, sewers - in all our cities that are in desperate need if replacement. This country was once the most sophisticated builder of such projects but we have made the grave error of thinking this stuff lasts forever. It does not. And again we are being left behind technologically when it comes to high-speed rail and inner-city transportation networks. We moan about gas prices but never seem to take seriously alternatives to the automobile.

I agree with free markets governed by clear laws. But free does mean the freedom to bring the financial system to its knees in pursuit if personal gain. Which is what the idiots on Wall Street did with their unregulated freedom. Before this equation can work again we need to raise a new wave, a new breed, of conscientious business leaders. And I don't see much effort to do that. I think we have to look far more closely at what we mean by "risk" - someone risking their own money or reputation is fine, risking our entire economy is not.

Believing nothing can be "transformative" is a bit sad coming from you. As I used to ask all my technology clients, "What comes after the Internet? And will it be invented here?" as I said before, nothing is forever as difficult as it might be to imagine what comes next.


Clearly I meant to write that "free does NOT mean the freedom to bring the financial system to its knees".

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