“Most Serious Financial Crisis Since the Great Depression...This is the Result of Rightwing Ideology

from Democracy Now!:



Economics Journalist Robert Kuttner on the “Most Serious Financial Crisis Since the Great Depression”: “This is the Result of Rightwing Ideology and the Political Power of Wall Street”

Amid growing fears of a worldwide recession, the Federal Reserve slashed a key interest rate by three quarters of a percentage point on Tuesday, the biggest single cut in nearly a quarter of a century. Meanwhile, President Bush and Congressional leaders pledged to work together on a stimulus measure that would inject about $150 billion dollars in additional money into the economy. But many economists are skeptical over whether any measures can turn around a severe slump in the housing market and the subprime mortgage crisis, signs of growing unemployment and weakening consumer spending and the added blow of record high oil prices. We speak to veteran economics journalist Robert Kuttner and Robert Weissman, co-director of the corporate accountability group Essential Action, and editor of Multinational Monitor magazine.

Listen to or watch the show at: http://www.democracynow.org/2008/1/23/recession

Just as it did at the end of that last, great, Republican triumph, the Roaring 20s.

That in 1929, we had a trade surplus, not a multi-trillion dollar debt

That most people didn't own homes, and there was no sub-prime mortgage nightmare

That there were no "home equity" loans

That there were no credit cards, so no credit card debt.

A large portion of our country wasn't owned by off-shore interests.

We're in unchartered waters.

...but there's more to this. Greenspan takes the hit for opening the tap after 9/11, but Bill Clinton also bears part of the blame for allowing Glass-Steagall to be repealed in 1999. Yes, it was a Republican Congress but it happened on his watch. There's no way around that.

that forbade banks from indulding in the investment schemes. My husband had a book on banking laws that was from 1933 and he remarked that it was still operative, that was in 1996 or so...I guess it is just an antique now?

...so I did a little research, and Congress passed a law in 1999 that reversed Glass-Steagall, which is the legislation you're speaking of.

That's one of the reasons we have this mess. The banks used to be forbidden to take depositors' money and invest it in risky ventures like CDOs and hedge funds under the old law.

Now, they could offer a mortgage to anyone who an fog a mirror because they knew they'd never keep the loan on their books. If you're gonna sell off the loan to the Chinese anyhow, who cares if the homeowner can't pay?

This is going to change. When it does, all these inflated real estate prices will adjust to the mean.

They have to. There's no way out of it.

:eyes:

now they will make sure that doesn't happen--nice folks they are