But then an era of deregulation began and financial crises have now become a cyclical thing. We have seen several over the last three decades and will continue to see them even with the new financial reform bill passed by the Democrats in Congress and President Obama. Certainly the bill is a start but it's nowhere close to the barriers we need to break the deadly interconnectivity between the various financial institutions in this country. The massive tide of greed and OCD we have in our culture towards money will be an Everest like mountain to conquer.
Adding insult to injury is the fact that deans and professors of our country's most respected economics schools (Harvard, Columbia, Yale) are all whores for the private financial sector--filling up the minds of students with drivel about the benefits of a truly free and unregulated market. The amount of money that these men make from the likes of AIG and Goldman Sachs in sitting on their boards is in direct conflict with their duty, as educators, to be impartial and unbiased when assessing economic trends.
These professors, along with their partners in crime (literally) on Wall Street, have set up a narrative which essentially paints the Democrats, and their leader President Obama, as being socialists who want to redistribute wealth and destroy free market capitalism. Ironic, because it was these same people who begged the United States government to be bailed out of their mess created by blind greed and compulsion. But this is a small irony compared to one very massive and titanic fact.
President Obama saved capitalism.
In a recent piece in the New York Times, Timothy Egan successfully argues that this is exactly what happened.
Suppose you had $100,000 to invest on the day Barack Obama was inaugurated....As of election day, Nov. 2, 2010, your $100,000 was worth about $177,000 if invested strictly in the NASDAQ average for the entirety of the Obama administration, and $148,000 if bet on the Standard & Poors 500 major companies. This works out to returns of 77 percent and 48 percent.
Not bad, hmmm? Imagine investing that money in January of 2007 and seeing the result on Election Day 2008. The drop would give even the strongest heart great pains.
Of course, markets aren't entirely a measure of what drives our economy, as Egan points out. So let's take a look at the banks and the auto industry--the "two motors that drive our economy."
The banking system was resuscitated by $700 billion in bailouts started by Bush (a fact unknown by a majority of Americans), and finished by Obama, with help from the Federal Reserve. It worked. The government is expected to break even on a risky bet to stabilize the global free market system. Had Obama followed the populist instincts of many in his party, the underpinnings of big capitalism could have collapsed. He did this without nationalizing banks, as other Democrats had urged.
These are indisputable facts. What is also not up for debate in how thankless the banks are. They know that they were part of the problem but don't want to admit to it. Nor do they want to admit that this small form of socialism saved their asses.
Saving the American auto industry, which has been a huge drag on Obama’s political capital, is a monumental achievement that few appreciate, unless you live in Michigan. After getting their taxpayer lifeline from Obama, both General Motors and Chrysler are now making money by making cars. New plants are even scheduled to open. More than 1 million jobs would have disappeared had the domestic auto sector been liquidated.
Also, completely indisputable facts although I'm sure many who are highly emotional and sensitive about the government will try.
“An apology is due Barack Obama,” wrote The Economist, which had opposed the $86 billion auto bailout. As for Government Motors: after emerging from bankruptcy, it will go public with a new stock offering in just a few weeks, and the United States government, with its 60 percent share of common stock, stands to make a profit. Yes, an industry was saved, and the government will probably make money on the deal — one of Obama’s signature economic successes.
Interest rates are at record lows. Corporate profits are lighting up boardrooms; it is one of the best years for earnings in a decade.
Profits indeed. Corporations are borrowing at record low rates but they aren't hiring. That's where the problem lies. Why is this? Well, greed is the overriding factor. The real reason, though, is they are seeing how long they can hold out on jobs and hopefully force the federal government to ease the new (and paltry) regulations. They want to see if they can get away with it and the latest election proves that they just might. The champions of deregulation have won again...even though that is the EXACT reason why things got so fucked up in the first place.
“I think corporate America is in fabulous shape,” said, Jamie Dimon, the chief executive of JPMorgan Chase
told a meeting of The Business Council, a group whose 150 by-invitation-only members personify industrial and financial power.
Really? Huh. I thought the Democrats were destroying capitalism and redistributing wealth. In reality, nothing could be further from the truth.
Does President Barack Obama deserve credit for the fact that corporate profits have risen faster under him than during any other 18-month period since the 1920s?
Egan carries this idea further.
The three signature accomplishments of his first two years — a health care law that will make life easier for millions of people, financial reform that attempts to level the playing field with Wall Street, and the $814 billion stimulus package — have all been recast as big government blunders, rejected by the emerging majority.
But each of them, in its way, should strengthen the system. The health law will hold costs down, while giving millions the chance at getting care, according to the nonpartisan Congressional Budget Office. Financial reform seeks to prevent the kind of meltdown that caused the global economic collapse. And the stimulus, though it drastically raised the deficit, saved about 3 million jobs, again according to the CBO. It also gave a majority of taxpayers a one-time cut — even if 90 percent of Americans don’t know that, either.
I disagree with him on the financial reform package in light of the evidence presented in Inside Job. But the fact remains that the president took all of the actions that he did to save capitalism-just as FDR did with even more stringent regulations.
And, even though no one has noticed yet, he has accomplished that goal.
They will whine a fierce storm, the manipulators of great wealth. A war on business, they will claim. Not even close. Obama saved them, and the biggest cost was to him.