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Obama’s commitment to powerful business interests is best reflected in his unwavering support for giant Wall Street gamblers. Instead of calling for dismissal and accountability of the economic team of advisors that played a catalyst role in bringing about this systemic financial meltdown, he has placed them in decision-making positions, ensuring the continuance of the failed Bush policies of looting taxpayers and giving it to Wall Street financial titans.
The longer his administration (in concert with the labial congress) continues on this doomed path, the longer the crisis, the more indebted the nation, and the more oppressive the economic hardship will get.
There is some speculation that the Obama administration might be compelled to nationalize the insolvent banks. Considering the financial-economic team of neoliberal advisors who would be in charge of carrying out the rumored nationalization, this measure would be committed largely to the powerful Wall Street interests. If implemented, the measure would be tantamount to the proverbial palace coup designed to salvage the rule of the royal family, that is, of the financial Kleptocracy.
There is no indication that, in the process of the rumored bank nationalization, there would be a seat around the decision-making table for taxpayer representation, or any room for public oversight and control of the nationalization policies and procedures. Instead, as pointed out by Jerry White, “taxpayers would assume responsibility for the worthless assets held by the banking giants so they could take these liabilities off their books and once again become profitable. After a temporary period of government direction, the banks would be turned over once again to private investors, who would buy the now lucrative shares for pennies on the dollar” [16].
While representing an improvement over the currently-confused bailout/rescue plans, this kind of (Wall Street-Sponsored) bank nationalization would not be able to wipe out all of the worthless assets of the insolvent banks and bring about an effective economic recovery, as it would not break free from the fraudulent influence of powerful financial interests.
Only a swift and unadulterated nationalization that does not pay taxpayers’ cash for gamblers’ trash would be able to cleanse the badly tainted financial markets of the gamblers toxic assets, shorten economic pains and cut taxpayers’ losses. By bringing the insolvent banks under public control (independent of the Treasury or the Fed that have abundantly proven to be representing the interests of Wall Street giants, not the people), this measure can then lead to the issuance of loans at reasonable rates by the thus nationalized banks, thereby unfreezing credit markets and rekindling investment and economic activity.
Furthermore, by allowing insolvent homeowners to pay affordable mortgage installments based on reduced or realistic home prices, this alternative would help citizens facing the specter of homelessness stay in their homes, thereby also gradually restoring trust in the mortgage market.
This type of nationalization of insolvent banks would, of course, require new politics on the part of the people who are suffering the most from the daunting economic hardship but do not seem to have a voice or representation in the fraudulent process of the bailout scam, which means the overwhelming majority of the American people.
The new politics has to go beyond the traditional channels of demanding change. It needs to draw upon the lessons of the protest movements of the 1930s that squeezed all kinds of economic guarantees and social safety net programs (known as the New Deal reforms) out of the Congress and the FDR administration.
The financial-corporate governments rarely, if at all, carry out grassroots-targeted reforms voluntarily. Only people pressure, pressure that would include a sustained and widespread protest movement, that is, pressure that would threaten the status quo, can bring about reforms that would benefit the grassroots.
Ismael Hossein-zadeh, author of the recently published The Political Economy of US Militarism (Palgrave-Macmillan 2007), teaches economics at Drake University, Des Moines, Iowa.
References:
[1] Kathleen Pender, “Government bailout hits $8.5 trillion,” San Francisco Chronicle (26 November 2008), click here
[2] William Greider, “Time for a Bank Holiday,” The Nation (19 November 2008), http://www.thenation.com/doc/20081208/greider
[3] Mike Whitney, “Every Trick in the Book,” Information Clearing House: click here
[4] Ellen Brown, “A Radical Plan for Funding the New Deal,” YES! Magazine (14 December 2008), http://www.yesmagazine.org/article.asp?id=3162
