I went to dinner with a group of people recently and actually heard a Republican guy say that the Wall Street people... insinuating Republicans in general... deserve their riches because they are SMARTER ... smarter than ... Democrats? Never mind the fact that many Wall Street insiders are Democrats, or at least give a lot of money to Democrats.I had to inform him that Clinton's Treasury Secretaries Robert Rubin and Larry Summers actively campaigned along side Republicans for Wall-Street-friendly laws that resulted in the current financial melt-down... laws such as the repeal of the 1930s ear Glass-Stegall Act that separated regular commercial banks from high-flying investment banks. Glass-Stegall was put in place prevent any future melt-down of greedy speculative investment banks from spreading to the main street economy via commercial banks.... oops. These SMART people thought a key principle of economics, that the value of money had to actually be founded on something tangible, no longer applied.
Clintonistas ALSO helped pass the Commodity Futures Modernization Act, Sponsored by Senator Phil Gramm, John McCain's economics advisor. This Act allowed the Credit Debt Swaps, used by AIG's Financial Products division, to go unregulated. So, I guess this makes democratic economic policy makers Robert Rubin and Larry Summers just as SMART as the Republicans with whom they collaborated.
I have a theory about why Obama has picked Larry Summers and Tim Geithner, Wall Streeters, to lead his economic team. Obama knows he's up against the immense power of Wall Street .... So, there's a little "if ya can't beat 'em, join 'em" pragmatism going on here. Obama ALSO knows that, there's a fairly good chance no one can fix this mess, meaning these guys are going to fail... So, he gives the wall streeters a chance to fix their mess, and if the wall streeters fail, they take the blame and Obama has retained a non-wall street back-up option. That is, Obama can dump the Wall Streeters, Summers and Geithner, and bring in a new non-wall street team ... "Plan B" as it were.
The only problem with the theory is that Obama might not be given a second chance.
Sources:
Episode 10 of GDAE Podcast
3 comments:
One fact that I think deserves more thought, at least on my part, is that Barack Obama has ties to the University of Chicago, Milton Friedman's academic home for so many years before moving to the Hoover Institution. I wonder if there is an intellectually toxic atmosphere there created by Freidman and his acolytes that has unduly influenced Obama.
The only problem with the theory is that Obama might not be given a second chance.Let's hope...hope he doesn't need one. I'm not so sure that your theory works, unless Obama is willing to risk the utter collapse and take the hit...? It sounds even more risky than Wall Street at this juncture.
Poet: I suppose desperate people do desperate things... like Obama turning to Wall Street insiders to run his economic stabilization initiative.
I can hear the behind-the-scenes first meeting now:
Obama: OK guys. It was you and your friends that got us INto this mess. Now you're gonna have a chance to get us out of it.
Summers et. al: "Gulp"
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