Event

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Specter Party Switch Inevitable? History Holds the Answer

While Pennsylvania Senator Arlen Specter's announcement that he was switching from the Republicans to the Democrats may have gratified the latter and upset the former, no one should have been surprised by it. Historically, party switching is common, indeed inevitable, at times of party realignment.

Spurred by the rise of a new large dynamic generation and the emergence of a new communication technology, realignments occur about every four decades in U.S. politics.

The most recent one began with the election of Barack Obama last November. These large political makeovers normally enthrone a new dominant national party. Beneath the surface, realignments are characterized by major shifts in the voting coalitions that support the two parties. Demographic groups and regions move to and fro between the parties. These demographic shifts, and the attendant ideological solidification of the two parties, leave some politicians, like Senator Specter, who no longer represent their party's mainstream thinking, as outliers and essentially marooned.

Faced with the prospect of almost certain defeat by a reduced and much more conservative base in next year's Pennsylvania GOP Senate primary, the politically moderate Specter made the only rational choice he could and left the Republican Party.

The last previous realignment, which began with election of Richard Nixon in 1968, saw the movement of numerous Democrats, primarily Southerners, to the Republican Party. Starting with Strom Thurmond and continuing through Richard Shelby, these conservative Democrats, along with many of their constituents, saw the GOP as a more comfortable political home. But the movement between the parties wasn't only Southern, nor was it only in one direction. Conservative Colorado Democratic Senator, Ben Nighthorse Campbell, became a Republican and liberal Republicans like New York's John Lindsay and Don Riegle of Michigan went the other way.

If history is any guide, Arlen Specter's move from the Republican to the Democratic column will not be the last during the next several years. Other moderate Republicans, most likely from New England, the Northeast, and the upper Midwest, will almost certainly join him. At some point, it is also probable that a smaller number of conservative Democrats, who feel uncomfortable or politically threatened by President Obama's activist agenda, will find the GOP more compatible with their beliefs and fortunes. Just as the baseball offseason is a time for trading players, a political realignment leads to changes in the rosters of the two parties. Let the switching begin.

Thoughts on President Obama's First 100 Days

Yesterday, as we marked the passage of President Obama's first 100 days in office, I recorded some of my thoughts on how the new administration is doing so far:

Making the Case: Why Congress Should Pass Comprehensive Immigration Reform this Year

Today in the Senate, Senator Schumer is holding an important hearing: "Comprehensive Immigration Reform in 2009, Can We Do it and How?" Here at NDN, we believe the answer to whether Congress can pass reform this year is "yes." Below are seven reasons why:

1) In tough economic times, we need to remove the "trap door" under the minimum wage.

One of the first acts of the new Democratic Congress back in 2007 was to raise the minimum wage, to help alleviate the downward pressure on wages we had seen throughout the decade even prior to the current Great Recession. The problem with this strategy is that the minimum wage and other worker protections required by American law do not extend to those workers here illegally. With economic times worsening here and in the home countries of the migrants, unscrupulous employers have much more leverage over, and incentive to keep, undocumented workers. With five percent of the current workforce -- amazingly, with one out of every 20 workers now undocumented, this situation creates an unacceptable race to the bottom, downward pressure on wages, at a time when we need to be doing more for those struggling to get by, not less.   

Legalizing the five percent of the work force that is undocumented would create a higher wage and benefit floor than exists today for all workers, further helping, as was intended by the increase in the minimum wage two years ago, to alleviate the downward pressure on wages for those struggling the most in this tough economy.  

Additionally, it needs to be understood that these undocumenteds are already here and working.  If you are undocumented, you are not eligible for welfare. If you are not working, you go home. Thus, in order to remove this "trap door," we need to either kick five percent of existing American workforce out of the country -- a moral and economic impossibility -- or legalize them. There is no third way on this one. They stay and become citizens or we chase them away. 

Finally, what you hear from some of the opponents of immigration reform is that by passing reform, all of these immigrants will come and take the jobs away of everyday Americans. But again, the undocumented immigrants are already here, working, having kids, supporting local businesses. Legalization does not create a flood of new immigrants -- in fact, as discussed earlier, it puts the immigrant worker on a more even playing field with legal American workers. It does the very inverse of what is being suggested -- it creates fairer competition for American workers -- not unfair competition. The status quo is what should be most unacceptable to those who claim they are advocating for the American worker.  

2) In a time of tight budgets, passing immigration reform will bring more money into the federal treasury.  

Putting the undocumented population on the road to citizenship will also increase tax revenue in a time of economic crisis, as the newly legal immigrants will pay fees and fines, and become fully integrated into the U.S. tax-paying system. When immigration reform legislation passed the Senate in 2006, the Congressional Budge Office estimate that accompanied the bill projected Treasury revenues would see a net increase of $44 billion over 10 years. 

3) Reforming our immigration system will increasingly be seen as a critical part of any comprehensive strategy to calm the increasingly violent border region

Tackling the growing influence of the drug cartels in Mexico is going to be hard, cost a great deal of money, and take a long time. One quick and early step toward calming the region will be to take decisive action on clearing up one piece of the problem -- the vast illegal trade in undocumented migrants. Legalization will also help give these millions of families a greater stake in the United States, which will make it less likely that they contribute to the spread of the cartels influence.  

4) Fixing the immigration system will help reinforce that it is a "new day" for U.S.-Latin American relations.     

To his credit, President Obama has made it clear that he wants to see a significant improvement in our relations with our Latin neighbors and very clearly communicated that message during his recent trips to Mexico and the Summit of the Americas. Just as offering a new policy toward Cuba is part of establishing that it is truly a "new day" in hemispheric relations, ending the shameful treatment of Latin migrants here in the United States will go a long way in signaling that America is taking its relations with its southern neighbors much more seriously than in the past.  

5) Passing immigration reform this year clears the way for a clean census next year.  

Even though the government is constitutionally required to count everyone living in the United States every 10 years, the national GOP has made it clear that it will block efforts for the Census Bureau to count undocumented immigrants. Conducting a clean and thorough census is hard in any environment. If we add a protracted legal and political battle on top -- think Norm Coleman, a politicized U.S. Attorney process, Bush v Gore -- the chance of a failed or flawed census rises dramatically. This of course would not be good for the nation.  

Passing immigration reform this year would go a long way to ensuring we have a clean and effective census count next year. 

6) The Administration and Congress will grow weary of what we call  "immigration proxy wars," and will want the issue taken off the table.  

With rising violence in Mexico, and the everyday drumbeat of clashes and conflicts over immigration in communities across America, the broken immigration system is not going to fade from public consciousness any time soon. The very vocal minority on the right -- those who put this issue on the table in the first place -- will continue to try to attach amendments to other bills ensuring that various government benefits are not conferred upon undocumenteds. We have already seen battles pop up this year on virtually every major bill Congress has taken up, including SCHIP and the stimulus. By the fall, I think leaders of both parties will grow weary of these proxy battles popping up on every issue and will want to resolve the issue once and for all. Passing immigration reform will become essential to making progress on other much needed societal goals like moving toward universal health insurance. 

7) Finally, in the age of Obama, we must be vigilant to stamp out racism wherever it appears

Passing immigration reform this year would help take the air out of the balloon of what is the most virulent form of racism in American society today -- the attacks on Hispanics and undocumented immigrants. It will be increasingly difficult for the President and his allies to somehow argue that watching Glenn Beck act out burning alive of a person on the air over immigration, "left leaning" Ed Schultz give air time to avowed racist Tom Tancredo on MSNBC or Republican ads comparing Mexican immigrants to Islamic terrorists is somehow different from the racially insensitive speech that got Rush Limbaugh kicked off Monday Night Football, or Don Imus kicked off the radio.   

So for those of us who want to see this vexing national problem addressed this year, this important hearing is a critical step forward.  But we still have a long way to, and a lot of work ahead of us if we are to get this done this year.

(Also check out our recently released report, Making the Case for Passing Comprehensive Immigration Reform This Year, which succinctly lays out our case for why Congress can -- and should -- pass comprehensive immigration reform this year).

The Administration Goes Out on a Limb for GM -- and the Rest of Us

Similar to Churchill's famous observation about democracy, the Administration’s new plans for General Motors are a dismal idea, except for all of the alternatives. Under the plan, GM has to come up with a detailed strategy by June 1 that plausibly will allow it to survive and so receive nearly $12 billion more from the taxpayers or file for bankruptcy. By then, the government will have lent GM $27 billion.

What’s new in the plan is that the Treasury will swap half of that debt for equity (GM shares). In the end, the government and a healthcare trust managed by the United Auto Workers will hold 89 percent of the auto giant. Unsecured bondholders will own the rest, if they agree to swap their debt for equity too. (Even as they complain bitterly, the bondholders will have little choice, since if they don’t go along, GM goes belly-up and they get nothing). With the clarity that often accompanies impending doom, GM is finally taking serious steps to restructure itself -- something it could have done a decade ago and avoided all this. Toppled last year by Toyota as the world’s Number One automaker, the former Detroit titan is now headed for much leaner territory. In exchange for the government’s billions and the UAW concessions that have kept it afloat for the last six months, GM has already announced plans to close down Pontiac (Saturn and Hummer will follow soon), shutter nearly 30 percent of its plants and, by the end of 2010, reduce its workforce by one-third and pare its dealership network from 6,200 to 3,600. If all of this works, GM will end up the Number Three automaker operating here and Number Four or Five in the world.

Already weak before the financial crisis and recession hit, GM probably might have been able to stumble through a normal business downturn without much help. But like a number of other national brands, GM found that it couldn’t survive a protracted financial-market freeze that dried up its credit lines and a deep recession that decimated its sales. The risk now is not that GM managers won’t be able to come up with more, reasonable plans, especially with their countless advisors from investment banks, consulting firms and the President’s auto task force. The real risk here is that GM won’t be able to produce competitive automobiles that will sell and keep the company in business into 2010 -- and the government can’t do anything about GM’s capacity to turn out sellable cars.

That’s actually the good news here: Larry Summers, Tim Geithner and Steven Rattner won’t try to tell GM how to run itself. Instead, once they approve GM's new plans, we all become passive investors, much like the big pension funds that hold large stakes in hundreds of other companies. The government doesn’t know much about running an airline or a retail chain either, two other industries with huge market leaders near bankruptcy. So why hadn’t it offered to lend billions to United Airlines or the GAP, and then swap those loans for majority equity positions?

What the easy critics of the plan don’t see is that GM is part of a much larger and deeper global network of suppliers and distributors, so like Lehman Brothers and Bear Stearns -- and Citigroup and AIG -- GM's sudden failure would have cascading effects. On top of that, there’s the deep recession -- and it’s still getting worse, not better -- which could dangerously aggravate those cascading effects. In short, an abrupt bankruptcy by one of America’s largest and most iconic companies during the worst recession in 80 years could drive down the economy another big notch, making all of the current problems that much harder to solve. So, if it costs the Treasury another $12 billion to try to head that off -- or another $20 billion down the line -- it will be worth it if it protects the rest of us from an even more dismal economy.

Think about it: If the Bush administration had done that with Bear Stearns more than a year ago and then with Lehman Brothers, all of our current problems would be a lot more manageable.

Looking Back - NDN's "Preview to the Summit of the Americas" Event

In March, NDN proudly hosted the first "Preview to the Summit of the Americas," in Washington, D.C. At the event, moderated by Mr. Nelson Cunningham, we gained valuable insight from our distinguished panelists. 

Our keynote speaker, U.S. Sen. Robert Menendez, has been a long-time friend of NDN's and inspired what has developed into the Latin America Policy Initiative at NDN, founded on a core principle: as stated by Sen. Menendez, "In the age of globalization, we are inextricably linked to the rest of the world – and to no people are we more closely connected than to our neighbors in Latin America." Below, an excerpt of Sen. Menendez's remarks at the "Preview to the Summit of the Americas":

[The Summit of the Americas] meeting isn’t just an opportunity to tackle our common challenges — it’s another chance to be reminded how connected we all are. Those of us who advocate strong cooperation across borders always have the challenge of explaining to a taxpayer in New Jersey why they might be asked to support a program in Nuevo Leon. The Summit is going to help the entire region remember why...Giving greater mutual focus to institution-building, cross-border development and democracy is a strategy meant to improve the quality of life of our citizens. But maybe above all, finding that focus represents an opportunity to build a new trust between us, to substitute unnecessary tension for a new bond of hope.

Click here for the entire address.

 

As we reflect on the Summit that just passed, we would like to recap the event and share the ideas presented by our rich panel.  Please access the video of each speaker:

U.S. Rep. Eliot Engel, Chairman of the House of Representatives Subcommittee on the Western Hemisphere
Ambassador Jeffrey Davidow
Hon. Samuel Lewis Navarro,
First Vice President and Foreign Minister of Panama
Jane Thery,
Head of OAS – USA Relations, Secretariat for External Relations of the Organization of American States (OAS) in Washington, DC.
Dr. Paul Byam,
Deputy Chief of Mission of the Embassy of Trinidad and Tobago
Ambassador Jose Pinelo,
Ambassador of Bolivia to the Organization of the American States
Ambassador Carolina Barco,
Ambassador of Colombia to the United States of America
Ambassador Luis Gallegos,
Ambassador of Ecuador to the United States of America

Is Immigration Overhaul Vital To U.S. Recovery?

In a word - yes. On NPR's Morning Edition today, Simon elaborates on our Case for Passage of Immigration Reform This Year, highlighting the increasing urgency of passing reform as a tool to revive the U.S. economy.  NDN has long sustained that undocumented immigrants suffer under the current broken immigration system because they fall victim to bad-actor employers.  These individuals make up about 5% of the U.S. labor force - that means 5% of workers fall outside of the protection of U.S. wage and labor laws, in addition to not being able to receive benefits or organize with labor unions.  We can implement a number of economic plans, but there will remain a trap door under wages until we fix the broken immigration system: 

Simon Rosenberg, of the Democratic think-tank NDN, says legalizing immigrants would go a long way..."The people who are not playing on an even playing field are the undocumented, because they can be paid less than you. They can be given less benefits. They can be forced to work 60, 70 hours by unscrupulous employers," he says.

Legalization Means New Revenue

Rosenberg and others also point to a Congressional Budget Office study that found legalizing the estimated 6 or 7 million unauthorized workers and their families would add tens of billions to the U.S. Treasury. It would come through more taxes paid, plus the fees and fines likely in any legalization package.

David Kallick, of the Fiscal Policy Institute in New York, says when 5 percent of the workforce lacks legal status, the economy takes another kind of hit.

"It means they can start an entry level job, but they can't really make the step to improve their education, get to the next level," he says. "And so you're essentially holding a whole contingent of people back from contributing even more to the economy than they do."

Immigration Proxy Wars

Both sides do agree on this - absent any larger solution, immigration will keep coming up on almost anything lawmakers touch. It's already happened this year on debates over children's healthcare and the stimulus package, and Democratic strategist Simon Rosenberg predicts more battles over the census, Mexican border security and especially healthcare.

"It's impossible to understand how we have universal health insurance in America without first fixing the broken immigration system," he says. "Because what the healthcare fight will become is a debate over whether universal healthcare covers illegal immigrants."

To find out more about what legalization of the undocumented would mean for the economy, check out the Immigration Policy Institute's latest report and fact check on the issue.  Opponents of reform, like Mark Krikorian of the Center for Immigration Studies, will argue that tax benefits will outweigh the cost of all the social services newly legalized workers would be eligible for.  This contention has been proven incorrect by the Congressional Budget Office, cited by Simon, which has stated a legalization program would provide a net benefit of dozens of billions of dollars. 

Continuing the discussion over reform and its impact on the economy, an excellent editorial in today's New York Times reiterates the same fundamental principles that have constituted NDN's proposal for CIR:

Immigration Reform and Hard Times
The Obama administration said last week that it would begin a major push for immigration reform this year. The country's two big labor federations just announced that they are joining forces to support that effort, which includes a path to citizenship for undocumented workers. That's double good news.

The administration is saying that it will keep its promise to fix the broken system, even if it means pushing the hottest of hot buttons: legalization, the dreaded "amnesty" that sets the Republican right wing ablaze and makes many Democrats quiver.

We are also heartened that American labor is speaking with a united voice in hard times, rejecting the false claim that fixing the immigration system will somehow hurt American workers. Even in a bad economy - especially in a bad economy - getting undocumented immigrants on the right side of the law only makes sense.

Administration officials said President Obama planned to speak publicly about the issue next month and would convene working groups this summer, à la health care, to begin discussing future legislation. Immigrant advocates were ecstatic, though it is important to note that this was not a promise to move a bill, only to start the debate. Even that is not going to be easy. Reform was thwarted in the last two Congresses by obstructionist Republicans committed to the delusion that expelling 12 million people amounts to a realistic policy.

The country has suffered mightily in the meantime. American workers and businesses continue to be undercut by the underground economy. The economic potential of some of the country's most industrious workers is thwarted. Working off the books - and living in constant fear of apprehension - they earn less, spend less, pay less in taxes and have little ability to report abuses or to improve their skills or job prospects.

The ingredients of reform are clear: legalization for the 12 million, to yield bumper crops of new citizens, to make it easier to weed out criminals and to end the fear and hopelessness of life in the shadows; sensible enforcement at the border that focuses resources on fighting crime, drugs and violence; a strengthened employment system that punishes businesses that exploit illegal labor; and a future flow of workers that is attuned to the economy's needs and fully protects workers' rights.

The last point has been a sticky one with some unions. The agreement between the A.F.L.-C.I.O. and Change to Win - a rival federation that includes service employees, the Teamsters and carpenters - will center on a new approach to future immigration, a compromise in which an independent national commission calibrates the size of temporary-worker programs each year, based on conditions in labor markets. It may not be a perfect plan, but after years of vitriol, it's encouraging to hear calmer voices outlining smart reform.

We expect to hear more from Mr. Obama soon.

The editorial goes on to highlight that, "It will take courage to defend the wisdom and necessity of fixing the immigration system. It will take even more courage to engage in the serious fight to do so."  This is true, and we are all ready to join in the conversation - not to fight, but to pass immigration reform because, "It is what the country needs and what American voters elected Mr. Obama to do." 

 

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Racism for Ratings?

Cable news seems to be multiplying blatantly racist shows, as opposed to shutting them down.  By accident I happened to catch some of the new "Ed" show, 6pm time slot on MSNBC and was less than happy to see the man who almost had to resign for recommending the U.S. bomb Mecca - Tom Tancredo - on with him to discuss immigration reform of all things.  I mean, even Fox news no longer has Tancredo on.  Mind you, one thing is to have a healthy debate and someone on the show who opposes reform, but Tom Tancredo does not know healthy debate. He is no opponent of immigration, he is a proponent of hate and mass destruction.  Lest we forget his campaign ad equating immigrants and Hispanics with "Islamic terrorists."  On the bright side, bring him on - keep bringing on the Tancredos out there - there will be no better tool to pass CIR.  As Simon has said before, anti-immigrant positions don't deliver politically.  Hence Tancredo was at 1% favorability among  Republicans during his vie for his Party's nomination.   His anti-immigrant stance and hatred towards other cultures is not popular.  He did so poorly in the race for the Republican Presidential nomination and in his own district, that he didn't even attempt to run for re-election in 2008.  A post on Kos pretty much expresses the same reaction to seeing Tancredo on the air, re-posted below.  So we are left with the question? Is Ed going to be MSNBC's Lou Dobbs?  Don't networks want to report actual news stories, or riveting educational pieces as opposed to serving as a space for bigoted individuals to air their frustrations? 

Ed Schultz: Why Tancredo?
by ademption

Thu Apr 09, 2009 at 06:43:22 PM PDT
This diary is about the new Ed Schultz show on MSNBC called "The Ed Show" which airs at 6 pm EST in place of the 1600 Penn Ave hosted by David Schuster. I have watched the Ed Show since its inception and for the most part I've enjoyed it. The Ed Show's main focus is topics related to the middle class. For instance, one day he discussed the rising costs of healthcare and had Senator Wyden of Oregon to discuss his healthcare plan. Another day, he discussed the EFCA and had a union guy as a guest. On Wednesday, he talked with Secretary of Education Arne Duncan on how to fix the education system. Until today, I liked Ed's topics and guests.

Unfortunately, today's show I think Big Ed may have jumped the shark with his invite of Tom Tancredo to appear on his show.

ademption's diary :: ::
Now I understand that immigration is a very divisive issue, even among Democrats. I also gather from today's show that Big Ed does not support comprehensive immigration reform like Obama. That's fine. We as progressives can't always agree on everything. I can understand Ed Schultz wanting to discuss the topic of immigration and even invite a guest that shares his viewpoint on the topic. But I cannot accept his choice of guest to discuss the issue tonight.

Tom Tancredo was the absolute wrong choice to discuss immigration. I can't understand why a professed progressive like Ed Schultz would give a divisive figure like Tancredo a platform for his show. Does Big Ed recall his insane remarks about bombing Mecca? His likening Miami, Florida to be a third world country? Tom Tancredo is so radioactive that even he and Karl Rove had a falling out. That is how much of a cretin that Tancredo is. I am absolutely flabbergasted that Tancredo was even invited on a so called progressive show. I don't even think that Fox News has Tancredo on the air anymore. Maybe I'm wrong, but I haven't even heard about Tancredo since the Republican primaries in 2007. I thought that he had fallen off the face of the earth until I watched the Ed show today.

I know that the Ed Show has gotten really decent ratings in his first week on MSNBC. But I don't think that having Tom Tancredo on his show helps. I am so offended by Ed Schultz having Tancredo appear as a guest that I am seriously considering not watching the show ever again. And again, I like the show. But having Tancredo appear really touched a nerve. I'm not only writing my concerns on Dailykos, but I'm going to let MSNBC know as well.

For those who watched Big Ed during his regular timeslot at 6 pm or his guest stint on Countdown at 8 pm EST, do you think it was appropriate for Ed Schultz to invite Tom Tancredo to appear on his show?

Thoughts on Wall Street 2.0

Check out the following passage.  Is it from the Onion?

No, amazingly, it is from the NY Times today:

During World War I, Americans were exhorted to buy Liberty Bonds to help their soldiers on the front.

Now, it seems, they will be asked to come to the aid of their banks - with the added inducement of possibly making some money for themselves.

As part of its sweeping plan to purge banks of troublesome assets, the Obama administration is encouraging several large investment companies to create the financial-crisis equivalent of war bonds: bailout funds.

The idea is that these investments, akin to mutual funds that buy stocks and bonds, would give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars. But there is another, deeply political motivation as well: to quiet accusations that all of these giant bailouts will benefit only Wall Street plutocrats.

The potential risks - politically for the administration, and financially for would-be investors - are considerable.

The funds, the thinking goes, would buy troubled mortgage securities from banks, enabling the lenders to make the loans that are needed to rekindle the economy. Many of the loans that back these securities were made during the subprime era. If all goes well, the funds will eventually sell the investments at a profit.

But, as with any investment, there are risks. If, as some analysts suspect, the banks' assets are worth even less than believed, the funds' investors could suffer significant losses. Nonetheless, the administration and executives in the financial industry are pushing to establish the investment funds, in part to counter swelling hostility against the financial industry.

Many Americans are outraged that companies like the American International Group paid out many millions in bonuses despite crippling losses and multibillion-dollar rescues from Washington.

The embrace of smaller investors underscores the concern in Washington and on Wall Street that Americans' anger could imperil further efforts to stimulate the economy with vast amounts of government spending. Many Americans say they believe the bailout programs - and the potentially rich profits they could yield - will benefit only a golden few, including some of the institutions that helped push the economy to the brink.

"This is an opportunity to forge an alliance between Main Street, Wall Street and K Street," said Steven A. Baffico, an executive at BlackRock, referring to the Washington address of many lobbying firms. BlackRock, a giant money management firm, is playing a central role in the government's efforts and is considering creating a bailout fund. "It's giving the guy on Main Street an equal seat at the table next to the big guys," he said.

The new funds are still under discussion, and they are unlikely to be established for several months, if indeed the plans go through at all.

Throughout this financial and economic crisis there has been this lingering sense that those close to Wall Street believe a "recovery" is possible, that our economy and our behaviors will snap back to the pre-crash boom years when cash flowed, government regulators looked the other way and profits were extraordinary.  That those in charge need to channel this "populist" anger towards the Street, calm it down and things will settle back down to normal. 

I just don't think this is going to happen. 

First, economic elites have been deeply and dangerously out of touch with the American middle class this decade. For elites it was a time of boom, appreciating assets, cheap money, and a radical reduction in their taxes.  For those struggling to make it the Bush years were a very different experience - declining incomes, more without health insurance and in poverty, exploding debt and a sense of falling further and further behind. 

Both the intensity of the anger towards the banks and the steepness of our Great Recession can only be understood if one understands that the typical family was already in distress before the Recession began; that for them the economy turned tough years ago and those in power were unconcerned, did nothing about it and if anything told them in a terribly Orwellian fashion that contrary to their experience things were actually good.  This "anger" is not therefore ephemeral, and will not quickly dissipate.  It has built up over a long time, a time when those in power enriched themselves and offered to everyone else a modern version of "let them eat cake."  

Second, what ails the American financial system today is not a crisis in confidence but a crisis of trust; and I agree with Barack Obama that because our families were already in such distress, and have such unsustainable levels of debt the "voracious American consumer" is not coming back soon.  What this means in policy terms is that the Obama Administration should not be focused on saving discredited financial institutions and going back to the good ole days.  Brands like AIG and Citigroup cannot be saved.  Who in their right mind will do business with them given what has happened? What leaders in the developing world, so harmed by this American-led global economic crisis, will allow their citizens or their governments to put money in these wildly irresponsible American institutions?  The government should immediately begin dismembering these companies, selling off whatever valuable parts remain for like Chrysler they are no longer capable of surviving as independent brands. 

For our financial system to regain the trust of Americans and those abroad a much serious effort will have to be made to show that the lax regulatory system has been fixed and consumers better protected; those at the center of the global crisis expunged and damaged brands shut down (and not put in charge of fixing the system itself); and if in any way in this process of fixing everything a small number of elites get super wealthy all these reforms, this effort to build back global trust, may be for naught. 

As I wrote when I returned from my recent trip to Chile, I think the American financial community is in deep denial about the global loss of trust that has come from their reckless behavior.  To many the Masters of the Universe have now become reckless, greedy exporters of economic contagion.  Salvaging the once highly successful American global financial sector will require much more than the firing of a few CEOs or a few slap on the wrists while floating these very same companies trillions of dollars.  It will require first and foremost a rejection of the concept of "recovery;" and it will require a fundamental transformation of Wall Street, a Wall Street 2.0, a new, improved, different and chastened Wall Street, and the sooner we get there the better for all of us.

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