{"id":283647,"date":"2018-09-19T12:21:08","date_gmt":"2018-09-19T12:21:08","guid":{"rendered":"http:\/\/www.merindab.com\/private\/2018\/09\/19\/the-three-big-lessons-we-didnt-learn-from-the\/"},"modified":"2018-09-19T12:21:08","modified_gmt":"2018-09-19T12:21:08","slug":"the-three-big-lessons-we-didnt-learn-from-the","status":"publish","type":"post","link":"https:\/\/www.merindab.com\/private\/2018\/09\/19\/the-three-big-lessons-we-didnt-learn-from-the\/","title":{"rendered":"The Three Big Lessons We Didn\u2019t Learn from the Economic Crisis"},"content":{"rendered":"

roguetelemetry<\/a>:<\/p>\n

\n

robertreich<\/a>:<\/p>\n

\n

Ten years ago, after making piles
\nof money gambling with other people\u2019s money, Wall Street nearly imploded, and
\nthe outgoing George W. Bush and incoming Obama administrations bailed out the
\nbankers.<\/p>\n

America should have learned three
\nbig lessons from the crisis. We didn\u2019t, to our continuing peril.<\/p>\n

First unlearned lesson: Banking is a risky
\nbusiness with huge upsides for the few who gamble in it, but bigger
\ndownsides for the public when those bets go bad.<\/p>\n

Which means that safeguards are
\nnecessary. The safeguards created after Wall Street\u2019s 1929 crash worked for
\nover four decades. They made banking boring.<\/p>\n

But starting in the 1980s, they
\nwere watered down or repealed because of Wall Street\u2019s increasing thirst for
\nprofits and its growing political clout. As politicians from both parties grew
\ndependent on the Street for campaign funding, the rush to deregulate turned
\ninto a stampede.<\/p>\n

It began in 1982 when Congress and the Reagan administration deregulated
\nsavings and loan banks \u2013 allowing them to engage in risky commercial lending,
\nwhile continuing to guarantee them against major losses.<\/p>\n

Not surprisingly, the banks got
\ninto big trouble, necessitating a taxpayer-funded bailout.<\/p>\n

The next milestone came in 1999,
\nwhen Congress and the Clinton Administration, under then Treasury Secretary
\nRobert Rubin, repealed the Glass-Steagall Act \u2013 a 1930s safeguard that had
\nprohibited banks from gambling with commercial deposits. (For the record, I was
\nno longer in the Cabinet.)<\/p>\n

Then in 2000, Congress and Clinton
\nbarred the Commodity Futures Trading Commission from regulating most
\nover-the-counter derivative contracts, including credit default swaps.<\/p>\n

The coup de grace came in 2004,
\nwhen George W. Bush\u2019s Securities and Exchange Commission allowed investment
\nbanks to hold less capital in reserve.<\/p>\n

All of this ushered in the 2008 near meltdown \u2013 which was followed by another attempt to impose safeguards, the
\nDodd-Frank Act of 2010.\u00a0<\/p>\n

And now? The Street\u2019s political
\nclout is as great as ever, which explains why the Dodd-Frank safeguards are now
\nbeing watered down \u2013 clearing the way for another crisis.<\/p>\n

The second lesson we should have
\nlearned but didn\u2019t is how widening inequality makes our economy susceptible to financial disaster. \u00a0<\/p>\n

In the decades leading up to 2008,
\nstagnant wages caused many Americans to go deep into debt \u2013 using the rising
\nvalues of their homes as collateral. Much the same thing had happened in the
\nyears leading up to 1929.<\/p>\n

Wall Street banks were delighted to
\naccommodate \u2013 lending willy-nilly and often in predatory ways \u2013 until the
\nhousing and debt bubbles burst.<\/p>\n

And now? The underlying problem of
\nstagnant wages, with most economic gains going to the top, is still with us.
\nOnce again, consumers are deep in debt \u2013 inviting another crisis.<\/p>\n

The third big lesson we didn\u2019t
\nlearn concerned the rigging of American politics. After the crisis, many
\nAmericans realized that Wall Street, big corporations, and the wealthy had
\nessentially bought up our democracy.\u00a0<\/p>\n

Americans saw the Street get
\nbailed out while homeowners, suddenly owing more on their homes than the homes
\nwere worth, got little or nothing.<\/p>\n

Millions lost their jobs, savings,
\npensions, and homes, but the bankers and big investors came out richer than
\nbefore.<\/p>\n

Bankers who committed serious fraud
\nescaped accountability. No executive went to jail. Big banks like Wells Fargo
\ncontinued to break laws with impunity<\/a>.<\/p>\n

Many officials involved in deregulating
\nthe Street became top executives in the Wall Street banks that benefited from
\nderegulation. Some involved in writing the Dodd-Frank Act are now employed by
\nthe same financial institutions that are watering it down.<\/p>\n

Meanwhile, big corporations and
\nwealthy individuals continue to flood Washington with money, making it
\nthe capital of \u201ccrony capitalism.\u201d<\/p>\n

Widespread outrage at all this
\nfueled the Tea Party on the Right and the brief \u201cOccupy\u201d movement on the Left.
\nBoth eventually morphed into the two anti-establishment candidacies of 2016 \u2013
\nauthoritarian populist Donald Trump and democratic populist Bernie Sanders.<\/p>\n

And now? Anti-establishment fury
\nremains the strongest force in American politics.<\/p>\n

Trump has been using it to conjure
\nup racist and xenophobic conspiracies and to create the most authoritarian
\nregime in modern American history. He promised to \u201cdrain the swamp\u201d but has
\nmade it bigger and filthier.<\/p>\n

Democrats don\u2019t know whether to
\nsimply oppose Trump and his authoritarianism, or get behind a reform agenda to
\nwrest control of politics and the economy from the moneyed interests.\u00a0<\/p>\n

But to do the latter they\u2019d have to
\ntake on those that have funded them for decades. I wish I had more confidence
\nthey will.\u00a0<\/p>\n

Sad to say, ten years after the
\nnear meltdown of Wall Street we seem to have learned very little. Only worse:
\nWe now have Trump.<\/p>\n<\/blockquote>\n

Republican-controlled congress also rolled back most of the Dodd-Frank Act. Wages remain stagnant as only corporations are benefiting from this\u00a0\u201cgreat economy\u201d.\u00a0 No one is putting money into circulation; the poor and cash-strapped can\u2019t, the rich hoard off-shore.\u00a0 \u00a0This led up to the 2008 crisis seeing banks are letting companies and individuals run up huge debt with the low interest.\u00a0 It\u2019s not a sexy situation like a\u00a0\u201ctech bubble\u201d but it\u2019s root causes people ignore.\u00a0\u00a0<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

roguetelemetry: robertreich: Ten years ago, after making piles of money gambling with other people\u2019s money, Wall Street nearly imploded, and the outgoing George W. Bush and incoming Obama administrations bailed out the bankers. America should have learned three big lessons from the crisis. We didn\u2019t, to our continuing peril. First unlearned lesson: Banking is a … <\/p>\n

Continue reading “The Three Big Lessons We Didn\u2019t Learn from the Economic Crisis”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[1185,60,4],"_links":{"self":[{"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/posts\/283647"}],"collection":[{"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/comments?post=283647"}],"version-history":[{"count":0,"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/posts\/283647\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/media?parent=283647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/categories?post=283647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.merindab.com\/private\/wp-json\/wp\/v2\/tags?post=283647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}