This story originally appeared at Truthdig. Barack Obama and the Democrats he led to a stunning victory two years ago are going down hard in the face of an economic crisis that he did nothing to create but which he has failed to solve. That is somewhat unfair because the basic blame belongs to his predecessors, Bill Clinton and George W. Bush, who let the bulls of Wall Street run wild in the streets where ordinary folks lived. And there was universal Republican support in Congress for the radical deregulation of the financial industry that produced this debacle.
The irrational attack on Muslims everywhere by the GOP’s leadership is not only deeply subversive with regard to the American ideal of religious tolerance but also poses a profound threat to our national security.
The corruptions of journalism were on full display when CNN’s Fareed Zakaria turned to Robert Rubin this past Sunday for advice on how to fix the financial crisis.
The core issue for the economy is the continued cost of a housing bubble made possible only after what Clinton Treasury Secretary Lawrence Summers back then trumpeted as necessary "legal certainty" was provided to derivative packages made up of suspect Alt-A and subprime mortgages. It was the Commodity Futures Modernization Act, which Senate Republican Phil Gramm drafted and which Clinton signed into law, that made legal the trafficking in packages of dubious home mortgages. In any decent society the creation of such untenable mortgages and the securitization of risk irrationally associated with it would have been judged a criminal scam. But no such judgment was possible because thanks to Wall Street's sway under Clinton and Bush the bankers got to rewrite the laws to sanction their treachery.
It is Obama's continued deference to the sensibilities of the financiers and his relative indifference to the suffering of ordinary people that threaten his legacy, not to mention the nation's economic well-being. There have been more than 300,000 foreclosure filings every single month that Obama has been president, and as the New York Times editorialized, "Unfortunately, there is no evidence that the Obama administration's efforts to address the foreclosure problem will make an appreciable dent." The Times noted that the administration's main program has been a bust, with only $321 million of the $30 billion allocated to the program having been spent to help folks stay in their homes.
The ugly reality that only 398,198 mortgages have been modified to make the payments more reasonable can be traced to the program being based on the hope that the banks would do the right thing. While Obama continued the Bush practice of showering the banks with bailout money, he did not demand a moratorium on foreclosures or call for increasing the power of bankruptcy courts to force the banks, which created the problem, to now help distressed homeowners.
The subject of housing foreclosures is inherently boring unless you happen to own a home being foreclosed, in which case your family's life has just been turned disastrously upside down. But few of the well-paid pundits on television are in such a position, and as a result the tragedy that has hit 4 million families in the past two years has received scant notice.
But even that highly privileged group of commentators must now be aware that those foreclosures are behind Tuesday's news that US home sales reached their lowest point in fifteen years and that there is unlikely to be an economic recovery without a dramatic turnabout in the housing market. The stock market tanked Tuesday on reports that US home sales had dropped 25.5 percent below the year-ago level.
When homes are foreclosed in a neighborhood the equity of those in the area who have faithfully paid their mortgages is slashed. And when the banks dump those foreclosed properties back on the market, prices drop even lower. Yet the administration has offered the most tepid of responses to stanch the fierce bleeding of home equity worth. A paltry $4.1 billion has been committed to efforts by the states to help the unemployed and other distressed borrowers stay in their homes. Compare that with the trillions spent on making the financial industry super-profitable once again.
There is no way that Obama can begin to seriously reverse this course without shedding the economic team led by the Clinton-era "experts" like Summers and Treasury Secretary Timothy Geithner who got us into this mess in the first place. They are spooked by one overwhelmingly crippling idea—don't rattle the financial titans whom we must rely on for investment. But when it comes to keeping people in their homes, it is precisely the big banks that must be rattled into doing the right thing.
Obama gained credibility through sacking General Stanley McChrystal for making untoward remarks. Why not sack Summers and Geithner for untoward policies that have inflicted such misery on the general public?
Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
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Saluki Kid: What YOU fail to understand is you have no research skills. If you did, you wouldn't be singing this tune. President Obama arrived on the scene completely unaware, I'm afraid, he placed himself in the eye of the "perfect storm" that had been gathering for the past 20 years. I am afraid, as earnest as Obama is, who could have fixed this, and fixed this in only two years? The Republicans? Surely you jest. This is not to say that other political parties are not guilty of "shenanigans" but which party is pleased with the following incidents in our recent American history?
We have lost over 15 million jobs in this country and it started, not with Obama, but with corporate greed and the complicity of politicians who also like money and decided American citizens "be damned." We are now hearing how well other countries are improving their living standards and their GNP, while we sink into poverty, unrest, and the worst case of political polarization in American History. Absolutely no one in the House and Senate can compromise to solve our deepening problems. . And corporations? U.S. corporations may say they are patriots, but money, apparently, speaks louder than patriotism, as American corporations outsourced American jobs to other countries with federal tax cuts and credits for doing so!
Corporations (invited by Cheney and Bush) were also at the ready in Utah to lease our National Wilderness land to oil companies, logging companies, and mining companies who were prepared to do mountaintop mining that would have destroyed prehistoric landmarks in the Wilderness Areas, and would have grossly polluted Utah's water. The worst past of this plan was the disingenuous method they used to hide this from the American people. Just for the fun of it: Google" these four words: Wilderness Lands+Robert Redford +Bush Cheney.
Corporations are now citizens"”citizens with lots of money! Will your vote count now that your vote will be "outsourced" by a corporation? Should you be unaware of this also: "Google": U.S. Supreme Court +January 21, 2010 +corporate spending
There has been no indication so far that President Obama has any major disagreement with Summers or Geithner who are more than Clinton era "experts" since he selected them as his. There is no idea President Obama has any better idea of what is wrong and what should be done.
There has been little to indicate what kind of industrial policy would re-orient the economy to produce the kinds of goods and services which can be traded, produce wealth, create more jobs and better distribute increasing income more equably. He has failed so far as the transformational leader he ran as. He has not dought to capture a new narrative for the nation and then selected those to carry out that new agenda.
Obama and his administration are in denial about the structural problems in the economy and they're encouraged by the likes of the New York Times. There's a romantic fantasy on the part of Democrats as regards globalization, that it will lift the poor of the world out of poverty. Republicans recognize it for what it is - plantation economics.
In all fairness to the NYT, The Nation seems also to be in on the delusion.
Blame Bush, then take a trillion dollar defcit and turn it into a potential 12 trillion defcit, but first reward all your union friends who elected you. Bad plan!
Obama is a prisoner of the finance people for this reason: He wants to continue selling debt instead of correcting the budget. As long as he is dependent on selling debt to bankers, he's powerless.
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