Unending recession?

Robert Reich interviewed on Letters to Washington on KPFA radio.

Interesting points:

  • TARP gave banks a lot of money with few strings attached, giving nary a thought to small business, underwater home owners, telling the banks to not worry about restricting bonuses, just take the money. TARP did prevent a financial meltdown but left the banks even bigger than they were, meaning among other things that these banks are too big to fail and will inevitably request to be bailed out again. And the financial reform that was enacted contains large large loopholes. Wall Street is still in charge of Main Street and Washington.
  • The job stimulation was much too small. The administration exhibited a lack of understanding regarding the depth of the problems. The administration didn’t understand that the states would act as an anti-stimulus factor because they had to cut budgets and lay off workers. The administration was hardly able to make a case for their too small efforts at job stimulation and the public has yet to understand the difference between TARP and the job stimulation efforts.
  • Reich talks about the roles of Geithner and Summers in the White House. Reich sees Summers and Geithner as being too concerned with the needs of Wall Street and not to the needs of real people who were, and are, losing their jobs and homes. He says that had people in danger of losing their homes been granted the same low interest rates that were granted the banks, many people would still be in their homes. It was a mistake to bailout the banks and not normal people. A political as well as an economic mistake, leaving people frustrated and afraid and angry with no place to go but to the Tea Party and their ilk. This last item was a LSW thought.
  • Of equal importance, certainly for the prospects of leaving the Great Recession behind us, is the income inequality gap, wherein 1% of the population rakes in almost 25% of the income. One-percent of the population can’t spend enough to make up for all those who have lost savings, lost jobs and income and can not afford to spend and for those who basically have had their money routed to the rich. The income gap prevents the economy from picking up steam.

    Thus the recession will continue, on and on and on, while government policies prevent the government from addressing the structural mechanisms that contribute to, and maintain, the income gap, as well as prevents the government from stepping in to spend money to rejuvenate the economy when neither the consumers nor the private sector are spending. (It should be noted that the Tea Party dislikes the government and is against policies wherein the government spends to get the economy going or to affect a redistribution of money back to the middle class. Bozos on parade.)

  • Completing the picture, Reich says that the insecurity and fear created by a picture that includes the government saving banks, bankers continuing to receive large bonuses (LSW’s words), the loss of jobs, loss of savings, the fear of losing homes, can be and has been translated by demigogues into a politics of resentment, focusing on scapegoats and leading to nationalism and jingoism, s exemplified by Newt Gingrich analogizing Muslims to Nazis and and calling for racial profiling.
    Once again, dark prospects.

An interview worth listening to.

2 comments to Unending recession?

  • admin

    Understanding the past is perhaps one key to preparing for a richer future for all, and holding the people who caused this disaster responsible is also necessary, in order to prevent the continuation/formation of the same configuraton of forces and institutions which brought most of us to the edge.

    it is said (see Stiglitz, Krugman, Baker etc) that when the private sector is not spending the government becomes the spender of last resort.

  • Why not raise taxes by taxing the 48% that pay no federal income taxes? At least then everyone would have some skin in the game. It’s far too easy to vote for bigger government and more handouts when it’s always someone else’s money that’s paying the tab.

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