Trouble Ahead: Can the Right Seize the Banking Reform Issue in 2010?

Eliot Spitzer explains how the White House defense of the status quo will give Republicans powerful ammunition in the 2010 elections.

Few things are as potent in politics as calling for change at a moment of fundamental dissatisfaction with the status quo. Nobody should know this better than the current White House. Gauzy words describing the possibilities for change are always more comforting than defending the current dire straits. That is why — in addition to all the substantive arguments — the current White House plan for banking reform is so troubling.

Let us fast forward a couple of months. Momentary GDP pops notwithstanding, the economy next year is likely to be in pretty sad shape. Consumer spending is sagging; foreclosures are still climbing (and may surge as ARMs re-set); unemployment is likely to be hovering in the 9.5-10.0 range; federal deficits and state deficits will be soaring; and Goldman profits will still be setting new records.

Added to this toxic political brew will be a new, and perhaps counter-intuitive, but highly successful political attack from the RIGHT: break up the banks. Imagine this: by next spring, an intellectual consensus will have emerged that the concentration in the banking sector that developed from the 1980s until the crash of ‘08 was misguided. Voices as disparate as Former Fed Chair Paul Volcker, Bank of England Governor Mervyn King, meta- investor George Soros, and the Wall Street Journal editorial page will be in agreement on this point.

A few brave souls on the Right — recognizing that the Republican Party has been bereft of ideas in its attacks on President Obama — will then try to re-define a populist, conservative attack by asserting that the White House has been captured by Wall Street. Real populism and change, they will argue, will come from the Republican, not the Democratic, party.

The power of such an attack from the Right should not be underestimated. There will be a huge first mover advantage that goes to the candidates who grab the real banner of attacking the structure of Wall Street as having been the root of the crash of ‘08. We Democrats are spending way too much time wringing our hands over the new, “reformed” structure of regulation, and not nearly enough focusing on restructuring the banks. Congress continues to mediate the intramural battle among regulators who are defending turf in the next regulatory flow chart. Yet the real debate should be how to take the big banks and make them smaller: how to peel off proprietary trading and other high-risk endeavors that are now being funded and guaranteed by taxpayers.

In addition, there is too much attention being paid to the one recent idea thrown into the mix by the White House: how to place a tax on big financial institutions after the next crash, so that they shoulder the cost of the next bail out. The notion that a levy on surviving big banks when the next crisis hits can pay for the bail out seems wrong in at least three ways:

First, applying a levy at the moment of crisis will merely accentuate a down turn. At a time when we will presumably need more liquidity and lending to revive a stalling economy, the federal government is going to apply a significant tax to healthy institutions capable of lending? Not likely.

Second, having the healthy institutions cover the losses of the sicker institutions takes us right back into the land of moral hazard. Profligate, risk taking entities will be bailed out by those that exercised caution.

Third, any downdraft significant enough to bring “too big to fail” institutions to the brink of the precipice is likely to be broad based enough so that virtually all the other major institutions are troubled, probably leaving them in a no position to cover the cost of the bailout.

So the simple question remains: why aren’t we focusing on the problem that got us here in the first instance — the scope, range, and size of the mega-institutions whose risk taking has so far inflicted only enormous harm on our economy? If the Republicans pick up this issue before we do, the elections of 2010 could be even worse than we are now fearing.

Cross posted with the permission of New Deal 2.0.

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    1. Skippy

      Naw Dan, that tool is just as bad, as the one we use twice before this last election.

      Partisan polotics seems to me, DOA these days, one is just as bad as the other.

      Skippy…Hell even crazy family’s stick together, trapping the few good memebers in a hell, bound by blood.

  1. Mannwich

    The GOP, as currently situated, is not even remotely smart enough to do something as brilliant as this……

    1. Doug Terpstra

      True, even the Newt now sounds only slightly smarter but no more honest than Joe, the unlicensed plumber. Still it may all be a game.

  2. Observer

    This is very good stuff. The worry is that in the next national election, the public may not like the Republicans (for, in a sense, getting us into this mess) nor the Democrats (for patching things over rather than really fixing them). Spitzer is correct that one of the two major parties had better take this issue up, fast. He would like it to be the Democrats. I would be content if either party does it. If they don’t, they and we run the risk of a third party emerging, the exact nature of which is hard to predict.

    1. Peripheral Visionary

      Well spoken. I do think that either party would have to make a major change; Democrats in refocusing on financial regulation (not their strong suit) or Republicans on softening their opposition to regulation (also not their strong suit.) We will see who makes the changes first; the Republicans have a slight advantage in that they have a few who are financially savvy but not tied to industry–e.g. Ron Paul (maybe Peter Schiff?)–but that’s no guarantee that they will own the issue.

    2. ndk

      If they don’t, they and we run the risk of a third party emerging, the exact nature of which is hard to predict.

      As a political party-fearing man in the mold of George Washington — no, not that one, the original — I’d be thrilled to see one or more third parties emerging. I think a lot of parliamentary systems out there do a better job of rotating views and groups in and out of power, which is far better than our ridiculous toggling between one establishment and the second slightly different establishment.

      The danger I see there is that lobbyists and their permanent public servant friends become the inertia and permanence in government, as political appointees come and go, leaving chaos in their wake. It’s like this to some extent in the current system too, but there’s more institutional memory in this format than in some others.

      I know there are several instances throughout history where a third party has been scary, dangerous, and a disaster for the country as a whole. But I will seriously take anything over the corporatocracy and oligarchy we have today. And I will never believe that either of these parties can deliver that difference. I didn’t vote in the last election because I couldn’t in good conscience endorse the damn system itself.

      I’ve had more positive experiences working with government in China than in America. I think we can do better here. And even with some thrashing about, I would welcome the change that a Bull Moose Party would bring.

      1. Observer

        A third party might be good, it might be really nutty. I’m afraid to find out which, but maybe I have read a little too much history. If the two major parties would be tougher on the banks, the odds of a third party emerging would be much lower.

        1. SidFinster

          That is what worries me.

          I like the idea of pitchforks and torches storming your local infestment bank as much as the next cat, but a mob can be fickle and be easily led to places I don’t want to see it go.

    3. Ultimate Janitor

      What if, God forbid, a 3rd party could emerge before 2012?

      I guess if a 3rd party president were actually elected, trying to work with the congresswould be like trying to preside over an asylum for the criminally (mostly theives not murderers) insane.

    4. Kevin de Bruxelles

      Spitzer posits an open, utopian political environment where politicians are free to calculate policies solely based on what is best suited to win elections. Of course the hermetically sealed two-party US political system is very much a closed system, and where only “two” choices are given. Elections are won by, on the one hand, blindly attacking the other choice, and on the other, making vague positive-sounding promises for the future. There is absolutely no need for the Republicans to threaten one of the most massive wealth/power nodes in the US to get a few dumb schmucks to vote for them. Why go after powerful Citi when they can so easily get the same results by pounding pathetic Acorn instead?

      Spitzer plays the concern troll convincingly while simultaneously laying the ground work to head off any reform by stating the dangers of one tax proposal that was never going anywhere anyway. It seems the rumbling of discontent by the masses at the current state of the US is finally being felt at the top. The response is self-referential analysis; to try to convince the peasants that there is meaning in the fluctuations within the closed US political system; not mentioning that as any bird needs to keep its two wings moving to fly, the US system needs constant motion for both its wings to convince the citizens that our democracy is still soaring.

      And why should Spitzer make any reference to an alternative? The closed US political system finds itself in a position of commanding authority. Not only is there no other international political system to challenge it; there is only miniscule domestic opposition to their monopoly on power; and it is divided on two extreme flanks; the Dennis Kucinich left and the Ron Paul right. As things stand, due to the animosity between these two positions, they can only serve as self-cancelling focal points of discontent and the closed US political system can destroy each in detail. Only if these two factions were to start actively working together could the closed US political system find itself facing a raging two-front political war for legitimacy. Sadly I’m not betting on this happening since both sides are fatally imbued with partisan booby traps that will make future broad growth and consolidation difficult.

      With the Obama presidency giving the word underachieving new meaning, combined with the still fresh memories of the mal-achieving Bush Administration, the other lurking danger to the closed US political system is from cynicism from the broad center about the two-party system. Signs of such a movement have been appearing, among other places, on certain economic blogs. Not everyone looking for change will in fact be satisfied with monthly First Family portraits featuring a cute melanin-enhanced family unit while the President actually spends four years running a four corners offense to kill the clock on any substantive change. Nor will others be satisfied with pummelling the straw men of socialism and Acorn for the next three years as the country crumbles. And for these people the only solution the closed US political system has to offer is the distraction of tighter and tighter swings of the pendulum combined with massive amounts of inside-baseball analysis of where exactly the pendulum is heading. These discussions serve the purpose of focusing the public’s attention on the hypnotic effects of the swinging pendulum while denying even the possibility of activity outside the closed system.

      Opponents of the system must create an alternative — yes a third party — that can act as a focal point of discontent, that can serve as a magnet for the many who are on the verge of abandoning the closed US political system. Just as it is hard to convince passengers to leap from a sinking ship directly into the rough waters in the middle of the ocean; it is difficult to convince people to abandon the current political system without at least the semblance of a sturdy lifeboat to carry them. And while discussions on Too Big To Fail are important; the even more fundamental problem that the closed US political system refuses to address is the on-going evisceration of US manufacturing capability. Two hundred years ago Alexander Hamilton found the intellectual arguments to protect infant industries, today we urgently need to save “geriatric industries”, while staying mindful of the dangers of outright mercantilism.

  3. Fred

    So, the “We” look to Elliott Spitzer for guidance? Maybe he has some dating advice for you, too.

  4. Valissa

    ROTFLMAO… that’s a good one Elliot! I find it hard to believe that the right, which has lead the way in sucking up to big money for so long will actually turn around and bite the hand that feeds them. But if the Republicans could actually pull it off the Dems would deserve the consequences. Of course, there is very little difference between the two parties these days so does it even matter any more?

    It’s time to get all those state election laws that penalize 3rd parties repealed and see if it’s even possible to start having some real political choices. It may be that our country has crossed a bureaucratic tipping point and there is no returning to sanity in governance no matter how many political parties people try to create.

    1. john newman

      The right won’t have to ACTUALLY punish big money any more than Obama has. Faced with making real change, although no fat ladies have sung yet, Obama appears to have prefered to stick with the large bills leaving change as an issue for his future opposition. With our two existing parties change will always be in the opposition because once in power you get to participate in the “bonus culture” you kvetched about while in opposition.

    2. craazyman

      Hah. The Big Money is a whore with two naked tits and the Republicons suck on one, the Demagogues on the other. Like some Statue by Bernini — “Mother Lode” I would call it and I can see it in my mind, in all it’s marble glory and comical transcendence of gross metaphor.

      Mr. Spitzer’s reasoning is fairly sound. Although after the raking we’ve taken from the Joker I’m not sure anyone in America with a synapse connecting left and right lobe would believe a word that comes out of a National Politician’s mouth at this point. Liars for Hire that they are.

      No, we need our own country. And let them have another for themselves. Maybe put a fence around Washington, and let them have it — along with the Redskins under Mr. Snyder’s mismanagement.

      The bank issue will resonate, but who has the credibility to make it their own?

  5. wes

    I know he got caught with his pants down, but I truly believe he is one of the few politicians that is really taking on the banks. As a citizen, I think he is thinking of us regarding the fraud that has been committed on wall street. His antics
    has limited him, but he seems to have cut to the root of the problem as far as wall street. Maybe he could be in the new party. I wonder if just calling it “the third party” would be enough? I hope so.

  6. wes

    I know he got caught with his pants down, but I truly believe he is one of the few politicians that is really taking on the banks. As a citizen, I think he is thinking of the country regarding the fraud that has been committed on wall street. Maybe he could be in the new party. I wonder if just calling it “the third party” would be enough? I hope so.

    Ron Paul? spine like a jellyfish & runs back to the republicans like a scalded dog once once called out. He is not fit for the office. Don’t know Mr Schiff.

  7. Froggy

    I’ve been reading NC for six months daily as a very conservative republican and by and large I see eye to eye with most of the content here. That said, I have also had the scales removed from my eyes on the issue of “who is in bed with the big money wall street fat cats”. I assumed (incorrectly) that the GOP had big business in its pocket with issues ranging from taxes to laisse faire policy, BUT there is something more important to big business than those things.

    Hegemony. Big business stays big by staying in bed with big government. Big government provides the layers of regulations and legislative constraints on market forces which benefits big business by limiting up and comers and solidifying their positions. Big business finances democrats like Obama, Dodd, Franks, Pelosi, et al in order to hold the line and keep the little guys down.

    The GOP/Tea Party movement will very likely pick up the ball (breaking up the big banks) and run with it. It is trite to say that we’re too stupid, but most of the financial blogs that I read are/were democrat leaning and the CW of people in business (not at the CEO level) is that TBTF has to be ended and quick. Do not be surprised to wake up one morning and realize that many of you democrats have been left behind on this by your party.

    The GOP is not the party of big business anymore. It is most definitely the party of small business that wants to grow bigger. The GOP has had its problems with growing government in the recent past, but Obama will have pretty much blown the doors off of that argument by 2010.

    There is a consensus developing in this country around conservatism-fiscal conservatism that is. Spitzer is as partisan a democrat as it goes, but he sees the writing on the wall and what he reads is that as long as the dems are content to wallow in big business money and spend their way to utopia, they are going to get bodyslammed for it.

    1. bj

      “The GOP/Tea Party movement will very likely pick up the ball (breaking up the big banks) and run with it.”

      Maybe, but I doubt it. The right is working on its purity, so expect tax cuts as their solution (again).

    2. squanto

      You say conservatives have the momentum in terms of getting spending under control. If that’s true, it’s only because they’re now in the opposition and they reflexively oppose everything Obama does. During the Bush Administration the national debt nearly doubled (from $5.7trn to $11.2trn) and you never heard a peep from the right about fiscal responsibility. Today’s Republicans are all for cutting taxes but they no are longer hawks re: spending. It’s like they want to drive the gov’t into bankruptcy.

    3. bgno64

      The GOP/Tea Party movement will very likely pick up the ball (breaking up the big banks) and run with it.

      Never going to happen, for one simple reason:

      If the government were to break up capitalist institutions like banks, that’s government meddling in the economy, isn’t it? Teh Socialism; your conservative activists oppose it on those grounds.

  8. Bsjo

    If we are lucky, maybe Spitzer will take up the mantle for a 3rd party. He has been really the only politician to effectively take on Wall Street (as NY AG). Further, his ideas will resonate with the populace at large.

    Spitzer for President!!

    1. freedom of association

      Nader’s Crash!ng the Party has a lot of great dirt on the bipartisan suppression that a third party will face – in Nader’s case it included coercive threats of arrest by law enforcement. If Spitzer were to take on both parties along with the banks, that bignosed Jersey whore they blackmailed him with will pale in comparison. Personal, familial, economic destruction.

  9. Doug Terpstra

    The Obama administration’s continuing fumble of this crisis and healthcare refrom is baffling and maddening. And yes, the Democrats would surely be toast in 2010 and 2012, except for one thing: Republicans have gone certifiably insane, cuckoo, looney….

    It’s all just too strange. It may well be a brilliant bit of collusive theater in the end, to keep us all confused and conflicted.

    1. Froggy


      It may be comforting for you to believe that we are looney or whatever, but you are likely to end up on the short side of that trade and straining to cover. I am about as “right wing” as you can get: Iraq war vet, Christian, small business type. I used to revel in the partisanship especially in the lead up to last year’s election, now I just want the issues dealt with and I don’t really care by whom.

      There is no doubt that the GOP has been stymied by an overfixation on the social agenda and this has caused it to gravitate away from the conservative side. The conservatives however, are the ones who have the momentum with respect to getting spending under control, ending TBTF, and allowing the weak and profligate in big business to die in place of the innovative and prudent. My assessment is that WE (the US as a whole) are heading toward the place where the resonance of this policy is going to overwhelm the “fear” of the conservative social agenda.

      Make no mistake, I am all about the social agenda. But you are not going to see independents dying on that hill to save gay marriage in order to restrain the NEED to reduce moral hazard in the economy. By the same token, I am open to setting the social stuff aside for candidates that are committed to legitimate restraint of govt. spending and actual banking reform. If I am open to that, then I can assure you that I am not alone.

      The time for fighting the mommy wars, abortion litmus tests, etc are over for now. Obama will be seen as a bulwark against conservative social “over reach” in any case which will further help conservatives gain support much in the same way Clinton did. The “status quo” is good enough on social issues for us conservatives right now, what we want is to stop the decline economically.

      1. Doug Terpstra


        We’ll agree to leave sexual morality and proselytizing for another venue. I didn’t mean to sound so gleeful about the demise of good conservatives. And no, it’s no comfort whatsoever to witness (no faith required) the bizarre disintegration of the Republican Party—Warner, Luger, et al replaced by Limbaugh, Joe the Plumber, Glenn Beck and Sarah Palin, etc.

        But long before these hateful zealots, it was modern militant neocons, with their blind ideology of voodoo, trickle-down reaganomics under enabler-serial-deregulator Greenspan that brought us to the point we are now. After voting for change, I’m now mourning the fact that Obama is follwing suit in every meaningful way.

        I’m for a viable third party at this point, though, if the republic (strike that) empire coheres we will surely weather a lot of turmoil before then.

        1. ndk

          But long before these hateful zealots, it was modern militant neocons, with their blind ideology of voodoo, trickle-down reaganomics under enabler-serial-deregulator Greenspan that brought us to the point we are now.

          Yep. I’m convinced that the Neocons and Greenspan together inflicted enough damage on the Republican brand that conservative ideas will have to coalesce under a new banner.

          I would be thrilled if Froggy and his colleagues prove me wrong. Anyone who is against big business, growth of debt and irresponsibility, and mega-corporations is a friend of mine. Go Froggy. :D

  10. DoctoRx

    The post is appreciated.

    Froggy’s comments were also very appreciated. The votes in the House against TARP I and TARP II came from the small town populist Republicans and the truly left-leaning Dems, with the Repubs %-wise more against than the Dems.

    It was that vote and the gen’l inertia of the Dems all last year that told me that BHO, a Party Animal if every there was one given his non-resume, was not going to rock the Big Finance boat.

    1. psychohistorian

      The Big Finance boat needs to be sank to the bottom of the big blue sea and I will vote for anyone who aims to do that.

  11. bobh

    This is the next act of the political tragedy that started unfolding last December, January and February, after Obama inherited this mess. He had a once-in-a-century chance to do things right by nationalizing the insolvent banks, wiping out their stockholders, trimming their bondholders and rebuilding the financial system with smaller banks, more oversight, and severe constraints on future looting by the guilty parties. He could have done this in a way that made the republicans go along (it is their system he would have been saving), making them vote for it every step of the way by shaking a populist stick at them. But he took the advice of Summers and his young ward Tim and gave everything away to the bankers so they would get their bonuses back, the country would be looted again, nothing would get fixed, and Democrats would own the mess and spend 2012-2020 out of power while right wing idiots complete the destruction of my country.

    1. psychohistorian

      I would say that the President still has a chance to save himself given the right public reaction to our next step down with the economy….which is right around the next corner.

      We the people need to force our government to do the proper thing.

    2. Connolly

      Right on the $$$, bobh.
      This is so simple as to be child-like.
      As usual in this Country the populace is far far ahead of the fools we elect.
      This is nothing more (nor less) than a Tragedy for all of us.
      “OBAMA” is truly a character out of a nightmare.


  12. R Craddock

    Repubs will probably not bring up reform,neither will Dems,come election time because both parties have their tin cups held out to the bankers,and most American Voters don’t have a clue about the real scope of corruption going on between Bankers/Congress/Treasury/Fed ,so unless we have a total meltdown like the Great Depression to shake up Americans the Dems have nothing to fear.

  13. lark

    It would be great if the Repubs went after this issue.

    That might light a fire under the b*tt of Summers et al.

  14. Froggy

    Slam dunk win in VA for McDonnell who is very conservative. Deeds tried to hang the social agenda millstone around his neck and he just talked about jobs. If (BIG IF) Corzine goes down tonight, it will be a very strong signal that the country wants the business at hand (ie the economy, TBTF, spending) dealt with before we can indulge in any health care/cap and trade/card check issues which ought to be way on the back burner right now.

  15. kwark


    It appears to me that “Tea Party Republicans” are paid from the same deep pockets that own the movers and shakers in both parties. It’s clear that our so called “two party” system is so thoroughly corrupt that “change” – originating from either party – will prove to be nothing but smoke and mirrors. As with Bush 2 and Obama, we’ll see just one more swap of corporate dweebs for another set of corporate dweebs. Paranoia alert: I doubt that a third party candidate CAN be elected President, or for that matter, any sizable number of Senators and Congressmen – the Repub and Dem powers that be simply won’t allow it to happen. “They” don’t even have to resort to fraud or ballot-stuffing (although “they” are certainly not above those tactics). All “they” need to do is flood the airwaves with lies – fear will keep those voters voting for the anointed Republicrat or Demopublican.

  16. timbo

    I know this much. Partisan squabbling about who was murder one, and who was the accomplice in this vicious murder scene to me is immaterial.

    Both were at the scene of the murder with blood spatters on their clothes and murder weapons in hand, with plenty of motive.

    When its all said and done, both parties oversaw massive credit bubbles, rampant spending increases, wars, corporatism and all its vices, a total disregard for the constitution, and total disdain for American ideals – whatever your defintion.

    So when the finger pointing begins in earnest, it’ll turn me off even more.

    Kind of feel bad for the Dems, Obama didn’t even give his hopey-changey platform lip service.

    If a real leader can ever take office, its gonna take a serious populist surge. Not the Oprah Winfrey style shit we saw in ’08, more like Tiananmen square.

    Hopin for the best

    1. psychohistorian

      Tiananmen square did not end well, I give Oprah Winfrey credit for speaking around the edges of true humanity for many and hopin for the best is not a strategy. Nor is much of this textual white noise that we tilt back and forth about to each other helpful when we agree on the basics, but it is all we have for now and words and concepts are important.

      We need the progressive techie geeks to give “We the people…” the cattle prod of focus that millions of constituents response to real-time opacity of congress critters actions can bring. That would bring us the change we want.

  17. yuan

    Magical thinking.

    The two main parties are united in their utter subservience to rent-seeking oligarchs.

  18. Michael Fiorillo

    I think there is a lot of insight in what Spitzer has to say, but I would only disagree on two things: the time frame and who exactly will seize the terms of debate.

    My worry is not so much about any current Republican candidates, who all seem pretty hopeless. My fear is that Obama’s captivity – willing or unwilling, it doesn’t matter – and cravenness, combined with the structural readjustment-by-another-name that is being forced down people’s throats, will fuel a backlash against representative democracy in general and a hunger for a strong leader.

    What a burn that would be, having to take to the streets to defend these bastards from even worse bastards!

  19. jbmoore

    Unfortunately, the Democrats are showing us that they are just as ineffective at governing as the GOP. It doesn’t help Obama that he squandered a chance to be an effective President and pass significant financial reform legislation last Spring. Though perhaps he never intended to do so. Actions speak louder than words. The actions we get from the current government (both Legislative and Executive) is that the Special Interests’ interests matter and the People’s interests don’t. Even if the GOP quits feeding on itself and develops such a strategy as outlined above, it is a risky one because they would have to make a TBTF breakup happen. If they win office and fail to come through with their promises, that will be the end of the GOP. Such a strategy is also more Democrat than Republican. Antitrust is not the GOP’s strong suite.

  20. Jesse

    God help the US if it gets a new Huey Long, or worse. Palin would fit the bill, but even she would only garner a minority.

    I would give any third party very long odds.

    Obama’s failure is a tragedy still unfolding.

  21. MG

    I hope that Spitzer is actually right and the GOP would be really serious consider adopting this as a platform issue in 2010. It would go a long way to bring me back as a registered Republican Party voter (changed to Independent in 2004).

    However there is nearly nothing in the Republican mantra or party today that suggests this the GOP is following this strategy of really breaking up the large banks. If anything, there has been a rising tide and sentiment among those who consider themselves “Republican” that ‘less regulation is needed’ including in the financial industry. As insane as this sounds, there is a very vocal presence out there right now that supports this according to recent polling data.

    If anything, the Republicans are going to bring out their tried and true “lower taxes is the magical elixir for everything” as the mantra in 2010 especially with the upcoming Bush tax cuts in 2001 and 2003 sunsetting in the near future. That is what the Club for Growth, the US Chamber of Commerce and other schills for big business will be pushing for in a big way and they likely will bulldoze any Republicans who oppose this message.

    What I want to hear a candidate say in a short manner is – “Look we have to be realistic here with the federal budget and that requires putting a real clamp on the increase in gov’t spending, sensible regulation reform but getting the federal gov’t out of the ownership role of companies, letting some of the tax cuts especially the 2003 tax cuts expire, and reevaluating a defense budget that is over $1 trillion a year.”

    The chances that this happens are zero.

  22. gordon

    Well, things look bad. I’m not an American, so in a sense it’s all pretty academic to me except in the sense that US problems have a way of spreading.

    So I’ll offer myself as Podesta for the US. As a 61-year-old widowed retiree from Australia who has never lived in the US I don’t have any vested interests there (though I have some cousins whom I’ve never met) and am prepared to spend a year or two banging heads together for a modest salary, free accommodation and transport within the US and a sufficient armed guard. After I’ve finished, I’ll go home to the other side of the Pacific.

    “Podesta”, by the way, is the title of a medieval Italian City-State official deliberately imported from a different city to avoid favouritism and corruption in administration.

    1. Siggy

      Did you know that Podesta was Chief of something in the Clinton Administration. Interesting name, interesting history.

  23. Patrick

    The dembots are in power, and unemployed (to the tune of 10%) Joe Six Pack is going to ‘throw the bums out’ as punishment.

    All the republicons need to do is promise ‘morning in america’ and they’re home free.

  24. Bob Goodwin

    I am a libertarian and republican. This blog is (mostly) read by dems, so I will try to make my comments cogent, and not partisan.

    I was mad as hell at Paulson and Bush. Not enough to become a democrat, but plenty happy to give all republicans a few terms in the wilderness. My Libertarian principles were in tatters, because the Wall street psychopaths clearly used our excess liberties to the detriment of the populace. Obama has not been an improvement.

    Republicans have had a fund raising advantage until the last two cycles. Wall street suddenly had the funds to buy both parties. It is unclear how this will play out in the future.

    The tea-parties are a running joke to the left, and rightly so due to their lack of sophistication. But one should be wary of waking activism. I have found they are largely full of people like me, who kinda liked free markets and were appalled by Tarp. And who were kinda republican too.

    How out of touch are rupublican legislators who have taken Wall Street largess for years? A lot. But their base has flipped. I don’t think it will take them very long to flip too.

    The democrats will howl with legitimate rage. And it won’t be fair. In a great historical irony, the mess that Paulson built will be blamed on Obama. Johnson’s great society was built on the ashes of southern bigotry. This is a smaller irony than that was.

    1. mannfm11

      I agree with you in a lot of ways Bob. The left is snickering at all of us and blaming what was caused by leftist policies on capitalism and free markets. Notice they are now blocking the investigation of the Fed. But, Paulson didn’t create this mess and neither did Bernanke. The fuel for this whole matter was created in the tech bubble of the 1990’s and the GSE’s FNM, FRE and to some extent sallie Mae and the Congressional dictates behind them. You might investigate the massive expansion of the FNM and FRE balance sheets, starting in the early 1990’s. This was high powered money and it is still swirling around the globe, having provided the credit to build China and other bubbles indirectly. You might read what Doug Noland was writing before Bush was even elected and the tech bubble had burst.
      This is a November 2000 article Doug wrote for the Prudent bear fund where he is a funds manager. Here is a link to his entire archieves:

      With this information, you might begin to get the idea of what really happened here. By the time Paulson got there, the whole thing was already in collapse. Brilliant minds had created a financial death machine out of genius models that were awarded Nobel Prizes. Just think what Obama will do with his Peace prize with these in mind.

      1. Bob Goodwin

        I don’t disagree with your analysis. But I do differentiate between ideological error and theft. Alan Greenspan, Bill Clinton and Barney Frank all thought they were doing right from three different ideologies. Robert Ruben and Hank Paulson played crisis against the public interest.

  25. Richard Kline

    While I appreciate the hypothetical from Spitzer, it is inconceivable the the Republican Party as presently constituted will take on ‘break up the banks’ as an issue of any kind, serious or otherwise. The GOP of the Naughts believes in the true religion of market forces; government intervention is _unthinkable_, literally. Those Tea Party phonies: they’re funded by big, BIG ultra-right wing M-O-N-E-Y which has no brief for such a program. None, nada. What is it that those Tea Partyhats are braying about when hired to show up at their astroturf forums? Break up the Government! Audit the Fed! Chasten the SEC! Get the government out of Medicare! Louts, loons, and liars, naught else.

    It would be a smart political move for the GOP to do just what Spitzer proposes, but it’s just not on.

    Regarding a third party, Americans have a history of toying with the same but without real seriousness. We Usonians like to sit on our fat sofas glaring at the godbox turning thumbs up and thumbs down, just like tonight in November 09. But we only have two thumbs and no wits, to many of us, so that means third parties can’t get into the picture. And if one was to occur, where would it come from? The Greens are drawing 1.5% and kissing Democratic ass most of the time. Ron Paul isn’t even a candidate let alone a party, and besides the GOP is cannibalized by libertarian religious cranks already: why do they need _another_ party to push such nostrums? It’s sick to think of it, but in reality the most probable source of a functional Third Party at this point is Bloomberg business technocrats who decide that the Democrats are to soft a tool. They could go it right now as the Better Business Party, and pull 25% just for showing up. In other words, the real Republicans who have been pushed out of the GOP stand a better chance of founding a ‘back to business as usual’ party than any real reformers. Because ask yourself this: “Where ARE the real reformers?” They are mired in the Democratic party as a permanent minority of perhaps 30% of it, and not about to go it alone. In effect, they are neutered. In many respects, I’d love to see them pull out and try it, and the country needs it. The net result, though, is that the ‘Democratic Party’ would then become ‘the Republican Party wearing an Ass’ Hat’ with a functional majority of around 50% of the vote. Still, it would be a great good thing to see a party take up the banner of _real_ reform, and push the debate in that direction as I think the public would be open to that at least and roaring for that at best. But what is sure is that the GOP of this place and time is temperamentally incapable of any such behavior.

    1. Bob Goodwin

      You make two classic mistakes contrary to your typically insightful analysis Richard. Tea-partiers are not paid protesters, and the republican party is not the monolithic sum of its polititians. It is true that both parties have their fringe members driven by a social agenda. This makes the outcomes uncertain across the board. However the marriage between ‘free market’ and ‘big business’ has been broken in many republicans mind. I have no doubt the politicians would have no problem voting for a populist agenda to retain their jobs.

      Wall Street is now blue.

  26. mannfm11

    This is deeper than that. I suspect that by 2012, we are going to have a new party in the US with a new name that is going to shock the world and win the White House. It is probably going to be set up by some anti establishment Republicans and a few like minded Democrats. Remember, it has only been about 6 years ago they thought the Democrats might be an endangered species. How walking into the White House at the peak of the greatest mania in history in 2001 could change the perspective. The swap will come as Obama walked in with only his own nonsense into a situation where he hasn’t a snowballs chance in a blast furnace.

    You might look up Bill Moyers interview of William Black for what is really going on here. The real thing that is going on is government doesn’t want to deal with a bankruptcy as large as what we have in the major banks. I suspect that even the high rollers, Goldman and JPM are bankrupt, but are hiding behind the curtain of Fed influence. I would be shocked if WFC, BAC and C made it without massive props being added. But, the big thing is the mess cannot be unwound and there is no telling how far the criminal element in this matter reaches. Goldman was selling credit default swaps on CDO’s it had to know were total crap so they could sell more synthetics, then moved the swaps onto AIG, then buying swaps on AIG as well, most likely because they knew they had just bankrupted them. How many thousands should be busting rocks instead of collecting million dollar bonuses?

    1. Bob Goodwin

      I have several times made the case that Bush is Pierce, and Obama is Buchannan. Pierce and Buchannan are typically 2 of 3 lowest ranked presidents. (Pierce was a northern alcoholic, and Buchannan a midwesterner who was a ruthless polititian, but a timid leader) They both served during the final death throe’s of the Whig party, and campaigned anti-slavery, but governed pro-south. The democrat and whig parties were essentially the same. Thus was born a new party – the radical reformist party of Abraham Lincoln. Pretty messy affair, actually.

      1. weinerdog43

        Hi Bob. Buchanan was indeed terrible, but he was not a Midwesterner. He was from PA as opposed to the Midwest.

  27. Richard Kline

    So gordon, you would make a better President of the US right now than anyone who ran in the last election. On the whole, partisan politics are a good thing for a body politic: it gives the rubes a focus, and let’s off the steam which would otherwise build to civil war. But the podesta model of governance was, to me, in many ways the best innovation of the early modern period. It has never been implemented at the level of the nation-state, though. Or at least not formally, for the chair of the European Commission is quite close, historically and ‘genetically’ to that function. But Europe is about to give itself an elected President so that’ll be the end of that.

    But you’d have my vote tomorrow, m’friend.

    1. gordon

      Thanks, Richard Kline. I’ll get my passport up to date!

      Meanwhile, the Third Party proponents might usefully review the career of William Jennings Bryan.

  28. charcad

    For Middle America the “Banking Reform” issue is just a subset of a larger economic war relentlessly waged against them by Blue Interests and Blue Coasts. Other fronts include:

    1. Falsely labeled “Free Trade” intermediated by Deep Blue money centers.

    2. The AGW hoax used to justify massive increases in Deep Blue government bureaucracy, securitized carbon credits and general higher costs passed along to the consumer.

    3. The entire Higher Education scam.

    4. Open borders flood of immigrants.

    Spitzer focuses on the “Bank Reform” issue because controlling and sabotaging this is of immediate importance to collective Blue interests, particularly in NYC. And the banks and Wall Street *are* majority Deep Blue, contrary to paid DNC shills spreading their mendacious propaganda.

    Not that the GOP in its present form offers any alternative for Middle America.

  29. nanute

    Say what you like about Spitzer, this much is true: He has always been a thorn in the side of big money, crooked corporate shysters. His personal indiscretion was the only way they could marginalize him as a political reformer looking out for individual investors.

    Whomever grabs a hold of true financial and banking reform will win the respect of the left, and the begrudging respect of the lunatic fringe on the right. The ultimate question is whether meaningful reform can transpire peacefully. I’m not optimistic, but hoping it is so. There is a growing reactionary force on the right (which Republicans can’t disown), and these people own a lot of guns and ammo. I’m not optimistic because corporate control of the political process is now blatantly obvious. The party most likely to step in and institute meaningful reform, (Democrats), are showing just how much their pockets have been lined by real power. It is early in the term of Obama, and there is a slight chance that he may be able to pull us from the brink of National suicide, but it is a very slim thread.

  30. NABNYC

    The Democrats should not only lose the next election, they should be disbanded, their leadership thrown into prison or at least have their heads shaved and be sent into exile. Honestly, what else do they deserve? They had a huge percentage of the public out raising money, donating, campaigning to get them in charge. Then we have a strong majority in the Senate and House, control of the white house and many of the States. The Republicans are down to 20% of the population.

    What have the Democrats done with this overwhelming public mandate for change? They’ve used their dominance to solicit bribes from the big corporations, wall street, and all the rich people in the country, to enrich themselves and ensure that they can continue to buy their position in future elections. They have conducted what can only be described as shake-down operations of every major financial organization involved in healthcare. Obama holds secret meetings with the insurance companies, promises not to pass single-payer or medicare for all, and in return the insurance companies pay huge bribes to the Democratic party. Repeat the same scenario with the doctors’ groups, the drug dealers, the hospital owners.

    What have the Democrats done for the public to “reform” healthcare? If they compel 40 million Americans to buy health insurance, that will be another $50 Billion a year (per Kucinich) or up to $200 Billion a year (my calculations) stolen from the public and given to the Medical Industry, to the insurance companies, to the doctors, to the hospitals. What do I get out of this “reform?” Not a thing.

    What have the Democrats done to create jobs for the unemployed? Nothing. What have they done to end these illegal wars in the middle east? Nothing. What have they done to rescind the Bush/Cheney evisceration of the Constitution? Nothing. What have they done to bring to justice those who started these illegal wars, those who have engaged in a program of kidnapping, torture, and murder? Nothing. Any efforts to indict, prosecute, imprison the Wall Street criminals who have stolen our money, to seize their assets and really save the country and the world? Nope. The Democrats are too busy collecting “donations” from Wall Street to enforce any laws.

    As far as I’m concerned, a lifelong Democrat, I will not vote Democrat next year, or maybe ever again. I would never vote for a Republican, but I’ll either vote for a progressive independent or not vote at all. Something I’ve never done in my life. But these Democrats have convinced me there is no point in voting, the parties are essentially the same. Corrupt.

  31. charcad

    Say what you like about Spitzer, this much is true: He has always been a thorn in the side of big money, crooked corporate shysters.

    Spitzer’s superficial populism is just a mask for a small family feud inside the larger context of “New York”. Spitzer’s “populism” extends to a corporatist making $500k per year and living in Westchester.

    As everyone now knows, the socio-politico-economic entity called “New York” long ago ceased to make anything of value to other human beings. It now subsists solely on hyper-financialization abetted by its (shrinking market share) mass media. Spitzer has absolutely no intention of undermining this hyper-parasitic economy.

    There is a growing reactionary force on the right (which Republicans can’t disown), and these people own a lot of guns and ammo. I’m not optimistic because corporate control of the political process is now blatantly obvious.

    You are very unclear here. Do you mean to imply “these people” will fight for Goldman Sachs, Halliburton, the Federal Reserve and banksters in general in a civil upheaval? If so you need to broaden your information sources beyond the Daily Kos and the SPLC. For “these people” those entities represent the Antichrist incarnate.

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