Will It Be Fair To Refer To The Coming Great Depression As "The Trump Depression?"

I was born in 1948. My grandparents used to tell me about the Great Depression. There's no one alive today who was a sentient enough being at the time to remember it first hand. And many Americans under 40 relate to it about as much as they relate to the Battle of Yorktown. Yesterday, both the New Yorker and New York Magazine published vital pieces on the Great Depression and what it has to do with us in 2020-- Susan Glasser for the New Yorker and Eric Levitz for New York. Hint: our White House is occupied by Donald J. Trump.

"In September 2006," wrote Levitz, "Nouriel Roubini told the International Monetary Fund what it didn’t want to hear. Standing before an audience of economists at the organization’s headquarters, the New York University professor warned that the U.S. housing market would soon collapse-- and, quite possibly, bring the global financial system down with it. Real-estate values had been propped up by unsustainably shady lending practices, Roubini explained. Once those prices came back to earth, millions of underwater homeowners would default on their mortgages, trillions of dollars worth of mortgage-backed securities would unravel, and hedge funds, investment banks, and lenders like Fannie Mae and Freddie Mac could sink into insolvency. At the time, the global economy had just recorded its fastest half-decade of growth in 30 years. And Nouriel Roubini was just some obscure academic. Thus, in the IMF’s cozy confines, his remarks roused less alarm over America’s housing bubble than concern for the professor’s psychological well-being. Of course, the ensuing two years turned Roubini’s prophecy into history, and the little-known scholar of emerging markets into a Wall Street celebrity."

Roubini isn't buying onto the nonsense about a V-shaped recovery. He sees an "L-shaped depression," although he expects thing to get better before they get worse. "He foresees," continued Levitz, "a slow, lackluster (i.e., 'U-shaped') economic rebound in the pandemic’s immediate aftermath. But he insists that this recovery will quickly collapse beneath the weight of the global economy’s accumulated debts. Specifically, Roubini argues that the massive private debts accrued during both the 2008 crash and COVID-19 crisis will durably depress consumption and weaken the short-lived recovery. Meanwhile, the aging of populations across the West will further undermine growth while increasing the fiscal burdens of states already saddled with hazardous debt loads. Although deficit spending is necessary in the present crisis, and will appear benign at the onset of recovery, it is laying the kindling for an inflationary conflagration by mid-decade. As the deepening geopolitical rift between the United States and China triggers a wave of deglobalization, negative supply shocks akin those of the 1970s are going to raise the cost of real resources, even as hyperexploited workers suffer perpetual wage and benefit declines. Prices will rise, but growth will peter out, since ordinary people will be forced to pare back their consumption more and more. Stagflation will beget depression. And through it all, humanity will be beset by unnatural disasters, from extreme weather events wrought by man-made climate change to pandemics induced by our disruption of natural ecosystems."

Levitz's interview with Roubini is something you should read unless something like this will keep you up nights:

There’s a conflict between workers and capital. For a decade, workers have been screwed. Now, they’re going to be screwed more. There’s a conflict between small business and large business.

Millions of these small businesses are going to go bankrupt. Half of the restaurants in New York are never going to reopen. How can they survive? They have such tiny margins. Who’s going to survive? The big chains. Retailers. Fast food. The small businesses are going to disappear in the post-coronavirus economy. So there is a fundamental conflict between Wall Street (big banks and big firms) and Main Street (workers and small businesses). And Wall Street is going to win.

Not scary enough for you? How about this? Is this the kind of thing you can lose sleep over?

You’re going to start having food riots soon enough. Look at the luxury stores in New York. They’ve either boarded them up or emptied their shelves,  because they’re worried people are going to steal the Chanel bags. The few stores that are open, like my Whole Foods, have security guards both inside and outside. We are one step away from food riots. There are lines three miles long at food banks. That’s what’s happening in America. You’re telling me everything’s going to become normal in three months? That’s lunacy.

The Republicans have lost their minds entirely if they thing that Donald Trump and the crew of misfits and sycophants he's hired to run the government are the right people to save the country. And the Democratic electorate is just as clueless, passing on Bernie and Elizabeth in favor of Status Quo Joe, who only looks "good" in comparison to Trump but is certainly not up to this job:

The market, as currently ordered, is going to make capital stronger and labor weaker. So, to change this, you need to invest in your workers. Give them education, a social safety net-- so if they lose their jobs to an economic or technological shock, they get job training, unemployment benefits, social welfare, health care for free. Otherwise, the trends of the market are going to imply more income and wealth inequality. There’s a lot we can do to rebalance it. But I don’t think it’s going to happen anytime soon. If Bernie Sanders had become president, maybe we could’ve had policies of that sort. Of course, Bernie Sanders is to the right of the CDU party in Germany. I mean, Angela Merkel is to the left of Bernie Sanders. Boris Johnson is to the left of Bernie Sanders, in terms of social democratic politics. Only by U.S. standards does Bernie Sanders look like a Bolshevik.

In Germany, the unemployment rate has gone up by one percent. In the U.S., the unemployment rate has gone from 4 percent to 20 percent (correctly measured) in two months. We lost 30 million jobs. Germany lost 200,000. Why is that the case? You have different economic institutions. Workers sit on the boards of German companies. So you share the costs of the shock between the workers, the firms, and the government.

Meanwhile Susan Glasser wants to remind us that the GOP is all about diversion. They want the electorate to think about anything rather than the "side"-effects of the pandemic. "In recent days," she wrote, "the Republican-controlled Senate has not considered any major legislation related to the virus and the historic havoc it has wrought on the country’s public health and economy. Nor does it have any current plans to do so, leaving the fate of a three-trillion-dollar relief measure passed by the Democratic-controlled House last Friday uncertain... Trump right now is mass-proliferating diversions, from last week’s spurious 'Obamagate' to this week’s threat to withhold federal funds from Democratic-led states that make it easier for voters to cast ballots by mail this fall. If it seems as though Trump is generating more controversies than usual these days, that’s because he is. He is a superspreader of distraction. It’s an excellent way to make one forget, at least for a while, about the death and economic destruction currently rampaging across the country."

Of course Trump is trying to distract. The emerging politics of the pandemic are not good for him, nor are they likely to get better. They have recast the fall election as a referendum on Trump’s basic competence to lead the country through a once-in-a-century convergence of crises. During the pre-pandemic impeachment era, Richard Nixon was the inescapable historical point of comparison for Trump’s corruption-ridden Presidency. Now it is Herbert Hoover. Running for reëlection after the stock market crash of 1929 and three failed years of trying to stop the Great Depression, Hoover promised Americans that “Prosperity Is Just Around the Corner.” Upbeat predictions amid bread lines didn’t cut it, and Hoover lost badly. The brutal political reality of running for another term while the country is experiencing mass unemployment is one that almost no President can overcome. In fact, the last time an American incumbent successfully won during a recession was in 1924.

Then again, Hoover’s campaign slogan seems like a winner today compared with the clunker Trump has been trying out in recent days: “Transition to Greatness!” On May 7th, Trump débuted the phrase, saying at a White House appearance with Texas Governor Greg Abbott that, while the economy was cratering now, he expected that late this year-- preferably, right around the November election-- it would begin to “transition into greatness.” A fantastic 2021 would follow. “I think next year we’re going to have a phenomenal year,” the President insisted.

The line stuck with him. By the next day, at an appearance with Republican members of Congress, Trump was calling it his new campaign mantra, claiming to have invented it on the spot (although he had used the same phrase just the day before), and insisting it was a more brilliant advertisement for his reëlection than anything the professionals could come up with. “It’s a great term. It just came out at this meeting,” he told the Republicans as reporters looked on. “That’s right. It came out by accident. It was a statement and it came out and you can’t get a better one. We can go to Madison Avenue and get the best, the greatest geniuses in the world to come up with a slogan, but that’s the slogan we’re going to use: ‘Transition to Greatness.’ And it’s starting right now.”

I suppose it’s not a surprise, more than three years into his Presidency, that Trump will lie about anything, even the coinage of a campaign slogan, but on simple grounds of political malfeasance alone this one seems to be an epic Presidential fail. It’s safe to say that nobody ever got reëlected to anything by promising a “transition.” You would think the guy whose 2016 success was aided by a catchy campaign slogan on a red baseball cap would know a dud when he sees one. Politicians win by attacking the other team, as Trump did so effectively four years ago, by ripping off Ronald Reagan’s 1980 promise to “Make America Great Again.” It is a lot harder to do that if you’re an incumbent, and harder still if you’re the incumbent at a time of epic death and economic suffering. If the record you’re running on is so bad that your own slogan vows to do better next time, it’s hard to envision winning. Yet that is exactly what Trump is selling these days. “TRANSITION TO GREATNESS,” Trump tweeted this Monday, at 4:39 a.m. On Tuesday, emerging from a lunch with Senate Republicans, he explained once again his theory of the case. “It’s a transition to greatness,” Trump said. “Above all, next year, you are going to have a tremendous year.” On Wednesday, he promised, on Twitter, a “normalization!” that somehow, miraculously, will take America out of this mess, “now that our country is Transitioning back to Greatness.” Madison Avenue is surely grateful that Trump is claiming responsibility for this at least.

The U.S. is reporting 95,379 deaths today (Friday), 1,116 more death since Thursday. By Memorial Day the U.S. will be very close to the gruesome 100,000 mark, most of whom should not have died, had our political leaders-- foremost Trump-- done their most basic jobs of protecting the country. This week presidential historian Robert Dallek, writing for Time, reminded his readers that "Herbert Hoover, who won the election of 1928 and had a reputation as a brilliant mining engineer and highly successful businessman, likewise struggled to respond to the stock market crash of 1929 and economic collapse beginning in 1930. The problem for Harding, Hoover and the Republicans who controlled Congress in the 1920s was an unyielding faith in free market capitalism. Convinced that the markets would automatically turn up, as they had in 1921, Hoover repeatedly urged the country to believe that prosperity was right around the corner. With conditions worse than ever and unemployment reaching 25% of the work force in 1932, Hoover lost the presidency in a landslide to New York Governor Franklin D. Roosevelt... Roosevelt’s leadership fostered renewed hope, with expanded job opportunities provided through public works projects, including dam-building and flood control that protected the environment, as well as projects for artists and writers. As important, his administration humanized America’s industrial economy with Social Security to insulate seniors from hardships, unemployment insurance and minimum wages and maximum hours that gave laborers unprecedented protections from market swings. On the strength of that success and his leadership in World War II, he won a record four presidential elections." Stuck with a status quo nothing as the Democratic nominee, what we need to do now is elect as many progressive as we can to Congress-- like the men and women you'll find listed by clicking on the thermometer on the right.

Trump, who is no student of history, says that he has presided over the best economy ever in the United States and accomplished more in his first year and a half in office than any previous occupant of the White House. Never mind that the coronavirus has triggered a precipitous downturn with over 1.4 million Americans infected and more than 89,000 fatalities. In the beginnings of a reelection campaign in which Trump has to explain away nearly 15% unemployment, the worst since 1933, he is predicting a third-quarter resurgence and a fourth-quarter expansion that will carry over into next year.

...Certainly no one can blame the pandemic itself on Trump, but he has overseen a slow and shortsighted response to the infectious virus. The Washington Post has cited more than 18,000 questionable statements he has made, including numerous outright lies. His credibility problem has played a significant part in making him the first president since polling began in the 1930s to go through almost four years without achieving 50% public approval-- evidence that many people cannot square his rhetoric of alleged accomplishments and self-congratulation with public realities.

There is no question but that the country is facing a national crisis demanding an imaginative response like FDR provided with his New Deal. We can’t simply talk our way out of this challenge by ordering cities and states to reopen public businesses without an escalating death toll. The lackluster response to the economic problems of the 1920s shows just how cheap talk is in this kind of situation: leaving massive national problems to work themselves out without serious federal intervention only made things worse.

...Today, Americans are once again facing the consequences of a failure to act, and a mistaken belief that a miracle solution is on its way. The past has already shown that there is a better way forward-- but as the coronavirus crisis continues, it only seems more likely that FDR’s is not the history Trump plans to repeat.

Greece-- And The Thrifty Dutch... And The Shifty Romney

Wednesday night I had dinner-- at Uncle Nick's on 8th Avenue, a low end Greek restaurant that deserves none of the accolades bestowed on it by a food press desperate for faux-authenticity-- with my old friend Bart and his grandson, Nicky, who are visiting from Amsterdam. Last time I saw Bart, or even heard from him, he didn't have any children, let alone grandchildren. We both worked at a youth center in Amsterdam, de Kosmos. I ran the macrobiotic restaurant. He was the financial controller of the whole institution. So who better to ask about how the Euro crisis that is rapidly coming down the pike in the guise of a Greek (+ Spanish/Portuguese/Italian) default would impact the industrious, thrifty Dutch? Bart said no one knows. That doesn't sound good. The next morning I found someone who does-- Nouriel Roubini ("Dr. Doom," the first guy to warn about the impending mortgage crisis here in the U.S.)-- and his prognosis... lives up to his charming nickname.

Actually, he's being very realistic in his prognosis-- Greece has to leave the Eurozone and default. (I still have a jarful of old drachmas, lira, pesetas, etc. I wonder if they'll ever be accepted as currency again.) He says it's either this year or next for an orderly Greek default. Hard to imagine it would take that long.

Greece is stuck in a vicious cycle of insolvency, lost competitiveness, external deficits, and ever-deepening depression. The only way to stop it is to begin an orderly default and exit, coordinated and financed by the European Central Bank, the European Union, and the International Monetary Fund (the “Troika”), that minimizes collateral damage to Greece and the rest of the eurozone.

Greece’s recent financing package, overseen by the Troika, gave the country much less debt relief than it needed. But, even with significantly more public-debt relief, Greece could not return to growth without rapidly restoring competitiveness. And, without a return to growth, its debt burden will remain unsustainable. But all of the options that might restore competitiveness require real currency depreciation.

The first option, a sharp weakening of the euro, is unlikely, as Germany is strong and the ECB is not aggressively easing monetary policy. A rapid reduction in unit labor costs, through structural reforms that increased productivity growth in excess of wages, is just as unlikely. It took Germany ten years to restore its competitiveness this way; Greece cannot remain in a depression for a decade. Likewise, a rapid deflation in prices and wages, known as an “internal devaluation,” would lead to five years of ever-deepening depression.

If none of those three options is feasible, the only path left is to leave the eurozone. A return to a national currency and a sharp depreciation would quickly restore competitiveness and growth.

Of course, the process would be traumatic-- and not just for Greece. The most significant problem would be capital losses for core eurozone financial institutions. Overnight, the foreign euro liabilities of Greece’s government, banks, and companies would surge. Yet these problems can be overcome. Argentina did so in 2001, when it “pesofied” its dollar debts. The United States did something similar in 1933, when it depreciated the dollar by 69% and abandoned the gold standard. A similar “drachmatization” of euro debts would be necessary and unavoidable.

Losses that eurozone banks would suffer would be manageable if the banks were properly and aggressively recapitalized. Avoiding a post-exit implosion of the Greek banking system, however, might require temporary measures, such as bank holidays and capital controls, to prevent a disorderly run on deposits. The European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) should carry out the necessary recapitalization of the Greek banks via direct capital injections. European taxpayers would effectively take over the Greek banking system, but this would be partial compensation for the losses imposed on creditors by drachmatization.

Greece would also have to restructure and reduce its public debt again. The Troika’s claims on Greece need not be reduced in face value, but their maturity would have to be lengthened by another decade, and the interest on it reduced. Further haircuts on private claims would also be needed, starting with a moratorium on interest payments.

Some argue that Greece’s real GDP would be much lower in an exit scenario than it would be during the hard slog of deflation. But that is logically flawed: even with deflation, real purchasing power would fall, and the real value of debts would rise (debt deflation), as the real depreciation occurs. More importantly, the exit path would restore growth right away, via nominal and real depreciation, avoiding a decade-long depression. And trade losses imposed on the eurozone by the drachma depreciation would be modest, given that Greece accounts for only 2% of eurozone GDP.

Reintroducing the drachma risks exchange-rate depreciation in excess of what is necessary to restore competitiveness, which would be inflationary and impose greater losses on drachmatized external debts. To minimize that risk, the Troika reserves currently devoted to the Greek bailout should be used to limit exchange-rate overshooting; capital controls would help, too.

Those who claim that contagion from a Greek exit would drag others into the crisis are also in denial. Other peripheral countries already have Greek-style problems of debt sustainability and eroded competitiveness. Portugal, for example, may eventually have to restructure its debt and exit the euro. Illiquid but potentially solvent economies, such as Italy and Spain, will need support from Europe regardless of whether Greece exits; indeed, without such liquidity support, a self-fulfilling run on Italian and Spanish public debt is likely.

The substantial new official resources of the IMF and ESM-- and ECB liquidity-- could then be used to ring-fence these countries, and banks elsewhere in the eurozone’s troubled periphery. Regardless of what Greece does, eurozone banks now need to be rapidly recapitalized, which requires a new EU-wide program of direct capital injections.

The experience of Iceland and many emerging markets over the past 20 years shows that nominal depreciation and orderly restructuring and reduction of foreign debts can restore debt sustainability, competitiveness, and growth. As in these cases, the collateral damage to Greece of a euro exit will be significant, but it can be contained.

Like a doomed marriage, it is better to have rules for the inevitable divorce that make separation less costly to both sides. Make no mistake: an orderly euro exit by Greece implies significant economic pain. But watching the slow, disorderly implosion of the Greek economy and society would be much worse.

How lucky were the Turks that they never were accepted into this nightmare scenario? They're certainly having the last laugh now! Austerity without growth is the mean-spirited conservative consensus and even obvious failure isn't moving the needle-- at least not among the delusional bankster-class. And there are a significant number of low-info American voters-- Republicans-- eager to embrace this in the form of a economically and fiscally clueless con man. Mixing David Korten with Roubini may seem like oil and water but in his book, Agenda For a New Economy Korten advocates steep taxes on sociopathic behavior by hedge fund managers and Wall Street banksters. When confronted by the argument that these taxes will retard "financial innovation," Korten blurts out what every sane American has come to realize since he wrote his book:

Good. That is the intention. We should not be providing incentives to financial predators to come up with ever more innovative forms of theft.

Amen! And there has never been a candidate who has represented this class of financial predator more thoroughly than Mitt Romney, destroyer of businesses and destroyer of lives on the alter of quick turnover greed and avarice. Romney truly is the culmination of financial evil in a capitalism adrift from its moorings. Like Wall Street, the Romney model "doesn't develop its business plans to meet our needs; it develops its plans to place us in a position of dependence on Wall Street products that afford it the greatest opportunity to profit at our expense." But, as the Romney team was pointing out loudly as I was blogging this, at least he's white. Korten never mentioned Romney or his financial backers by name here but... well, draw your own conclusions:

Real investors commit funds and entrepreneurial energy to creating and growing businesses. People who buy and sell pieces of paper in hopes of making unearned gains on price movements are engaging in speculation, otherwise known as gambling, and those who hold the bets and distribute the winnings are bookies or dealers. Simply using honest language would help distinguish between real investors creating real wealth and speculators creating financial wealth with financial games.

Shouldn't Barney Frank Be Able To Vote Ron Paul's Proxy When The House Financial Services Committee Votes On The Fed?

Before the great mortgage collapse that plunged the U.S. and most of the rest of the world into the Great Recession the banksters, according to the L.A. Times, knew they were playing with fire. Jim Puzzanghera and Scott Reckard reported exactly two years ago that “Before Washington Mutual collapsed in the largest bank failure in U.S. history, its executives knowingly created a ‘mortgage time bomb’ by making subprime loans they knew were likely to go bad and then packaging them into risky securities.”

Joshua Holland picked up the trail in his fantastic book, The Fifteen Biggest Lies About The Economy noted that according to the "the Wall Street Journal, U.S. prosecutors are [still] investigating whether Morgan Stanley misled investors about mortgage-derivatives deals it helped design and sometimes bet against.” I hope they're asking some of the investors.

And the Securities and Exchange Commission charged Goldman Sachs with “defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.”

They needed some help laundering the risk out of those shaky loans, and they got it. A Senate panel investigating the roots of the crash “unveiled evidence that credit-ratings agencies knowingly gave
inflated ratings to complex deals backed by shaky U.S. mortgages in exchange for lucrative fees.”

Nobel Laureate Joseph Stiglitz neatly summed up the environment in which this took place:

"The mortgage brokers loved these new products because they ensured an endless stream of fees. They maximized their profits by originating as many mortgages as possible, with frequent refinancing. Their allies in investment banking bought them, sliced and diced the risk and then passed them on-- or at least as much as they could. Our bankers forgot that their job was to prudently manage risk and allocate capital. They became gambling casinos-- gambling with other people’s money, knowing that the taxpayer would step in if the losses were too great."

They wouldn’t have been able to do it without reckless deregulation for deregulation’s sake-- a bipartisan affair [corrupt conservatives on both sides of the aisle] fueled by the right-wing noise machine. Greed and the herd mentality are constants, after all; without regulations that protect the public interest, they can only lead to disaster.

As financial reporter Gillian Tett detailed in the Financial Times, a crucial moment in the development of the crisis occurred back in the mid- 1990s, when JP Morgan was struggling to deal with the huge number of loans on its books and needed large reserves of cash in case those loans went bad. It was at that moment when two groups of young JPM hotshots-- one that was creating those exotic new investments and another that was knee-deep in “subprime” loans-- started to talk to each other and realized that they could launder the risk out of sketchy home loans by securitizing
them.

This discussion, which would lead to so much economic pain for millions of people around the world, could not have come to fruition without the demise of the Glass-Steagall Act in 1999. It forced firms to choose between writing loans and investment banking, but it was done in by a massive lobbying effort by investment bankers after the tech bubble had collapsed in 2000.

In the early 1990s, betting on interest rates was all the rage among higher-risk investors. But, as Tett noted, in the middle of the decade, “The interest rate climate suddenly changed, unleashing wild market turbulence and causing many of the derivatives contracts to produce huge losses-- or ‘blow up,’ as traders call it.” In the aftermath, these exotic investment products had a bad name, and there were widespread calls to regulate them.

But the International Swaps and Derivatives Association fought back furiously, arguing that a regulatory clampdown would not only run counter to the spirit of capital markets, but also crush creativity. Their aggressive lobbying campaign was effective: By the mid-1990s, regulatory pressure had died away.

Then, as the new century dawned, with little public debate, a group of lawmakers-- Republicans and “blue-dog” Democrats-- led by John McCain’s future chief economic adviser, Phil Gramm (who would gain some infamy by saying that the Great Recession was overblown and America had become a “nation of whiners), pushed through the “Commodity Futures Modernization Act of 2000,” which put the final nail in the regulatory coffin. The legislation provided us with what became known as the “Enron Loophole”-- which exempted most energy trading from oversight-- and it also assured Wall Street’s whiz kids that their new products would be free of pesky regulation. The popularity of those
investments soon exploded.

The Enron Loophole, like the Halliburton Loophole, was nice for a tiny handful of billionaire political donors but both were a catastrophe for normal American families. Conservative politicians, mostly Republicans but a handful of right-wing Democrats, made out like bandits as well. The bill essentially passed the House on July 1, 1999 343-86, just 69 Democrats and 16 Republicans putting the welfare of the citizens of this country first. I'm not going to name all 343 bad guys, but here a where-are-they-now list of some of the more noteworthy creeps ultimately responsible for crashing the economy:

Dick Armey (R-TX)- now chief Teababgger
Spencer Bachus (R-AL)- now head of the Financial Services Committee
Shelley Berkley (D-NV)- a thoroughly corrupt New Dem running for the U.S. Senate
Rod Blagojevich (D-IL)- rotting in prison on corruption charges
Roy Blunt (R-MO)- now a U.S. Senator and Romney's liaison with Senate Republicans
John Boehner (R-OH)- handsomely rewarded by Wall Street which bought him the Speakership
Richard Burr (R-NC)- now a Senator, who ran almost totally financed by banksters
Joe Crowley (D-NY)- head of the New Dems, under investigation by the House Ethics Committee
Duke Cunningham (R-CA)- rotting in a federal prison on multiple corruption convictions
Nathan Deal (R-GA)- now Governor of the most corrupt state in America
Tom DeLay (R-TX)- forced to resign from Congress, recently sentenced to prison, appealing
Jim DeMint (R-SC)- now a Senator and teabagger
John Doolittle (R-CA)- escaped criminal corruption charges by retiring from Congress
David Dreier (R-CA)- still in the closet
Mark Foley (R-FL)- outed; frequent guest on Bill Maher's show
Dick Gephardt (D-MO)- a lobbyist... sleazy!
Lindsey Graham (R-SC)- now a Senator + see "David Dreier" above
Ralph Hall (D-TX)- now a Republican, even more corrupt than before
Denny Hastert (R-IL)- forced to retire in a cesspool of corruption
Baron Hill (D-IN)- now one of the sleaziest lobbyists in Washington, DC
Tim Holden (D-PA)- likely to be defeated Tuesday over his corruption
Steny Hoyer (D-MD)- last seen trying to bolster Holden; hoping to be Speaker
John Kasich (R-OH)- now governor of Ohio; in contention for the worst in America
Ron Kind (D-WI)- vice chair of the corporate shills, The New Dems
Don Manzullo (R-IL)- recently stabbed in the back by Eric Cantor but will soon reemerge as a lobbyist
Buck McKeon (R-CA)- drowning in more scandals than anyone else in Congress
Bob Menendez (D-NJ)- shitty congressman is now a shitty senator
Bob Ney (R-OH)- served time in prison for corruption; now a dj
Rob Portman (R-OH)- now a senator and much touted as the most whitebread Romney VP pick
Ileana Ros-Lehtinen (R-FL)- still under the protection of Debbie Wasserman Schultz
Paul Ryan (R-WI)- Ayn Rand acolyte still serving Wall St. everyday and in every way
David Diapers Vitter (R-LA)- now calling hookers from the Senate floor instead of the House floor

Awesome, huh? So who were the heroes and heroines back in the day who just said no to Wall Street bribes and voted against this deregulation that proved so toxic? Here are a few noteworthy ones:

Tammy Baldwin (D-WI)- candidate for Senate
Sherrod Brown (D-OH)- now a senator
Barney Frank (D-MA)- still amazing, still driving Republicans insane... see below
Dennis Kucinich (D-OH)- looking for a new home; Atwater is calling his name
Barabra Lee (D-CA)- always right... about everything
John Lewis (D-GA)- still the conscience of the Congress (minus the Republicans)
Jerry Nadler (D-NY)- the Manhattan congressman who stands up to Wall Street
Ron Paul (R-TX)- managed to get it right... for the wrong reasons
Bernie Sanders (I-VT)- now a senator; always gets it right... for all the right reasons

Yesterday the Republicans in the House Financial Services Committee voted for some amemdments to further interfere with the functioning of the Consumer Financial Protection Bureau by subjecting the agency-- unlike similar agencies-- to bring the CFPB's budget under congressional control. Barney Frank, listened closely to the Republicans' fake piety about congressional control and proposed that it apply to the Federal Reserve as well. It stunned Wall Street hack Ed Royce (R-CA) into silence. And when the vote came, all the Republicans but two who are afraid of teabaggers-- Steve Stivers (OH) and Lynn Westmoreland (GA)-- voted against it. It failed 24-33, four Wall Street tools on the Democratic side, Joe Donnelly (Blue Dog-IN). Jim Himes (New Dem-CT), John Carney (New Dem-DE) and Gary Peters (New Dem-MI) rushing across the aisle to where the bankster bribes are. I wonder what North Carolina and Minnesota teabaggers would say if they ever found out Patrick McHenry and Michele Bachmann voted to protect the Fed from scrutiny. Barney, by the way, asked if he could vote for the absent Ron Paul but that was not allowed.

Let me leave off with a quote from NYU economist Nouriel Roubini, known as “Doctor Doom” for accurately predicting the crash:

"Today any wealthy individual can take $1 million and go to a prime broker and leverage this amount three times; then the resulting $4 million ($1 equity and $3 debt) can be invested in a fund or funds that will in turn leverage these $4 million three or four times and invest them in a hedge fund; then the hedge fund will take these funds and leverage them three or four times and buy some very junior tranche of a CDO that is itself leveraged nine or ten times. At the end of this credit chain, the initial $1 million of equity becomes a $100 million investment out of which $99 million is debt (leverage) and only $1 million is equity. So we got an overall leverage ratio of 100 to 1. Then, even a small 1% fall in the price of the final investment (CDO) wipes out the initial capital and creates a chain of margin calls that unravel this debt house of cards."

And these are the financial predators who have sworn to invest whatever it takes to install Romney in the White House and a Republican majority in the Senate. God help us all.

The Obama Economic Team: Yes They Can?

Watching President-elect Obama put together his economic team has left me a little nervous. Some, like Lawrence Summers and Robert Rubin, are Clinton retreads who have always been more concerned with corporate interests than with working families. Geithner I'm not as sure about but judging by the exuberant reaction from Wall Street, he probably more one of them than one of the rest of us. I might be wrong; I don't know. That's why I'm nervous-- despite reassurances from even someone as inherently pessimistic as Nouriel Roubini. On the other hand, I do know Rahm Emanuel, another Clinton retread that Obama scooped up, and I know what a disaster that's going to be.

E.J. Dionne, in today's Washington Post writes that Obama's choices are sending a clear signal: "He wants his actions to be big and bold. He sees economic recovery as intimately linked with economic and social reform. And he is bringing in a gifted brain trust to get the job done." That sounds good but I'm not certain it's not 80% Dionne's wishful thinking and 20%... everyone else's prayers. Still, Dionne makes a good case:

Obama is also using the crisis to make the case for larger structural reforms in health care, energy and education-- "to lay the groundwork for long-term, sustained economic growth," as he put it. Obama clearly views the economic downturn not as an impediment to the broadly progressive program he outlined during the campaign but as an opportunity for a round of unprecedented social legislation.

"He feels very strongly that this is not just a short-term fix but a long-term retooling of the American economy," said one of Obama's closest advisers. "Obama has a holistic view of the economy. Health care is going to be part of it," the lieutenant told me, and so will green energy investments, education reform and a new approach to regulating financial markets.

Obama further underscored his decision to tether social and economic policy by linking his announcement of Melody Barnes as the director of the White House Domestic Policy Council to the unveiling of his economic team.

OK, I'm breathing a little easier. And a friend of mine who works on Capitol Hill made me actually feel good when Peter Orszag was named to head the Office of Management and Budget, who Ezra Klein had already assured us means Obama is serious about not putting off health care reform.

Orszag will be coming from the Congressional Budget Office, OMB's legislative cousin. There, he's shown an almost single-minded focus on health care reform. He's added dozens of health care analysts to the staff, reconstructed the health policy division's management structure, and is readying to release two major books on health policy options and CBO's health care scoring models that will be extremely central in how Congress looks at building a health care bill. Amidst all that, he's toured the country giving a slide show about the problems of the health care system, the overwhelming danger it poses to our fiscal condition, the incredible inefficiencies that beset the delivery, and the research that suggests reform could not only save money but also improve care. He's also acted as a powerful and credible counterweight to those who counsel incrementalism, or delay, on health reform. Indeed, when it became common to suggest that the bank bailout should displace ambitious agenda items like health care reform, Orszag took to his blog-- yes, he has a blog, did I mention that?-- to write:

Many ob-servers have noted that addres-sing the probl-ems in finan-cial markets and the risks to the economy may displace health care reform on the policy agenda... Although it may not seem immediately relevant given our current difficulties, it will be crucial to address the nation’s looming fiscal gap-- which is driven primarily by rising health care costs — as the economy eventually recovers from this current downturn. Indeed, our ability to address our current economic difficulties (through both financial market interventions and potential additional fiscal stimulus) would be severely impaired if investors were not so willing to invest substantial sums in Treasury securities without charging much higher interest rates. That willingness reflects the (currently accurate) view among investors that Treasury securities are extremely safe investments.

If we fail to put the nation on a sounder fiscal course over the next few decades, though, we will ultimately reach a point where investors would lose confidence and no longer be as willing to purchase Treasury debt at anything but exorbitant interest rates. If that were to occur, we would lack the kind of maneuvering room that we currently enjoy to address problems in the financial markets and the economy. So if you think the current economic crisis is serious, and it is, imagine what it would be like if we didn’t have the ability to undertake aggressive and innovative policy interventions because creditors were effectively unwilling to lend substantial additional sums to the Federal government…

That left me chanting "Yes, we can, Yes, we can" and thinking that Emanuel might not be as terrible a choice-- or at least one the nation will survive-- as I thought. And that's when my old pal-- and former Emanuel defender-- chimed in that he used to make a point of watching every hearing Orszag testified at. "He was like a human calculator in a way, kind of a ruthless competence, but the calculations were always around how things actually affected working people and those who needed help, had a way of shooting down Republican jibberish that left them slinking off."

OK, OK... I'm back off the limb and remembering how smart Obama is and that I had resolved to trust him. Whew. Cause we're not just talkin' about being a little-- or even a lot-- better than Bush or McCain now.