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Wednesday, November 19, 2008

Hooverian Class War Returns: Cushioning the Banks While Refusing to Save Jobs or Require Loans to the Taxpayers who Saved the Financial System

It's amazing to see how quickly the policies of Hoover that produced the last great Depression have returned in full force to rule the ongoing decisions at Treasury and among most of the Republicans in Congress. For a little bit, we fell into the stupid hope/delusion of thinking that finally Bush, Bernanke, and Paulson had discovered historical wisdom and learned something from the past. We believed they had imbibed of the elixir of historical wisdom that brought them to reject the mistakes of Hoover in favor of a more activist government that would use its power to protect the people of this country from the harm of an economic depression produced by a government that refuses to act on behalf of the people it is sworn to protect.

But the refusal of Paulson, Bernanke, and Bush to protect the jobs of home-owners and small business-owners by requiring the Banks they so generously bailed out to use their billions of tax-payer money to provide loans to the citizens that saved them, and to the manufacturing industries (like the auto industry) that provides the anchor to the entire economy, has once again underlined the fundamental Hooverian orthodoxy that controls this administration, and only the Inauguration on January 20 will bring the destructive reign of this ideological orthodoxy to an end. Unfortunately, by then it may be too late to stem the tide of the flood of job losses that may be released by the collapse of the dam if the US auto industry is allowed to fall into bankruptcy.

While our neo-Hooverians are willing to devote billions of dollars to supporting the banks, without requiring the banks to use any of these billions of dollars to make loans to the consumers and business-owners on whom the functioning of the economy depends, these Hooverians seem completely happy, now that they have protected the banks from collapsing, to conclude that their work is done. Now it seems they believe all they have to do is sit by and watch while Congress refuses to require the banks to use their newly gifted billions (courtesy the taxpayers) to provide loans to home- and business-owners, or to the Detroit auto manufacturers, so that jobs can be protected, and products can continue to be manufactured, and people can continue to purchase what is manufactured.

Apparently these new Hooverians (including Paulson) think that it is enough to have kept the financial system from collapsing. Now they seem to believe all they need to do is stand by and watch while the spiral of economic slow-down and job loss increases in pace and size, until what began as a recession turns into another great depression.

After the stock market collapse of October 1929, there was no immediate economic collapse into depression. For almost a year after the crash of 1929, the economy and the market teetered in the kind of unsteady recession we are witnessing now. But in the absence of any clear policy direction from Hoover that emphasized the value of preserving and supporting the economy of jobs in 1930, by the second half of 1930 the entire economy began to collapse, and the stock market quickly followed as both headed into a tail-spin steadily downward for two long years from mid-1930 to mid-1932, by which time what had been a recession in 1930 had turned into a full-blown economic depression--reflected in a stock market that had lost nearly 90% of its value by 1932.

The new Hooverians, in their lack of concern or attention to making policy decisions that support the kinds of investment and loans that will maintain existing jobs (like those in the auto industry), and create new jobs (like those that could be created if banks opened their doors to major investments in alternative energy, and the government passed policies that supported such investments), are repeating the same kinds of mistakes that drove the recessionary economy of early 1930 into the depression economy of 1932.

So as you watch the decisions of the do-nothing, "let the market function" Hooverians like Paulson, and of the Republican/Hooverian party of naysayers, who would rather see the US auto industry collapse than admit the fundamental error of their market fundamentalist ideology, think of Hoover and the Republicans of 1930, who had no idea of the wreck their do-nothing market strategy was to make of the economy within two years.

If you want to see the recession of 2008, like the recession of 1930, turn into the great depression of 2010, then just stand by and allow the Hooverians to have their way with mis-ruling our economy. But if you want to avoid watching--like spectators to a nightmare--the recession of 2008 slide into the depression of 2010, your work is simple and clear: Employ the wisdom of history to help your legislators and policymakers avoid repeating the Hooverian mistakes of the past. Overrule the Hoover do-nothing strategy that would allow the Banks to sit idly by on the $700 billion cushion of protection provided them courtesy of the US taxpayer, while they refuse to use those billions to provide loans to the very citizen tax-payers who have bailed them out....

Hooverian capitalism is capitalism of, by, and for the wealthy, no matter what happens to the rest of us; This is the capitalism of the Paulson/Bush policy which freely aids the banks with billions while it outright refuses to provide relatively small bridge loans to the industries that employ a majority of middle-class working Americans. If this is not plutocratic class war, I dont know what is....

The plutocrats are always so quick to yell "class war" whenever workers challenge the right of the wealthy to use tax-payer money to feather their nests without any regulatory oversight; and yet rarely are the plutocrats ever called to account for using the power of their unregulated wealth to wage class war constantly and ruthlessly on the low and moderate-income people whose taxes they freely use to stabilize the financial system and feather the nests of wealthy CEOs, even while these same banks and CEOs refuse to use this money to do what banks are supposed to do: loan out their money to those who seek to deploy it to preserve and create jobs....

So on Tuesday we witnessed the amazing spectacle of Paulson declaring to Congress that he had full right and authority to bail out the banks while utterly refusing to admit that any of the TARP money should be used to make relatively small bridge loans to the auto companies to support their ability to continue to support manufacturing jobs....

And then we wonder why there are so few manufacturing jobs left in the United States! The financial sector and the investing elite that controls it no longer appear able to comprehend this simple logis: As there is less and less manufacturing in this country, there will be less and less real wealth standing behind and supporting their financial games on the stock market. As jobs disappear, the basis of the wealth that supports their paper stock wealth will vanish with it, and we will all finally witness the stock market follow the steady decline of jobs down and down and down as occurred in 1930 to 1932.

Fortunately, this time around, we have a new President who seems to understand the fallacies of the Hooverian ideological approach to the market. This President is taking over the White House at the beginning of the downward spiral instead of at its end. But because Obama does not take office until January 20, there is still much damage and downward momentum that can be furthered if the Bush/Hoover/Paulson policies are allowed to continue to govern the market until January 20.

Every day in which the Hoover policies of do-nothingism prevail means thousands of additional job losses, and an accelerating rhythm of economic decline, which in our accelerated market of the 21st century could potentially spiral out of control into a depressionary deceleration much more quickly than occurred in 1930. And the bankruptcy of GM, if that is allowed to happen under the charge of our Hooverians, could be the trigger that opens the floodgates of spiralling job loss that not even Obama may easily be able to control once it takes hold....

The best way to avoid this possibility is to promote policies that will not only save as many jobs as possible now, but will begin to produce new jobs (by quickly passing, even before Obama takes office, for example, major green collar jobs legislation and incentives such as those being promoted by Senator Stabenow of Michigan.)

"Preserve and Create--Jobs, Jobs, Jobs," is the policy of those who would wish to avoid repeating the 1930s-era mistakes of Hoover in 2008, and of driving the recessionary economy of 2008 into the depression of 2010.

It's not too late now, but unless we act boldly and quickly to support and create jobs, instead of allowing bad policy to destroy them, we may find ourselves within a year on an uncontrolled slide into depression.

The choice is ours--it is 1930 again, and we can either allow the Republican policies of Hoover/Bush/Paulson hold sway over our destinies, OR we can choose to laugh these policies out of government and defeat them. If we want to preserve the market for democracy, let's get about the work of driving the Hooverian policymakers out of the market so "the market" can begin to function more fairly again, for the benefit of everyday workers, home-owners and small businesses, rather than only to the benefit of the plutocrats (who could care less whether the rest of us are in a great depression by 2010, since they are well-insulated from its impacts). While we may be standing in soup-lines within a year, they will be sipping the champagne purchased with the $700 billion in taxpayer aid provided to them so the financial institutions could continue to exist even as the rest of the economy collapsed into oblivion....

In the (not so good) old days they called this kind of situation the class war of the plutocrats against the workers. Today, in the absence of any stomach for class analysis among most in the laboring classes, this situation is simply termed "greed." But since greed is presumed to be universal, the laboring classes (including white collar laborers) have disarmed themselves, and thus rendered themselves incapable of any meaningful critique of the circumstances oppressing them. And with that collapse of meaningful critique came with it the collapse of democracy, which depends on self-government, which cannot function in the absence of the tools of critique.

And like Katrina, in the absence of social critique, the depression, if it comes, will be viewed as if it were a natural disaster instead of a disaster of human manufacture that resulted from particularly bad structures of unequal power and particularly bad structures of decision-making.

Hoover has returned to Washington, and in the persons of Bush and Paulson has brought plutocratic class war with it. Now the only question that remains is: Will the people of the United States recognize, before its too late, who their oppressors are, and laugh Hoover and his policies out of the market so that the work of critique and healing can begin. Let critical laughter rain down on the nation in such abundance that policies requiring the people to serve the plutocrats are replaced by policies that require financial institutions to serve the people. What a fine and fair and truly democratic reversal of fortune that would be! And we might all yet be saved if we learn to laugh in this critical way....

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