Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Barack Obama Page 2 of 13

The American Death Wish

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On February 6, 2016

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I wrote this article January 19th, 2009. Obama had just been inaugurated, we knew who his economic team would be, his Chief of Staff (Rahm Emmanuel), and we knew the basics of the stimulus package. 

I knew, then, that the last opportunity for America to avoid catastrophe, as opposed to mere disaster, had passed, and so I wrote this article. It has held up well, and the predicted decline in standards of living is well underway–sooner and faster than even I expected. 

Enjoy.

I’ve been struggling with how to write this post for quite some time. It’s the conversation you have to have with a friend, where you have to say something like: “It’s nice that you’re trying as hard as you can George. I even believe you are, but it doesn’t matter. Because, George, your best just isn’t good enough.”

Or, as Captain Jack Sparrow would put it, all that matters is what a man can do, and what a man can’t do.

Sometimes the world doesn’t grade us on a curve. You need to jump a fence, and you can’t. You need to climb a rock face, and you aren’t good enough. You’re running away from a bear, and you don’t run fast enough. And now you’re dead. You wanted to get into a good grad school, but you don’t have the grades or test scores. You’re in a fight, and the other guy wins, and you wind up on the ground, and he puts the boots to you, and you’re crippled for life. You tried “your best,” but you lost and you’re going to pay the price for losing for the rest of your life. Maybe you lost because he fought dirty, and you’d rather take the chance of being crippled for life than kick someone in the balls. Maybe you lost because he trained harder than you, while you were out drinking with your friends.Or maybe you needed to pay for health care, and you didn’t have the money, and someone you loved died. And they died because you didn’t have the money–because your country didn’t have universal health care. And maybe you always worked as hard as you could, and you campaigned for health care with all your heart. It doesn’t matter, your child, your wife, your husband—they’re still dead. Your best wasn’t good enough.

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

Now this is where America is. This is the real world. The United States in aggregate has been living beyond its means for over 30 years now. You have been shipping the real economy overseas. Ordinary families have been going in debt. The government has been going in debt. You’ve been voting yourself lower taxes and not paying for infrastructure reinvestment, or education, or anything else that matters, really. You’ve been spending too much money on guns, not enough on butter. You’ve been pushing the bill off into the future.

And whenever I write about what needs to be done to fix this, about simple things like universal healthcare, which we know for a fact reduces health care costs by 1/3, because it has worked for every single other country that’s ever done it, people come out of the woodwork and they tell me that’s not “politically feasible.” Or perhaps I suggest a 55 mile an hour speed limit, “That’s not feasible.” Or I might suggest spending significantly less on the military, as half the world’s military spending is a bit overboard. “That’s not politically feasible.” Or raising taxes, “That’s not feasible.” Or…but why go on, the list is endless.

Then Obama comes out with a stimulus bill which simply will not do the job. It is not big enough. It is not adequately well-constructed. It has no vision. It won’t work. This isn’t really in question: Even their own report(pdf), which has its thumb heavily on the scale, shows it won’t work if you take the time to look at the job charts.

A lot of people think this is some academic debate that doesn’t matter in the real word, like, “How many angels can dance on the head of a pin?” It’s not, it’s deadly practical. The US is in severe decline. It is past the point where any other country would have flamed out and had an economic collapse (Argentina collapsed with better numbers than the US has now, for example). But, because of America’s privileged position in the world, it’s been able to stagger on.

Now, folks can say, “Ian those things aren’t necessary, I think the following steps will fix it” and that’s fine. I could be wrong. Obviously I don’t think so, or I wouldn’t write what I write, but, hey, plenty of people have been dead certain they were right, and were dead wrong.

But what gets me is that so often what I hear is this refrain: “That isn’t politically feasible. We can’t do that.” Now, when they says “can’t,” they don’t mean, “Those things are impossible” or, “We don’t have the means,” what they really mean is, “We won’t do them, because they would be hard or they’re outside our ideological comfort zone.”

Fair enough. But if those things are necessary, and if you don’t do them, then the consequence is going to be catastrophe. I don’t mean disaster. New Orleans was a disaster, and it wasn’t enough to wake America up. The current financial crisis was a disaster, and so far it’s looking like it wasn’t enough to convince people that real, fundamental changes are needed.

So because no one will do what is necessary, catastrophe will happen. What I mean by this is a severe decline in the US standard of living, probably between 20 percent to 40 percent, starting in 4 to 6 years and taking place for a decade. It might happen sooner if folks keep refusing to do what needs to be done to fix the financial crisis and stop it from turning into a worldwide Great Depression. Even before that happens, you’re going to see real wages declining for Americans while their assets collapse in price.

To see what a precipitous decline in standard of living is like, read up on Russia’s history in the 90’s. A lot of people will die of starvation, cold, heat, lack of medical help, and from violence.

That’s just the way it’s going to be. Because while there are no problems that America has that America can’t fix, it also appears that there are no problems America has that America is willing to fix properly. And it doesn’t matter why. It just doesn’t matter, just as the bear doesn’t care why you couldn’t run fast enough when it mauls you to death. When the economy finally goes into full bore collapse, when all the bills come due and everyone decides to stop paying Americans to consume, it won’t matter why Americans thought they could suspend the economic laws of gravity forever and live beyond their means for decades.

It just won’t matter. You can do what it takes to fix the problems or you can’t. If it’s true that you can’t, then I quite seriously, sadly, and with utmost sincerity, suggest that you either start learning how to survive in a societal meltdown, or you get out, or you hope that your number comes up in the next few years so you don’t have to pay the bill that comes due when people think they can live in fantasy land, on credit, forever.

America elected Barack Obama. He’ll have, essentially, two chances to fix things. He’s failing the first one already, with his botched stimulus bill and that’s going to be disastrous. If he fails the second one, that’ll be catastrophe.

So I sure hope that, yes, America can.

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The Bailouts Caused the Shitty Economy, Part 2

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On February 1, 2016

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Back in 2013, I wrote an article making the argument that bailouts were responsible for the bad economy.

The reason the economy has not recovered and will not recover for at least a generation is because of the overhang of bad debt, the glorification of financial “profits” (they aren’t), the failure to de-financialize the economy, and the confirmed control of government by the rich.

There is also a section on alternatives to the what we did. “We should do something,” is not the same as, “We must do what we did.”

But, be clear, the economy would be better now if we had not done anything. Yes, the immediate two years after the financial collapse would have been worse, but we’d be better off now than we are.

I think we need to note, first, where we are.

  • We are about to go into worldwide recession. In other words, the good part of this business cycle is mostly over. In many countries, it has been over for some time.
  • Peak to peak—from the peak of the last recovery to the peak of this recovery, the employment to population ratio has not recovered. It didn’t recover in Bush’s economy either, by the way.
  • Median incomes in the US have dropped. This is true in a number of other countries.
  • All of the gains of the recovery went to somewhere between the top 3 percent to top 5 percent. And really, that means the top 1 percent, .1 percent, and so on.
  • The rich are now richer than they were before the crash.
  • China is has hit the mercantile wall. After the financial collapse, they were the engine of global demand. But with so many of their customers in austerity, this could not be maintained.

In other words, the economy never actually recovered. You can argue it did, dishonestly, by looking at stats like unemployment (which don’t consider people who have given up looking for jobs), or GDP, but for most people, this is a shit economy, at best.

It has, however, been a good economy to be rich in.

Now, as I’ve been writing about what Capitalism is this last week, I think it’s worth noting something very fundamental.

The 2000’s economy was sick. It was doing the WRONG THINGS. It was doing them with trillions of dollars. Derivatives such as CDOs, vast expansion of borrowing for stock buybacks, the housing bubble, and so on.

It was doing things which had negative real returns–even measured in money. That these actions had negative, real returns was revealed in the financial collapse when those derivatives were worth ten cents or less on the dollar, and by the fact that central banks and governments had to spend trillions on the bail out.

Measured in human welfare, the mal-investment was worse. When you measure this in “opportunity cost,” meaning what we could have done with those resources instead, which would have increased human welfare, the cost was beyond vast: There are no words.

Capitalism is a system where markets make the primary economic investment decisions through price signals and the availability of money (these are not always identical, which is why I separate them).

More to the point, markets say, “If you are making money, do more of what you are doing.” The assumption is that if you’re making money, other people want what you’re doing, and that what people want is what has the most social utility—the greatest welfare for the buck.

I trust it is obvious to anyone but those brainwashed by the cult of economic utility that, in the 2000’s, the individuals who were making the most money were not creating welfare. They were, instead, reducing human welfare, absolutely and relative to other options.

The other case for capitalism and markets is that they are supposed to be self-correcting. People may make money doing the wrong thing due to market failures, but eventually they will lose that money.

They did.

I repeat, they did. The people making the wrong decisions lost all their money. They lost more than all their money.

We have a shitty economy now because we bailed them out. They then went back to doing all the wrong things, but with a huge debt overhang and more power.

What we needed was new economic decision makers. We needed the people who had all that money to lose their money and thus their political power, making it possible for a different set of people to make money.

Those people would have started off with a lot less money, and a lot less power, and that means there would have been a lot less money in politics, which would have fixed a swathe of problems political, social, and economic.

All that was required for this to happen was to DO NOTHING. Let the banks and brokerages and so on go out of business, and allow the process of law to proceed. The laws on the books at the time made most of what bankers and shadow bankers and various other decision makers doing illegal. Rather than allowing them to pay fines to indemnify themselves against law breaking, actually apply the law. Start with RICO statutes (conspiracy), grab their emails, and prosecute for fraud. (They were, essentially, all engaged in some fraud or another, though I don’t have time to go into that in this piece).

As an additional slice, all their remaining assets would have been seized as proceeds of crime, and they would have had to rely on public defenders.

This is what happens if you just follow the laws and regulations on the books. No special action is needed. None. Except to ensure laws are actually followed, I guess. That it requires special action for rich people to be subject to the law, is, however, part of the point.

So, we have a shitty economy now because we did not get rid of the people making terrible decisions who caused the financial collapse. We have a shitty economy because of the bailouts.

I went into personal decline in 2009 because I recognized that a watershed opportunity had been missed. It was our last chance to get off the train to Hell, really. Oh, we’ll get off that train one day, but we’ll already be in Hell.

The bailouts caused this shitty economy.

Much of what happened was a case of Obama’s decision making, either through action or inaction. TARP passed because he pushed it, for example. Bankers were not properly prosecuted because his DOJ chose not to do so. Many consider the actions of the Fed beyond his purview, but they are wrong.

The full argument is in my pieces “What Can Obama Really Do?” written in 2010, and “Could Obama Have Fixed the Economy?” written in 2014, though I also wrote an absurd number of pieces at Firedoglake on specific policy in real-time. I know for a fact that those articles reached the White House (though I don’t know if Obama ever read them). I know they were included in Dodd’s briefings.

Many other people were writing good proposals at the time as well. People more famous than I. The ideas were available.

So, I once said I don’t hate Clinton. I don’t hate Obama any more, but I did for a long time. He had a historic opportunity to be the next FDR. He deliberately chose not to be, and to instead help and defend the people who caused the financial crisis.

Obama triumphalists who go on about what a great president he is are either misinformed or cockroaches. The true cost of anything is the opportunity cost, and Obama’s opportunity cost is beyond large. Everything he could have done, and did not even try to do.

This is a bad economy, in terms of the numbers that matter to ordinary people. Less have work, and those who do make less money. It is about to get worse. Obama, and yes, Bernanke at the Fed, and Tim Geithner, and various other central bankers and politicians (including, yes, Bush), are responsible for how bad this economy is.

I will add that the most logical, good stimulus, would have been a massive energy project, in which America’s buildings were all retrofitted to be at least energy neutral. It would have directly put to work the people who needed that work, it could not be offshored, with some fairly simple policy, it could have created a solar manufacturing industry in America, and so on.

This means that some of the losses of climate change will also be Obama’s responsibility. Opportunity cost, again.

Enough.

The Obama presidency will go down as a huge failure to historians looking back in even 20 years. The larger point is this: Capitalism does have some virtues, and one of them is wiping out people who are doing the wrong thing. That doesn’t mean that “all bailouts” were a bad idea, but bailouts of the people who caused the crisis (bankers, shadow bankers) were. The primary bailouts caused the lousy economy.

There will be another crisis. Learn the lesson of the last one. If we don’t, well, crises will continue until we do.

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I Am So Happy About Gay Marriage Being Legal in the US

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On June 26, 2015

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But, yeah, sorry, but, can we talk Obama for a moment?

Rainbow White House

Obama did not support gay rights until after he was subjected to IMMENSE pressure, including public heckling and a gay donor strike.

Now, I appreciate a politician who will cave to interests I believe in, but let’s be clear, this is a case of caving.

My friends, above all things, supporting, trusting, and giving credit to people who do not actually have your interests in heart is what hurts you, again and again. Until you learn who you can actually trust (and for what), you are going to continue to get hurt.

Among the other news of the week was the passage of “Fast Track” legislation for the TPP trade deal. That is going to cost many of you your jobs, and it is going to make many of the rest of you poorer, even if you keep a job. People I trust on the Hill tell me that Obama has NEVER lobbied harder for anything (not even Obamacare) than he did for TPP.

Obama, as a rule, is happy to give you things that the oligarchy doesn’t mind. They don’t, overall, mind gay rights. A large chunk of the oligarchy wanted Obamacare (it was and is a huge subsidy to insurance and pharma companies, among others). There is a reason the public option was never seriously considered by Obama; it was a potential threat to insurance companies.

None of this is to say Obama is all bad, he certainly isn’t. But he is not your friend if you want widespread economic prosperity, and he never has been. Nor will he ever be. Nor, to point out what should be obvious, is Hilary Clinton (also not always for marriage equality).

You set yourself up for immense hurt when you trust the wrong people with political power and it is important not to engage in revisionism about what is, after all, very recent history.

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Obama Tries to Make His Bones Again with the Trans-Pacific Partnership

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On April 24, 2015

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Apparently Obama is angry at progressives for attacking the Trans-Pacific Partnership. 

“What I am averse to is a bunch of ad hominem attacks and misinformation that stirs up the base but ultimately doesn’t serve them well. And I’m going to be pushing back very hard if I keep hearing that stuff,” Obama told a small group of reporters on the call.

Of all the criticisms, “The one that gets on my nerves the most is the notion that this is a secret deal,” he said. “Every single one of the critics saying this is a secret deal, or sent out e-mails to their fundraising base that they’re working to stop a secret deal, could walk over and see the text of the agreement.”

No: Every critic doesn’t have access. Only a partial version of the deal is available to the public, and only because it was leaked.  The very idea that these deals should be done in secret is fundamentally anti-democratic. They do it because they know people would object if they knew what was in them.

The Electronic Frontier Foundation has a good summary of what’s wrong, in terms of copyright enforcement. 

In short, countries would have to abandon any efforts to learn from the mistakes of the US and its experience with the DMCA over the last 12 years, and adopt many of the most controversial aspects of US copyright law in their entirety. At the same time, the US IP chapter does not export the limitations and exceptions in the US copyright regime like fair use, which have enabled freedom of expression and technological innovation to flourish in the US. It includes only a placeholder for exceptions and limitations. This raises serious concerns about other countries’ sovereignty and the ability of national governments to set laws and policies to meet their domestic priorities.

Go read the rest if you want to be sick to your stomach.

The bill also includes takings tribunals, in which firms would be able to sue governments for violating the terms of the deal. (In the past, such tribunals have been used successfully to sue for such things as banning additives which cause cancer, since the lost sales are a loss for the company involved.)

Obama made his bones by completing the Wall Street bailout. Now, before he finishes his term, he wants to give the people who can make him filthy rich after he’s no longer President a big, fat, slobbery kiss that will make them billions. This may well be, to him, the most important thing he’s done in his entire presidency:

In a meeting with reporters in the US Capitol, Senator Sherrod Brown of Ohio said his caucus has been “talked to, approached, lobbied, and maybe cajoled by more cabinet members on this issue than any [other] issue since Barack Obama has been president. And that’s just sad.”

Brown continued: “I wish they had put the same effort into the minimum wage. I wish they had put the same effort into Medicare at [age] fifty-five. I wish they had put the same effort into some consumer strengthening on Dodd-Frank.”

Like all Presidents, even George W Bush, Obama has done both good and evil. But the TPP, from what we know, is almost entirely bad and no one should trust a deal like this that is largely secret.

As usual, the TPP is about constraining Democracy, not just internally, but by locking countries in to laws which they then can’t change without abrogating the trade deal.

I covered this in “Free Trade is Elites Betraying Their Own Population“.  You should read it.

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The End of the American Dream and How Democratic Apologists are Creating It

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On November 7, 2014

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I’m going to be even more blunt than usual. Democratic apologists (and Obamabots) are a huge part of why the US is becoming a worse and worse place to live for most of the population.

The only “progressive” group who really got any of what they wanted from Obama were gays.  Why did they get it?

  • They CUT OFF DONATIONS
  • The got in OBAMA”S FACE AND HIS WIFE’S FACE

They did everything they could to hurt Obama, politically and personally.

I will be even more frank, the contempt I have for Democratic apologists and Obamabots is far greater than what I feel for Republicans.  Republicans tend to be pretty straight: they intend to repeal the last millenium worth of social progress and institute a new Gilded Age.

Democrats, on the other hand, lie about how they care, care, care, but their ACTIONS show that they want to repeal the last millenium of non-identity based civil liberties and re-institute the Gilded Age.

Do not even dare to talk to me about the financial crisis.  The most important thing that happened to allow the financial crisis was the repeal of Glass-Steagall, which happened under Bill Clinton (D) with his whole-hearted approval.  Which is why Bill is worth 100 million or so now.  He made a lot of bankers and brokers very rich, and if you were hurt in the financial collapse and the shitty economy since then, well, he’s even more to blame than George W. Bush.

Furthermore things like the no-fly list and “1st Amendment Zones” started under Clinton.

Yes, the Big Dog may have had a pretty good economy, and may have been competent, but he is massively complicit in what happened after he left.

As for Obama, he has been worse on civil liberties than George W. Bush.  It is not even close.  He is significantly worse.

The thing is Obama promised to be great on civil liberties. He campaigned on that.

Democrats, as a group, are liars.  They make promises they do not keep.  People who cover for them are enabling this.

Now let me be even more clear.  The US and the developed world are in a Depression.  I know, I know, no one has told you that.  But when during the recovery and the boom the jobs don’t come back and the wages don’t increase, that’s a depression.  You just had the recovery and the boom and are moving into a recession.

You aren’t just going to lose twenty years.

You are going to lose your prosperity forever.  Sure, there will be good years (like about 3 years at the end of Clinton’s reign.

That is the smart money bet.  It is not that it couldn’t be stopped, it could be.  The policies required are known, the technology is available, and so on.  But they aren’t going to happen, because both parties want it to happen.  They compete to give money to the rich, that is their job, and apologists (for whichever party) enable it.

People keep using the Japanese lost decade as an analogy.

Japan did not lose a decade, it never recovered.  And it is still getting worse.  And Japan, remember, started with a huge trade surplus and a massive savings rate (though it did have a demographic time bomb.)

You redeem one of the two parties, by taking out bad actors, or you create a viable third party, or you lose your prosperity unless you get very lucky (and by very lucky I mean “get an FDR at the right time.”)

Obama could have been FDR. He was given the opportunity. He blew it.

And Dem apologists made excuses for him all the way along.  “The Republicans are worse.”

Yes, well, I’d rather be killed by an axe murderer than a guy with a chainsaw, but at the end of the day, I’m still dead.

And so will be your prosperity.

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The Obamacare Fiasco

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On November 14, 2013

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I think Schadenfraude nicely sums up what I’m feeling about Obama’s troubles with his signature health care bill, though I do feel  sorry for people who are being hurt by Obamacare.

It’s not the website that is killing Obama, of course, it’s the cancellation of pre-existing policies (though the website is an unforced mistake).  Obama told people they could keep their policies, but that decision was never his to make, it was up to insurance companies.  Since there is no robust public option, Obama does not have any significant leverage over the insurance companies, there is nothing he can do to them, so why shouldn’t they do what is in their best interest?

Please don’t say something like “because that would hurt people” because I’d laugh so hard I might rupture something.  Insurance companies are run by evil people as a class, and they make their money, not by providing care but by denying it.  The more care they deny, the more money they make.  One of my friends once designed medical “interest free” loans for people who needed life-saving operations.  Sounds like a deal, doesn’t it?  Of course, that’s zero interest on list price, not on what the insurance company was paying.  The company was making a hundred to two hundred percent profit per policy. Nice business to be in, if you have no soul.

When you are dealing with bad people, you must assume bad faith; bad behavior.  You must plan for it.  The best option was always Medicare-for-all (and I was told by at least one House staffer that they could pass it if they really wanted to and were willing to go nuclear.)  The problem with Obama has always been this sickening need to be one of the boys.  He appears to genuinely like and genuinely admire the people who have “made it” in this society—people like Jamie Dimon and the people who run insurance  and drug companies.  He thinks you can make deals with these people, and make sure everyone wins.

You can’t.  These people are the most successful parasites ever produced by our nasty form of sociopathic capitalism.  You can only give them what they want or you can rip them from the body politic, so they stop sucking the blood from the host they’re killing.

So the insurance companies have bitten the hand that fed them.  Obama gave them everything they wanted and made sure nothing of importance they didn’t want (like a public option) was in the bill. Now they’re chomping and chewing, destroying what remains of his presidency.

He has reaped as he sowed.

This is going to get worse.  As Corrente has repeatedly pointed out, the provider networks on the low cost plans are extremely thin.  People are going to find out that they’re only covered in theory, that there is no hospital that treats their type of cancer anywhere near them, for example.  They’re going to find out that they’re paying for coverage they cannot, in effect, use, for any number of reasons.  Drug costs will continue to rise, as well, since Obama carefully made sure all methods of reducing them were made illegal.

Obamacare was, and is, a subsidy.  A way of keeping the insurance companies going; of keeping the current healthcare system going.  The good, gold-plated private insurance plans, unless you’re an executive, are pretty much gone. As such everyone had to be forced to buy a shitty private insurance plan.  It will definitely help some people, some people will win, but many people will lose.

I will point out, for what feels like the millionth time, that simply putting everyone on Medicare would have been less expensive per person and produced better outcomes.  Even a robust public option would have given Obama leverage, because the insurance companies would have been scared everyone would migrate over to it, and so would have needed to treat people well.

But this… this is the worst of all worlds, and that is how it was designed to be.

It’s unclear to me how much of this is corruption (rest assured, Obama, like Clinton, will make tens of millions miraculously quickly on leaving office) and how much is some pathological need to be one of the boys, but I am clear that this failure is the inevitable product of how Obamacare was designed.

Why Obama And Democrats Don’t Do Much of What Liberals Want (Netroots Failure: Part 2)

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On November 2, 2013

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Politicians do most things because someone wants them done who can hold them accountable if they don’t do it. That includes bad things, and good things. Anyone who doesn’t understand this reality doesn’t understand even the most basic part of politics.

In 2008 Clinton reached out to the Netroots, and felt the Netroots (we, not me, I had almost no contact with the campaign) mattered enough to at least listen to. Obama did not.

You dances with the ones who brought you, as Canadian Prime Minister Brian Mulroney once said, Obama won by bypassing the Netroots and lying to Progressives and Liberals: he won without us, he owed us nothing once elected.

The movement, such as it was, was bypassed and lost power. As a result, for example, we could not improve Dodd-Frank, insist on more help for homeowners (which I pushed hard for), improve the shitty stimulus bill, or get any of a number of other liberal or progressive priorities pushed.

Note that gays were originally ignored by Obama as well.  What did they do?  They got in Obama’s face personally, heckling him and they organized a very effective donor boycott.  As a result, they got much (but not all) of what they wanted from him.

Holding someone accountable means “inflicting pain”.  If they don’t do what you want, you must be able to do something to them they don’t like (heckling), or take away something they want (money).

Like FDL or not, the last serious attempt by left-wingers other than gays to hold Obama accountable was when they refused to go along with the Affordable Care Act if it didn’t include a public option.  FDL said “if this bill has no public option, we won’t support it.”  When it didn’t, they didn’t.  You may think that’s not a good red-line, but they had a red line.  Of course FDL, virtually alone, did not have the juice: they could not inflict enough pain or take away enough funding  or create enough bad publicity for Obama to care, especially when powerful interests (read: insurance companies), didn’t want a public option.  (For doing so, FDL was attacked by all the usual suspects on “left-wing” blogs and labelled firebaggers.)

Political power is constituted of getting people elected, getting people unelected and being able to reward or punish people for doing or not doing what you want. If you can’t do any of those things, you have no power.

This is realpolitik.

The Bailout Caused the Sucky “Recovery”

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On October 30, 2013

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This will be another brief post.  Bailing out banks, brokerages and so on in the way it was done had the following effects:

1) Fewer, larger financial institutions.  Too bigger to fail.

2) Rewarding people for outright fraud and insane risk taking. Remember, they kept their bonuses and salaries, they are rich, even if they belong to one of the few companies that went under.

3) A huge overhang of bad debts which has to be worked off.

4) An understanding that financial profits are still the way, you, personally get rich.

5) Making the rich, richer (yes, they are richer now)

The reason the economy has not recovered and will not recover for at least a generation is because of the overhang of bad debt, the glorification of financial “profits” (they aren’t), the failure to de-financialize the economy and the confirmed control of government by the rich.

In other words the bailout caused the sucky “recovery”, or, if we are to be honest, the current long Depression.

The standard argument is “we had to do something”.  Yes and no.

1) We could have done something else, like nationalizing the banks, making bondholders and shareholders eat their losses, taking what remains and putting it in bad banks, then breaking the banks up and re-privatizing them.

2) Actually, if we’d just let them go under per the law, with the FDIC taking them over, things would have been worse initially, but there would have been an actual, robust recovery when it occurred.  By now you’d be better off.  And the shock could have been cushioned with generous EI, letting people stay in houses and so on.

TARP, though it actually wasn’t the key bailout (those were done mostly through the Fed) is when Obama said “I am going to keep the same people who caused this mess in power in the financial system, make sure they don’t lose their money, and that’s just too bad for everyone else.”  When he confirmed that Bernanke was to stay on, he confirmed that he was, essentially, ok with what had happened.

The bailout decision did not “save the world” instead it doomed a good chunk of the world to twenty years of a shitty economy, minimum.  Forget the unemployment rate, the percentage of Americans employed hasn’t recovered, and won’t, and that’s before we talk about Europe.

This is the first of Obama’s legacies.

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