Thursday, August 19, 2010

Over-Enthused

In late June, awaiting the final passage, and the President's approval of, financial reform legislation, the Washington Monthly's Steve Benen commented

And in the larger context, this will add to an impressive list of historic accomplishments spanning President Obama's first 18 months in office....

In the same piece, Benen noted Taegan Goddard's observation "Not since FDR has a president done so much to transform the country." That week, Peter Beinart gushed in The Daily Beast

Decades later, liberals and conservatives still disagree about whether Reagan’s reforms changed America for good or ill. What they don’t disagree about is the fact that they fundamentally changed America. Those changes made Reagan one of the most consequential presidents in American history. Eighteen months in, it’s a good bet that historians will say the same about Barack Obama.

If the federal government were a baseball or basketball season (hardly; no one gets 162, or even 82, shots at victory) or even a football season (a more-realistic 16 games), President Obama's won-loss record would in fact be very impressive. In a June 28 piece in which Benen quoted Beinart, he noted Rachel Maddow having observed

The list of legislative accomplishments of this president in half a term even before energy reform which he's probably going to get to is, to quote the vice president, 'a big freaking deal.' Love this administration or hate it, this president is getting a lot done. The last time any president did this much in office, booze was illegal.

But, alas, government- and life- don't mimic a professional sports season. And the President's enemies, whether the "professional left" his spokesman scolded, conservative talk radio, and even the Repub Party weren't the primary catalyst behind the economic catastrophe which awaited Obama upon taking office. Upon signing the financial reform bill, the President attempted to assuage our concerns about the power power behind the throne that brought us here, claiming

There will be no more taxpayer-funded bailouts. Period. If a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy.

Or maybe not. Rolling Stone's Matt Taibbi concludes "Wall Street's Big Win" by noting that MIT economist Simon

Johnson was part of a panel sponsored by the nonpartisan Roosevelt Institute – including Nobel Prize-winning economist Joseph Stiglitz and bailout watchdog Elizabeth Warren – that concluded back in March that the reform bill wouldn't do anything to stop a "doomsday cycle." Too-big-to-fail banks, they said, would continue to borrow money to take massive risks, pay shareholders and management bonuses with the proceeds, then stick taxpayers with the bill when it all goes wrong. "Risk-taking at banks will soon be larger than ever," the panel warned.

Without the Volcker rule and the ­Lincoln rule, the final version of finance reform is like treating the opportunistic symptoms of AIDS without taking on the virus itself. In a sense, the failure of Congress to treat the disease is a tacit admission that it has no strategy for our economy going forward that doesn't involve continually inflating and reinflating speculative bubbles. Which sucks, because what happened to our economy over the past three years, and is still happening to it now, was not an accident or an oversight, but a sweeping crime wave unleashed by a financial industry gone completely over to the dark side. The bill Congress just passed doesn't go after the criminals where they live, or even make what they're doing a crime; all it does is put a baseball bat under the bed and add an extra lock or two on the doors. It's a hack job, a C-minus effort. See you at the next financial crisis.


The old saying, "fool me once, shame on you; fool me twice, shame on me," seems uncomfortably applicable.




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