The Change That Didn't Happen

[Donnachaidh]

http://counterpunch.org/toussaint08042011.html

With the announcement of the candidacy of Barack Obama for President of the United States in 2012, the campaign trail has officially started. Contrary to what one might have expected two years ago, Obama faces a tough re-election challenge. Furthermore, a victory does not seem guaranteed. Despite the stabilization of the financial system, achieved through a massive handout of public resources without any type of restrictions to the same people responsible for generating the crisis, the real economy is still awaiting the arrival of a true economic recovery. While 89% of the benefits of economic growth in the United States during the Obama administration have gone to the corporate sector, ordinary citizens continue to face a harsh situation characterized by high levels of unemployment, a reduction of income as well as record numbers of foreclosures across the nation. It is precisely the inability of the administration to provide answers and solutions to the pressing problems of the population that calls into question its ability to win the election, despite having an advertisement budget of more than a billion dollars available for this purpose.

However, this situation is not surprising if we take into consideration the decisions Obama has made since 2008. A large proportion of the millions of voters who supported him were expecting for the new elected president to appoint a team of progressive economists which would promote a modern version of the New Deal. A large proportion of the millions of voters who supported him were expecting for the new elected president to appoint a team of progressive economists which would promote a modern version of the New Deal, with the objective of reforming capitalism and starting a new era of regulation of the economy. As it happened, reality was quite different. Obama instead decided to chose the most conservative economists close to the Democrats. Those responsible of promoting the de-regulation of the financial system under President Bill Clinton. When we stop and observe three emblematic names, the coherence of his choice is revealing.

The first of these advisers is Robert Rubin, Secretary of the Treasury from 1995 to 1999. Rubin was co-chair and co-CEO of Goldman Sachs from 1990-92 before he joined the Clinton administration. Upon arrival to the Treasury, Rubin was faced with the first major failure of the neoliberal model in the nineties, the Tequila Crisis in Mexico. Afterwards he strongly supported, along the IMF, the implementation of harsh austerity measures that aggravated the financial crisis experienced by South East Asia countries in 1997-1998, shortly followed by the crisis in Russia and Latin America. Rubin has never doubted the benefits of liberalization and decisively contributed to impose policies on developing countries that undermined the living conditions of its population and greatly increased inequality. In the United States, exerted its powerful influence to secure the repeal of the Glass Steagall Act, enacted in 1933. This law, among other things, made emphasis in the incompatibility of deposit and investment banking, creating a clear cut division among the two activities. Once Glass Steagall was abolished, the door was open for all sorts of greedy rentiers eager for maximum profits regardless of the risk, which ended up creating the conditions for the recent economic crisis. To close the loop, the repeal of the Glass Steagall Act allowed the merger of Citicorp with Travelers Group to form the banking giant Citigroup. In 2000, Robert Rubin joined the leadership of Citigroup, which the U.S. government had to bailout in November 2008, guaranteeing more than 300 billion dollars in assets! Its important to point out that the services provided by Rubin as chairman of Citigroup's executive committee were generously rewarded. According to the Financial Times, Rubin received over 118 million dollars in salary plus bonuses and stock between 1999 and 2008. (3) However, it was during his participation of the Board of Directors when Citigroup plunged into an increasingly risky financial policy that led to the fiasco which ended up costing the U.S. Treasury the astronomical sum of 45 billion dollars.

The second adviser on stage is Lawrence Summers, who inherited the post of director of the National Economic Council at the White House during the first half of the Obama administration. However, his career includes a number of stains which should be permanent. In December 1991, while he was chief economist of the World Bank, Summers dared to write in a memo: "Countries with small populations in Africa have a very low pollution. Air quality is uselessly higher than in Los Angeles or Mexico. It is necessary to encourage the movement of polluting industries to the LDCs. There must be some degree of pollution in countries where wages are lower. I think the economic logic which dictates that toxic waste should be directed where wages are lower is inexorable. <...> The concern will obviously be higher in a country where people live many years and therefore more likely get cancer, than in a country where infant mortality in children under 5 years old, is 200 per thousand.” With Summers in charge, productivist capitalism would enjoy a splendid future.

More at the link --

[dtexdem]

1. Loose change. It gets lost in the sofa.

And the change that we believed in didn't even make it to our piggy banks -- instead, it all went to some very-piggy bankers. ;-)