Disappeared News

by Larry Geller

Do you think our leaders in Washington are on the right track with this economic meltdown thing? Is shoveling taxpayer money at high-rolling bankers (who must already be bathing in the stuff, deliriously happy at how well they are doing) exactly what you want Congress and Obama to do? No?

Does allowing foreclosures to continue and interest rates to skyrocket for the average American please you? No? How about all the personal bankruptcies due to the lack of a single-payer health care system in our great country?

How does unemployment feel, your own or your neighbors’?

WHY CAN’T THEY FIX THIS?

Check out the first segment of today’s Democracy Now on the web. Read, listen or watch. This interview has gone viral. Amy Goodman’s guest is Chicago lawyer Thomas Geoghegan, whose Harper’s Magazine cover story is “Infinite Debt: How Unlimited Interest Rates Destroyed the Economy.” (You can search for it using Google or buy the magazine, it has other articles of interest.)

The Democracy Now segment has gone viral. Please click over there and have a look.

Towards the end of  the interview Geoghegan identifies the filibuster as the obstacle the prevents Congress from taking action. How refreshing. But here’s a snippet to entice you:

THOMAS GEOGHEGAN: In the article, I talk—that appeared in Harper’s, I’ve talked about the fact that we’ve not focused enough on the big deregulation that precedes all other deregulations, and that’s the ceiling that has existed on the financial sector since time immemorial on the amount of interest that banks can get from their clients, their customers, their depositors. Historically, and even up through movies like It’s a Wonderful Life with Frank Capra and Mr. Potter and George Bailey, the interest rates in this country were capped at eight percent, nine percent. In the 1970s, we began to deregulate this, and then we had a massive big bang with a Supreme Court case that effectively knocked out all the interest rate caps. And we have today, taken as common, that banks can charge 17, 18, 19, 30, 35 percent, not to mention payday lenders charging 200, 300, 400 percent in states like Illinois, California [inaudible]—
…

You know, if you are Mr. Potter in It’s a Wonderful Life and can only get six percent, seven percent on your loan, you want the loan to be repaid. Moral character is important. You want to scrutinize everybody very carefully. But if you’re able to charge 30 percent or, in a payday lender case, 200 or 300 percent, you don’t care so much if the loan—in fact, you actually want the loan not to be repaid. You want people to go into debt. You want to accumulate this interest. And this addicted the financial sector to very, very, very high rates of return compared to what investors were used to getting in the real economy, the manufacturing sector, General Motors, which would give piddling five, six, seven percent returns.

So the capital in this country began to shift in the financial sector. That’s why the financial sector began to bloat up. That’s why we ended up, by 2006, having a third of all profits going into the banks and the financial firms and not into the real economy.
…

AMY GOODMAN: —talking about money fleeing from the auto industry.

THOMAS GEOGHEGAN: Sure. I feel one of the reasons I am in favor of the bailout of the auto industry is, aside from all the other reasons, a sense of guilt that we set up all the returns in this economy in favor of financial firms and really disinvested from industry. And even worse, we began to turn industry into a banking itself. General Motors, General Electric began to operate banks, because that’s where they made the big profit, in the loans to consumers, uncapped interest. It’s a very destructive situation.

A section that follows discusses how we failed to invest in labor and unionization while the financial sector soared (and now crashed). So we find ourselves unable to compete in the world economy.

So guess what—we shouldn’t be bailing out the banks that caused the problem. We’re just putting them back in business to cause more problems. We should be overhauling the system and replacing it entirely, with appropriate regulation and controls.

Yay! Common sense at last!

Similar points of view have appeared elsewhere. I like the presentation in this interview. Hope you have time to check it out.

Then, we need to find a way to restore democracy in this country somehow so that the people’s interest will come first.

Permalink posted by Larry @ 3/24/2009 11:32:00 PM