Over the last 10 years the United States has experienced a net loss of 3.5 million jobs in those sectors of the economy outside of health, education and government. And the only thing that kept that figure from being much much larger is the huge number of McJobs that were created, in the service of fast food and the like. How did this huge job exodus take place? It had a lot to do with the approximately 42,400 factories whose operations were moved to places like China and Mexico where labor is dirt cheap. (For more details, read this article, where you will find that according to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone. You will also read that according to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30% (2.3 million), from 7.8 million to 10.1 million. Meanwhile, during that same time period, U.S. employment at American multinational corporations declined 8% (1.8 million), from 22.9 million to 21.1 million.
Also read about how, during the George W. Bush administration's final months of plunder, leaders dedicated to a doctrine of government by entrepreneurship proceeded to sell off the state, channeling the profits to cronies and loyalists. Survey the federal agencies doomed to failure by the inept and even hostile staff appointed to run them. Read a compelling account of the devastating results of wholesale deregulation. From political scandal to mortgage meltdown, understand the consequences of enshrining the free market as the logic of the state.
Yet during this same 10 years, since Duhbya stole the White House, the OTC (over the counter) derivatives market, where banks traded their exotic financial innovations, grew from relative insignificance to a $600 trillion dollar death star. A portion of this secretive market finally exploded, causing the greatest economic crisis since the Great Depression. The people who agree with Larry Summers that the recession is over should pay a visit to Michigan, where I just spend the holidays. My home town is a disaster area.
However, during those same 10 years, the major financial institutions, 5 of which -- Citi, BofA, JPM, Morgan and Goldman -- hold 95% of all derivatives exposure, paid themselves hundreds and hundreds of billions in bonus pay, skimming the short-term profit off the frothy asset bubbles they were inflating while they cleverly transferred the risk to us taxpayers. Their game was, literally, selling us down the river.
And what we are now experiencing, aside from the pain of national foreclosure, massive cuts in services, state defaults, federal bankruptcy, etc., is the cover-up of what happened, criminal or quasi-criminal, as well as the cover-up of the negotiated governmental response to the banking crisis, which some feel is also criminal.
One of the main things Obama promised during his campaign was transparency, but we have had ZERO transparency on this issue at every level. He even suspended mark-to-market accounting so that we wouldn't find out about the insolvency of the "surviving" financial institutions -- institutions that are now paying themselves huge bonuses again, USING OUR TAX DOLLARS to do so! Without most of them even knowing, taxpayers have been forced to purchase or guarantee multiple trillions of dollars of toxic assets -- without even being informed about what those assets actually are! "Our" government doesn't want us to know! Why not? Because that might well prevent the scam from being implemented.
So, tell me please: how can real financial regulatory reform be worked out BEFORE a full understanding of the depths to which corrupt banking practices have sunk? (The complicity of the Obama administration, not to mention Senate Finance Committee and House Financial Services Committee members of both parties, in this obstruction of transparency, is nothing less than a national scandal. And yet, so far, it is successfully being kept hidden from the vast majority of Americans!)
The entire country has just endured endless months of discussion about the intricacies of health care reform, and what we ended up with was a joke. What we SHOULD have been talking about during this time was how our government should respond legislatively to a once-in-a-century financial calamity. Instead, they desperately changed the subject to health care, and did their negotiating on financial reform in private. There's been no discussion about reforming the credit rating agencies, whose fraudulent ratings provided the glue for the house of cards, and no discussion of the merit of breaking up the banks, or re-imposing Glass-Steagall, spiting the experienced wisdom of people like Paul Volcker and, dare I name him, Alan Greenspan. Instead, our legislators let bank lobbyists draft the legislation themselves(!), so that enough loopholes will remain, to allow business-as-usual to continue.
The banksters understand all this completely. It's what enables them to make millions of dollars in bonuses. Quite likely they will have to wreck the US economy in order to get all the money they want and can get. But hey, that's not their problem; they can always pick up the pieces after everything falls apart, and pick them up at bargain prices, thereby emerging much more powerful and more dominant over the rest of us than ever before. So the current situation is not their problem; it is OUR problem. And it seems we are too weak and/or lazy and/or in the dark, to do anything about it.
Does anyone really think that all of a sudden our bought-and-paid-for politicians are going to stick it to the banksters? Please, spare me such naÃ¯vete'. The politicians will sooner close the libraries, reduce social security checks by half, and make kids pay to ride the subway to school, than to take a hard line with their financial betters, on whom their reelection depends.
That is the reality. The bankers get it. And most Americans still don't. (Click here for source article.)
As Frank Rich points out in a recent column, there may not be one person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit -- in the years since 9/11, we've all become counterterrorists. But in the 16 months since that other calamity in downtown New York, i.e. the crash precipitated by the 9/15 failure of Lehman Brothers -- most of us are still ignorant about what Warren Buffett called the "financial weapons of mass destruction" that wrecked our economy. Fluent as we are in al Qaeda and body scanners, when it comes to synthetic CDOs and credit-default swaps, most of us are still in the dark.
Regarding this plot, what we don't know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks -- secure that it can keep the bonanzas while we still get stuck with the losses.
The window for possible change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washington's already limited capacity for heavy lifting, especially in an election year. The White House's chief economic hand, Lawrence Summers, has repeatedly announced that "everybody agrees that the recession is over" -- which is technically true from an economist's perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties, and the revolving door between finance and government never stops spinning.
It's against this backdrop that this week's long-awaited initial public hearings of the Financial Crisis Inquiry Commission are so critical. This is the bipartisan panel that Congress mandated last spring to investigate the still murky story of what happened in the meltdown. Phil Angelides, the former California treasurer who is the inquiry's chairman, said in interviews late last year that he has been busy deploying a tough investigative staff and will not allow the proceedings to devolve into a typical blue-ribbon Beltway exercise in toothless bloviation.