“We Are Going Down A Long, Dark, Blind Alley”

Read that and lots more like it in Bill Moyers’ new post on truthout. It’s a transcript of Moyers interviewing Simon Johnson, an MIT business professor and senior fellow at the Peterson Institute for International Economics, and, let me tell you, it’s tough stuff. If you like being compared to an emerging economy that’s clenched in the icy grip of oligarchs, then it’s for you! Johnson, conveniently, has his own blog, baselinescenario.com – making this a blog post about a blog post about a blog post. It’s okay, though, because Bill Moyers’ post is actually a transcript of his Journal interview, and, still, so interesting.

Johnson’s point here is that Obama may be relying too heavily on the same folks who got us into this economic disaster. Anyone who has wondered why the new Treasury Secretary is the same person who headed the NY Federal Reserve during the gestation of the current crisis has noticed this already. It goes further and deeper, however, when you consider how beholden our Congressional representatives are to the same kinds of people.

I have this feeling in my stomach that I felt in other countries, much poorer countries, countries that were headed into really difficult economic situation. When there’s a small group of people who got you into a disaster, and who were still powerful. Disaster even made them more powerful. And you know you need to come in and break that power. And you can’t. You’re stuck. …

[T]he policy that we seem to be pursuing, of being nice to the banks, is a mistake. The powerful people are the insiders. They’re the CEOs of these banks. They’re the people who run these banks. They’re the people who pay themselves the massive bonuses at the end of the last year. Now, those bonuses are not the essence of the problem, but they are a symptom of an arrogance, and a feeling of invincibility, that tells you a lot about the culture of those organizations, and the attitudes of the people who lead them.”

If that doesn’t worry you, you need to go read or watch the whole thing, because there are plenty more chills where that came from. It doesn’t have to end badly, however, there’s certainly a way to save the banks, without nationalizing them, while protecting consumers/taxpayers. Naturally, there’s more detail involved than I can include here, but I’ll give you a taste:

The structure or banking system, the concentration of power in big financial institutions has to change. There’s a lot of appeal to FDR and what he did in the Great Depression.

I would go back to Teddy Roosevelt 100 years ago, and think about trust busting. Okay? Now, the banks don’t violate existing antitrust laws. That’s ’cause our antitrust laws are 100 years old and need to be changed, okay? We need to break them up for exactly the same reason that Rockefeller and the oil interests, standard oil, at the end of the 19th century, was too powerful, economically and politically. And it had to be broken up. And breaking it up was the right thing to do. That’s where we are with the banks today.”

(I hear you. Kind of a lot of “okays”, but fewer than Caroline Kennedy’s “you knows”.) Recovery will have to start with someone, our new president, I hope, standing up to entrenched banking interests, armed with answers and advice from other experts, and working for us outside the “web of interest” that brought us down this “long, dark, blind alley” to our great national detriment.