It never ceases to amaze me that one of the best news shows on TV is hosted by the Comedy Channel. Last night Jon Stewart interviewed Elizabeth Warren, professor of law at Harvard and Chairman and Chair of the the Congressional Oversight Panel for TARP. The interview revealed the clearest and most realistic explanation I have heard for our country’s current economic crisis. Here is some of what was said:
- Our government created a number of regulations and watchdog functions after the Great Depression in the 1920s
- From1920 through 1980, we had economic ups and downs, but they were extremely mild. We saw recessions rather than depressions or the possibility of economic collaps.
- People who head up big companies and the government like to do their real negotiating behind closed doors. This gives them a lot more freedom and it gives us, the taxpayers, much less visibility into what is really happening.
- In the 1980s, the “big guys” in the financial industry realized they could change their business model and become far more profitable if they could just neutralize those pesky watchdogs the government had put in place.
- Using closed door meetings and highly paid lobbyists, along with a series of favors to highly placed government officials, they managed to do just that.
- Three things happened:
- Profits for financial institutions went through the roof
- Bonuses for executives in financial institutions went into the ionosphere
- Risk caused by what they were doing skyrocketed
- The “big guys” really liked the profits and bonuses, so they ignored the risk. In fact, they started creating all kinds of new “financial products” that were really designed to confuse the situation, spread the risk to someone else, or make it look like there wasn’t much risk.
- Eventually the housing market, which had long been overheated with ridiculous growth rates, cooled. A small dip in revenue streams sent the ponzi scheme that had been built by the “big guys,” their lobbyists and government cohorts, crashing down.
- The “big guys” didn’t want to “pay the piper” and take responsibility for what they had done. Instead they:
- Claimed they were too big to fail so we had to bail them out
- Continued with their closed door meetings
- Tried to tell the American public that economic booms and busts were part of a natural cycle. They didn’t mention that they like this because they have figured out ways to make lots of money on both sides of the boom and bust cycle.
- Tried to tell Congress and the American public that they couldn’t see the housing decline coming. These guys are paid lots and lots of money to do just that, and they’re still getting to keep their jobs and get huge bonuses while they are telling us they are idiots!?
So now, according to Warren, we are at a “make or break” point in our economy. We don’t have any more time to let the “big buys” convince us that they know best and we certainly cannot believe that any of them has the best interest of the American Middle Class or your average consumer at heart.
Realistic checks and balances have to be put back in place. The economy can only be saved by taking power away from the people who created this situation and giving it back to the American Middle Class.
It is time for all of us to stand up and take responsibility for this. So, write your senator today. Let them know that you are watching, that you want reasonable and realistic safeguards put back into place so that we avoid devastating booms and busts in future. Let them know that it is high time we had a watchdog committee that had the consumer and the American public as its first and highest priority. Let them know that committee needs to be free of backdoor ties to people who want the watchdogs to go away.
The current situation has massive implications for the economy and for our future. Some people try to make it look incredibly complex, but even a child can see what is happening. The “big guys” like their power and their privileges. The “little guys,” us, are standing around watching everything we value being taken away. We can change the situation if we speak up and band together. Our constitution gives us a way to make ourselves heard. It isn’t easy when everything is so out of balance, but it is possible. So let’s get out there and change our world back to something that makes sense!
