Thursday, May 28, 2009

Bill Clinton on the Economic Meltdown

For what it's worth, here's part of Bill Clinton response to accusations that he played a significant role in the economic meltdown:

Now, there basically have been three charges,... one, because I enforced the Community Reinvestment Act for the first time and over 90 percent of all lending done under that law was done when I was president, $300 billion, that part of that was a lot of little banks made loans to people they had no business making loans to to buy houses so they could check the box for the Community Reinvestment Act. That’s the right-wing argument.

Then there’s the argument from the left that I shouldn’t have signed the bill that got rid of the Glass-Steagall law because that enabled banks and investment banks in effect to merge their functions.

And then there’s the argument that I make, which is that I should have raised more hell about derivatives being unregulated. I believe the last one is by far the most valid … although I don’t think that the Congress would have permitted anything to be done because Alan Greenspan was against it.

Republicans right-wingers, including many former Bush Administration figures, being the aggressive authoritarian figures that they are, have been incapable of admitting the blunders the have made for thirty years. Although Greenspan has been a believer in the Milton Friedman school of economic nonsense (it is nonsense since any objective measure shows that implementing draconian Friedman solutions to troubled economies usually aggravates the problems), he at least had the honesty to admit at long last that he's wrong.

Part of the right-wing spiel is that Bill Clinton 'caused' the meltdown some ten years ago. Well, Clinton actually was a major force in growing the economy during the 1990s and did much to create real jobs, particularly in the technology sector. Did Clinton make mistakes? Yes, of course. Every time Clinton behaved like a Republican and kowtowed to Gingrich and the more conservative members of his own administration he indeed made a small contribution to the current meltdown. Poppa Bush made his contribution when he allowed some regulations that made the Enron fiasco more likely. Reagan made his contribution through excessive deregulation (no one should forget the S & L crisis as one example or Bush 41's dismal handling of the economy).

But the person at the helm was George W. Bush. The blunders began with two wars with no end in sight. The blunders continued with the lack of a real energy policy despite the growing crisis of the last six years. A major and arrogant move on Bush's part was touting the business ethics reform package of 2002 and immediately watering down the bill after it was passed with his famous executive signing statements. Another major move was the gutting of the SEC. A Republican Congress eager to cash in on all the goodies was a factor (how many of those Republican clowns wound up working on K Street? (I know, even a few Democrats like Daschle lost their heads)).

Personally, I think there was also a political factor: I believe George W. Bush was hoping he could dump the economic mess on the next president, except the crisis came to a head sooner than he expected. Did Clinton play a role? Sure he did. Whenever he behaved like a Republican. And that's the real point. The conservative economic philosophy of the last 30 years is bankrupt. That bankruptcy began the moment Reagan took the solar panels off the roof of the White House and effectively said let the good times roll. For the wealthy and the well-connected, the last thirty years were good times, but not for the overwhelming majority of Americans. Except briefly, to some extent, during the Clinton years.



Anonymous S.W. anderson said...

Nice, the way Clinton frames his screw-ups in terms of just three oopsie-daisies, then acknowledges one as "the most valid."

In fact, throwing the floodgates wide open to free trade, with NAFTA, WTO and most-favored-nation status for China, all within the space of five years or so — all without putting in place any real safeguards and compensation for large numbers of American workers and businesses sure to be devastated by being suddenly placed in direct competition with infinite numbers of dirt-cheap foreign workers, was beyond incompetent. It was presidential malpractice. The result has been a self-inflicted economic disaster unprecedented in world history.

Given that opening up trade was probably inevitable, it could have and should have been carefully phased in over at least a 20-year period, with plenty of money and other resources in place to help the casualties.

Yeah, for two or three years on his watch the poor and near poor made some gains, for the first and only time since the mid-1970s. Still, the overall costs to the country's have-nots have been as staggering as the gains for the already well off have been.

Allowing investment houses to do banking and banks to run investment operations was brass-plated idiocy. The proof is in the toxic-assets pudding.

11:42 PM  

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