Nestor Kirchner died tragically this Wednesday morning, aged only sixty. Hundreds of thousands have come out to mourn him, and it occurred to this observer that if President Obama’s policies had also prioritized the people, he would not now face the need for mailing urgent appeals, emails, recorded telephone calls, an unprecedented appearance on Jon Stewart’s comedy Daily Show, all in a last ditch effort to persuade us to vote for his party.
It was on The Daily Show that Mr. Obama, when pressed, blurted out, “Larry did a heck of a job”. Commentators have seized on the uncanny resemblance to Bush’s “heckuva job, Brownie” during the hugely messed-up response to hurricane Katrina, even pointing to a Freudian reversion. But Larry Summers has simply danced to the bankers’ tune, the same as when he and his mentor, Bob Rubin, led the gutting of Glass-Steagall which, coupled with greed, led inexorably to the current mess.
When Nestor Kirchner stood up to the IMF, its backing of the lenders, its austerity prescriptions, he was, like Franklin Roosevelt, on his own against the bankers, the economists who prophesied the roof would fall in, and capital interests. Still, because of his steadfastness it was the IMF that blinked and restructured the loans. It took courage, it took new ideas and new local Latin American trade agreements to break the IMF cordon, but he was successful in saving his people from many more years of misery.
In our case the bankers were not lenders, they were not owed money; they had incurred gambling losses and we chose to cover them. Many economists including prominent Nobel Laureates opposed Summers. Coddled by the banks to the tune of $10 million, he, in turn, coddled them. Yet the President chose to hire and support him. Of course, any politician trying to stay alive in our political climate needs the oxygen of campaign dollars and can hardly afford to offend such powerful backers.
On The Daily Show, the President also stated that a major bank failing would have led to a hundred banks failing. It may be disingenuous (or politic) but not fact because bank failure nowadays is receivership and restructuring. The shareholders and the bank’s executives lose, the depositors are secured. Banks fail every week, and in a quiet smooth process are transitioned by the FDIC without the bank’s depositors even noticing anything amiss other than perhaps a name change.
The Financial Reform Bill was supposed to tackle the fundamental problem of unregulated securities and related markets. When it passed, the bankers having successfully fought off even minor regulatory provisions, financial stocks shot up. Ditto for health care reform, which failed to address the basic problem in health care: bloated for-profit facility providers and insurers, who amplify costs and stand between doctor and patient. A vast majority of Americans favored a not-for-profit single-payer system, yet what we got was “reform” mandating the purchase of insurance and no governmental bargaining on the price in an echo of Bush’s Medicare drug coverage. Quite naturally health care stocks shot up when the bill passed. Everything for the paymasters, perhaps a few scraps for the common folk.
As for the economy, it remains sluggish because the sludge is still there. We have been witnessing financial legerdemain. The banks still carry the toxic assets, just marked up to purchase price because accountants were forced by the bankers through Congress to change the mark-to-market accounting rule. Until the markets clear and the sludge is out, we are mired in a blocked kitchen sink thanks to Larry’s excessive fat recipe for bankers. The Fed keeps adding more water — carried off fortunately by the Chinese — when what we need is Nestor’s Drano.
And the President keeps sending urgent appeals offering the partially bought over the completely bought.