Beware the Shock Doctrine

The bail out plan offered by the Bush administration has the distinct odor of the Shock Doctrine: using a crisis to scare the country into precipitous action that will increase executive department power and benefit wealthy Republican supporters.

Its brevity alone is a red flag. Its insistence on its acts being "non-reviewable" is outrageous but fully in tune with the fascist tendencies of the Bush presidency.

Here's the full text, and I note that I'm not the only one who thought of N. Klein's Shock Doctrine. Paul Krugman in the NY Times and Sebastian Mallaby in the W. Post have already written columns against it.

But Republicans in Congress are trying to pressure Democrats to give the Bushites all they want. This is classic Shock Doctrine stuff. Democrats need to resist this attempt to panic them and make sure this plan has real oversight, doesn't further benefit the rich and penalize everyone else, and incidentally, that it will actually work.

On Economy, Obama Offers Ideas, McCain Blames Rival

--that's the headline in today's Washington Post:

"As officials in Washington raced to put together a bailout plan for the nation's teetering financial system, Sen. John McCain hammered Sen. Barack Obama as part of the problem while Obama said any rescue should include a new stimulus package for working families. "

McCain, who has supported the Bush push for the deregulation that led to this crisis, whose main economic advisor was the architect of the deregulation that is most directly responsible for the banking crisis, and whose campaign manager and many other advisors were big time lobbyists deeply involved in gaming the system, attacked Obama for ties to one person (Franklin Raines) who was never an Obama advisor at all. In a separate story, the Post called this assertion "particularly dubious." Yet the McCain campaign cites the Post as their source.

McCain also attacked a former Fannie Mae exec who was briefly on Obama's vp selection committee, saying that Jim Johnson had been paid with "your money." But the Post points out:"the severance packages were paid by company shareholders, not taxpayers."

On the plan to save the economy currently being devised by members of the administration and Congress, the Post story quotes Obama yesterday: "We'd better do it in an intelligent, systematic, thoughtful fashion. I'm much less interested at this point in scoring political points than I am in making sure that we have a structure in place that is sound and is actually going to work."

Obama Press Conference Q & A on Economic Crisis

This is from Obama's press conference Friday--about 10 minutes.

Our President in Waiting

Barack Obama met Friday with economic experts
including former Fed chair Paul Volcker, former
Treasury Secs. Robert Rubin (D) and Paul O'Neill (R),
and financial wizard Warren Buffet. NY Mayor
Bloomberg (I) participated by phone.

This is What Leadership Looks Like

On the day that administration and congressional leaders announced that a plan was in the works to prevent what essentially would be Great Depression II, only globally, Barack Obama met with economic experts and made a statement, excerpts of which follow:

"In recent years, I have outlined plans that would have helped prevent the problems we now face, and yesterday I proposed the outlines of a plan that would establish a more stable and permanent solution to strengthen our financial system. Today, I fully support the effort of Secretary Paulson and Federal Reserve Chairman Bernanke to work in a bipartisan spirit with Congress to find this kind of solution.

In the coming days, I will more closely examine the details of the Treasury and Fed proposal, and as I do, I’ll work to ensure that it provides an effective emergency response by including four basic principles that my economic advisors and I just discussed this morning.

First, we cannot only have a plan for Wall Street. We must also help Main Street as well. I’m glad that our government is moving so quickly in addressing the crisis that threatens some of our biggest banks and corporations. But a similar crisis has threatened families, workers and homeowners for months and months and Washington has done far too little to help.

In the same bipartisan spirit that is being shown with regard to the crisis on Wall Street, I ask Senator McCain, President Bush, Republicans and Democrats to join me in supporting an emergency economic plan for working families – a plan that would help folks cope with rising gas and food prices, spark job creation through repair of our schools and roads, help states and cities avoid painful budget cuts and tax increases, help homeowners stay in their homes, and provide retooling assistance for America’s auto industry. John McCain and I can continue to argue about our different economic agendas for next year, but we should come together now to work on what this country urgently needs this year.

The second principle I would like to see in the emerging plan from the Treasury and the Fed is that our approach should be one of mutual responsibility and reciprocity. It must not be designed to reward particular companies or the irresponsible decisions of borrowers or lenders. It must not be designed to enhance the personal gain of CEOs and management. The recklessness of some of these executives has helped cause this mess, even as they walk away with multimillion dollar golden parachutes while taxpayers are left holding the bag. As taxpayers are asked to take extraordinary steps to protect our financial system, it is only appropriate that those who benefit be expected to contribute to the protection of American homeowners and the American economy. Just as support is not designed to payoff egregious executive compensation, it should not reward those who are ruthlessly foreclosing on American families.

Third, this plan must be temporary and coupled with tough new oversight and regulations of our financial institutions, and there must be a clear process to wind down this plan and restore private sector assets into private sector hands after restoring stability to the system. Taxpayers must share in any upside benefit that such stability brings.

Fourth, this plan should be part of a globally coordinated effort with our partners in the G-20. This is a worldwide issue, and while the United States can and will lead in stabilizing the credit markets, we should ask other nations, who share in this crisis, to be part of the solution as well.

One last point. We did not arrive at this crisis by some accident of history. What led us to this point was years and years of a philosophy in Washington and on Wall Street that viewed even common-sense regulation and oversight as unwise and unnecessary; that shredded consumer protections and loosened the rules of the road. CEOs and executives got reckless. Lobbyists got what they wanted. Politicians in both parties looked the other way until it was too late. And it is the American people who have paid the price. The events of this week have rendered a final verdict on that failed philosophy, and it will end if I am President of the United States.

Finally, given the gravity of this situation, and based on conversations I have had with both Secretary Paulson and Chairman Bernanke, I will refrain from presenting a more detailed blue-print of how an immediate plan might be structured until I can fully review the details of the plan proposed by the Treasury and the Federal Reserve. It is critical at this point that the markets and the public have confidence that their work will be unimpeded by partisan wrangling, and that leaders in both parties work in concert to solve the problem at hand.

I know these are difficult days. And I know there are a lot of families out there right now who are feeling anxiety – about their jobs, about their homes, about their retirement savings. But here’s what I also know. This isn’t a time for fear or panic. This is a time for resolve and for leadership. I know we can steer ourselves out of this crisis. That’s who we are. That’s what we’ve always done as Americans. Our nation has faced difficult times before. And at each of those moments, we’ve risen to meet the challenges as one people, and one nation. That is the America we need to be and can be today."

Who Advises McCain on the Economy?

Two Minute Drill: the Obama Plan

This is Obama's two minute message outlining his solutions to the economic crisis. The more detailed speech and text is in the post below.

This is Leadership in a Time of Crisis

Barack Obama on the Economic Meltdown and the Future

"Since this turmoil began over a year ago, the housing market has collapsed. Fannie Mae and Freddie Mac had to be effectively taken over by the government. Three of America’s five largest investment banks failed or have been sold off in distress. Yesterday, Wall Street suffered its worst losses since just after 9/11. We are in the most serious financial crisis in generations. Yet Senator McCain stood up yesterday and said that the fundamentals of the economy are strong...

Now I certainly don’t fault Senator McCain for all of the problems we’re facing, but I do fault the economic philosophy he subscribes to. Because the truth is, what Senator McCain said yesterday fits with the same economic philosophy that he’s had for 26 years. It’s the philosophy that says we should give more and more to those with the most and hope that prosperity trickles down. It’s the philosophy that says even common-sense regulations are unnecessary and unwise. It’s a philosophy that lets Washington lobbyists shred consumer protections and distort our economy so it works for the special interests instead of working people.

So let’s be clear: what we’ve seen the last few days is nothing less than the final verdict on an economic philosophy that has completely failed. And I am running for President of the United States because the dreams of the American people must not be endangered any more.

It’s time to put an end to a broken system in Washington that is breaking the American economy. It’s time for change that makes a real difference in your lives. If you want to understand the difference between how Senator McCain and I would govern as President, you can start by taking a look at how we’ve responded to this crisis. Because Senator McCain's approach was the same as the Bush Administration’s: support ideological policies that made the crisis more likely; do nothing as the crisis hits; and then scramble as the whole thing collapses. My approach has been to try to prevent this turmoil...

Make no mistake: my opponent is running for four more years of policies that will throw the economy further out of balance. His outrage at Wall Street would be more convincing if he wasn’t offering them more tax cuts. His call for fiscal responsibility would be believable if he wasn’t for more tax cuts for the wealthiest Americans, and more of a trillion dollar war in Iraq paid for with deficit spending and borrowing from foreign creditors like China.

His newfound support for regulation bears no resemblance to his scornful attitude towards oversight and enforcement. John McCain cannot be trusted to reestablish proper oversight of our financial markets for one simple reason: he has shown time and again that he does not believe in it.

What has happened these last eight years is not some historical anomaly, so we know what to expect if we try these policies for another four. When lobbyists run your campaign, the special interests end up gaming the system. When the White House is hostile to any kind of oversight, corporations cut corners and consumers pay the price. When regulators are chosen for their disdain for regulation and we gut their ability to enforce the law, then the interests of the American people are not protected. It’s an ideology that intentionally breeds incompetence in Washington and irresponsibility on Wall Street, and it’s time to turn the page.

Just today, Senator McCain offered up the oldest Washington stunt in the book – you pass the buck to a commission to study the problem. But here’s the thing – this isn’t 9/11. We know how we got into this mess. What we need now is leadership that gets us out. I’ll provide it, John McCain won’t, and that’s the choice for the American people in this election. "

But I am running for President because we simply cannot afford four more years of an economic philosophy that works for Wall Street instead of Main Street, and ends up devastating both. I don’t want to wake up in four years to find that more Americans fell out of the middle-class, and more families lost their savings. I don’t want to see that our country failed to invest in our ability to compete, our children’s future was mortgaged on another mountain of debt, and our financial markets failed to find a firmer footing. This time – this election – is our chance to stand up and say: enough is enough! "

--Barack Obama in Golden Colorado on Tuesday. This speech talks in detail about the causes of the financial and economic crises, the proposals Obama made months ago, and what he will do as President.

The video above has the speech in full. It's 38 minutes but if you really want to know what Obama will do, multitask if you must but watch and listen. The prepared text is here.

McCain Running Away from Himself on the Economy

The Bush-McCain 500

The stock market plunged more than 500 points on Monday, and no one knows how far it will fall today. Government bailouts of several major financial institutions, the fire sale of others and now bankruptcy of one over the weekend led directly to this moment, but both the causes and the ultimate effects go far beyond the financial world of wealthy speculators that seems to be a world of its own.

Charlie Rose assembled a panel of economic experts and reporters, and I couldn't keep up with their doomsday predictions. There was talk of global recession, of a deep and longlasting recession in the U.S., of hard times extending into 2011 or 2012. Another group of economists on Larry King spoke of "a financial system that is coming apart at the seams."

Who is responsible? For the specific failures, a combination of deceptive managment, and overall a combination of greed, fear and ignorance. But for the broad failure of the economy that is likely to get much worse, the blame falls on the economic policies of the Bush administration and the McCain Congress that held power until the 06 election, by which time it was already too late to stop what is happening now.

Washington failed to regulate these industries, partly based on ideology, partly at the behest of lobbyists like those running the McCain campaign. The financial institution catastrophe can be traced to deregulation, specifically legislation passed with the leadership of Phil Gramm, the chief architect of McCain's economic philosophy and his likely Secretary of the Treasury.

The economic disaster for millions of Americans and potentially billions of people around the world also has its roots in the Bush-McCain economy of paying off the rich with tax cuts and paying out the wealth of the country to Halliburton and other crony corporations, resulting in a $500 billion deficit and the weakening of the dollar.

Add this to the money flowing to buy foreign oil and all the jobs that corporations exported, a process encouraged by Bush-McCain economics, and the result is high unemployment that is going to go even higher, low consumer confidence and drops in U.S. production.

When all of this came to a head Monday, John McCain insisted that "the fundamentals of the economy are strong." That's what Herbert Hoover said as America plunged into the Great Depression.

So now Americans have to decide whether they are going to entrust this dangerous situation to John McCain, who has supported the policies that led to this ongoing catastrophe, even though he admits he doesn't know much about economics, and his VP candidate Palin, who increased debt as mayor and governor, and whose chief economic accomplishment in both offices was to extract millions from the federal government for pet projects.

Or will they turn to the Democrats, to Barack Obama and Joe Biden, who have both warned on the record that those Bush-McCain policies were going to lead to disaster, and who already have plans to attack these problems and repair this economy spiraling out of control, with judicious policies (advised by economists who managed the prosperity and budget surplus of the Bill Clinton years) and bold plans to protect jobs and pensions and social security, and to re-industrialize America with a Green Deal for the future.

That choice is only going to become more dramatic in the coming weeks.

Read My Lipstick

The top two signs are from a grassroots
rally in Alaska, the third from an Obama
appearance in New Hampshire over the weekend.