Krugman: “Populism that makes Bankers Angry is Exactly what the Economy Needs”

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Crossposted at Daily Kos

   Yesterday, in a NYTimes Op-Ed titled “Reform or Bust”, Nobel Economist Paul Krugman gave some well needed advice on good economics and good politics that President Obama and Democratic members of Congress should listen to.

    It’s not just that taking a populist stance on bankers’ pay is good politics – although it is: the administration has suffered more than it seems to realize from the perception that it’s giving taxpayers’ hard-earned money away to Wall Street, and it should welcome the chance to portray the G.O.P. as the party of obscene bonuses.

    Equally important, in this case populism is good economics. Indeed, you can make the case that reforming bankers’ compensation is the single best thing we can do to prevent another financial crisis a few years down the road.

   One obvious point is the need, politically, to make the GOP the party that defends huge Wall St salaries and bonuses, which they will do anyway and gladly. Politically, the GOP can not be for the bonuses. They just can’t. Even more so, they can not be against the regulations AND against the bailouts. It just won’t work. Like Saruman in Lord of The Rings when confronted by Gandalf and the Riders of Rohan at the foot of Orthanc, the GOP can not be all things to all people, or against all things either. When too many eyes are watching at once the illusion is broken. The GOP can not be against all cures and still appear in the populist corner, as their teabagging antics try to portray, badly. The GOP must stand for something, and they do, they stand for the Super Rich and Corporate Wealth. Proving this is very important.

    Recently wingnutty teabagging Republican Senator Jim DeMint (C Street-SC) offered his answer to all that economically ails Wall St. Guess what? His answer; More Tax Cuts!

    Instead of looking at more regulation, we could do a lot by fixing our tax system here in this country, to make us globally competitive. The President needs to focus on what really has caused problems and look at what has really made America so prosperous, and I’m afraid that’s not the lens he’s looking through right now.

ThinkProgress.org

    Because who would think that cutting taxes for Wall St would be kind of rewarding for them, or a serious attempt at real reform.

    The GOP has NO new ideas, and the only ones they do have are Failed, totally and utterly Failed. Bipartisanship with these guys is a sort of cheating off of the dumb kid in class at ths point. It WILL NOT WORK. I understand why Obama has made the effort, but no it is time to play hardball, it is NO LONGER the time to keep trying to make the GOP feel good about themselves, especially when their ideas suck and they hope you fail.

    More and my own analysis below the fold.

     As is plainly obvious, the banksters are back to the same old crap that got us into this clusterf$%k in the first place. Bonuses are going to be huge this year, and subsidized with OUR tax dollars. Huge risks are being taken again, just as before the gigantic crash that was caused by deregulating securities (a brilliant GOP idea, that one was). High Frequency Trading Scandals are out of control and our old friend the Credit Defeault Swap is back again, only instead of using mortgages the banks are using life insurance now. It makes sense, I mean, it’s not like a large portion of our population will be passing away due to old age in the next few years!

     Of course, sold out Republicans and their Democratic ConservaDem/BlueDog counterparts are sure to oppose anything that might upset their Corporate puppet masters, but that is not important, because it is as certain as it is to say that it will rain somewhere today or Glenn Beck will see Nazi stuff on his way to work. What is important is where President Obama will stand on the issue. It is a stance he MUST take if we are to have any hope that Obama’s Presidency is really about change, he has to start acting like it and showing us he is a fighter.

     According to Krugman, Larry Summers of all people recently found his inner fighter, taking the Chamber of Commerce to task for their anti Wall St reform ads, which he compared to “the financial-regulatory equivalent of the death-panel ads that are being run with respect to health care.”

     To that I say WAY TO GO LARRY!!!

     Unfortunatly, President Obama has yet to consistantly back up his tough talk with more tough talk, let alone tough action.

     Paul Krugman writes in his article that in an appearance with Bloomberg News, President Obama was quoted as saying “Why is it that we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or N.F.L. football players?”

     As Krugman writes, and I concur, it is because NFL players don’t need to be bailed out by tax payers when they lose all their money. Plus, Pro Basketball, Football and Hockey have team salary caps, and because of that there is more parity in the meagues and thus better competition. The one team sport without salary caps, baseball, is by far the least competitive, with the wealthiest teams consistantly making the playoffs while poorer teams languish in last place. As of now, the Goldman Sachs and Citigroups of America are the Yankees and the Red Sox, and the small businesses are the Royals and the Pirates, who never have a chance of suceeding and only do so against all the odds. It doesn’t work in baseball, and what is more American than baseball, other than apple pie.

      So, if salary caps would be good for baseball, why not for the rest of America, or, at least, the heart of the American economy down on Wall St?

     Simply put, if President Obama can not hold Wall St accountable, there is no reason to have hope anymore. Accountability is my number one issue, politically and economically, and the message I get when we don’t go after Bush/Cheney War Crimes or Wall Streets excesses is that some people are more than equal, some people are above the law and above accountability.

    I don’t think that is how a Democracy or the Rule of Law is supposed to work, and I believe the rule of law MUST apply both politically AND economically of we are to remain a free and equal society.

    The fact is, President Obama MUST address the huge salaries and bonuses stolen earned on Wall St. His Administration MUST prove to the lower 99% of America that their are rules and consequences to breaking them. Chiefly, Wall St must be moved off of the short term bonus system and onto a long term system with rewards for doing well over the long term, not just what is good tommorrow.

    Further, we MUST regulate Wall St in a meaningful and thorough manner, one that can not be unwound in the next Administration or Congress. It took 70+ years for Republicans to undo the firewalls put up by FDR and Keynes, if the Republicans of 2009/2010 can undo Obama’s changes in a heartbeat, it wasn’t really change at all.

    The article Krugman wrote is a good read, and should be taken seriously by the Democratic party if they are interested in hanging onto power for a while. President Obama is going to get called bad names by stupid people anyway. I think he should give them a better reason to dislike him as much as they do.

    Therefore, I leave you with the final quote from Krugman’s article, with which I titled this diary. It speaks truth to power, something the President must start doing and backing up with real action if we his supporters are to keep up the hope.

    It’s time for the president to realize that sometimes populism, especially populism that makes bankers angry, is exactly what the economy needs.

NYTimes.com

     It’s time, Mr. President, to fight for us, the little people who voted for you. We want a Public Option in health care reform, not just because it is good policy, but because it proves that the Special Interests CAN and WILL be confronted and denied their wishes. We WANT real reform, we want real change.

     It is time to stop playing Mr. Nice Guy, President Obama. We want you to FIGHT, and fight for us.

     We, your supporters, are behind you, and we’re all hoping that you do the right thing.

Also crossposted at The Progressive Electorate.com