Undernews is the online report of the Progressive Review, edited by Sam Smith, who has covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

March 26, 2009



Ralph Brauer, Progressive Historians - Geithner and Summers along with Rubin are why this financial crisis will not be satisfactorily resolved, for in order to take the necessary steps to alleviate it all would have to admit their part in causing it and even more pointedly admit that their boss at the time, William Jefferson Clinton, also played a role. . .

If one parceled out blame the way they do in auto accidents, the GOP would bear the majority of it for they supplied the Congressional majority--and even put their names on the bill that caused this mess, the Gramm-Leach Bliley Act. But Rubin and his two sidekicks convinced Bill Clinton that the bill would be a good idea. So on Rubin's advice, Clinton looked the other way while Citi put its considerable lobbying forces into motion to make Gramm-Leach-Bliley possible, which is why one of the pens Bill Clinton used to sign the bill hangs in a prominent place in the office of former Citi CEO Sandy Weill--the man who created what was once America's largest financial institution out of a loan-sharking business.

Both Geithner and Summers played a role in this fiasco. Summers was the more prominent for he served as Rubin's assistant Treasury Secretary before succeeding his mentor, who for his role in making Citi's mergers legal received a cushy job at Citi as his reward. Geithner at the time was serving as Under Secretary of the Treasury for International Affairs under both Rubin and Summers. Several commentators have noted the closeness of the three.

Where Rubin's fortunes fell as Citi plunged into one of the greatest bubble implosions in economic history, one that rivals the collapse of the East India Company or the Tulip Bulb fiasco, Summers and Geithner were fortunate to remain some distance from ground zero. . .

Summers was chased from the Presidency of Harvard only to reemerge as one of Barack Obama's chief economic advisors. Geithner became head of the New York federal reserve where his chief accomplishment was to sign off on the Bush Administration's bailout plan, a plan that was supposed to rescue companies at the center of this mess--one of which was Citi. . .

The Glass-Steagall Act, as it became known, was one of the most important pieces of economic legislation in American history. Essentially it prohibited banks from entering into the securities market, which Glass felt was one of the root causes of the Great Depression. Sixty years later this history was ruled irrelevant for the "new economy" of the 1990s as Rubin openly campaigned for the repeal of Glass-Steagall.

If Glass-Steagall was one of America's greatest pieces of economic legislation, the bill which repealed it--Gramm-Leach-Bliley--is surely one of the worst. . . What is still not generally understood about GLB is that it not only allowed banks to play with the likes of derivatives and subprime mortgages, it spurred the economic concentration and interlocking institutions that lie at the center of this crisis. . .

The presence of Geithner and Summers in the administration of Barack Obama merely testifies that as long as they have the President's ear, the roots of this crisis--and hence its long term resolution--will be ignored, for to do otherwise would be to admit they helped to cause it. Yet we also should remember had Barack Obama not won in November, waiting in the wings was the man whose name is on the bill that repealed Glass-Steagall--Phil Gramm. . .

Geithner, Summers and Rubin ultimately were part of a fascinating convergence that took place at the end of the last century. For the first time since Grover Cleveland's Democrats and William McKinley's Republicans agreed on economic fundamentals, in the 1980s and 90s the two parties occupied the same economic common ground.

Gramm-Leach Bliley is not the result of some conspiracy or even a bald-faced attempt by Wall Street to buy off Congress and the Executive branch--although record amounts of lobbying funds were spent to be sure it passed. In the end GLB is about the power of shared ideas, an economic orthodoxy that made the likes of Rubin, Summers and Geithner indistinguishable from their Republican counterparts. . .


Boston Globe -
President Barack Obama's aunt, a Kenyan immigrant who ignited controversy last year for living in the United States illegally, has returned to her quiet apartment in a Boston public housing project to prepare for an April 1 deportation hearing that will be closed to the public.

Zeituni Onyango, a tall, frail-looking woman in her late 50s who walks with a cane, had fled Boston to stay with relatives in Cleveland last fall after media attention erupted over her case. She was spotted at Obama's inaugural festivities in January and, according to neighbors, returned to Boston a few weeks ago for her third attempt to fight removal from the United States. She had been living in the country illegally since she was ordered deported in 2004. Now the woman Obama called "Auntie Zeituni" and described as a kindly woman who kissed him on both cheeks and guided him during his trip to Kenya 20 years ago, is in a national spotlight, where her case is seen as a test of the Obama administration's commitment to enforcing immigration laws. Critics, outraged that she is living in taxpayer-funded public housing while thousands of citizens and legal immigrants are on waiting lists, are scrutinizing the case for political favoritism. Others caution that she may have legitimate grounds to stay in the United States.


Washington Post - Under Mayor Adrian M. Fenty's proposed fiscal 2010 spending plan, the April 16 holiday, which commemorates the day President Abraham Lincoln freed the District's 3,000 slaves in 1862, would be discontinued next year. This would avoid paying holiday rates to critical personnel, saving $1.3 million -- enough to pay for 23 full-time employees, the mayor's office said. . .


Memphis Commercial Appeal -
A pair of Memphis legislators argued over whether a bill to fine people who wear their pants so low they expose their underwear amounts to "legislating fashion" or "legislating decency and hygiene." The "Saggy Pants Bill" makes it a misdemeanor to "knowingly wear pants below the waistline, in a public place, in a manner that exposes the person's underwear or bare buttocks." It defines underwear as "clothing worn between the skin and outer layer of clothing, including but not limited to boxer shorts and thongs."


CBS 5, San Francisco -
One week after President Barack Obama's top law enforcement official seemed to indicate the feds would no longer raid pot clubs, DEA agents busted a medical marijuana facility in San Francisco.As agents carried large plastic containers of marijuana plants out of Emmalyn's California Cannabis Clinic at 1597 Howard Street, a small crowd of protesters formed a gauntlet outside the door, booing the agents and chanting, "our medicine is marijuana … listen to Obama!" DEA spokeswoman Casey McEnry told CBS 5 the documents regarding the raid are sealed, so the DEA was not able to give any details. "Based on our investigation we believe there are not only violations of federal law, but state law as well," said DEA Special Agent in Charge Anthony D. Williams in a written statement.

Boston Globe -
Dozens of Massachusetts cities and towns are taking steps to impose stiff new fines for smoking marijuana in public and even to charge some violators with misdemeanors, a trend that critics say subverts the state ballot question passed overwhelmingly last fall to decriminalize possession of small amounts of marijuana. In recent weeks, at least seven communities - Duxbury, Lynn, Methuen, Medway, Milford, Salem, and Springfield - have passed bylaws that target people who light up in public. And two dozen cities and towns expect to vote this spring on similar measures, which proponents liken to local open container laws that ban drinking alcohol in public. . . Question 2 passed by a vote of 65 to 35 percent, making Massachusetts one of a dozen states to decriminalize possession of small amounts of marijuana, Bernath said. Proponents of the change, including billionaire financier George Soros, who spent more than $400,000 in favor of decriminalization, said that it would ensure that those caught with small quantities would avoid the taint of a criminal record.


Anonymous common sense said...

Joseph Stiglitz, Nobel laureate and former Chief Economist at the World Bank:

One of the reasons why our economy is weak is that we have growing inequality in our society. That means that people who would spend the money don’t have it. We sustained their consumption by lending but that lending was unsustainable and so unless we do something about the underlying inequalities both within our countries and across the world, it may be difficult to restore the global economy to the kind of prosperity that we would hope.

March 26, 2009 5:25 PM  
Anonymous crash and burn said...

"The Fed cannot monetize new Treasury issues without the word getting out. If and when this happens, the US dollar’s exchange value is likely to drop while interest rates and inflation rise.

To avoid a crisis of this magnitude, the US needs to focus on saving the dollar as reserve currency. As I previously emphasized, this requires reducing US budget and trade deficits.

Despite the near-term budget costs of ending the occupation of Iraq and the war in Afghanistan, terminating these pointless military adventures would produce immediate large out-year budget savings. Closing many foreign military bases and cutting a gratuitously large military budget would produce more out-year savings. The Obama administration’s belief that it can continue with Bush’s wars of aggression while it engages in a massive economic bailout indicates a lack of seriousness about America’s predicament.

Rome eventually understood that its imperial frontiers exceeded its resources and pulled back. This realization has yet to dawn on Washington."
Paul Craig Roberts

p.S., This is exactly what Ron Paul proposed, but for his honesty, the Dems libeled him as a racist And the Mo. State Police say his supporters are terrorists.

March 26, 2009 10:47 PM  
Anonymous Mairead said...

Did you really expect anything else from the Dems? Honestly?

We seem to be living in a world that barely existed even when it did exist, and that nobody under 45 ever experienced except in fantasy.

We're convinced that the Supreme Court is our last line of defence against predation even though the historical record shows that, except for the period of the Warren Court, SCOTUS has always been on the side of the ruling class.

We're convinced that the Dems are the party of the working class even though the historical record shows that, except for two small patches (FDR's New Deal and LBJ's Great Society, both driven by fear) the Dems have been just as bad as the GOP.

Those delusions persist in spite of everything, and they overwhelm our real-world experience so completely that a plausible case could be made for calling us psychotic.

Will we sober up before it's too late?

March 27, 2009 12:27 PM  

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