April 29, 2010

Wolf Blitzer asked David Gergen for his perspective on Wall Street reform and apparently Gergen wants the American public to think that a series of booms and busts is normal.

BLITZER: Our senior political analyst David Gergen for some perspective.

David, can we now simply assume that there will be Wall Street reform?

GERGEN: I think so, Wolf. There are a couple of contentious issues still to resolve. Consumer protection and derivative, both very important. But this bipartisan agreement today will end the filibuster.

CNN has learned that Republican Senator Susan Collins will now vote to end the filibuster. I'm sure other Republicans will join her. That will really pave the way not only to a debate, but final passage of a bill, and the biggest -- the biggest reform of the financial industry since the Great Depression.

BLITZER: Can they clean up their act, if you will, and do the kinds of things that will prevent what happened a year and a half, two years ago?

GERGEN: That's a very important question. Nobody knows the answer, Wolf. What we do know, Hank Paulson when he was treasury secretary said we'll have disruptions in the financial markets about every four or five years. That's just the nature of capitalism. The question is are they now putting the safeguards in place to prevent the next disruption or the one after from turning into a great recession and throwing so many people out of work. The hopes are that they will and that they've done a lot of good things and this is a very dynamic, capitalistic system and things, you do have sort of these eruptions, periodically and you can't be absolutely certain, but the country backs us, Wolf. Notably some banks. We've learned now that Citigroup as well as UBS and Morgan Stanley backed these financial reform and most economists say that it will make us safer.

BLITZER: We are told, by the way, that the vote on the Senate floor to move forward and allow this debate to actually begin on the Senate floor will happen within the next hour. We'll of course, watch that closely, David. So the Obama administration and the Democrats get health care reform. They're probably going to get some sort of financial reform right now, but when you look towards November and the midterm elections, doesn't the economy and jobs, don't that really represent the top priorities that the Democrats need to make sure they don't do as bad as some expect?

GERGEN: Absolutely, on that issue, the jury is still out. We still have a very stubbornly high unemployment rate. We'll be watching those numbers very closely in the months ahead.

BLITZER: David Gergen will be watching with us every step of the way. David, thanks very much.

Sorry David, but there's someone who's not a Villager hack named Thom Hartmann who would disagree with you.

From Thom Hartmann at Common Dreams Debt is Not Money:


Although Thomas Jefferson and Alexander Hamilton - two opposite sides of the national bank debate - both understood this simple concept, it wasn't brought into the realm of law until the mid-1930s with a series of strict regulations on the abilities of banks to create debt (loan money), and strong political limits on the ability of government to go into debt outside of wartime. That's why from the founding of this nation until 1935, we experienced a "banking panic" at least once every 10 to 15 years from 1776 until 1935.

Then Roosevelt took the banks in hand, by creating a series of regulatory agencies and empowering them with strict laws. The result was that for fifty years in the United States - roughly 1937 to Black Monday of 1987 - we didn't experience a single national "panic" or consequential bank failure. The stock market grew steadily (allowing for the blips surrounding WWII).

It was also hard to get a credit card (short term debt), buy a car (medium-term debt), or get a mortgage (long-term debt) without proving that you would be able to repay the amount in the future - in other words, that there would be future expanded-economy dollars that you could lay claim to because of your particular job and skills. Credit was regulated.

Reagan changed the rules of the game, particularly when he brought in the anti-regulation Libertarian Alan Greenspan as Chairman of the Fed. He ran up a massive federal debt - greater than that of every president from George Washington to Jimmy Carter combined - in just eight years, and began the process of loosening the power of bank regulators.

That process was finished by a Republican Congress (particularly Phil Gramm) and President Bill Clinton (with help from Rubin and Summers) and then booted out the door by George W. Bush, who borrowed even more than Reagan. Bush even used an obscure 19th century law to fight states' attorneys general who wanted to regulate or prosecute fraud among banks and mortgage lenders in their states (see the article by Eliot Spitzer in the Washington Post just before his being outed for sleeping with a hooker).

It's pretty amazing that until your buddy Reagan started mucking up the works along with the others that followed him, booms and busts weren't considered normal, huh? But the David Gergen's of the world would have you believe that this is just normal and not a result of Roosevelt's New Deal regulations being unraveled by his anti-regulation, free market espousing buddies. Their kind of freedom means the freedom to take the entire United States and possibly world economies down with their greed and the freedom to hide their dealings that did it.

Gergen was just crying about the Goldman Sachs hearing being a "lynching" the other day. Now he's trying to paint the results of deregulation and their activities as somehow normal. He's showing himself to be nothing but a water carrier for the have-mores with no concern for the average citizens who's lives they have destroyed with their gambling that took down the financial markets.

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