As #BernieSanders Rises, So Does The Perfidy of Angry Pundits Like Paul Krugman
It is a very strange day when both Paul Krugman and Lloyd Blankfein chime in on Bernie Sanders’ banking reform proposals on the same day and it turns out they’re sharing the same bed!
Bankfein had this to say on CNBC’s Squawk Box:
“Sorkin: You mentioned politics and politics are bad and Bernie Sanders taking a shot at you. How do you see this whole campaign turning out and also do you think it’s impacting the markets in any meaningful way?
Blankfein: I think he mentioned me by name. I don’t take it personally since we never met. Another kid from Brooklyn. How about that? It has potential to look to personalize it. It has potential to be a dangerous moment, not just for Wall Street, not just for the people who are particularly targeted, but for anybody who is a little bit out of line. We have a moment in time where people are — it’s a liability to say I’m willing to compromise, I’m going to get one millimeter off the extreme position I have and if you do, you have to backtrack and swear to people that you’ll never compromise. It’s just incredible. It’s a moment in history. Eventually, people, the electorate, will notice nothing is getting done and somebody will come up with a new idea of saying hey send me to Washington I’ll compromise and I’ll get things done and that will be the new, new thing and everybody will rally to that point. There’s a pendulum that swings in markets and also in the political economy as well. But right now, it’s an odd moment in time. Could you imagine we could ever have a country if the Jeffersons and the Hamiltons just came in there with a total pledge and commitment to never compromise with the other side?“
Blankfein hits only one nail on the head, but without realizing he hit an entirely different nail than the one he intended. Yes, voters have long noticed that nothing’s getting done and, worse, what little good has gotten done is being undone, bit by bit, no thanks to the interference of the industry he represents, both with the sanction of the neoliberal wing of the Democratic contingent in Congress and the neoconservatives and conservatives there. So, if polarization is having the effect of making the left intransigent, that intransigence translates into Democrats finally realizing they’ve been hurt, not helped, by decades of triangulation, and that core principles cannot be abandoned without dire consequences.
The most recent budget that was passed by Congress and signed by President Obama contains no budget budget increase for the Securities and Exchanges Commission (SEC) as it is tasked with even more responsibility as part of the implementation of Dodd-Frank. You can’t be serious about regulating an industry that failed so spectacularly that the public had to intervene in order to prevent a massive failure, only to de-fang the very regulations intended to prevent another meltdown by depriving the agency of a full operating budget.
This tack, asphyxiation through the de-funding and repeal of regulations is the same one Republicans have been using since gaining control of the House of Representatives, at the bidding of the banking industry, and with the acquiescence of certain liberal-leaning Democrats . The IRS is another vital government agency that has also seen its funding severely curtailed, making it much harder to do what it is tasked to do: collect taxes from unwilling entities. Indeed, today’s news cycle informs us that the IRS had to shut down tax return electronic filings because of computer hardware issues. Were the IRS adequately funded, would it have been forced to take the same action?
Blankfein’s analysis of our politics is naive to the uninformed listener, and jaded to those who are in the know. Naive in that he compares politics to trading in the stock markets when politics are far more complicated than trades, and jaded because he leads the very powerful group of people who rigged the markets in the first place. Elizabeth Warren, who was asked about Blankfein’s statements, said this:
“When Blankfein says that criticizing those who break the rules is dangerous to the economy, then he’s just repeating another variation of ‘too big to fail,’ ‘too big to jail,’ ‘too big even to prosecute,’”
Warren is correct. Blankfein sees Sanders’ candidacy and his success as dangerous, not to the political process, but to the elites and their ability to continue manipulating the political process and, through it, the entirety of government policy.
Which brings me to Paul Krugman who, in the past few weeks, has spared no effort in his attempts to tarnish Bernie Sanders’ policies one by one, very methodically. On a day when several of his peers in the pundit class put out glowing analyses of the performance of the Dodd-Frank Act and claims this proves Sanders’ call for regulation of the banks is unnecessary and even dangerous, it was pretty strange to see Blankfein make an appearance on TV , effectively driving home that same point. That Blankfein would feel threatened by a Sanders presidency is hardly surprising. Sanders has been a very vocal critic of Wall Street, including Mr. Blankfein, specifically, and the Federal Reserve, from the days of Alan Greenspan to the present day. But that Krugman would take Blankfein’s position in order to prop Hillary Clinton, how twisted is that?
Sorkin: Do you think Wall Street or the business community should be worried about Bernie Sanders or is when you see the comments? I’m just curious what the reaction is. I’m assuming you’re backing Hillary Clinton.
Blankfein: Yes, you’re assuming it. I don’t want to help or hurt anybody by giving them an endorsement.
One must stress that Paul Krugman’s service to the nation, as a preeminent columnist and economist, cannot be overstated. Without his vocal advocacy, we probably would not have corrected the course of one of America’s worst economic failures. Krugman was instrumental in raising public awareness and ensuring the full understanding of what was happening. That said, and over the last two years, Paul Krugman has been on a mission to re-frame the narrative of the Obama administration’s achievements in specific areas and in ways that just aren’t supported by the reality still lived by tens of millions of Americans. Yes, millions of jobs have been created under President Obama and we are better off today than we were in January of 2009. Does that mean the suffering has ended? Are all these new jobs high quality, high wage jobs? Healthcare has been treated similarly by Krugman. Millions more subscribers than forecast have elected to sign up for Obamacare. How do the coverages compare to what used to be called “good insurance?” What about the cost? Do the deductible levels currently set leave subscribers so exposed that they could go bankrupt? What about the rate at which insurers deny service? Availability of physicians and facilities on Obamacare networks? How do all those compare to good insurance? Here too, while the benefits of having so many more people covered with healthcare coverage are undeniable, qualitatively speaking, it is as undeniable that there are huge problems with the setup and who it benefits the most. Universal healthcare would not only extend coverage to 29 million Americans who are currently without access in the renegade states, but also cut out the obscene profits the insurance middlemen are reaping and removing the large albatross that deductibles and coinsurance embody. Under Obamacare, unless you have a Platinum plan, you can easily incur enough medical debt to go bankrupt, or be discouraged from getting needed treatment. Yes, in the absence of the reinstatement of Glass-Steagall, Dodd-Frank adds just a bit more security. But is that little bit of security sufficient? Will it prevent another too-big-to-fail situation? Does it prevent banks from consolidating to the point where they present an even bigger risk? As Professor Robert Hockett of Cornell University explains:
Sanders’s rival for the Democratic nomination, former Secretary of State Hillary Clinton, joined by her husband’s former Treasury secretary, Larry Summers, objects to this proposal (although both make constructive proposals of their own). Her professed ground is that the original Glass-Steagall Act wouldn’t have prevented our most recent crisis, which was caused mainly by shadow banking. This is a bit like objecting to the iPhone 6s because your flip phone had inadequate functionality. It suggests incomprehension of Sanders’s, Warren’s and McCain’s proposals, for the whole point of these proposals is to regulate 21st-century shadow banking just as the original Glass-Steagall regulated 20th-century shadow banking.
So what is shadow banking? “Shadow banking” refers to the performance of risky bank-like functions by institutions that are not as carefully regulated as banks. The most dangerous such function is that of borrowing short-term in order to invest in longer-term financial instruments, all while hoping that you will be able to “roll over” — renew or refinance — your short-term loans over the durations of those longer-term investments. When you can do that, you can make a great deal of money by investing in higher-end speculative financial instruments, because short-term borrowing costs are lower than long-term speculative yields. But you also put those who lend to you — notably bank depositors or counterpart small savers (more on them, below) — at great risk, for you’re engaged in a “musical chairs” form of finance: You avoid bankrupting yourself and your lenders only as long as your speculative investments keep rising, bubble-fashion, in price.
But if you listen to former Fed Chair Bernanke’s interview with ABC’s This Week in September in which he claims his policy tweaks and the tools Congress gave the Fed before his departure are plenty to avert a disaster, and the only things missing are regulations on shadow banking (AIG being the type of risk he refers to.) That is the same position Hillary Clinton officially adopted on banking reform in her debate answers, and now Paul Krugman is blessing this idea, through this and other writings, in the last couple of weeks. If Bernanke can’t really be faulted for having conservative views, he was a Republican until last year, and if we’ve rightly been doubting Clinton’s progressive chops and the effect Wall Street money has on her policy choices, then what does it say about Paul Krugman who, at the end of 2014, was still writing like this in “Wall Street’s Revenge:”
“But what Congress did is still outrageous — and both sides of the ideological divide should agree. After all, even if you believe (in defiance of the lessons of history) that financial institutions can be trusted to police themselves, even if you believe the grotesquely false narrative that bleeding-heart liberals caused the financial crisis by pressuring banks to lend to poor people, especially minority borrowers, you should be against letting Wall Street play games with government-guaranteed funds. What just went down isn’t about free-market economics; it’s pure crony capitalism.
And sure enough, Citigroup literally wrote the deregulation language that was inserted into the funding bill.
Again, in itself last week’s action wasn’t decisive. But it was clearly the first skirmish in a war to roll back much if not all of the financial reform. And if you want to know who stands where in this coming war, follow the money: Wall Street is giving mainly to Republicans for a reason.”
The voting public has learned a few things since December 2014, including just how much the Clintons have earned in Wall Street donations to SuperPACs and speaking fees. As Krugman wrote, follow the money…
As a public, we’ve been groomed from 2008 to believe two things: 2016 is inevitably Hillary’s turn, and a majority of Democratic-voting Americans supports Hillary Clinton’s candidacy. Indeed, preparations for this coronations have been made since 2008, in the background:
The Undemocratic Party
Naturally, it began with fundraising. In early 2013, Clinton supporters founded the Ready for Hillary super PAC, which over the next two years raised about $13 million. While Ready for Hillary cast itself as a grassroots effort fueled by very small donors, over half the PAC’s cash haul arrived via gifts of $2,500 or larger. A full third of the total came from gifts of $10,000 or more.
The really big money, meanwhile, came from other sources. In January 2014, Priorities USA Action, the largest super PAC to support Barack Obama’s reelection, declared it would back Clinton — a move the New York Timescalled “perhaps the earliest start to big-dollar fund-raising in support of a nonincumbent presidential candidate” ever.
When Clinton declared her candidacy last spring, the big dollars were ready: Priorities USA almost immediately collected over $15 million, virtually all of it in gifts of $500,000 or more. To date Priorities USA has raised over $50 million for Clinton, with another $42 million in future pledges.
Krugman and other pundits’ carefully crafted narratives have fostered an atmosphere in which no criticism can be made of the current economic situation without appearing to reduce President Obama’s legacy, when it would have been just as easy to point to the deficiencies caused by GOP obstruction and nullification without, in any way, detracting from our president’s excellent track record. Why then, has Krugman spent the last two years writing a rather substantial body of work in praise and support of President Obama’s achievements?
The answer is two-fold: in a political environment where the left swung further leftward, it is the only way for a neoliberal candidate like Hillary Clinton to maintain a neoliberal agenda, and it keeps Black voters in Clinton’s corner, because they are assumed to want to preserve Obama’s legacy at any and all costs. It is true that whomever is chosen in the primary will be elected thanks to a significant number of Black voters and the presumption is that Blacks will be united in their desire for President Obama’s legacy to be kept intact, especially if the issues are framed in the context of succession versus erasure. Make no mistake, the pundit class, in its effort to denigrate Sanders is painting him as the same kind of nullifier as the Republicans, as an outsider who is trying to take over the Democratic party; as “other” in the context of mainstream American thought.
Our favorite pundits, old and new, all are engaged in the same tactics they’ve spent the last seven years criticizing the Republicans for. It’s a well-orchestrated game in which one pundit writes something and all the others reference that to build upon it and create a new narrative which the rest of the press refers to as if it were fact. But these were opinions to begin with; not facts… This is how American public opinion is being manipulated and half a picture painted in the media.
Where have we seen this kind of political manipulation before? For that, we must reach back to the cold war era and Senator Joe McCarthy and his Select Committee on Un-American Activities and the damage he inflicted on tens of thousands of Americans through the witch-hunts he waged for decades. Last year’s movie, Trumbo, tells the story through the lens of what happened to one Hollywood writer whose career, and his friends and colleagues’ were nearly ruined.
What is going on today, isn’t quite the same in the sense that there is no obvious witch-hunt going on and people aren’t being forced to
testify against lie about each other in public hearings. We don’t have Rosenbergs standing trial for treason. No, the drama that is unfolding is far subtler but no less damaging to our democracy. If the narrative has been that the plutocracy is grabbing power through the GOP apparatus in Congress and state governorships and state houses, to anyone paying attention to our news cycle, it should be more than obvious by now, that those same plutocrats and oligarchs are playing both ends against the middle or more accurately, the middle and right ends against the left, as it were, in order to preserve the current oligarchic order. As I’ve written previously, the press has no small part in the attempts to influence public opinion in the ongoing Democratic primary election.
But remember, Hillary Clinton’s campaign is falling apart because of her and her husband’s inability to manage public careers that are devoid of scandal and filled with ethical judgment. No one forced the Clintons to take money from Wall Street. It was a choice they made. Hillary could have given nearly free speeches as Sanders always does. She has chosen not to and she is against any kind of effective banking reforms. Veteran Washington Post reporter Carl Bernstein appeared on CNN today to speak about Hillary Clinton and her habit of self-inflicted wounds:
During the latest Democratic debate, Hillary Clinton accused Bernie Sanders of an “artful smear” campaign against her for his jabs against her on the money she and her husband and daughter have earned from speaking fees and donations from Wall Street. Watch:
But as she was shrilly lobbing accusations against Sanders, look who was sitting next to the former governor of Vermont that Clinton repeatedly mentions supports her and not fellow Vermonter, Bernie Sanders?
— Zaid Jilani (@ZaidJilani) February 5, 2016
Yes, right in the New Hampshire debate audience, sitting right next to Howard Dean, was Steve Elmendorf, acolyte to none other than Lloyd Blankfein. Who says Hillary doesn’t have a finely honed sense of irony and a perverse sense of humor?
Indeed, as Matt Taibbi writes in “The Vampire Squid Tells Us How To Vote,” on Blankfein’s appearance on CNBC last week:
“Anyway, according to his book, Geithner got good advice from Clinton. The former president advised him to press for tax hikes on the rich, but to “make sure I didn’t look like I was happy about it.” Then Clinton added that Timmy shouldn’t take the public-anger thing too hard:
“You could take Lloyd Blankfein in an alley and slit his throat, and it would satisfy them for about two days,” Clinton said. “Then the blood lust would rise again.””
This is how the Clintons view us, and whom the press is protecting. This is the pecking order Paul Krugman so desperately tries to preserve in his desperately acrid attacks on Bernie Sanders, and his use of the derogatory “Bernie Bro” meme to attack anyone who supports Sanders. This is the same tactic those who propped Joe McCarthy used, successfully, for years, in order to tarnish the reputations of innocent people and neutralize them. Is Paul Krugman a present day Hedda Hopper? You be the judge. Read his op-eds and blog posts written during the month of January and February 2016. They represent an abrupt departure from what had been the silent treatment given to Senator Sanders’ candidacy, and it coincides with his rise in the polls from ZERO, to within single digits of overtaking Clinton.
As I wrote in a previous piece, there are no prophets in the media. There are no prophets in politics, either. There are only those who are willing to compromise ethics in order to advance their careers, with very few exceptions who have managed to have a career with few ethical shortcuts. What is unfolding now is a high stakes play to draw the public’s attention away from certain Democrats’ indebtedness to the same corrupting forces in American politics that they’ve railed against for the last few years, with the sole aim and purpose to ensure the installation of the Democratic party’s sanctioned candidate as victor in the primary, over the public’s wish, if need be. It must take a panicked establishment to go ahead and attempt to convince the public that it is better off with incremental change because sweeping change is impossible. At no time in recent memory have so many public media figures tried to interfere with an election – certainly not while telling the public that change is not possible. Change is up to the public will. What is or isn’t possible is up to the public will – not the say so of some pundits with clear conflicts of interest.
Keep your eyes wide open. Keep your news sources varied, and your trust in those who have the least to gain. Keep in mind this warning from the Prophet Jeremiah:
“Therefore, do not listen to your false prophets, nor to your diviners, nor dreamers, nor enchanters, nor to your sorcerers, that tell you not to serve the king of Babylon… But the nations that bring their neck under the yoke of the king of Babylon, and serve him, those will I let remain still in their own land, says the L-rd, and they shall till it, and dwell therein…”
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Transcript: Lloyd Blankfein on CNBC’s Squawk Box
SORKIN: YOU MENTIONED POLITICS AND THE POLITICS ARE BAD AND BERNIE SANDERS TAKING A SHOT AT YOU PERSONALLY. HOW DO YOU SEE THIS WHOLE CAMPAIGN TURNING OUT AND ALSO DO YOU THINK THAT IT’S IMPACTING THE MARKETS IN ANY MEANINGFUL WAY.
BLANKFEIN: I THINK HE MENTIONED ME BY NAME. I DON’T TAKE IT PERSONALLY SINCE WE NEVER MET. ANOTHER KID FROM BROOKLYN HOW ABOUT THAT. IT HAS POTENTIAL TO LOOK TO PERSONALIZE IT. IT HAS POTENTIAL TO BE A DANGEROUS MOMENT. NOT JUST FOR WALL STREET, NOT JUST FOR THE PEOPLE WHO ARE PARTICULARLY TARGETED BUT FOR ANYBODY WHO IS A LITTLE BIT OUT OF LINE. WE HAVE A MOMENT IN TIME WHERE PEOPLE ARE — IT’S A LIABILITY TO SAY I’M WILLING TO COMPROMISE, I’M GOING TO GET ONE MILLIMETER OFF THE EXTREME POSITION I HAVE AND IF YOU DO YOU HAVE TO BACK TRACK AND SWEAR TO PEOPLE THAT YOU’LL NEVER COMPROMISE. IT’S JUST INCREDIBLE. IT’S A MOMENT IN HISTORY. EVENTUALLY PEOPLE, THE ELECTORATE WILL NOTICE NOTHING IS GETTING DONE AND SOMEBODY WILL COME UP WITH A NEW IDEA OF SAYING HEY SEND ME TO WASHINGTON AND I’LL COMPROMISE AND I’LL GET THINGS DONE AND THAT WILL BE THE NEW NEW THING AND EVERYBODY WILL RALLY TO THAT POINT. THERE’S A PENDULUM THAT SWINGS IN MARKETS AND ALSO IN THE POLITICAL ECONOMY AS WELL. BUT RIGHT NOW IT’S AN ODD MOMENT IN TIME. COULD YOU IMAGINE WE COULD EVER HAVE A COUNTRY IF THE JEFFERSONS AND THE HAMILTONS, JUST CAME IN THERE WITH A TOTAL PLEDGE AND COMMITMENT TO NEVER COMPROMISE WITH THE OTHER SIDE?
SORKIN: DO YOU THINK WALL STREET OR THE BUSINESS COMMUNITY SHOULD BE WORRIED ABOUT BERNIE SANDERS OR IS? WHEN YOU SEE THE COMMENTS. I’M JUST CURIOUS WHAT THE REACTION IS. I’M ASSUMING YOU’RE BACKING HILLARY CLINTON.
BLANKFEIN: YES, YOU’RE ASSUMING IT. I DON’T WANT TO HELP OR HURT ANYBODY BY GIVING THEM AN ENDORSEMENT.
KERNEN: I WOULD PHRASE IT DIFFERENT THE YOUNG PEOPLE IN THIS COUNTRY ARE SUPPORTING A SOCIALIST. SUDDENLY WE FORGOT SOCIALISM DOESN’T WORK. I’M READY TO FIRE ALL THE ACADEMICS AT ALL THE UNIVERSITIES AND SEND MY DAUGHTER TO BRIGHAM YOUNG OR LIBERTY OR SOMETHING.
QUICK: IT IS PROBABLY A REFLECTION OF THESE PEOPLE GROWING UP AFTER THE FINANCIAL CRISIS.
KERNEN: I DON’T KNOW WHAT IT IS A REFLECTION OF BUT SOCIALISM DOESN’T WORK REAL WELL. LIVES ARE NOT REALLY IMPROVED BY IT.
FEBRUARY 2, 2016
Five years after the Financial Crisis Inquiry Commission issued its report into the financial meltdown, we have a long way to go to prevent a repeat of the crisis.
Congress and President Barack Obama created the commission to look into the causes of the Wall Street crash. We reviewed millions of pages of documents, interviewed more than 700 witnesses and held 19 days of public hearings across the country, including in communities hard hit by the crisis.
This two-year process confirmed that the meltdown was avoidable, caused by widespread failures of regulation, reckless risk taking on Wall Street and systematic breaches in ethics and accountability. Our inquiry exposed the urgent need to increase banking oversight and consumer protection.
Despite a furious attempt by some to rewrite history, the commission’s findings have stood the test of time. In the years since, Americans continue to wonder whether anything has changed, and whether their economic security is still at risk. The answer isn’t simple.
Read the rest of this opinion piece on SacBee.