How Wall Street Gutted State Budgets And Caused Republicans (Wall Street) To Make YOU Pay For It!
So let me “big picture” this trend sweeping across the country of Republican governors slashing programs that help women and children, the environment, education, food safety and all sorts of other valuable services that the government provides to it’s taxpayers. The Wisconsin example that Governor Scott “no-bid” Walker has presented us is perfect for illustrating this point because he is forcing state employees to take massive cuts in their pensions and has attempted to blame the problem on them. We have to back up a few years to get to the root of the problem. It started during the Clinton presidency when Bill decided that deregulating Wall Street was a good idea. For all the great things President Clinton did, this one blunder was the beginning of the mess we find ourselves in today. Granted, President W. took it and ran with it and fucked it up even more monumentally by not enforcing hardly any regulations. But President Clinton still deserves a lot of the blame in my opinion….and his own too. From The Washington Independent in April of 2010…
Speaking with ABC’s Jake Tapper on This Week, former President Bill Clinton — during whose tenure the government decided against regulating derivatives and allowed the repeal of some of the Depression-era Glass-Steagall Act, allowing the creation of megabanks — said he was wrong.
I think [Treasury Secretaries Robert Rubin and Larry Summers] were wrong and I think I was wrong to take [to take their advice], because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency. And the flaw in that argument was that first of all sometimes people with a lot of money make stupid decisions and make it without transparency.
Clinton’s admission underscores the basic importance of financial regulation; during the boom and bust, derivatives, worth at least $4.5 trillion nationally, went entirely unregulated.
Now there were people who foresaw the problem with this stupid-ass decision, one of them was Brooksley Born, who was the head of the Commodities Futures Trading Commission in the late 90’s. From a Washington Post article in May of 2009…
A little more than a decade ago, Born foresaw a financial cataclysm, accurately predicting that exotic investments known as over-the-counter derivatives could play a crucial role in a crisis much like the one now convulsing America. Her efforts to stop that from happening ran afoul of some of the most influential men in Washington, men with names like Greenspan and Levitt and Rubin and Summers — the same Larry Summers who is now a key economic adviser to President Obama.
The effect of this monumentally stupid move (deregulation) was the loss of value of state pension funds across the country. Pensions ARE NOT ENTITLEMENTS, contrary to what Republicans and their friends in the media have been pushing. Pensions are added benefits to employees, given to them and often matched by the employee. When a person takes a job, part of the incentive to get people to take the job is the pension. It’s not a government handout, like Governor Scott Walker and Chris Christie want you to believe.
ABC News had a story in September of 2008 (pre-Obama, for all you Trolls who think the prez caused this mess) and gave a couple of examples of the effect of this deregulation…
As the credit market shut down at midday Monday, Massachusetts was unable to borrow the final portion of a $400 million loan from Wall Street investors to make quarterly aid payments to cities and towns and had to dip into its own funds to make up the $170 million shortfall.
Pension funds in New Jersey also took a hit, with state treasurer R. David Rousseau saying that the state’s Division of Investment lost more than half of the $200 million it invested in June with the now-bankrupt Lehman Brothers. In addition, governor Jon Corzine said that his administration is reviewing 5 percent across-the-board cuts, which could add up to $500 million, at every state department and agency.
Did you catch that, New Jersey lost more than half of it’s $200 million that was invested in Lehman Brothers. And what do we have going on in New Jersey now, Chris Christie trying to stick it to the middle and lower income folks in his state. The dots have to be connected from the deregulation in the 90’s and early 00’s to the crisis we now face. There is a direct correlation between the two and the lesson we should all learn is that DEREGULATION FOR GREEDY ASSHOLES RESULTS IN RECORD PROFITS FOR CORPORATIONS AND CUTS IN NUTRITION PROGRAMS FOR HUNGRY CHILDREN! Man we live in a great country, don’t we?
The amazing thing is that Republicans did not learn any lesson from this, some still want to privatize Social Security…slapping hand to forehead.