Orszag Zigs into Citibank

Joe,

So what are the other options? AFAIK, it’s a poor choice: either the Wall-Street types or the protectionist-unionist types which the New Dems of the 90s spent so long trying to exorcise.

Neither: how about some basic across-the-board (literally) market oversight, such as regulating derivatives as insurance policies (which many are, if not in name) or force all trading of such thru relatively transparent exchanges like NYSE. Ditto for bonds. Demand traceable paper trails for trades, including mortgages (bully for those foreclosed homeowners using the “show me the note” defense against banks who can’t produce the paperwork, hope they win). And so forth. Else we get the mortgage-based securities mess that started the recession, the California “deregulation” rules gamed by Enron traders, etc. More thoughts, Joe? And BTW, it could be worse for Orszag: he could’ve wound up at Goldman. At least IndyMac bank and Countrywide are no more.

Their blind spots have to do with the workers who once constituted the Democratic party’s base, but who now, with their manufacturing jobs gone, have lost their faith in government and find it easier to vote their anger–against one party, then the next–than to vote for anything or anyone.
-
That’s pretty astute, we’ve had three “no confidence” votes in a row, in ’06, ’08, and just now. Yet the Money Party always wins: http://www.newdeal20.org/2010/11/12/money-and-the-midterms-are-the-parties-over-interview-with-thomas-ferguson-26869/?author=1
-
Also, declining union membership hasn’t been at all good news for those workers.
-
The Wall Streeters know the bond market intimately; they don’t spend much time thinking about how to improve life for the vast swath of Americans who have suffered the mergers-and-acquisitions, the leveraged-buy-outs, the private equity hoggery, the CDO and CDS’s and all the other financial gimmicks of the last 40 years.
-
I guess I don’t necessarily disagree with that, but I’d add Paul Volker’s point– that the only financial innovation of the last 25 years was the ATM: http://www.ritholtz.com/blog/2009/12/volcker-only-financial-innovation-has-been-atm-machines/ And I’d mention that despite the absence of benefits for economic growth, the financial sector has sucked up more and more of our GDP growth, while almost everyone’s wages are stagnating, leading our wealth disparity to shoot to once-unthinkable, Venezuela/Brazil levels.
-
That is, there’d be no reason to object to “private equity hoggery” and all the rest, but for the fact that it appears to be hostile to economic growth altogether, and perhaps even parasitic on the bottom 80 or 90 percent of wage earners.

The operative word is “hoggish”. Wall St. has lost all perspective about what it is all about. It has abandoned those who risk money to invest. Their concern is more with achieving lavish living standards for themselves than with taking a reasonable share for their services and returning the bulk to the investors, many just plain middle class people, trying to play their game.
.
Trust is what it’s all about. It goes a long way. Wall St. lost it, and I don’t know that they are willing to earn it back. It doesn’t matter what political label they claim, Dem or Repub, they all gather in the same back room and cause the same damage in the end.

I have to temper my comments slightly. There are reputable financial advisors who can help maneuver Wall St. and investments, but anybody who even thinks they can do it on their own for free will be in for a shock and a sound beating sooner or later.

Sun sets in West. Joe Klein shocked.

The Democrats have long since accepted the GOP framing that “the economy” is what matters in politics.
 
I put that in scare quotes because it’s an economy independent of a citizenry. GDP goes up but none of it goes into my pocket. Rising GDP just means I can’t afford to buy real estate or pay my kid’s tuition to a fancy Eastern school.
 
Out here in Greater Methlabbia, no matter how much we resented being exploited as if a colony of the Northeastern establishment, we at least thought it was run by well educated professional people who knew what they were doing. Then we saw the bank execs hauled before Congress and they all said, “We just went along with the math guys. We don’t understand our business, either.” We saw the head of BP confuse the Gulf with an “ocean.” We saw the auto CEOs who claimed they had no clue their businesses were going to fail. Gee, I saw GM in about 2006 acting like a dot-com company, selling cars for almost zero profit in search of bigger market share, and highly leveraged in mortgages, and *I* knew it would be bankrupt in four years. And I’ve never taken a business course, nor was I paying close attention. But somehow GM’s management thought, as long as Ford is showing weakness by having some slight eco-consciousness, we can punish them. And they weren’t even Texans. (Down here destroying oneself in order to take down a hated enemy is part of the culture, but I didn’t think Detroit was so, er, Confederate.)
 
Here’s a clue, New York: This is a country with a populace, not a fistful of dollars. This is a government of the people, not an economy in which people are to be manipulated to achieve the highest output. We’re getting dangerously close to a situation, or we may be there already, where hardly anybody believes his or her interest coincides with that of the “nation,” especially if the “nation” is nothing but a GDP chart. GDP goes up but I get poorer? Hmm.

While I’m a long way from this level of cynicism, many of my fellow Texans have never been to the Northeast and have only a vague idea of what goes on there. To them, the Ivy League, Wall Street, Time magazine, the broadcast media—it’s all one big ugly, culturally foreign monolith, whose success just means our failure. A whole lot of people out here where you took your recent road trip, Joe, just want to take a sledgehammer to the whole edifice. And that should scare the people back East as much as it scares me. Because y’all scare us even more.

“Blind spots”

As if their policies have not represented an orchestrated assault on the working class. As if they’re simply out of touch with average Americans. As if they’re not merely doing the bidding of their patron class.

And, finally, as if “consciousness” will be enough to prevent looming catastrophe, given perpetual war and government’s burgeoning partnership with corporations.

Not only is Barack Obama not Bill Clinton (i.e. he’s worse), even Bill Clinton’s policies are not enough circa 2010.

The Reagan tax cuts on the wealthy saw their rates drop from 70 to 28%. The country has been in temporarily arrested descent ever since, but hell, no talk of extreme wealth redistribution here!

“It’s also not an argument for massive wealth redistribution”
.
As if that distribution hasn’t already happened.
.
Congrats JK-your side one!
.
Oh wait did you mean from the top down? Yeah don’t worry about that either, that ship has sailed.

This is an interesting rhetorical direction in which you’re heading, Joe Klein.

Hey deconstructiva…
.
…those are really good policy arguments.

This is excellent commentary, thank you.

Drop the notion that the “heartland” is being victimized by wicked “New York” and you’ll see the country’s situation a lot more clearly. New York is no longer the only financial/banking center in this country — in the last 30 years the South has risen on deregulated financial activity. Birmingham, Houston, etc. are pretty big names in shady financial services too. In fact, the lawlessness, financial exploitation of the poor, corrupt collusion between elite financial interests and government and comfort with growing income inequality and a weak middle class, that now defines the values and attitudes of our financial elites nationwide, are all pretty much a traditional “Confederate” state of affairs. Thanks to the Southern Conservative take over of our political and financial culture, we’re all poor exploited red necks now.

By the way, did you forget Enron? Here in the Northwest where I live those bloodsuckers destroyed a lot of lives. And guess what? After Enron crashed, the people who crashed it were in great demand in the larger banking and finance community.

That’s right — the Texans who screwed over my part of the world in the early part of the decade are the very same ethics and morality free guys who screwed over the rest of the world at the end of it.