Are you ready for the next crisis?
By Paul Craig Roberts
Online Journal Contributing Writer
Nov 4, 2009, 00:11
that the US is a failed state is piling up faster than I can record it.
conclusive hallmark of a failed state is that the crooks are inside the
government, using government to protect and to advance their private interests.
conclusive hallmark is rising income inequality as the insiders manipulate
economic policy for their enrichment at the expense of everyone else.
in the US is now the most extreme of all countries. The 2008 OECD report, �Income Distribution and Poverty in OECD
Countries,� [PDF] concludes that the US is the country with the
highest inequality and poverty rate across the OECD and that since 2000 nowhere
has there been such a stark rise in income inequality as in the US.
finds that in the US the distribution of wealth is even more unequal than the
distribution of income.
21, Business Week reported that a new report from the
United Nations Development Program concluded that the US ranked third among
states with the worst income inequality. As number one and number two, Hong
Kong and Singapore, are both essentially city states, not countries, the US
actually has the shame of being the country with the most inequality in the
distribution of income.
increase in US income inequality in the 21st century coincides with the
offshoring of US jobs, which enriched executives with �performance bonuses� while impoverishing the middle class, and
with the rapid rise of unregulated OTC derivatives, which enriched Wall Street
and the financial sector at the expense of everyone else.
Americans have lost their homes and half of their retirement savings while
being loaded up with government debt to bail out the banksters who created the
October 21 broadcast, �The Warning,� documents how Federal Reserve Chairman Alan
Greenspan, Treasury Secretary Robert Rubin, Deputy Treasury Secretary Larry
Summers, and Securities and Exchange Commission Chairman Arthur Levitt blocked Brooksley Born, head of the Commodity Futures
Trading Commission, from performing her statutory duties and regulating OTC
worst crisis in US financial history struck, just as Brooksley Born said it
would, a disgraced Alan Greenspan was summoned out of retirement to explain to
Congress his unequivocal assurances that no regulation of derivatives was
necessary. Greenspan had even told Congress that regulation of derivatives
would be harmful. A pathetic Greenspan had to admit that the free market
ideology on which he had relied turned out to have a flaw.
may have bet our country on his free market ideology, but does anyone believe
that Rubin and Summers were doing anything other than protecting the enormous
fraud-based profits that derivatives were bringing Wall Street? As Brooksley
Born stressed, OTC derivatives are a �dark
market.� There is no transparency. Regulators have no information on
them and neither do purchasers.
Even after Long Term Capital Management blew up in 1998 and had to be bailed out,
Greenspan, Rubin, and Summers stuck to their guns. Greenspan, Rubin and
Summers, and a roped-in gullible Arthur Levitt who now regrets that he was the
banksters� dupe, succeeded in manipulating a totally ignorant Congress into
blocking the CFTC from doing its mandated job. Brooksley Born, prevented by the
public�s elected representatives from protecting the public, resigned. Wall
Street money simply shoved facts and honest regulators aside, guaranteeing
government inaction and the financial crisis that hit in 2008 and continues to
plague our economy today.
financial insiders running the Treasury, White House, and Federal Reserve
shifted to taxpayers the cost of the catastrophe that they had created. When
the crisis hit, Henry Paulson, appointed by President Bush as
Rubin�s replacement as the Goldman Sachs representative running the US Treasury, hyped fear
to obtain from �our�
representatives in Congress, with no questions asked, hundreds of billions of
taxpayers� dollars (TARP money) to bail out Goldman Sachs and the other
malefactors of unregulated derivatives.
Goldman Sachs recently announced that it was paying massive six- and
seven-figure bonuses to every employee, public outrage erupted. In defense of
banksters, saved with the public�s money, paying themselves bonuses in
excess of most people�s life-time earnings, Lord Griffiths, vice chairman of
Goldman Sachs International, said that the public must learn to �tolerate the inequality as a way to achieve
greater prosperity for all.�[Public must
learn to �tolerate the inequality� of bonuses, says Goldman Sachs vice-chairman]
words, �Let them eat cake.�
to the UN report cited above, Great Britain has the seventh most unequal income
distribution in the world. After the Goldman Sachs bonuses, the British will
move up in distinction, perhaps rivalling Israel for the fourth spot in the
total insanity of unregulated derivatives, the high level of public anger, and
Greenspan�s confession to Congress, still nothing has been done to regulate
Rubin�s assistant treasury secretaries, Gary Gensler, has replaced Brooksley
Born as head of the CFTC. Larry Summers is the head of President Obama�s
National Economic Council. Former Federal Reserve official Timothy Geithner, a
Paulson prot�g�, runs the Obama Treasury. A Goldman Sachs vice president, Adam
Storch, has been appointed the chief operating officer of the Securities and
are still in charge.
another country in which in full public view so few so blatantly use government
for the enrichment of private interests, with a coterie of �free market� economists available to
justify plunder on the grounds that �the
market knows best�?
A narco-state is bad enough. The US surpasses this horror
with its financo-state.
Brooksley Born says, if nothing is done, �it�ll happen again.�
can be done. The crooks have the government.
[PCR Note: The
OECD report shows that despite the Reagan tax rate reduction, the rate of
increase in US income inequality declined during the Reagan years. During the
mid-1990s the Gini coefficient (the measure of income inequality) actually
fell. Beginning in 2000 with the New Economy (essentially financial fraud and
offshoring of US jobs), the Gini coefficient shot up sharply.]
Craig Roberts [email
him] was Assistant Secretary of the Treasury during President
Reagan�s first term. He was Associate Editor of the Wall Street Journal. He has
held numerous academic appointments, including the William E. Simon Chair,
Center for Strategic and International Studies, Georgetown University,
and Senior Research Fellow, Hoover Institution, Stanford University. He was
awarded the Legion of Honor by French President Francois Mitterrand. He is the
author of Supply-Side
Revolution : An Insider�s Account of Policymaking in Washington; Alienation
and the Soviet Economy and Meltdown:
Inside the Soviet Economy, and is the co-author with Lawrence M.
Stratton of The
Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the
Constitution in the Name of Justice. Click here for
Peter Brimelow�s Forbes Magazine interview with Roberts about the recent
epidemic of prosecutorial misconduct.
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