Moon of Alabama Brecht quote
March 28, 2009

The Right Takes The Crises As An Opportunity

To see Simon Johnson, an ex-IMF functionary with a critical and pessimistic view on recent capitalist excesses in The Atlantic was welcome but not unexpected. To read the first few graphs of an op-ed by another ex-IMF functionary with a similar basic analysis on the neo-conned op-ed pages of the Washington Post was, at first, a surprise. But deeper into the piece it turned out to be as neo-conned/neo-lib as most of the other stuff WaPo publishes.

It is a typical case of using the correct analysis of a crisis to then, in disguise, present a solution that applies the same mindset and tools that brought up the crisis in the first place.

Desmond Lachman: Welcome to America, the World's Scariest Emerging Market

I still recall the shock I felt at a meeting in Russia's dingy Ministry of Finance, where I finally realized how a handful of young oligarchs were bringing Russia's economy to ruin in the pursuit of their own selfish interests ...
Over the past year, I've been getting Russia flashbacks as I witness the AIG debacle as well as the collapse of Bear Sterns and a host of other financial institutions. Much like the oligarchs did in Russia, a small group of traders and executives at onetime venerable institutions have brought the U.S. and global financial systems to their knees with their reckless risk-taking -- with other people's money -- for their personal gain.
We delude ourselves that our banks face liquidity problems, rather than deeper solvency problems, and we try to fix it all on the cheap just like any run-of-the-mill emerging market economy would try to do.
[W]atching Goldman Sachs's seeming lock on high-level U.S. Treasury jobs as well as the way that Republicans and Democrats alike tiptoed around reforming Freddie Mac and Fannie Mae -- among the largest campaign contributors to Congress -- made me wonder if the differences between the United States and the Asian economies were only a matter of degree.

Up to here the argument seems fine - even populist and consistent with (and probably copied from) the Johnson piece and in my view correct.

But now follows the real intend and what the whole piece is constructed to aim for:

[I]nstead of laying out a realistic plan for increasing our national savings, we choose not to face up to the Social Security and Medicare crises that lie ahead, embarking instead on massive spending programs that -- whatever their long-run merits might be -- we simply cannot afford.

The right wingers are using the crisis for an attack on the few basic social programs the U.S. has. They of course never admit that these programs were created in the first place to attenuate the effects of such crises. They also have nothing to offer to replace these programs but deep poverty and early death for all people more poor then themselves.

The saving rate is already increasing quite fast. Social Security in the U.S. is financially well. Better indeed than equal programs in other countries. Alternatives like pension funds are doing much, much worse. Medicare/Medicaid financial problems could be solved with some decent price controls and anti-cartel action towards the pharmaceutical industry combined with a universal insurances scheme where everyone has to pay and gets. A well regulated single-payer health care system would also go a long way to better the international competitive situation of U.S. industries.

But the moneyed class would not like that at all. It would make it harder to fleece that money. Their trick now is to use this crisis as an opportunity to rob the masses even more than they are already doing. Imagine all the money going towards social security today being redirected towards Wall Street and the medicare/medicaid money to private insurance looters.

There have already been several attempts like this. Bush put a lot of energy into his Social Security reform campaign. It did not work back then. But now the crisis gives the wingnuts another chance. Expect many more of such op-eds. The correct analysis, recognizing the crisis for what it is, but with solutions that would only make it bigger. These will not only come from the far 'republican' right but also from the usual death eaters in the democratic caucus.

This WaPo Sunday op-ed is only preparing the ways.

The right sees the crises as an opportunity. They are right to do so. It is one for the left too. Let's use it.

Posted by b on March 28, 2009 at 04:42 PM | Permalink


actually I do not understand the article that way, but maybe I do not understand this type of economist code. of course the US has a social security and medicaid problem as more and more people get unemployed. and of course what is done now is insuring speculators against making mistakes instead of giving money to people who would spend it on actual products - out of need -, thus jumpstarting productive economy.
for those speaking German - politicians in this country find it is time to reassess the GDR
oh the irony of it - to quote Angela Merkel - western politicians did not study dialetics.

Posted by: outsider | Mar 28, 2009 5:01:47 PM | 1

I read it b's way. Cracked me up to see that right-wing crap sandwiched in with IMF commonsense. Makes sense that AEI would want to buy their own tame IMF guy, and who better than a Salomon Smith Barney whore? If you can sell those shitty funds with their front-end/back-end no-escape loads, you can sell any kind of predatory nonsense.

Posted by: ...---... | Mar 28, 2009 5:45:21 PM | 2

The Republican Party will blame Obama, and he seems to be helping them out on that, for the financial collapse and for the coming disasters in Afghanistan and Pakistan. By 2012 they will be saying all the woes in the world were caused by the Democrats and Obama.

Unless he wakes up and offers real change.

Posted by: heru-ur | Mar 28, 2009 8:01:17 PM | 3

S.O.T, but all part of the Neo Crusade On Philadelphia (NECROPHIL), please, please
don't tell me that $57 BILLION has been 'spent for reconstruction' in Afghanistan!!
There is absolutely nothing to show for it!
'The war that has to be won'
[HINT: And that war ain't Afghanistan, it's wholesale looting by American Taliban]

Posted by: | Mar 28, 2009 8:47:10 PM | 4

I keep looking around for him, I know little adolph is in the wing somewhere.....

Has anyone spotted him yet?

Posted by: bob | Mar 28, 2009 11:55:34 PM | 5

The Simon Johnson article is a good read and lays out a plan more in line with Krugman.

The WP article says is another line of attack on social programs. The IMF has always required the peasants make the sacrifices while the oligarchs get bailed out.

We are in a fine mess however it go's.

Posted by: jdp | Mar 29, 2009 12:27:00 AM | 6

In the crisis of the early 90'ies, Sweden institutionalised a pension reform, slashing the guaranteed pension levels by 30% and putting in mandatory savings in pension funds. The propaganda at the time was that the funds would compensate for the lowering.

Last week someone tabulated how much money the swedish population has payed into the funds and the net worth. In total the funds have lost some 8% in nominal value compared to the sum of money payed into them. That is, it would have been better to stockpile it in matresses. And half the loss is the fees to the banks and middlemen - the true beneficiaries of the system.

Posted by: a swedish kind of death | Mar 29, 2009 4:24:46 AM | 7

@6 I knew somebody was gonna say that. IMF gets blamed for a lot of bad stuff that was going to happen anyway. It also gets blamed when domestic parasites hijack agreed reforms. You're just parroting slogans when you say that stuff. Look into it more.

Posted by: ...---... | Mar 29, 2009 9:21:08 AM | 8

@bob #5: No, but these things are notoriously difficult to predict. We may see a charismatic leader take charge and abolish the old discredited forms, this being allowed by the 'populist rage' ... but then again we may not. Americans like their forms and traditions/illusions ("checks and balances") as much as anyone. We haven't even ever gotten rid of that dumbass electoral college system.

The standards of the Roman legions said SPQR until the very end...

Posted by: Cloud | Mar 29, 2009 12:45:33 PM | 9

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