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June 15, 2017

LEWIS POWELL AND RONALD REAGAN (PART I)

My followers have read many of my posts concerning the two men in the above title who had a lot to do with ending FDR’s New Deal policies (to the everlasting detriment of America and its people). Ex-Speaker Newt Gingrich has said that his main purpose in living was to end the New Deal, and others have voiced their displeasure and even disgust with what Roosevelt did and was trying to do long before the tea party existed and long before (and since) Gingrich the professor was denied tenure at West Georgia College and turned his attention to a greedy politics funded by the rich and corporate class.

FDR’s mortal sin? He was trying to even the playing field and adopted plans and policies that would bring America out of depression and into prosperity for the many as well as the few. He succeeded well beyond anyone’s expectations and America had a prosperous and relatively downturn-free economy for more than forty years thereafter. Wage inequality was unknown as both the workforce and their employers fairly shared the economy’s wealth and income and real economic growth went from good to great. The economy under his leadership and that of his successors of both parties zoomed as America also became the leader of the free world by example. Postwar Europe and Japan followed his lead from the devastation of war to their current lives as prosperous democracies (while we have regressed).

His New Deal programs were the order of the day and Republican as well as Democratic presidents who followed FDR continued his New Deal policies with the result that we had a prosperous economy long after his death – until Powell and Reagan came upon the scene with their policies of impoverishment of the many in favor of enrichment of the few in 1971 and 1981, respectively.

Let’s review some more history before noting how the destruction of the New Deal has ravaged our economy by funneling its income and wealth to the rich and corporate class while simultaneously impoverishing the working poor and throwing millions from the middle class into poverty, brought on, among other things, by a severe lack of regulation of the big banks, whose machinations prior to Bush’s Great Recession included but were not limited to sales of credit derivatives and fraudulent sales of packaged mortgages to unsuspecting buyers such as retirement funds for nurses, police and firemen, all of which brought us a Bush-inspired hair-raising domestic recession and a near global economic meltdown reminiscent of the stock market crash of 1929 followed by The Great Depression.

Our hysteria at the time and our fears based on the prospect of another Great Depression were in response to what was going on at the time; the insolvency of big Wall Street banks, hundreds of billions in bailouts, trillions of dollars lost in homeowners’ equity in their homes, brutally high unemployment etc. The Bush administration’s response? Further relaxation of already-relaxed banking rules and regulations (which is what got us into this near fatal mess in the first place) and an open pocketbook for cheap loans from the Fed to the banks in order for them to get their house in order as we flirted with a global economic meltdown. It was a scary time as another 1929 loomed in our future with another Hoover II experience in the offing.

We will never know how a different approach would have worked out. Iceland, for instance, nationalized their banks, had the banks’ shareholders take the loss, installed new management and returned the banks to such new managers and now have a functioning and prosperous banking community. Here we left the managers in place even though it was their reckless disregard for good banking practices (and our failure to regulate them) that caused the crisis in the first palace. Unlike Iceland, we bailed out our Wall Street big banks, provided them with massive loans from the Fed for a restart and extended our forgiveness from bankruptcy to not only the banks but to their insurers, vendors and even their shareholders. Given such public largesse, our banks like those of Iceland are now functioning and prosperous, even more so than before, due in part to Republican removal of some of the provisions of the Dodd-Frank Act of 2010 designed to foil a repeat of reckless banking practices, practices such as allowing FDIC funds to be used once again in their investments along with other such time bombs in again trusting banks and corporations to allocate risk in the marketplace for us free of regulation.

So how could such an emergency come to pass in the first place? Why did this happen? We were told that we could trust the banks and our corporate culture and that they needed little if any regulation since they were equipped to fairly and honestly allocate risk in the market and would do so. We all know the result – a nearly global depression due to the greed and reckless investment practices of the banks and corporations who had promised us that regulation of their activities was unnecessary and that they could do a better job with self-regulation than regulations imposed by government supervision.

Events afterwards (see their billions paid in fines for mortgage fraud) prove that they lied and remains as self-evidentiary proof that greed overwhelms duty in the marketplace under the aegis of free market capitalism and that contrary to those today who lament government’s regulation of banks and corporations as invasions of their businesses and profit making, the people through their government are better and more honestly equipped to regulate banks and corporations than they are. I hope this is the last time we invite the foxes into the henhouse on their promises that the chickens will prosper rather than be devoured under the foxes’ tutelage. Stay tuned for Part II.     GERALD       E

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