Last week we read about the efforts of the willfully/happily ignorant Texas School Board to dummy up social studies/history books to make sure students were fully indoctrinated in the belief that unfettered free enterprise and market deregulation are not only the path to economic success but moral, even religious imperatives.
This week we continue to get confirmation that unfettered free enterprise and market deregulation lead inevitably to economic disaster and massive human suffering, while the nation’s inability to reverse course is a sign of its political and moral decline.
So, which lesson iz r kids learning?
If we think our government elites have advanced much beyond the delusion that humans walked with dinosaurs, how do we explain our government’s deference to too-big-to-fail banks and the continued belief by nearly half of Congress that government shouldn’t intervene in the economy to reduce unemployment?
We have an Administration that meekly announced on Wednesday that there isn’t much they can do about the fact unemployment will remain about 10 percent through the rest of year. It seems we just have to wait for the labor market to self-correct, which, we are promised, it will do after a predictable "lag" and after the bailed out and restored banking system deems it suitable to do less looting and more lending.
Last night, our Treasury Secretary told Rachel Maddow (as he’s told others) that the previous Administration and its regulators made egregious mistakes in overseeing financial giants. No kidding. But this is the same Tim Geithner who publically undermined even a modest Volker rule designed to encourge too-big-to-fail banks to become smaller. And it’s the same Tim Geithner who headed the New York Federal Reserve while it was watching, even helping, Lehman commit Enron-style accounting fraud by hiding its excessive leverage.
Just as the Texas Board is rewriting history, so our government is in the process of forgetting that its disastrous deregulation of the financial sector created the breeding grounds for a massive financial meltdown.
The worst financial collapse in 75 years occurred within the last 3-4 years, but that history seems to be having little effect on Congress. We aren’t planning to break up the big banks, don’t know how to wind down international mega-banks, can’t figure out how to change compensation incentives and have no better plan to avoid systemic risks than to ask a "council" composed of the same people who denied we had a problem last time to be more careful next time. Can we have a fully independent consumer protection agency to make lenders think twice before bilking consumers? You must be kidding.
Allen Greenspan, the previously infallible pope of unfettered markets, told Henry Waxman last year that his entire philosophical premise about self-correcting markets had just been shattered by the market’s collapse. That should have been the end of this free market nonsense, but that speech will likely not make it into the next text books. The current chairman fears the Fed’s credibility might slip if it raised the inflation target to spur more growth and employment.
Instead, we’ll all be reading about how everything would have been just fine if the government hadn’t indulged in reckless tax and spend policies, unfunded entitlements, government controlled health plans, and deficit spending that couldn’t possibly create a single job, except maybe the ones in your local Congressman’s district.
The Texas School Board isn’t rewriting history; it’s just revealing what our elites have come to believe and are still using as their guidebook. Welcome to Texas. Please bow your heads to say, "thank you, Jesus, and watch out for the dinosaurs."
Yves Smith, Lehman: Regulators chose to deny extend, and pretend; also, Geithner Implicated in Lehman Accounting Fraud Allegation
HuffPo/Ryan McCarthy, Lehman’s Bizarro World
Bloomberg, Geither says unemployment may peak in second half of 2010
Paul Krugman, Alexander Hamilton was always at war with EastAsia
BaseLine Scenario/Simon Johnson, Enron and Merrill, Greece and Goldman
Tula Connell, Texas may bar students from learning about Cesare Chavez, Thurgood Marshall