As Susie already noted here, Elizabeth Warren's first chance to ask questions as a member of the Senate Banking Committee and to take some of these SEC chairs to task for not prosecuting anyone on Wall Street for their behavior, apparently hurt some of the bankers' feelings. MSNBC's Chuck Todd used the occasion to play the Villagers' favorite false equivalency game and compare wingnut McCarthyite Sen. Ted Cruz to Sen. Elizabeth Warren. Funny, how he sounds an awful lot like that anonymous Wall Street executive who was complaining about her.
And as Susie also pointed out, Warren telling the truth is not the same as Cruz' sorry display. What's really pathetic about Todd and and his cheap shot at Warren here is that even his colleague Chris Matthews went after Cruz and his attacks on Hagel for being the "new McCarthyism" in one of his segments on Hardball this Friday.
What I found humorous about the segment above is that even though Todd and his guests, Ruth Marcus and Michael Steele, did their best to be dismissive of Warren by even mentioning her in the same sentence as Cruz, you could also tell something else: They're scared to death of her.
Marcus admitted that maybe it was alright because Warren "was in her wheelhouse" (which I'd say is the understatement of the year), and they all had to admit that she'd be formidable if she decided to run for president -- -- although I find putting her in the same category as Marco Rubio is insulting as well.
There is no "Marco Rubio of the left," because the left doesn't need to prop up the few members of their party who are minorities to try to cover for their racist policies.
For all the fearmongering we hear out of our politicians on the right about how heaven forbid we're going to turn into Greece, the one country you never hear them talk about any more is Iceland. The reason they don't is, as Cenk Uygur explained on his show this Tuesday, they took a different path than the United States after their financial crisis and nationalized the banks, threw some the people responsible for the crash in jail and bailed out the homeowners instead of worrying about only bailing out the banks. And now they're coming back and their economy is growing again.
I love this story. It’s one of those that calls to mind the old Margaret Mead dictum, “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.”
Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.
Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.
So does the story end there? Did the people revolt and the banks give in, leading to a lower standard of living or some financial disaster or something? No. Debt deleveraging successfully brought back the Icelandic economy.
The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.
The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.
We’ve heard in this country for the past several years of housing crisis that principal forgiveness rewards bad actors and causes moral hazard, and that we can’t do that to the poor, put-upon banks. Well guess what? Debt write-downs work. They generate a wealth effect among the population, and they help to end balance-sheet recessions and bring about economic growth. What’s more, Icelandic home values came back, just 3% off their September 2008 pre-crisis level. You can take the example of Iceland or you can take the example of the rest of Europe. It’s your choice. But the facts reveal that austerity is counter-productive, while debt forgiveness is extremely productive.
More there so go read the rest. Dave's interview with Cenk below the fold.
It's subscription only but you can read more about Kaufman and his work at his blog AmericanStomach.com.
UPDATE: One of our readers was kind enough to send along a link to the full article. It's available here.
Thom shared a little of the article during his interview with Kaufman.
Hartmann: "The history of food took an ominous turn in 1991, at a time when no one was paying much attention. That was the year Goldman Sachs decided our daily bread might make an excellent investment."
And then towards the end of the story, just a couple of sentences here. "Bankers had taken control of the world's food, money chased money and a billion people went hungry." Remember the food riots of a couple of years ago around the world?
"The world wide price of food had risen by 80% between 2005 and 2008 and unlike other food catastrophes in the last half century or so, the United States was not insulated from this one." Could it be because it was our banksters that were doing it?
"As 49 million Americans found themselves unable to put a full meal on the table, one in five kids came to be dependent on food kitchens. In Los Angeles nearly a million people went hungry. In Detroit, armed guards had to watch over grocery stores." And then the question, "Could this happen again?"
Really great interview. Too bad our "mainstream media" isn't touching this one. As they noted during the interview, it looks like there's nothing that these bankers won't exploit to make a buck. Really disgusting. And all we've got going on in the United States is some half-baked sorry excuse for "reform".
This morning, Senate Minority Leader Mitch McConnell (R-KY) declared his opposition to the financial reform bill before the Senate. McConnell claimed to have principled objections to the bill, saying that it “institutionalizes” bailouts of Wall Street and that it would give the Federal Reserve “enhanced emergency lending authority that is far too open to abuse.” What McConnell did not mention was that, last week, he traveled alongside National Republican Senatorial Committee chairman Sen. John Cornyn (TX) to New York City for a private meeting with elite hedge fund managers and other Wall Street executives. The purpose of the meeting between the top Republicans and the financial executives was to enlist “Wall Street’s help” in funding Republican campaigns in the fall and killing any tough financial reform.
Separately, House Republican Conference Chairman Mike Pence (R-IN) met with hedge fund managers this morning and told them that “Democrats’ solution for financial reform consists of two words: government control.” He added, “America will continue to be the home of freedom and the free market; the place where liberty prevails.”
Krugman wrote about the need to reform the financial system in this short post on his blog at the New York Times -- Bank Failure: Two Brief Notes:
1. Some commenters on this blog have argued that lots of small banks failed in Georgia, without systemic consequences. But these banks weren’t allowed to collapse; they were seized by the FDIC — in effect, nationalized — and their depositors were protected. That is, in effect they were rescued, although the stockholders were cleaned out.
2. Other commenters say that lessons from the 1930s are no longer relevant, because now we have deposit insurance. Um, shadow banking? That’s the point I keep trying to make: what happened to us in 2007-8 was that a large banking system had grown up, relying on repo and other forms of short-term borrowing rather than deposits, that wasn’t covered by New Deal-era protections and regulation. So what we had was the 21st-century version of a bank run; not crowds of people lining up at bank doors, but crowds of investors demanding haircuts on repo, which has the same effect.
Barney Frank visited the set of the Rachel Maddow Show to talk about the TARP hearings and at the end of the interview he said something that was music to my ears.
Maddow: Should they be constrained from doing those things by rules rather than just being shamed for when they don't do it?
Frank: There's no question about it for the future. Look there's a problem in the American system and we as liberals should be honoring this. The principle that you don't go back and do things retroactively is a very important liberal principle so some of the things that the Bush administration let them do we can then undo. We can prevent them from going forward and this I can guarantee you.
We will very soon be adopting a set of regulations. We're going to be doing essentially now what Franklin Roosevelt had to do in the New Deal, what Theodore Roosevelt and Woodrow Wilson had to do around the turn of the last century. There is a whole lot of new financial activity that's going on and it's caused some damage and done some good, but it's gone on without rules and the one thing I am most confident about is we know how to stop this from happening again. Banning the bad subprime loans. Restricting the excessive kinds of leverage they've had.
Yeah, this is a very high priority for us and I think by the summer we're going to have a set of rules in place. It's going to be comparable I think to what FDR did with the New Deal, with the Securities and Exchange Commission and other rules. We will not depend on their good will. We will put some tough rules in place.
All I can say is I hope he means it, and that he follows through on what he said tonight. I don't know much about economics. It frankly bored me and was just never something I took an interest in. But I'm not a stupid person and I know after watching the 60 Minutes segment A Look at Wall Street's Shadow Market that if we didn't do something to regulate Wall Street that nothing was going to improve in our economy because there would be no trust of our current system.
I make that assumption because I don't trust it now and I'm probably like a lot of other people out there who thought they were spreading their risks in their 401(K)s, if you were lucky enough to have one, and watched it tank by close to forty percent over the last year. For anyone close to retirement age like a lot of my co-workers, those sort of losses are just devastating. You think you're doing the right thing and trying to prepare for retirement and poof, years and years of savings just vanished in a matter of a few weeks or sometimes a few days. I watched friends walking around in what was close to a state of shock when the market crashed.
So I welcome Barney Frank's talk of regulating these markets. I think it's overdue, and this summer could not come fast enough if that's when they try to get it through. For contrast, here's your standard talking head on the "news" saying 'thank goodness Tim Geithner didn't come out with any crazy talk about regulating this mess'. Yeah, that's the ticket, Joe Johns. Forget any regulation that might stop these industries from continuing to cook their books and leverage themselves in a way that would put a regulated insurance company out of business.