http://www.ianwelsh.net/road-to-ruin-bernankes-reappointment-is-just-the-status-quo/Road to Ruin: Bernanke’s Reappointment is just the status quo
2009 August 25
by Ian Welsh
I wasn’t sure whether to bother writing about Bernanke’s reappointment. Why? Because it’s just the status quo. But perhaps it’s worth spelling out the status quo.
Bernanke bailed out the banks and the rich. You know this, but what is not clear to many people is that bailing out the banks and fixing the banking system were not connected at the hip. It was possible to fix what was wrong with the banks by taking the big banks into receivership and then using them to lend directly. Wipe out the shareholders, write down the bondholders to the actual value of the banks, but keep lending to the real economy, and indeed increase lending and capital flows, by, say, deciding to refit every single building in America for energy efficiency and generation, and to take every clunker off the road.
The banking class, and the rich as a group, tanked the system. They committed what amounted to systematic fraud, and earned billions of dollars of bonuses for themselves by crashing out the system and daring Bernanke and other politicians (and Ben is nothing if not a pol) to do something about it. Bernanke folded, and threw trillions of dollars at them.
Despite what Bernanke’s, Paulson’s, Bush’s and yes, Obama’s, apologists say, this was not necessary. It resulted from a deep confusion of banks with what banks do, and a deep desire to keep the same class of people in charge of the economy, despite their manifest failures. Ben Bernanke, Paulson, Geithner, Bush, Obama and so on could not imagine taking out their friends—could not imagine letting them suffer the consequences of their results—could not even understand that their friends were parasites who were not necessary for the continuation of the system but were instead the people who had caused it to collapse.
The end result of this is going to be two things.
First - a lost decade or more, just like Japan (I prefer the phrase “bright depression”.)
Second - another collapse, even worse than this one.
The books have not been cleared, the garbage has been left on them, just like in Japan, but the US is not Japan, it is not a suprlus society which sells more than it consumes. It is, itself, a parasitical society which needs blood from donors to survive. Furthermore the American ruling elite left in place by this decision is much sicker and more shameless than the Japanese one (where people comitted suicide in shame over what had happened). Having gotten away with it once, they will do it again, indeed the huge bonuses they are paying themselves indicates they still think of themselves as the smartest people in the room, and they’re right in a sense. They sold America a pig-in-a-poke, and took America for trillions of dollars. Rule number one of running scams is never give a sucker (that’s you) an even break. They aren’t going to, and the end result will be another crisis, which is even worse.
Japanification is not a stable solution set given the realities of America’s deep structural deficit and the essential con-artist nature of its elites.
All Bernanke’s reappointment tells you is that the game is still on. While Bernanke did save the rich, they still lost a lot of money. They want it back. And they’re going to get it back, even if it means they suck the last drop of America’s blood and the host drops dead.
Welcome the new American century. Unless you’re in the charmed circle of con artists and grifters, you aren’t going to enjoy it much.
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