Saturday, January 09, 2010

The costs of the economic crisis in the states

The current  economic crisis has forced the cutting of higher education, of k-12 education, and of social welfare systems. What caused this crisis ? It was caused by the greed and avarice of the financial class and aided by the politicians of both major political parties.
Major banks and corporations looted the economy creating an international meltdown.  Now, they have been rewarded with bail out money.  The crisis was not caused by students, teachers, public employees  nor recipients of social security.     Now we have cuts in parks,  in universities, in nurses, libraries.  School children did not create this crisis.  Foster care children did not create this crisis.
The major bankers, finance capitalists in the U.S. robbed the bank last year  – and the federal treasury.  They took hundreds of billions of dollars – and you and I will have to pay for it.    Goldman Sachs alone took $10 Billion.  For example,  Ken Lewis of Bank of America received an 81 million dollar pension.  They have not even been punished.  One thing we should do is arrest the top 100 executives and CEO’s of these companies, give them a fair trial, and throw them in jail.  Until we arrest some people – there will be no real changes.”
Our financial system as a whole crashed not because of one bank. Goldman Sachs certainly played a major role as did JP Morgan Chase, Morgan Stanley, and CitiCorp, along with the many corporate finance institutions  like Bear Sterns, Merrill Lynch, Lehman Brothers, WaMu, Depfa, Glitnir .  We had a systemic breakdown because nearly all of our policy makers, academics, politicians, and pundits promoted  a failed, self serving  ideology of self-correcting financial markets.
(Including specifically the econmics profession ) Finance  profiteers walked off with big bucks while contributing to the  crash  of the system. The looting continues to this day.

So, the financiers robbed the banks and created the Great Recession.  – and the government allowed them to do so.  Government policy, including the work of Geithner, Summers, and both the Bush and  the Obama Administration, regularly placed the interests of Wall Street ahead of the interests of working people.  Our economy was looted –we  lost $11 Trillion.   Now, working people are losing their homes.  Over 10,000,000 jobs have been lost.  Over 15 million people are unemployed. .  Nationally, unemployment  for African Americans  is over 15.4%,  for Latinos  it is over 12.7%. For African Americans and Latinos under 25 years of age; it is over 25%.  That is young people in the   African Americans and  Latino communities are in a Depression.

            42 of the states have financial crises.  We will have fewer teachers, fewer police officers, cuts in needed health care, cuts in school spending—all because a small cadre robbed the banks.  Today, this same group is making millions in bonuses and special payments, while the economy remains stuck in a recession.
            If you want some detail on how this was done, see:
Paul Krugman.  The Return of Depression Economics and the Crisis of 2008.  (2009)
Dean Baker,  Plunder and Blunder; The Rise and Fall of the Bubble Economy.  (2009)
Nomi Prins.  It takes a Pillage; Behind the Bailouts, Bonuses, and Backroom Deals         from Washington to Wall Street.  (2009).

            Future posts will detail the costs of this crash to schools and the public sector. For an early analysis, see the posted summary on the California Budget Project web site.

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