The banking bailout, called the end of GOP ideology, is better understood as the largest application of the shock doctrine so far.
As Naomi Klein wrote the Shock Doctrine
"free market" policies have come to dominate the world-- through the exploitation of disaster-shocked people and countries.
Today, Wall Street stalwarts are disappearing in the worst financial crisis since the Depression, the housing market is in freefall, unemployment is skyrocketing. Americans are losing years of savings, much of the equity in our houses, or our jobs.
A lot of us are shocked.
This is when the "free-marketers" usually strike.
This time, the "free market" won't let them take out enough money by January 20th. So they propose we let them write checks of any size to anyone (as long as its "mortgage related"), without any review, nor even any need to disclose for months.
Never mind health-care or renewable energy; that money and more may now go to "mortgage-related assets" in swing states-- or straight to Bush cronies.
The crisis is temporary, but the plan is not.
Classic shock doctrine.
The Shock Doctrine has been discussed a lot on DailyKos.
Briefly, Klein shows how right-wing corporatist ideology has been imposed on dozens of countries, like Argentina, Indonesia, Poland, Russia, South Africa and others: long-term, corporatist "reforms" are presented as temporary solutions to a sudden crisis or shock.
As SusanG wrote:
Like an individual, a society that suffers a trauma—a natural disaster, an economic meltdown, a political upheaval—is initially so stressed in its wake that if ideologues move quickly enough, they can ram through "reforms" at what amounts to the political speed of light. Ergo, "the Shock Doctrine," with its ruthless privatization of formerly public property, elimination of social programs, busting up of worker groups, and the suspension of minimum wage laws. "Crises are, in a way," Klein writes, "democracy-free zones—gaps in politics as usual when the need for consent and consensus do not seem to apply."
I won't say more about Klein's book, except to very strongly encourage those of you who haven't read it to do so. Or at least read a few reviews or summaries (they don't do it justice, but its something.)
Shocks can be economic. As Klein notes, the Asian Financial Crisis of 1997 paved the way for the sell-off of many state-owned enterprises, and also gave the IMF a beachhead for its free-market policies.
Here's Wikipediaon how that worked out:
They suffered permanent currency devaluations, massive numbers of bankruptcies, collapses of whole sectors of once-booming economies, real estate busts, high unemployment, and social unrest. For most of the countries involved, IMF intervention had been been roundly criticized. The role of the International Monetary Fund was so controversial during the crisis, that many locals called the financial crisis the "IMF crisis".[15] To begin with, many commentators in retrospect criticized the IMF for encouraging the developing economies of Asia down the path of "fast track capitalism", meaning liberalization of the financial sector (elimination of restrictions on capital flows); maintenance of high domestic interest rates in order to suck in portfolio investment and bank capital; and pegging of the national currency to the dollar to reassure foreign investors against currency risk.[14]
They are now trying something similar here. The Bushies have four months left in office, and the next administration may-- may-- be a bit more hostile to this sort of thing.
Its true that we don't exactly live in a social Democracy, but thing can get a lot worse. Klein notes that those countries that have had a full dose of Chicago School capitalism, typically 25% to 60% of the population lives in abject poverty.
The current episode
As New Deal Democrat wrote in an excellent diary:
If Congress allows this to go forward, the "Shock Doctrine" has well and truly come to America's entire economy.
Let me now elaborate on this a little bit...
- The country is now in shock. We are not quite as shocked as if we had suffered a coup or terrorist attack, but let's face it: last week, century-old institutions vanished overnight and the stock market moved 4% some days. Add to this the background of 9% of Americans behind on mortgage payments or in forclosure9% of Americans behind on mortgage payments or in foreclosure and record unemployment.
- lawmakers are shocked
Congressional Leaders Stunned by Warnings
It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.
Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.
"When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.
- It is proposed to give the government broad, new, unreviewable powers This has been well-covered elsewhere. Basically, the government will be allowed to write a check to anyone so long as it is mortgage related. If they overstep their bounds, the remedy is... nothing.
- implications for the election They are required to report what they have done after three months. So they can pump money into swing states, and tell us after the election. If they lose, they will then have a month or two of writing checks until the next adminsitration takes office.
- The powers are a permanent solution to a temporary crisis Even though this is often presented as a temporary liquidity problem, there is no sunset clause. If Obama wins, the Dems might be able to repeal this, or at least control it. But if he loses, the GOP keeps the ability to write checks to whomever they please-- forever.Congressional Leaders Stunned by Warnings
Passing the bill will cripple the fight for nearly everything we believe in. Forget about spending money on renewable energy, aid to poor kids, health care, improved infrastructure or whatever. That money will already be sent out. The bulk may go to the bill's nominal purpose of welfare for rich institutions, but a lot will probably go to smooth things over in swing states or straight into the hands of Bush cronies. This is a thousand times less transparent and more corruptible than earmarks.
What can we do?
First, the most important thing we can do is to try to remain oriented. Yes, a lot of us are a lot poorer than we were a few months ago. But the contents of our wallets do not determine the content of our character, and our financial worth does not measure our true worth. This too shall pass.
Second, obviously, there is an election to win.
Third, we must recognize what is happening, describe it and denounce it-- loudly. We could say:
-The bailout is earmarks for the executive branch-- only worse. Allowing the executive to just throw money at whoever they want (as long as its "mortgage related") is similar to congressional earmarks. But the former need not be reported for six months, and is not subject to any form of oversight. And the bailout's version of earmarks is dozens of times the size of the congressional version.
-To the extent that the market problems are short term (after all, recessions come and go), the solutions must be short term, too. You don't amputate a foot to cure a stubbed toe.
-To the extent that economic problems are long term, they must not be fixed by the same failed economic policies that created them. As Jerome recently wrote
Reagan's legacy [and that of much of freemarket ideology] is, altogether, a bad thing for most Americans: stagnant wages, widening inequality, the glorification of greed and debt, narrow-minded "values", impunity for crimes at the top, a massive build up of the militaro-industrial complex and, more worring, the development of the propaganda apparatus that promotes all of the above as good things.
We won't fix our current problems with more Reaganomics.
Klein's book ends on a note of hope. We fight back, we can win-- if we keep our wits about us and try not to be too shocked.
We stopped them from privatizing Social Security. We can stop them from crippling an Obama administration by spending its budget in advance.
Again, in countries subjected to a full-scale Chicago School capitalism 25% to 60% of the country lives in abject poverty. So remember, as you watch your investments and income fall and your expenses rise, that things can get a lot worse.
We need to prevent that from happening here.Congressional leaders stunned by warning