In this excellent dairy, Jeffrey Feldman brilliantly breaks down the rational-vs-irrational mindsets that dominate in politics.
I also think that he indirectly forges a link between racism and economic populism that could wind up being a very dangerous combination if the Obama Administration doesn't start getting its act together regarding the banks and the reckless bankers that wrecked our economy.
Feldman touches on a specific aspect that I think can be further expanded:
Sarah Palin repeats the same story over and over and over again: This government, this president has used deceit to defraud the majority of the American people.
There is a relationship here between Palin and the nutcases and the Obama Administration's failure to prosecute reckless bankers and force the banks themselves to take major haircuts against their fraudulently produced mortgage-backed securities that were bailed out using the TARP program.
The Wall Street bailouts are the perfect lever for a right-wing demagogue to appropriate the economic populism stance that has been the historical prerogative of progressives. It's a simple, powerful message that I don't think she quite gets yet; I think she's an idiot, but if she ever draws this conclusion or is persuaded to, this country could be in some serious trouble.
From Krugman:
For the economy is still in deep trouble and needs much more government help. Unemployment is in double-digits; we desperately need more government spending on job creation. Banks are still weak, and credit is still tight; we desperately need more government aid to the financial sector. But try to talk to an ordinary voter about this, and the response you’re likely to get is: "No way. All they’ll do is hand out more money to Wall Street."
So here’s the real tragedy of the botched bailout: Government officials, perhaps influenced by spending too much time with bankers, forgot that if you want to govern effectively you have [to] retain the trust of the people. And by treating the financial industry — which got us into this mess in the first place — with kid gloves, they have squandered that trust.
I've discussed associated topics here and here and in many other pages.
The first thing that needs to happen is that Geithner needs to be fired or made to resign. He could not have done a worse job for his boss and for the country. The second thing that needs to happen is that Obama needs to do whatever he can to counteract the lobbying in Congress against real financial reform. Third, AG Holder needs to start loudly and publicly prosecuting the scumbags from Wall Street and the banking industry (Dick Fuld, Kerry Killinger, Charles Prince, and the rest) for bank fraud and investment fraud. Finally, Obama needs to go to the American people, as only he can, and lay out his case for how effective financial regulatory reform (for the banks and for the government) is the best way to ensure long-term economic stability going forward.
He needs to come up with a more serious plan than anything (without bothering to go into details here) that is on the table right now. Right now, I don't see it happening. Geithner must go. He is the wrong man at the wrong time in the wrong job.
One of the political parties in this country is incapable of governing effectively and embraces a nihilist mindset rejecting the very idea of governing effectively. The other party is not acting with the urgency the situation demands, against a backdrop of continuing economic hardship. The country also owes massive debt to other countries that it will have a very hard time ever retiring even in the best-case economic scenario. The current situation, I must say, is starting to remind me of Weimar Germany.
Of course, we're a long ways from such a scenario, and the U.S. in 2009 is obviously not 1930 Germany, but the Administration economic team, and the President, are playing with fire. It is not too late to take action.