Starve the beast! This is what former speaker of the house Tip O'neill called the Reagan/conservative strategy to cut government revenues, through tax cuts for the rich, in order to force a reduction in the size of government. What they didn't count on was that creating debt would become a new culture for not only the government, but for the America public.
And now it's over. America and many many Americans are now bankrupt. The illusionary/gambling economy of derivatives, MBS's, CDO's, and asset inflation is dead. The FIRE (Finance, Insurance, Real Estate) interests have robbed the treasury and middle class, and have left nothing but ashes.
AND THE PRESIDENT DOESN'T GET IT!
The President immediately was led down the wrong path when he appointed Geithner and Summers to his administration. These children of the FIRE interests convinced the President to try and resurrect an economic foundation that is built with smoke, mirrors, and snake oil.
TARP's to TALF's to PPIP's, all designed to save the "too big to fail" investment banks, which were allowed to turn into giant casino's thanks to Bill Clinton's (Summers again) repeal of banking regulation's and the prevention of regulation of CDS's. The Morgan stanley's and Goldman Sachs' have their fingers deep in the government and won't let go of power without a fight.
Even Obama's housing recovery plan is designed to try and reinflate the housing bubble which gave the illusion of wealth to Americans, while the big banks packaged homeowner mortgages and souls, into slot machine derivatives to be sold to hedge and Sovereign funds around the world.
Torn between the Geithner/Summers efforts to make the big banks the center of the Universe, and the Krugman/Keynesian efforts to go back to the 1930's, Obama stumbles blindly in the dark proposing a hodgepodge of failing economic proposals.
This is not the 1930's, and the FIRE economy is dead. We are never going back to the way things were. In the 1930's we were a country of very little debt and we had the ability to export our way out of a depression. Now we are a net importer, dependent on capital inflows, and borrow from the Chinese to pay our government's daily expenses.
The President has failed to develop the audacity to move America into the future and to a new sustainable economy that provides a comfortable transition to the inevitable reduced standard of living that America now faces. As we approach the era of declining oil, a stimulus plan that builds more dependency on oil based transportation by building more roads, is not only a waste, it's counterproductive. To bail out banks in an effort to have Americans go even deeper in debt, only deepens and prolongs the great depression we are now in.
Unlike FDR who took truly bold new moves during the last great depression, compromise Obama tries to reach a fantasy "bilateral" agreement with the very people who burned America's economic house to the ground.
The presidents failure to lead America away from the debt driven, oligarchical, nonproductive economy that is crumbling around us, to a sustainable economy based on renewable energy and conservation of resources, will be a failure for America and for the progressive movement.
The president needs to wake up soon and realize that this is not a recession, it's not just a depression, it's a tectonic shift in the worlds economy and threatens to push America to 3rd world status.
He needs to fire Geithner and Summers immediately, and not replace them with more children of the FIRE establishment. He needs to listen to the Krugmans, Reiches, Janszens, Johnsons, Roubinis and others who saw this coming. He needs to lay out a plan to move America to a new economy and he needs to treat it like it was WWII.
Biden was right! They didn't realize how bad things were, and they still don't! If they continue down the path of trying to resurrect this dead system with misdirected stimulus and bank bail outs, unemployment will be in the mid teens by the 2010 elections and Dems and progressives will be viewed as incompetent, and America will enter an extremely dangerous political period. America will turn to the Glenn Becks, Sarah Palins, and Rush Limbaughs to save them from the terrible conditions.
Time is rapidly running out Mr. President. Show us some audacity and give us some hope, before it's too late.