April 16, 2010

The Next Step for Krugman

Filed under: Bailouts Only Propped Up Zombies, Freedom, Reformism Can't Work — Tags: — Russ @ 4:34 am
In Krugman’s latest, he gives us another version of the common burning building metaphor to characterize Mitch McConnell’s crooked position on finance reform.

On Tuesday, Mitch McConnell, the Senate minority leader, called for the abolition of municipal fire departments.

Firefighters, he declared, “won’t solve the problems that led to recent fires. They will make them worse.” The existence of fire departments, he went on, “not only allows for taxpayer-funded bailouts of burning buildings; it institutionalizes them.” He concluded, “The way to solve this problem is to let the people who make the mistakes that lead to fires pay for them. We won’t solve this problem until the biggest buildings are allowed to burn.”
O.K., I fibbed a bit. Mr. McConnell said almost everything I attributed to him, but he was talking about financial reform, not fire reform.

He’s right about McConnell, of course, but Krugman’s scam is to pretend that he wants something different.
Let me try the burning building:
You have a building which will frequently catch on fire spontaneously, which often sets itself on fire. This fire then spreads to other buildings. Krugman and McConnell are both lying when they pretend to care about these other buildings, and when they claim they have the solution which will prevent further fires.
McConnell says “let it burn”. Let’s just vow, No More Bailouts. As Krugman rightly says, that’s obviously a lie. We know damn well the next time the fire starts, it will be fought. There will be another bailout.
But Krugman himself offers nothing but a more refined version of the same lie. He has now come out for the “resolution authority” scam. This is of course just the same no-more-bailouts lie, but with an extra layer of lie.
Just as we know a “no more bailouts” pledge will be broken when the next crisis hits, so we know any paper “resolution authority” will also be disregarded. The result will be the same – bail them out.
We don’t need to speculate on this since we already have resolution authority – the PCA law. This not only allowed but required the “resolution” of the insolvent banks in 2008. But we know what happened to this resolution authority – the same thing which will happen to the next version of resolution authority.
(With his silence on this point Krugman pretends this authority doesn’t already exist. He pretends his scam “reform” solution hasn’t already been proven to be a lie. For Krugman, Bill Black is an unperson.)
This is what disaster capitalism does. With every new piece Thugman reveals himself more and more its lackey.
The real solution for the burning building is in fact to let it burn. Better yet, demolish it. Set up a firebreak to defend the homes and other buildings which need to be defended (BTW, there are far fewer of these than the neoliberal corporatist Krugman and other globalization and financialization cadres think).
Let it burn down to the ashes. Once and for all. Then we’d be free of it forever.
That’s what reform has to mean – the will to freedom.
By definition, any prescription of a corporatist like Thugman, anything which leaves us still under the thumb of gangster rackets, any “order” of things where rackets still exist at all, cannot be reform.


  1. It’s just beginning to get funny now.

    Krugman’s latest:
    A question for the history-minded, related to today’s column: has there ever been a time in US political history when one of the two major political parties was so addicted to doublethink, so committed to pretending that it’s advocating the opposite of its actual agenda?

    Obviously things like this have happened in world politics — Orwell wasn’t a fantasist, he was drawing on actual experience. But did a major U.S. political party ever sound so Orwellian before?

    Does he mean a political party that proclaims itself in favor of health care for everyone and then instead switches it for a handout to insurance corporations? Or maybe one that stands for “the little guy” and funnels tens of billions of dollars into the pockets of rich bankers? Hey, how about a political party committed to expanding employment that sits idly by while one-fifth of the country is either un- or under-employed?

    Comment by jimmy james — April 16, 2010 @ 6:37 pm

    • The paragraph that begins “Obviously things” and ends “before” is also part of the Krugman quote, but unfortunately I can’t go back and fix it.

      Jimmy James regrets the error.

      Comment by jimmy james — April 16, 2010 @ 6:38 pm

    • Yeah, I laughed at that too. I said, “You mean the Democratic party? You’re right, by now even more than with the Republicans their actions betray their proclaimed ideals. That’s quite a feat.”

      Actually, Jimmy, you didn’t make an error in the HTML. There’s something screwy – I guess it doesn’t allow paragraph breaks in italicized comments? (But I would’ve sworn I’ve done that plenty of times without incident.)

      Who knows. At any rate, I fixed it.

      Comment by Russ — April 17, 2010 @ 2:21 am

  2. Preach, brother, preach. My goodness it is nauseating to hear all these Kool-Aid drinking imbeciles go on as if The Democrat’s “banking reform” legislation is something other than a big, fat, nothing burger.

    I listened-for as long as I could stand it- to a bunch of “process” pinheads on one of the local public radio stations discussing the fifty billion dollar tax on the banks that is, as I am sure you know, part of the Dem’s “banking/financial services reform” package.

    My but these nit wits seemed easily bamboozled by a big number. Fifty billion dollars! Gosh that’s a lot of money. Well, yes, until one realizes that it is a mere one fourteenth of TARP. And TARP was just one of many scams via which the banks robbed the nation. Ludicrous.

    Comment by Edwardo — April 17, 2010 @ 12:46 am

  3. Yesterday even the NYT seemed dubious about how well this could work. In this piece:


    they mentioned how the government would “try to charge” the banks for these resolution costs.

    In today’s version I can no longer find that phrase. Today it says:

    The costs of dissolving the company would have to be recouped from a fund generated by levies on the financial services industry.

    It sounds like they rallied their rhetoric a little, but they still don’t feel very confident about it.

    “Would have to be recouped” – who believes that would ever happen?

    As always, if the government had the will to “resolve” and “recoup”, it would have the will to simply break up the rackets completely. That it refuses to do the latter proves that it will never reliably do the former.

    Comment by Russ — April 17, 2010 @ 2:32 am

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