Thursday, February 12, 2009

Chomsky : Understanding the Crisis

A fascinating interview with Noam Chomsky at Foreign Policy in Focus.

On the people who are now designing Obama's economic policies :
"Dean Baker, one of the few economists who saw what was coming all along, pointed out that it's almost like appointing Osama bin Laden to run the so-called war on terror.
Robert Rubin and Lawrence Summers, Clinton's treasury secretaries, are among the main architects of the crisis. Summers intervened strongly to prevent any regulation of derivatives and other exotic instruments. Rubin, who preceded him, was right in the lead of undermining the Glass-Steagall act, all of which is pretty ironic. The Glass-Steagall Act protected commercial banks from risky investment firms, insurance firms, and so on, which kind of protected the core of the economy. That was broken up in 1999 largely under Rubin's influence. He immediately left the treasury department and became a director of Citigroup, which benefited from the breakdown of Glass-Steagall by expanding and becoming a "financial supermarket" as they called it. Just to increase the irony (or the tragedy if you like) Citigroup is now getting huge taxpayer subsidies to try to keep it together and just in the last few weeks announced that it's breaking up. It's going back to trying to protect its commercial banking from risky side investments. Rubin resigned in disgrace — he's largely responsible for this. But he's one of Obama's major economic advisors, Summers is another one; Summer's protégé Tim Geithner is the Treasury Secretary."

1 comment:

West End Bob said...

Exactly, Alison, exactly.

Talk about putting the foxes in charge of the hen-house!

These guys and their ilk navigating the economic ship of state is madness . . . .

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