Are You Ready for the Next Crisis?
Evidence that the US is a failed state is piling up
faster than I can record it.
conclusive hallmark of a failed state is that the crooks
are inside the government, using government to
protect and to advance their private interests.
Another conclusive hallmark is rising income inequality
as the insiders manipulate economic policy for their
enrichment at the expense of everyone else.
Income inequality in the US is now the most extreme of
all countries. The 2008 OECD report,
Distribution and Poverty in OECD Countries," [PDF]concludes
that the US is the country with the highest inequality
and poverty rate across the OECD and that since 2000
nowhere has there been such a stark rise in income
inequality as in the US.
The OECD finds that in the US the distribution of wealth
is even more unequal than the distribution of income.
October 21, 2009,
that a new report from the United Nations Development
Program concluded that the US ranked third among states
with the worst income inequality. As number one
and number two, Hong Kong and Singapore, are both
essentially city states, not countries, the US actually
has the shame of being the country with the most
inequality in the distribution of income.
stark increase in US income inequality in the 21st
century coincides with the offshoring of US jobs, which
enriched executives with
"performance bonuses" while impoverishing the middle class, and with
the rapid rise of unregulated OTC derivatives, which
enriched Wall Street and the financial sector at the
expense of everyone else.
Millions of Americans have lost their homes and half of
their retirement savings while being loaded up with
government debt to bail out the banksters who created
the derivative crisis.
Frontline`s October 21 broadcast, "The Warning,"
documents how Federal Reserve Chairman Alan Greenspan,
Treasury Secretary Robert Rubin, Deputy Treasury
Secretary Larry Summers, and Securities and Exchange
Commission Chairman Arthur Levitt blocked
head of the Commodity Futures Trading Commission, from
performing her statutory duties and regulating OTC
the worst crisis in US financial history struck, just as
Brooksley Born said it would, a disgraced Alan Greenspan
was summoned out of retirement to explain to Congress
his unequivocal assurances that no regulation of
derivatives was necessary. Greenspan had even told
Congress that regulation of derivatives would be
harmful. A pathetic Greenspan had to admit that
the free market ideology on which he had relied turned
out to have a flaw.
Greenspan may have bet our country on his free market
ideology, but does anyone believe that Rubin and Summers
were doing anything other than protecting the enormous
fraud-based profits that derivatives were bringing Wall
Street? As Brooksley Born stressed, OTC
derivatives are a
"dark market." There is no transparency. Regulators have no
information on them and neither do purchasers.
Term Capital Management blew up
in 1998 and had to be bailed out, Greenspan, Rubin, and
Summers stuck to their guns. Greenspan, Rubin and
Summers, and a roped-in gullible Arthur Levitt who now
regrets that he was the banksters` dupe, succeeded in
manipulating a totally ignorant Congress into blocking
the CFTC from doing its mandated job. Brooksley Born,
prevented by the public`s elected representatives from
protecting the public, resigned. Wall Street money
simply shoved facts and honest regulators aside,
guaranteeing government inaction and the financial
crisis that hit in 2008 and continues to plague our
financial insiders running the Treasury, White House,
and Federal Reserve shifted to taxpayers the cost of the
catastrophe that they had created. When the crisis
appointed by President Bush as Rubin`s replacement as
Goldman Sachs representative
running the US Treasury, hyped fear to obtain from
representatives in Congress with no questions asked
hundreds of billions of taxpayers` dollars (TARP money)
to bail out Goldman Sachs and the other malefactors of
Goldman Sachs recently announced that it was paying
massive six- and seven-figure bonuses to every employee,
public outrage erupted. In defense of banksters,
saved with the public`s money, paying themselves bonuses
in excess of most people`s life-time earnings, Lord
Griffiths, Vice Chairman of Goldman Sachs International,
said that the public must learn to
inequality as a way to achieve greater prosperity for
must learn to `tolerate the inequality` of bonuses, says
Goldman Sachs vice-chairman]
other words, "Let
them eat cake."
According to the UN report cited above, Great Britain
has the 7th most unequal income distribution in the
world. After the Goldman Sachs bonuses, the British will
move up in distinction, perhaps rivalling Israel for the
fourth spot in the hierarchy.
Despite the total insanity of unregulated derivatives,
the high level of public anger, and Greenspan`s
confession to Congress, still nothing has been done to
of Rubin`s Assistant Treasury Secretaries, Gary Gensler,
has replaced Brooksley Born as head of the CFTC.
Larry Summers is the head of President Obama`s National
Economic Council. Former Federal Reserve official
Timothy Geithner, a Paulson protege, runs the Obama
Treasury. A Goldman Sachs vice president, Adam
Storch, has been appointed the chief operating officer
of the Securities and Exchange Commission.
Banksters are still in charge.
there another country in which in full public view so
few so blatantly use government for the enrichment of
private interests, with a coterie of
"free market" economists available to justify plunder on the grounds
that "the market
is bad enough. The US surpasses this horror with
Brooksley Born says, if nothing is done,
nothing can be done. The crooks have the
Note: The OECD report shows that despite the
Reagan tax rate reduction, the rate of increase in US
income inequality declined during the Reagan years.
During the mid-1990s the Gini coefficient (the measure
of income inequality) actually fell. Beginning in
2000 with the New Economy (essentially financial fraud
and offshoring of US jobs), the Gini coefficient shot up
Paul Craig Roberts [email
him] was Assistant
Secretary of the Treasury during President Reagan`s
first term. He was Associate Editor of the Wall
Street Journal. He has held numerous academic
appointments, including the William E. Simon Chair,
Center for Strategic and International Studies,
Georgetown University, and Senior Research Fellow,
Hoover Institution, Stanford University. He was awarded
the Legion of Honor by French President Francois
Mitterrand. He is the author of
Supply-Side Revolution : An Insider`s Account of
Policymaking in Washington;
and the Soviet Economy and
Meltdown: Inside the Soviet Economy,
and is the co-author
with Lawrence M. Stratton of
The Tyranny of Good Intentions : How Prosecutors and
Bureaucrats Are Trampling the Constitution in the Name
of Justice. Click
here for Peter
Brimelow`s Forbes Magazine interview with Roberts
about the recent epidemic of prosecutorial misconduct.