Paul Krugman is a Hypocrite
Paul Krugman has been a Clinton Restorationist– a big Hillary supporter and Obama’s fiercest critic in the progressive punditocracy. So today he writes a very good piece laying out the regulatory disasters that led to our current economic crisis. He tells a tale of how after the Great Depression, Democrats worked to protect the banking system from runs, by enacting a split of Investment Banks and Commercial Banks. But, Krugman points out.
Wall Street chafed at regulations that limited risk, but also limited potential profits. And little by little it wriggled free — partly by persuading politicians to relax the rules, but mainly by creating a “shadow banking system” that relied on complex financial arrangements to bypass regulations designed to ensure that banking was safe.
But never once in the whole article does he point out who yielded to the enticements of Wall Street–who was responsible for destroying the Glass-Steagall separation of Banks and Investment Banks–Bill Clinton.
[...] http://mikehunt.tv/mikehunttv created an interesting post today on Paul Krugmann is a Hypocrite [...]
Krugman should have mentioned Clinton’s role in repealing Glass-Steagall (boy that name Steagall has been a real spelling test for people lately!), but I think he’s attempting to play the part of disciplined, on-message partisan here. He probably sincerely worries that Obama can’t or won’t be elected and that the only “progressive” way forward is with Hillary. And given the behavior of the right-facing media, he probably feels he has to soldier along with a Hillary-friendly message. He has written about the need for partisanship more than once. Here is one example.
Krugman strikes me more as a fairly naive idealist affecting a jaded cynicism. But unless there is more to the accusation that he hopes for a job in a Hillary administration than I think, I’d be reluctant to label him a “hypocrite”.
But then, I’ve survived on PK columns for these past 7 years. I’m not really objective.
I was struck by exactly that: it was Bill Clinton who endorsed the shadow banking system. (BTW Newshour tonight interviewed his treasury secretary.)
But a recent NYTimes article on the new billionaires recently highlighted Sanford Weill, who made his money illegally and then had Clinton legalize it.
The rather bald-faced acceptance of corruption and big-money special interest money by the Clinton wing of the Democratic party is shocking in its strength.
The future of a two two-party system in this country frankly depends on the success of a most unlikely candidate: Senator Barack Obama.
Sorry, I meant “true two party system” above.
Here’s the NYTimes article:
July 15, 2007
Age of Riches
The Richest of the Rich, Proud of a New Gilded Age
By LOUIS UCHITELLE
Corrections Appended
The tributes to Sanford I. Weill line the walls of the carpeted hallway that leads to his skyscraper office, with its panoramic view of Central Park. A dozen framed magazine covers, their colors as vivid as an Andy Warhol painting, are the most arresting. Each heralds Mr. Weill’s genius in assembling Citigroup into the most powerful financial institution since the House of Morgan a century ago.
His achievement required political clout, and that, too, is on display. Soon after he formed Citigroup, Congress repealed a Depression-era law that prohibited goliaths like the one Mr. Weill had just put together anyway, combining commercial and investment banking, insurance and stock brokerage operations. A trophy from the victory — a pen that President Bill Clinton used to sign the repeal — hangs, framed, near the magazine covers.
These days, Mr. Weill and many of the nation’s very wealthy chief executives, entrepreneurs and financiers echo an earlier era — the Gilded Age before World War I — when powerful enterprises, dominated by men who grew immensely rich, ushered in the industrialization of the United States. The new titans often see themselves as pillars of a similarly prosperous and expansive age, one in which their successes and their philanthropy have made government less important than it once was.
“People can look at the last 25 years and say this is an incredibly unique period of time,” Mr. Weill said. “We didn’t rely on somebody else to build what we built, and we shouldn’t rely on somebody else to provide all the services our society needs.”
etc.
NO ONE EVER wants to remember the real disaster of the Clinton years. I don’t get it. Progressives aren’t willing to believe that their hero politician could have dumped this irresponsible economy on us and conservatives can’t get past the BJ. When will there be real reflection on his presidency?
Bill did what he had to do. He balanced the budget. Sure blame him now for the bank crisis, but really it was everyone flipping homes, that was complicit.
Morgan- Sandy Weill made a deal for Citibank that was against the law. He then lobbied Clinton and Rubin to change the law. Prof. Roubini suggests the only way out of the coming meltdown is a Nationalization of the Mortgage business. Not the sort of outcome I would expect you to support.
http://www.rgemonitor.com/blog/roubini/250488
Jon, I “support” none of this – but government caused the problem, it is not the solution.
You yourself have said, that many people should have rented. I agreed. The pressure to allow poor and lower middle class to own homes, didn’t come from the right. Creative financing is the root cause of this. It’d be so refreshing if you started your next post analyzing how liberal efforts to encourage home ownership played its role.
Liberal efforts? do the words “ownership society” ring any bells?
And Phil Gramm was the one who pushed through the repeal of Glass-Steagall — pushed through a Republican controlled congress.
Take a look at this:
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=106&session=1&vote=00105
And take special care to notice which way the Democrats and Republicans voted on it.
You can’t blame the repeal of Glass-Steagall on democrats and be taken seriously by anyone who’s paying attention.
[...] Krugman, who was so wrong about Obama during the campaign, is not above offering advice now. His basic point is that “FDR made [...]
I noticed that Mr. Reasoner never referenced the vote at the HOUSE. Could it be because the majority voting for the bill were DEMOCRATS? And let’s not forget who ultimately decided to sign it into Law….a Democrat.
Case closed!