Thursday, September 18, 2008

We've Been Here Before

In the TV show Battlestar Galactica the characters often quote a line from their fictional scriptures that goes "this has all happened before, this will all happen again." It seems to me that quote also applies to the current financial disaster we find ourselves in.

In 1929, before the Black Tuesday crash of the stock market there was no regulation on financial institutions, or the stock market, or insurance companies. There was also no social safety net, as we know it today. Specifically, no Social Security. This meant that frequently older Americans were forced to live in crushing poverty once they stopped working. The environment in the United States, before the stock market crash of 1929 was "every person for themselves," and frequently it was only the very, very rich robber barons who were able to take care of themselves.

This all changed, of course, after president Roosevelt was elected in 1933. He instituted the New Deal, over the objections of the Republicans, which started getting people back to work; the Democrats also pushed through Social Security, which helped keep retired Americans out of the crushing poverty they had labored under previously; another thing the Democrats did was put in place laws regulating the behavior of our financial institutions, brokerages, and insurance companies. These laws were intended to prevent the kind of financial meltdown that happened on Wall Street that was the major contributer to the Great Depression (which also indirectly led to World War II). And for the most part those laws worked. Until now.

The Republican goal has always been to roll back all of these social and legislative advancements to pre-1929 levels. And they have been successful. Starting in the 80's some of the laws governing banking and financial markets were rolled back. And this accelerated in the 90's. Called "de-regulation" the GOP argued that banks and financial firms would regulate themselves and stimulate the economy. This is, of course, a bunch of hooey.

When banks and financial institutions are not "hampered" by regulation and government oversight they run wild. Making bad financial decisions, taking on risky loans, and engaging in all-around questionable business practices. Then when they get in trouble they run to the government for help. If the laws to prevent their bad behavior had been left in place they would not have needed to be bailed out. Or nationalized, in the case of AIG.

It seems that those who do not learn from history truly are doomed to repeat it. The problem with the Republicans is not that they have not learned the lessons of history (they haven't), but that they truly do not care that they have caused this present financial disaster with their willful and ignorant drive to "de-regulate" everything. They have no remorse over the financial damage and suffering they have caused. And they want to keep on hurting people.

If John McCain gets into the White House he will push for even more de-regulation until there are no laws left restraining the financial institution's actions. Present crisis be damned.

Make no mistake this present financial and economic meltdown is purely the fault of the Republicans and their drive to "de-regulate" everything. It's what they do. And it is what they will continue to do. Now, I don't think we are on the verge of another Great Depression, but as Paul Krugman said recently "if we work at it hard enough" we could have one.

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