Born-Again Democracy (William Greider)

From the current issue of The Nation magazine:

By William Greider

Our country is at a rare and dangerous juncture. The old order is crumbling, and virtually all the centers of power that govern us have been discredited by events. The president is irrelevant, weak and unbelievable, even to his own party. The Democratic majority controlling Congress is stalled by its own shortcomings. The treasury secretary, given his arrogant approach to the financial crisis, is not to be trusted as a steward of the public interest. Nor are the conservative Federal Reserve and its chairman. The private power of Wall Street is utterly disgraced and desperate.

This condition of vulnerability is sure to prevail for at least the next three months, until a new president and new Congress take office. In the meantime, the governing elites are clinging to the old order, trying to salvage it by delivering massive amounts of relief from taxpayers to the failing financial institutions. The American people correctly see this approach as a historic swindle that rewards the villains at the expense of the victims. A Nevada real estate broker asked the Washington Post, “Instead of having a bailout, why don’t we have indictments?”

Indictments can wait, along with fundamental reforms. Right now the country needs to confront the fire raging through the financial system and engulfing people and productive assets in the real economy. Aroused and angry, the public, for a change, can play a decisive role in the political arena, as it did when the House rejected the bailout package. That shock to the system was valuable therapy. People can drive politicians to begin facing reality and to develop a more forceful strategy for national recovery, an approach that serves the country as a whole and has a far better chance of succeeding. The sooner our leaders recognize that the old order is gone, the sooner Americans can begin reconstructing a more viable and equitable economy.

The calamitous unwinding of financial institutions in recent months has an ominous resemblance to events that unfolded after the stock market crash of 1929, when three years of recurring waves of bank failures and economic contraction led to massive suffering. The government, led by the Federal Reserve, was scandalously derelict during that crisis. This time Washington has reacted more aggressively but still hasn’t found a strategy to stabilize finance or reverse the gathering recession.

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