Washington
Can Not
Bail Out
Red Ink
Sea

Bill Moyers Journal with Bill Geider
Moyers:
You have been writing for a long time now that America's moving toward a corporate
state. If we become one, can we exercise the self-correcting faculty that
prevents us from hitting the iceberg out there?
Greider:
One of the reasons I think politics is going to change fairly dramatically
is that the Federal Reserve, accompanied by the Treasury Department and I think
will be accompanied by the Congress, has crossed a very dangerous line in their
bailout. They have essentially said, "We will put money on the table,
taxpayers' money on the table, for any financial institution or business that
is too big to fail." That is, if it fails, it'll send dangerous ripples through
the economy.
And we've got a list now of maybe 30, 40, depending on how you count them,
that we will be there to save you. I regard that as profoundly dangerous for
the American Republic because once you cross that
line and you have this special club that's privileged, that has benefits from
government that nobody else can get, where do you stop it?
I mean, if I were running a big manufacturing company, I would have quickly
run out and buy a subsidiary that's a bank or a financial firm that looks like
a bank. And I would then try to get myself on that list. Who wouldn't? What's
going on right now it's gotten a little attention - the union SEIU is fighting
it, is these private equity firms, which are huge money pots of investors that
take over and change corporations and come away with huge profits. The private
equity firms are trying to buy into the banks and financial firms.
Moyers:
And what would that mean?
Greider:
That would mean that this private unregulated equity fund would be
participating behind the door, so to speak, in the management of our regulated
banks. But it would also, in a pinch, if it's big enough, maybe have a tap into
that federal guarantee that if you're too big to fail, we'll be there for you.
Moyers:
This morning in the "New York Times" one of the big stories in the
business section is the financial industry is organizing to stop Congress from
trying to regulate excessive speculation on oil and energy. They don't want
this capacity for exploiting people's needs.
Greider:
Well, I could lay us alongside that the Securities and Exchange Commission,
which, remember in olden days, was supposed to defend us innocent investors
against the guys running corporations. And that's why we have all these reports
and so forth and so on. They announced this past week that they're going to go
after the short sellers in the stock market.
The short sellers are the guys who say these folks at the corporate
headquarters are lying to you or the folks at Citigroup are still not telling
the truth about their losses and liabilities. So you see what I'm getting at.
It's equivalent to saying we don't want anybody bad mouthing us in the middle
of this trouble. And we'll try to penalize them if we can. Isn't that
contradictory to the public interest?
Moyers:
Have we hit bottom?
Greider:
I don't think so. But I think the short answer is nobody knows. My sense is,
partly because the rottenness, the bad assets and so forth and the inflated
housing prices and all the other defaults have so much more to play out -- I
think they will then feed back, and are already, into real economic
consequences for the general life of the economy.
Moyers:
Meaning?
Greider:
Well, people lose jobs. Unemployment will rise.
Moyers:
Like Cleveland.
Greider:
And like, you know, a perhaps less vicious story because it'll be more
gradual than what's happening in those neighborhoods in Cleveland. But then as that happens, the
losses feed back into banks because they've got consumer loans, they've got car
loans, they've got business loans. And even banks that have been more or less
virtuous in their behavior will be impinged by that. So I'm not making some
grandiose calamity prediction. I'm just saying we got a lot more pain to take
in this society before this works out.
Moyers:
Both parties have put the watchdogs to sleep, right?
Greider:
A better metaphor, instead of putting them to sleep, would be castration.
Moyers:
Both parties have been complicit in tipping the balance of power to capital,
right?
Greider:
I'm afraid so. That's right. I mean, if you go back over the last 20, 25
years, it was always portrayed as a cause of conservative Republicans, even
right-wing Republicans. And that was, of course, true. But I think a majority
of the Democrats were in collusion virtually every step of the way, and sometimes
they led the way.
Moyers:
Do you think Washington
really knows what's going on? Do you think they really understand what's
happening out there in Cleveland
and places like that all over the country?
Greider:
The short answer is, no, I've been in Washington
as a citizen and resident for 40 years. And I'm still occasionally shocked by
its ignorance of the rest of the country. And some of that is willful, of
course. But some of it is just, it's a very nice life in Washington. You get used to certain protective
qualities.
We saw that recently with these political players, who got good mortgages.
How do they do that? Well, we know how they did it. And in any case, Washington doesn't yet
see the depth of the problem.
If you ask me, well, who's figured this out? Who understands, at least in
general terms, where we are? The guys in Washington?
The politicians and their governing policy advisors? Or the dimwitted public? I
would say the public. And I think there's a lot of evidence in that. You know,
they keep seeing these polls where the public expresses doubt about this, about
--
Moyers:
Eighty-one percent of the people in the most recent polls say we're heading
in the wrong direction.
Greider:
I call that an extreme consensus. Why do the newspapers not celebrate that?
They're always looking for consensus politics. Here's the American public,
they've got an eighty -- you know, that's extraordinary.
Greider:
We have an opening in this crisis for, this is really going to sound
grandiose. We have an opening in this crisis for a deep transformation in
American politics. I don't say it happens this year, next year, or it's going
to take a number of years. But we are in the shock of reality. And people get
it everywhere and see the blood in the streets. And you tell them how this
worked and who did what to whom, and that's a basis for a new politics.
But it requires people -- this is the hard part -- to get out of their sort
of passive resignation to, "Well, we follow the Democrats" or
"we follow the Republicans" or "we let this group or that group
tell us how to think" and engage among themselves in a much more serious
role as citizens. And when, as they do that, they have to be willing to punish
the political powers, in smart ways or crude ways, however they can, first, to
get a place in the debate. But, secondly, to force the changing values of the
system.
And I, this may be wishful, but I think in the next year, two years, five
years, you're going to see both political parties floundering. What do we
believe about all this stuff? We've told folks this, you know, lovely story for
20, 25 years about the magic of the marketplace. Do we still want to kind of
prop that up? That's where they are now. They're still trying to prop up the
marketplace vision and make it work again. It's over.
I think events will demonstrate that. So if they're not willing to change
then we need to change the politicians. And that's all a bloody process and
doesn't happen quickly. But that's why I'm optimistic.
Moyers:
Bill Greider we look forward to your new book, the title of it will be?
Greider:
Come Home, America