Republicans: accountable for the financial crisis and loss of American prestige? by gimleteye

In Miami, we look at the video of the aftermath in Galveston-- the distribution of ice bags and food, the sound clips of people wondering what to do, next-- and think, there but for the grace of God, go I. But there is another hurricane--the collapse of the nation's premier financial institutions--that has been whipping its winds around us, with less apparent and yet more serious consequences for the past decade.

So long as we have a good job and a roof over our heads, the storm blowing out Wall Street windows seems a world away. But really, we have been in it a long time: the phantom inflation that government denies exists, the loss of purchasing power of the US dollar compared to other world currencies, the growth of asset bubbles substituting for real growth, the incessant demand for worker productivity to maintain corporate profitability while industry itself has vanished to low cost labor nations, and last but not least the way that the accumulation of national debt has masked an unbalanced economy and personal debt our own fragile finances.

That is why the pronouncements of the Bush White House and the McCain campaign ring so hollow: our economy is not fundamentally sound and has not been fundamentally sound for a long time. Yesterday, the McCain campaign rapidly adjusted its public message; by late in the day, it had dropped the line about being "fundamentally sound" and was citing the risk to Americans and the need for regulatory reform.

It is an insult to the intelligence of anyone who has paid attention to the active hostility of the Republican Party and its elected officials to regulation of any kind: public health, the environment, the economy. In all respects, and Florida is an excellent example, regulation has been the enemy of progress. Even today, conservative think tanks like the Cato Institute and the American Enterprise Institute strenuously argue that regulations are to blame for our economic ills, and even the housing crisis. Their talking points are calibrated to Republican party goals and disseminated through a variety of channels, including Fox News and Rush Limbaugh who sounds more and more like Joe McCarthy every day.

Since the collapse of housing markets beginning in 2005, the hurricane engulfing the nation's premier financial institutions has been along the lines of a slow, steady erosion of personal worth and equity, the way that waves are taking away the sand of Florida's Gold Coast.

For two years, on this blog, we have written about the fiscal and economic crisis in stark, uncompromising terms as the worst since the Great Depression. My own posts have been along the lines of a rail line worker at the side of the tracks waving a flag; stop, there's a train wreck ahead.

My view is informed by experience in the financial sector and, also two decades fighting against the growth model that wrecked the Florida landscape. During that time, the warning signs have been manifold that the lines between speculation and investment, between providing securely for the future-- for taxpayers, residents, citizens-- by balancing the imperatives of private profit with the public good have been throughly distorted.

If there is a single marker for the tragedy of the Bush terms in public office-- both in Florida and Washington-- it is the commandeering of public information by spin that conceals and masks the secret code of neoconservative ideology. "Compassionate conservatism", for instance, was nothing of the sort. It was a license to socialize risks and privatize profits across the board. We all want compassionate. And the idea of conservation appeals, on its face. But we got neither, and the result in so many ways is a crisis of individual liberty at home, economic security and a loss of American power and prestige.

The Wall Street turmoil, beginning with the bailout of Bear Stearns, the opening of the Federal Reserve "window" to private financial institutions, the takeover of Fannie Mae and Freddie Mac, the bankrupcy of Lehman Brothers, represents the early innings of national crisis: all these events will be recounted to future generations as unprecedented in the nation's history.

There should be no reward for this political recklessness.

The Miami Herald reports today of a visit to Florida, yesterday, by John McCain in Jacksonville-- attended by the state's top Republicans including former Governor Jeb Bush who left office in January 2006 and soon thereafter became a well-compensated consultant to Lehman Brothers.

The Herald notes: "As governor, Bush served on the three-member State Board of Administration that agreed to let the state's retirement fund buy a series of mortgage-backed securities from Lehman Brothers that turned out to be troubled. The subsequent steep drop in value prompted a $9 billion run on the fund last December by local governments who had invested their money in the SBA-managed fund. Lehman also manages two funds for the SBA, which is also heavily invested in some Lehman securities. Bush refused to talk to reporters after the rally."

Of course, Bush was silent. McCain's victory in Florida depends on advocating for regulatory reform that Bush fought tooth and nail.

McCain's campaign in Florida depends on protecting the obscure, opaque relationship between Wall Street, the financial arrangements (ie. investments by the State of Florida in billions of failed debt), and the web of obligations between real estate speculators and developers/ campaign contributors and local zoning councils, represented by such county commission majorities as that which plagues Miami Dade County.

These relationships propelled Jeb Bush to the governor's mansion for two terms; the underlying political ideology was the same that George W. Bush adopted in his successful run for president in 2000. It was, in short, the embrace of privatization over government authority, the hollowing out of bureaucracies responsible for regulation protecting the public health and environment, the triumph of loyalty and secrecy over competence and, above all else, certainty in the success of predetermined outcomes.

One of the best examples I know to prove the point is how the State of Florida handles the disposal of wastewater.

To make a long story short, the only way to accommodate the incessant growth of the state--now the fourth most populous in the nation-- has been to bury its wastewater. Think of the gears in the growth machine as starting with Wall Street greed; that's the big gear. It is defined by the stock options and fees and take-home pay of Wall Street executives, lawyers, and lobbyists pushing massive debt from ordinary home mortgages. Another big gear is the handling of infrastructure needed to move consumers into housing developments.

The origination of municipal debt, and how it is issued and who benefits, is taken for granted by taxpayers who really don't have the first idea except to wonder why highway interchanges and locations are often mapped and inserted on property related to powerful politicians and insiders. One of the most poorly understood gears in infrastructure is the disposal of wastewater.

In Florida, that happens through wells drilled deep underneath Florida's drinking water aquifers. The passing of Richard Deuerling, who ran Florida's "injection control" well program for decades, occasioned an outpouring of sympathy from the Florida chapter of the American Water Works Association. Its members, well drilling companies and large engineering firms and lobbyists, are major contributors to Republican political campaigns in Florida. As a gatekeeper, Deuerling presided over the department of an agency, the Florida Department of Environmental Protection, obsessed with secrecy. As governor, Jeb Bush refused to disclose to the public the exact extent of wastewater injected into Florida's underground geology which is defined by its porosity. The result is clear enough: there is more pollution ringing the peninsula of Florida than can be accounted for by environmental agencies.

Those agencies hide behind a scrim of insufficient regulation and outright intimidation through the political influence of the regulated communities. In the popular press, the ocean of bad debt is often referred to as "toxic"; it is, in its key respects of origination and disposal, no different from wastewater. Jeb Bush and his loyal lieutenants refused to disclose, when asked by Sierra Club, how much scarcely treated wastewater was being injected into Florida: it turns out to be billions of gallons per day.

The State of Florida and its agencies have carefully and quietly started to retreat from the practices of wastewater disposal that kept the costs of growth deliberately and unsustainably low. But it was only through this "gearing" and through the continued secrecy, that trillions of dollars of mortgage debt was allowed to proliferate-- that has resulted in an historic and unparalleled shifting of wealth away from the middle and lower classes.

The nation and Florida needs a whole new approach to governance that begins with inclusiveness, openness, and a willingness to dismantle Bush policies, programs and the politicization that infects federal agencies. In simple terms, the McCain campaign is now being managed by Bush acolytes and operatives. Their expertise is diverting public attention and media awareness and crafting a "balance" that conceals a radical and extremist agenda whose results are already evident-- if only the mainstream media would report it that way.

Let's hope that on November 5th, the nation elects Barack Obama and the hard work of reconstructing the nation's economy can begin.