USG seems to be using Shock Doctrine tactics to (not) reform Wall Street (This one's for Naomi Klein!)

Yesterday, Democracy Now reported on how the USG's new focus, now that HCR has gone through, will be reforming Wall Street. Robert Johnson, former economist at the Senate Banking Committee and the Senate Budget Committee and current director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute, said the following in an interview:

As we approach the election, elected officials know the American people are enraged, particularly about the question of “too big to fail”—large institutions that aren’t subject to the same rules as everyone else. At the same time, they need money for their reelection in this money-gushed politics system that we have. So we’re engaged in a Kabuki theater right now, hoping the material is too complex for the American people to understand, declaring victory, and yet basically encoding into law current practices of the banks.

 

Every one of your listeners should ask the question, given this legislation, if the President, House and Senate pass it, will we be in a place where AIG couldn’t have happened, Lehman Brothers couldn’t have happened, Bear Stearns couldn’t have happened, and, more importantly, nine, ten percent unemployment caused by the banking crisis couldn’t have happened? I argue this bill does very little, and even Gary Gensler, who’s probably the strongest element of the administration at the CFTC, argued yesterday at the Chamber of Commerce that it does not do the job, the end-user loopholes in derivatives regulation, which is, to my mind, the San Andreas Fault of the financial system.

via democracynow.org

I'm in the middle of reading Naomi Klein's book "The Shock Doctrine" which details tactics that allow very bad "reforms" to occur in the wake of very bad disasters. The idea is that while the locals are all distracted or confused thanks to a recent natural or man-made disaster, lobbyists and legislators push through very bad bills that put the citizens in a worse situation than they were in before.

A good example of this is how, after 911, the Patriot Act was shoved through before we even knew that it compromised a lot of our rights.

And here comes Johnson, above, saying "...we’re engaged in a Kabuki theater right now, hoping the material is too complex for the American people to understand, declaring victory, and yet basically encoding into law current practices of the banks."

This is the almost precisely the definition Naomi Klein uses in the her book, "The Shock Doctrine." What's our recent disaster? The financial crisis, of course, and we are the bewildered locals, reeling from said disaster, trusting our leaders when they tell us "we're fixing things!"

The really frustrating thing is that this tactic almost always works because we humans are hardwired to trust authority figures--especially when we "regress" during a disaster, as Naomi Klein's book shows us.

If you haven't read "The Shock Doctrine" you should.

Check out the rest of the transcript of the Democracy Now story on the USG's Wall Street "reforms" or watch the video of the segment. You can also listen to the segment, streamed over the 'net, too.

Posted via web from thepete's posterous