We Were Told of Crisis Beforehand

Before the bailout crisis dominated the political and financial news, a high-circulation political newsletter, CounterPunch, continued its breaking analyses and exclusives on its free website, sounding alarms to which we all should have listened.

Prominent among CounterPunch writers is Paul Craig Roberts, former assistant secretary of the Treasury in the Reagan administration and former associate editor of the Wall Street Journal editorial page, and former contributing editor of National Review.

Roberts has been warning for years that America is hollowing out its labor force, and is in clear and present danger of a market crash with clearly dangerous ramifications.

Writes Roberts:

In American today the greatest rewards go to investment bankers, who collect fees for creating financing packages for debt. These packages include the tottering subprime mortgage derivatives. Recently, a top official of the Bank of France acknowledged that the real values of repackaged debt instruments are unknown to both buyers and sellers. Many of the derivatives have never been priced by the market.

Think of derivatives as a mutual fund of debt, a combination of good mortgages, subprime mortgages, credit card debt, auto loans, and who knows what. Not even institutional buyers know what they are buying or how to evaluate it. Arcane pricing models are used to produce values, and pay incentives bias the assigned values upward.

‘Richistan’ [a financial reality derided by Robert Frank as the new American world of the super-rich operating virtually unregulated] wealth may prove artificial and crash, bringing an end to the new Gilded Age.

Roberts wrote that in an August 2, 2007 piece, The Return of the Robber Barons.

Roberts also notes that the titans of American capitalism, Warren Buffet and Bill Gates, particularly Buffet, offer proressive advice on fiscal and regulatory policy. Buffet's thoughts on fiscal and tax policy in line with mainstream progressive Democratic thought, arguing for a progressive income tax structure and against rising inequality in America under neocon economic doctrine.

Some of the super rich, such as Warren Buffet and Bill Gates, have benefited society along with themselves. Both Buffet and Gates are concerned about the rapidly rising income inequality in the US. They are aware that America is becoming a feudal society in which the super-rich compete in conspicuous consumption, while the serfs struggle merely to survive.

No doubt then that Roberts is a talking head seen on every major broadcast network, achieving a celebrity as some sort of oracle and prophet to whom we all should have listened. Right?

But the reasons for excluding writers such as Roberts ought to be contemplated by every thinking American.

Roberts latest piece, Bail Out the Homeowners!, makes the argument that the American government ought work directly for the American people.

Congress should focus the bailout on refinancing the troubled mortgages as the Home Owners’ Loan Corp. [other radicals like Alan S. Blinder, professor of economics and public affairs at Princeton and former vice chairman of the Federal Reserve are on board with the idea] did in the 1930s, not on the troubled institutions holding the troubled instruments linked to the mortgages.

CounterPunch and Paul Craig Roberts--dangerous people indeed, who must be excluded from the broadcast networks of our country, lest they reach too many people.

Let's hope President Obama pays heed.