Breaking the Oligarchy

Just watched a very poignant critique of a key problem in the US strategy for handling the financial crisis at the moment. Here's the link http://www.pbs.org/moyers/journal/02132009/watch.html. This is a Bill Moyers interview with Simon Johnson who offers some key insights on the current US oligarchy Obama has empowered to handle the crisis. Here's an excerpt:

BILL MOYERS: And, yet, Secretary Geithner's chief-of-staff is the former lobbyist for Goldman Sachs. How - serious question - how do they make a dispassionate judgment about how to deal with Goldman Sachs when they're so intertwined with Goldman Sachs' mindset?

SIMON JOHNSON: I have no idea. Of course, the administration, the new administration, has a lot of rules about lobbying. And they have rules that basically say, I think, as understood the rules, when they were first presented, I was very impressed. They basically said, "We're not going to hire lobbyists into the administration. There has to be some sort of cooling off period."

BILL MOYERS: And the next day Obama exempted a number of people from that very rule that he had just proclaimed.

SIMON JOHNSON: Yes. It's a problem. It's a huge problem.

Johnson then goes on with his suggestion which, although not brain science, is nonetheless strategically very insightful. Basically, you have to break up the large banks. Currently, the FDIC in the States has a very strong system for intervening with troubled smaller banks. The problem is these large banks, ie those that are too big to fail and have forced the taxpayer to bail them out. The idea is, and I think Geithner agrees with this in principle, is that if a bank is to big to fail then it shouldn't exist. The problem is how to do this politically. One key ingredient Johnson suggests is not currently happening, is that key lobbyists and former CEOs from these large banks should not be influencing the intervention process in favor of their own profit margins.

It's worth a listen.