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Friday, January 29, 2016

Paul Krugman, "Plutocrats and Prejudice": Bill Clinton's Repeal of Glass-Steagall?

In his latest New York Times op-ed entitled "Plutocrats and Prejudice," Paul Krugman tells us:

"Until recently you could argue that whatever the motivations of conservative voters, the oligarchs remained firmly in control. Racial dog whistles, demagogy on abortion and so on would be rolled out during election years, then put back into storage while the Republican Party focused on its real business of enabling shadow banking and cutting top tax rates."

Fascinating. "Shadow banking" is only the Republicans' fault. But consider what Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, has to say about the repeal of Glass-Steagall by Bill Clinton:

"Hillary Clinton won’t propose reinstating a bank break-up law known as the Glass-Steagall Act – at least according to Alan Blinder, an economist who has been advising Clinton’s campaign. 'You’re not going to see Glass-Steagall,' Blinder said after her economic speech Monday in which she failed to mention it. Blinder said he had spoken to Clinton directly about Glass-Steagall.

This is a big mistake.

It’s a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall. Many will recall that her husband led the way to repealing Glass Steagall in 1999 at the request of the big Wall Street banks.

It’s a big mistake economically because the repeal of Glass-Steagall led directly to the 2008 Wall Street crash, and without it we’re in danger of another one."

I agree with Reich.

Objectivity from Krugman? Not a chance.

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