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PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I’m Paul Jay in New York City. Now joining us again is Jeff Madrick. He’s the author of Age of Greed: The Triumph of Finance and Decline of America, 1970 to Present. And you have a long list of credentials, and go back and watch the other episodes and you’ll find it. But the most important thing is the book. Don’t forget the book. Let’s pick up where we left off. Obama comes to power as–becomes president at a time when the economy is unraveling. So maybe pick up our tale from there.

JEFF MADRICK, AUTHOR: Right. Obama did inherit a very difficult agenda. A lot of people thought it was the most difficult agenda any president inherited, that is, a typical historically myopic view. But Jimmy Carter, to take one example, inherited a horrible set of problems.

JAY: But here they’re talking about, like, apocalyptic language when, you know, they’re telling Congress in secret sessions that the world’s going to–the financial world will come to an end if you don’t [crosstalk]

MADRICK: But it was a very severe potential crisis, and I think they were more right than wrong about that and they by and large, on balance, did the right thing. That was under Bush, TARP, so let’s be clear about that. Obama hired, by and large, the same people, Geithner–Greenspan was not there, but Bernanke was an integral part of the team, of course, his successor. He hired Larry Summers, who is the architect–.

JAY: He reassembles much of the Clinton team who were in on all this deregulation of the ’90s.

MADRICK: Yeah, a little bit–it was a little bit disturbing, more than a little bit disturbing that he did that. Nevertheless, he got a stimulus package passed of $800-900 billion, a Keynesian stimulus package that did a lot to help us avoid a depression, a far worse recession than we actually had. Meantime, Bernanke, once he realized–and he was late in realizing how bad a crisis it was, but once he did, did step on the gas, figuratively speaking, to help us avoid a depression. We had learned the lessons, and they were basically Keynesian lessons, not Friedmanite lessons, about how to avoid a steeper recession. I think Obama did well getting that. Now, a lot of people say it should have been more. Theoretically, it should have been more. Politically, was it remotely feasible to get more? I doubt it. But he could have come back. Some people think I’m wrong, that he could have gotten [crosstalk]

JAY: Who knows whether he could’ve. I mean, the language was so apocalyptic, and even the–all the real serious sectors of the business community wanted it. They all wanted a stimulus of some kind.

MADRICK: But $900 billion seemed a lot, even in the fall. I was occasionally consulted by the John Edwards campaign. They were talking about such small numbers. It wasn’t the fall, but it was that spring. I would say $100 billion, [and they’d] say, are you kidding? A hundred billion dollars?

JAY: Well, there’s a lot of things, of course, we can talk about about how Obama dealt with the crisis, and I think it’s actually a topic for a whole ‘nother series of interviews, so let’s just focus on one here. Over the series of interviews, we’ve been talking about the increasing triumph of the finance sector, which is not just in terms of the economy but in terms of the country’s politics. How does that play out in the Obama years? Because, you know, you look in ’08, ’09, you know, the language of–that this–. You know, I remember the Newsweek cover, “We’re All Socialists Now”. I mean, everybody wanted the government to come intervene, and the world as we know it’s coming to an end. Now where are we now? Like, it’s as if it never happened when you look at Dodd-Frank’s bill and what’s happening in terms of regulation.

MADRICK: I think it’s even worse. We have leading Repulican congressmen saying, why do we need regulations? It’s another world. In a world where serious people are on serious television–they’re not serious people, but they’re on serious television, so–.

JAY: I’ll dispute the “serious television” part too, but go ahead.

MADRICK: Influential television [crosstalk]

JAY: Okay. That I can see.

MADRICK: –is telling us that teachers make too much money and it’s an easy job. In a world where that’s happening, I guess just about anything can happen. The lack of regulation created that monster crisis. For people to not take re-regulation seriously is an outrage, and that’s by and large what’s happening. But part of it is the backlash of Wall Street lobbying. There are 50 rules to govern the derivatives market, which we’ve been speaking about in earlier sessions. There were 20,000 comments. Now, how can the staff go through 20,000 comments? Where did the money come to write those 20,000 comments? We know where it came from. But it’s not only that. The Republicans, for the most part, in the House–but probably some Democrats are joining them–are unraveling the power of the CFTC, the SEC, by cutting back on their budgets. The staff of the Commodities Futures Trading Corporation, which should be regulating a large part of the derivatives market, has been cut, hasn’t been increased. There is a kind of craziness.

JAY: They’re pushing towards more deregulation.

MADRICK: So I hope people begin to understand how wacky things have become. And I can’t think of a more precise word. It is a wacky atmosphere where people are jostling for political position or to win the support of their big financial supporters, and it’s doing great damage to the country.

JAY: Is part of the underlying problem that because you can make more return on your capital in this more parasitical, speculative area, and the more capital that goes there and the more concentration of wealth that goes there–I can’t remember the exact numbers; they’re in your book as well. The amount of profit in the GDP now from the finance sector is what? It’s, like, 30 percent of profit is coming from finance.

MADRICK: According to certain measures it got up to 40 percent of all profit was in finance.

JAY: So the political power that therefore results, the ability to finance TV advertising, the ability to threaten–and you could even see there was a point there, at one point in ’09, where there was actually maybe some serious talk in the Obama administration of more real regulation. And the business press was filled with stories how Wall Street may switch horses to the Republicans and all of this.

MADRICK: Yeah. Well, I think they threatened them. But, you know, people ask me all the time: how did we get those regulations in the 1930s? You know, why are we caving in now? And I don’t exonerate Obama on this. One reason we got more regulations then was the Depression was more severe, people were hurting more. Another was the Pecora Commission. Pecora was just a flamboyant man in one of the great, fortuitous–that was a fortuitous event. But the third and biggest reason was we had Roosevelt. And Roosevelt made mistakes. He started clamping down on the economy in 1936, ’37, for example, and we went into another recession. But he was extraordinarily courageous and said it like it was, and he took those people on. President Obama–this is no measure of dislike for the man–he did not do that. He did not do that with financial regulation.

JAY: He didn’t do it on health care, either.

MADRICK: He didn’t really fight for the health care bill in the end. He let it go. He’s not a fighter, and we need a fighter. And I don’t even know exactly what he believes. I think he believed–he talked about how they got financial re-regulation done. You sit there and say, the Dodd-Frank bill, even though it had a few good things in it, basically kicked the can down the road for writing regulations. Meantime, Wall Street descended–just descended–. People–the head of the FCIC told me the other day, the Federal Crisis Inquiry Commission, you cannot imagine how they were bombarded by Wall Street lobbyists and analysts and specialists.

JAY: And no politician’s willing to really take on the power that kind of money has in influencing the outcome of elections.

MADRICK: Well, I guess not, unless you’re maybe Franklin Delano Roosevelt. But that’s my point: leadership could make a difference, leadership that really was willing to go to the mat.

JAY: Alright. So let’s–this is the last segment of this series of interviews. We’re going to do another one where we really go through the book. So we’ll get back to you. But what are we supposed to do, the rest of us who aren’t on the–you know, controlling the bubbles and making so much money out of the bubbles? And let me just ask you something specific. When President Obama was introducing health care reform, whether he believed it or not, he made the argument that you can’t control the health care sector unless there’s a public option. Now, in the end, I don’t think he had the courage of his conviction, or he never really had the conviction, whenever he gave up on the public option. But the argument’s rather interesting that only through a public option can you control a sector of the economy. So if it was true for health care, why isn’t it true for finance? Why is–you know, you’re not going to win any of these big regulations fights with Wall Street, ’cause they just overwhelm you. Should there be some demand on the part of the people that we need a public option for finance?

MADRICK: [incompr.] I never thought about that.

JAY: So you’re too big to fail? The hell with you. Go fail, ’cause we got a public option.

MADRICK: That–well, you know, some people would argue Fannie Mae and Freddie Mac were our public options.

JAY: But they kind of gave up on that. They privatized it, mostly.

MADRICK: Well, they privatized them, and worse than that, they had some leaders who, you know, were prone to corruption–let’s put it that way. But they did not cause this crisis. I don’t want to in any way imply that. I never thought about that. I guess even I would be a little bit nervous about federal government being the financier. But, of course, as the guarantor of–

JAY: Except they are, they are the financier.

MADRICK: –savings accounts and as–.

JAY: They are the financier. They just–they put the money into the same banks that caused the crisis. They are the financier.

MADRICK: Yeah, we could have a long discussion, but I’d need more preparation.

JAY: Okay. That’s fair enough.

MADRICK: I do think, however, sometimes–often when I give talks, people say, okay, what can we do? Or, you know, this book should have a happy ending; what’s the happy ending? And I say, you know, maybe the point of this book is not to have a happy ending, ’cause Americans tend to think we will muddle through and be okay. We tend to believe in our future, even though occasionally we have moments of pessimism, even Americans. We tend to believe that’s how our history always worked. It did not work that way. There were points in time when we had to get together as a nation to make tough decisions, to force people to sacrifice. Sometimes we never made those decisions. Sometimes we made them too late. Sometimes we made them not very well. Take the case of the abolition of slavery, for example. We don’t always come out okay. And if people start realizing that we are on a threshold where the nation may be in serious decline, not only because of finance, though that’s a big contributor, but because of a health care system run amok that we really don’t have the courage to deal with, and because of a defense establishment that keeps demanding more and more money for fancier and fancier weapons, we could be in serious trouble as a nation. We could begin a decline. Nations do decline. We have a long history of humanity with lots of evidence. And if I leave people with a message, I would say: start organizing. Start joining an organization. Send $10 here and send $10 there. Don’t think you can sit back and vote every once in a while and it’s going to be enough. And vote for the right people. And stop listening to some of these crazy TV stations.

JAY: That’s a good way to–good place to stop. I would only add, the decline, it’s the rest of us are going to pay for the consequences of that kind of decline, because the people that are doing well right now, they even make money during the declines.

MADRICK: They do, and they have. And we’ve become a kind of elitist society. We actually have become a class society. And we can talk about that another time.

JAY: And we will. Thanks for joining us.

MADRICK: My pleasure.

JAY: Thank you for joining us on The Real News Network. And you can–I’ll hold Jeff’s book up again here. It’s The Age of Greed, and you can find it all over the place. I’m not going to plug any particular place, but I urge you to go find it. Thanks for joining us on The Real News Network.

End of Transcript

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Jeff Madrick is a regular contributor to The New York Review of Books, and a former economics columnist for The New York Times. He is editor of Challenge Magazine, visiting professor of humanities at The Cooper Union, and senior fellow at the Roosevelt Institute and the Schwartz Center for Economic Policy Analysis, The New School. His last book, The Case for Big Government (Princeton), was named one of two 2009 PEN Galbraith Non-Fiction Award Finalists. His new book is titled, Age of Greed, The Triumph of Finance and the Decline of America, 1970-Present and is published by Alfred A. Knopf.