Bill Moyers Journal

by Bill Moyers

  Okay. This is a wonderful poem. I read this poem for a friend of mine, when his father passed away, at the memorial service. We all know it.

  DO NOT GO GENTLE INTO THAT GOOD NIGHT

  Do not go gentle into that good night,

  Old age should burn and rave at close of day;

  Rage, rage against the dying of the light.

  Though wise men at their end know dark is right,

  Because their words had forked no lightning they

  Do not go gentle into that good night.

  Good men, the last wave by, crying how bright

  Their frail deeds might have danced in a green bay,

  Rage, rage against the dying of the light.

  Wild men who caught and sang the sun in flight,

  And learn, too late, they grieved it on its way,

  Do not go gentle into that good night.

  Grave men, near death, who see with blinding sight

  Blind eyes could blaze like meteors and be gay,

  Rage, rage against the dying of the light.

  And you, my father, there on the sad height,

  Curse, bless, me now with your fierce tears, I pray.

  Do not go gentle into that good night.

  Rage, rage against the dying of the light.

  WILLIAM GREIDER

  No one was less surprised by the “whoosh” that went out of the housing bubble, or the clatter of Wall Street as the economy collapsed, than the journalist William Greider. During forty years of covering politics and economics he has followed the money like a bloodhound, reporting on how our system of checks and balances, of public safeguards against the might and will of organized wealth, was being bought off. In chronicling the connections of wealth and power Greider has tried to warn us of the inevitable consequences when moneyed interests are allowed to dominate the government’s decision making. His Secrets of the Temple: How the Federal Reserve Runs the Country became a bestseller. So did Who Will Tell the People? The Betrayal of American Democracy and The Soul of Capitalism: Opening Paths to a Moral Economy.

  No Robespierre radical, he once said that “we do not do guillotines. But there are other less bloody rituals of humiliation, designed to reassure the populace that order is restored, the Republic cleansed.” Those “rituals”—the relief and financial reform measures of FDR’s first hundred days and the New Deal—prevailed in the years following the Great Depression, bringing a measure of stability to our financial system that was the basis of a widening prosperity for a growing middle class. But recent years saw those reforms weakened to the point of uselessness—in the face of chicanery and pressure from big business, they snapped like the corroded beams of a bridge. The Glass-Steagall Act of 1933, which erected a firewall between investment and consumer banks, was repealed, setting the stage for the subprime mortgage rampage, and Congress exempted national banks from state usury laws prohibiting exorbitant interest rates.

  During our conversation, which took place in July 2008, after the collapse of Bear Stearns but before the complete meltdown that fall, Greider called for new laws to restore stability. Unfortunately, the reforms passed by Congress and signed by President Obama, while bringing some relief to consumers, are not likely to curtail the complex hoodwinkery that got the financial industry into trouble in the first place. Greider also said that in a time of economic pain our government will need to ask for sacrifices. It has not; the bailouts of banks and other financial institutions have in some respects only further spurred the avarice of the banking business. When the day of reckoning arrived, the emperors of Wall Street—as shameless as they were soulless—threw themselves on the mercy of the taxpayers they had so royally fleeced. But then they picked themselves up, dusted themselves off, and resumed business as usual.

  —Bill Moyers

  Where were the gatekeepers? Where were the watchdogs? Why did it take the Fed so long to put an end to predatory practices?

  To make the story overly crude, Congress repealed the law against usury. It was done in 1980 by a Democratic Congress, a Democratic president. And of course, the Republicans all piled on and voted for it. That was the first stroke, only the first of many, in which they stripped away the regulatory laws from the financial system and from banking. That allowed the free market modernized gimmicks of one kind or another, all these things we’re now reading about, to flourish. The gatekeepers said to the banking industry and to the financial industry, “We don’t think federal control or regulation is good for you, so we’re therefore liberating you to do your own thing.”

  So why did they do that in 1980?

  Well, the driver then, and it was a powerful driver, was inflation. And through the ’70s, for lots of reasons, inflation, which tends to undermine the value of financial wealth and money, was out of control. The Federal Reserve had lost control of it, not entirely its fault. But that set up a political climate that said, “The government is not working. Let’s get the government out of the way.”

  And as framed by Ronald Reagan and other conservatives, that was very appealing. But I think it’s fair to say most Democrats yielded to it against whatever their original instincts were because of political necessity. And then the third dimension, maybe the most important, was that you had this very powerful industrial sector, that is, banking and finance, that had pushed for years to get out from under the regulatory controls: limits on interest rates, the law against usury and against the merger of commercial banks with investment banks, which had been prohibited in the New Deal because it caused the disaster of 1929. The point I keep trying to make to people is that history learned the hard way that you need prudential controls on industries like banking because they’re so central to everybody’s well-being.

  Left to their own devices, they go too far?

  They will use their power to their own advantage, and that’s what we’re witnessing now, a kind of recklessness that was set free by political retreat. Some people were sincere; some of them were just on the make. But here’s our great American tension. We want an economy that’s dynamic, that’s growing, puts more jobs out there for people to get, rising wages, all that good stuff. And at the same time, we want an economy that’s stable. And that means no inflation, steady as you go, and so forth and so on.

  This is the mortal condition. You’re not going to escape that tension. Government is a powerful intervener that tries, ought to try, to balance those two desires. For many years, the Federal Reserve served that role and tried to strike a balance.

  And then what happened?

  During the last generation, twenty-five, thirty years ago, the Federal Reserve, the central bank that regulates money and credit, tipped hard in one direction, crudely in favor of capital and against labor. It not only hardened the value of money by suppressing inflation, but it participated very aggressively in the role of stripping away regulatory brakes on the financial system and banks, declined to enforce many of its own regulatory powers that exist in law. Meanwhile, it sort of kept a foot on the brake about economic growth and full employment and all those good things that might help working people by encouraging rising wages.

  So at the same time the Fed was helping to keep wages down in order to keep inflation from escalating, its policies were nonetheless helping banks and investors to inflate the value of their assets beyond reality.

  That’s it. At one point, writing in The Nation, I somewhat playfully and wickedly referred to Alan Greenspan, the Federal Reserve chairman, as the “one-eyed chairman.” He can see inflation in wages and goods and services and consumer prices, even when it doesn’t exist, and he’ll put his foot down on the brake. But he doesn’t see the inflation in the financial system at all.

  Inflation in the financial system, the value of financial assets, most obviously stock—rose fantastically over twenty, twenty-five years; two, three times the growth in the real underlying economy. Something’s wrong there, right? How do these financial assets, which supposedly reflect the economy, suddenly become
worth three times more?

  With deregulation, with the help of the Fed, and with the success of the super bull market, everybody’s animal spirits in the financial system became more animal. They went for it, and they said, “If you’ll get this rule out of the way or you let us make this kind of weird little gimmicky paper innovation, we’ll do even better.”

  And you had this force rising up, driving things higher in the stock market, while in many sectors of the economy, if not everywhere, people were saying, “Gee, this doesn’t feel that good to us.” Particularly working people.

  You wrote about a fantasy that was sold, an illusion that led to the housing bubble. Whose interest was it to sell a fantasy?

  The merchants of financial paper, to put it bluntly. The illusion was that you could dismantle or disregard traditional rules of proper banking and stewardship and that would definitely allow prices, profits, everything to go still higher, but could still somehow dissolve the risk not just for the society but for themselves. One example of that was what you heard about in the subprime mortgage thing. Who is holding this mortgage that’s been lent to these people who we know are going to fail because their incomes just aren’t sufficient? Well, it’s kind of hard to say because this mortgage is designed as a securitized package of one thousand mortgages. And you sell it in the financial market to investors all over the world.

  And then they sell it to somebody else, and it moves around, literally. So what you’ve done with this innovation is you’ve distanced the lender from the borrower. Each party—the guy who sold the mortgage, the bank, then the next guy who buys the bond—takes his returns up front, sells it on, and you strip away the responsibility for that lending. And that’s a pretty good microcosm of what happened generally in the financial system.

  I think you can get lost in the mechanics of how all this works. And it’s sometimes pretty dizzying stuff. I think the bigger message is that what some of our old folks knew turns out still to be true. The process of lending, borrowing, investing, all of those things, requires a personal, handson knowledge of what you’re doing and a level of integrity that, to put it bluntly, does not exist at this time in our financial system.

  This is deeper than a politician rolling over for his campaign contributors, the guys who finance the Democratic Party or the Republican Party. They do that, too. But they were sold a fantasy, an illusion, which sounded wonderful, about how markets make better judgments than government and the public—and that liberating finance and business from prudential rules that society imposes upon them will produce a bigger, better economy and better returns for everyone.

  All those fantasies have been wiped out. And if you think about it, as we go through the hard months ahead, America’s going to have to take some pain, right? In one form or another. The government’s going to have to probably ask for some sacrifices.

  How do they do that when the American people have just seen the government rush in to bail out the biggest, most powerful institutions in the country—the financial investment houses and major banks? Restore the federal law against usury. That won’t have too many details to it at first, but it’ll be a general statement that the federal government is prohibiting the kind of outrageous predatory practices that have become general in this country, not just from banks but other financial firms. We’re going to develop government laws that prohibit and penalize these institutions when they get caught doing it. Wealthy people, whether they’re banks or individuals, ought not to be able to use their power, their wealth, to exploit people who don’t have great wealth. That’s not too complicated—and I’m not being utopian here. I’m just saying that you can reestablish legal, moral limits on the behavior of finance and their wealthy patrons. And if they don’t want to observe those rules, then they need not apply for emergency loans at the Federal Reserve or the Treasury Department.

  You have been writing for a long time that America’s moving toward a corporate state. Can we exercise the self-correcting faculty that prevents us from hitting the iceberg out there?

  The Federal Reserve, accompanied by the Treasury Department and the Congress, crossed a very dangerous line in their bailout. They essentially said, “We will put money on the table, taxpayers’ money on the table, for any financial institution or business that is too big to fail.” I regard that as profoundly dangerous for the American republic because once you cross that line and you have this special club that’s privileged, that has benefits from government that nobody else can get, where do you stop it?

  Both parties have been complicit in tipping the balance of power to capital, right?

  I’m afraid so. If you go back over the last twenty, twenty-five years, it was always portrayed as a cause of conservative Republicans, even right-wing Republicans. And that was, of course, true. But I think a majority of the Democrats were in collusion virtually every step of the way, and sometimes they led the way.

  So there’s not much hope that our political democracy can produce economic democracy?

  The short answer is, no. I’ve been in Washington as a citizen and resident for forty years, and I’m still occasionally shocked by its ignorance of the rest of the country. Some of that is willful, of course. But some of it is just that it’s a very nice life in Washington. You get used to certain protective qualities.

  We saw that recently with these political players who got good mortgages. How do they do that? Well, we know how they did it. And in any case, Washington doesn’t yet see the depth of the problem. If you ask me, “Well, who’s figured this out? Who understands, at least in general terms, where we are? The guys in Washington? The politicians and their governing policy advisors? Or the dimwitted public?” I would say the public. And I think there’s a lot of evidence for that.

  We have an opening in this crisis for a deep transformation in American politics. I don’t say it happens this year, next year, or whether it’s going to take a number of years. But we are in the shock of reality. People everywhere get it and see the blood in the streets. And you tell them how this worked and who did what to whom, and that’s a basis for a new politics.

  But it requires people—this is the hard part—to get out of their sort of passive resignation—“Well, we follow the Democrats” or “We follow the Republicans” or “We let this group or that group tell us how to think”—and engage among themselves in a much more serious role as citizens. And they have to be willing to punish the political powers, in smart ways or crude ways, however they can, first, to get a place in the debate. But second, to force the changing values of the system.

  This may be wishful thinking, but I think in the next year, two years, five years, you’re going to see both political parties floundering. We’ve told folks this lovely story for twenty, twenty-five years about the magic of the marketplace. Do we still want to kind of prop that up? That’s where they are now. They’re still trying to prop up the marketplace vision and make it work again. It’s over. I think events will demonstrate that. So if they’re not willing to change, then we need to change the politicians. And that’s all a bloody process and doesn’t happen quickly. But that’s why I’m optimistic.

  Bill Greider returned to the Journal in March 2009. He had published a new book, Come Home, America: The Rise and Fall (and Redeeming Promise) of Our Country, laying out the case for a fundamental restructuring of the economy and a return to values embodied in the social contract. “Just as World War II presented a chance to thoroughly reorder American life,” he wrote, “this generation of Americans has the opportunity—the obligation—to envision a country very different from the one we have known for more than half a century.”

  It was not to be. Secretary of the Treasury Timothy Geithner had just proposed expanding government authority to crack down on Wall Street’s reckless behavior in an effort to prevent a future financial meltdown. For a brief spell it seemed there was real hope for the kind of reform Greider described in his book. But he saw in Geithner’s proposals “a glass half full” an
d said only an aroused public could demand the change necessary. Citizens across the country were outraged that the bailout of the giant banks had left intact the very people whose excesses had brought on the financial debacle and whose profits and bonuses were again soaring. The public’s rage, Greider wrote, “has great potential for restoring a functioning democracy. Timely intervention by the people could save the country from some truly bad ideas now circulating in Washington and on Wall Street.”

  In fact, Tea Party rallies did reflect some of the rage citizens were feeling toward crony capitalism, but mostly they were up in arms over President Obama’s health care proposals and stimulus spending by the government. The financial regulation reforms eventually enacted offered some safeguards that Wall Street didn’t like, but protected the status of a handful of the elite banks considered “too big to fail,” meaning that they could repeat their excesses of the past, confident that taxpayers could again be sent the bill.

  What’s your take on these proposed reforms? What’s missing?

  I don’t want to be a cynic, but it feels more to me like trying to restore the old order that failed. And I mean by that these big megabanks that had been liberated by deregulation to do as they pleased and the other rules that were undermined. I think this president’s first priority seems to be to re-create those institutions, some of which are now insolvent, as healthy again. It’s quite scary, because unless they set about to make much more fundamental changes, I fear we will, sure enough, get this back again.

  Can ordinary citizens do anything about this? How do they break this grip that money has on the politicians?