Editore"s Note
Tilting at Windmills

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March 26, 2009

AHEAD OF THE CURVE.... If you watched the "Rachel Maddow Show" on MSNBC last night, you saw a great segment with Sen. Byron Dorgan (D-N.D.) about those who got deregulation terribly wrong -- and the small handful who saw the disastrous consequences coming a decade ago. The name of a certain political magazine came up twice.

Dorgan and Maddow covered quite a bit of ground, including a helpful discussion on the repeal of Glass-Steagall, but of particular interest was Dorgan's reference to a Washington Monthly cover story he wrote in 1994 on the dangers of derivatives.

The Monthly's online archives don't go back quite that far, but Dorgan's prescient piece is available online.

Obviously, Dorgan deserves a lot of credit for getting this exactly right, especially when nearly everyone in the political establishment was completely wrong about deregulation. We might also give credit to the estimable Charles Peters, who had the wherewithal to publish Dorgan's piece when the political winds were blowing in the other direction. (Charlie's nonprofit, Understanding Government, has an annual prize for what he calls "preventive journalism." He ought to give himself one.)

For more on Dorgan's foresight and the larger issue of getting the dangers of derivatives right, also note this fine post that CJR ran earlier this month.

Steve Benen 7:30 AM Permalink | Trackbacks | Comments (15)

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I found the interview insightful. More press on the minority who cautioned against deregulation 15 years ago will do well to forward the argument for regulation at this stage of our economic history.

Let's expand the dynamic and begin to bring back Rachel Carson's and E.F Schumacher's work of a past generation wherein they foresaw our world's environmental degradation. Such breadth of concern could only strengthen our efforts to get this generation to better understand severe climate change (you know the dreaded rhetorical device called global warming) and the need to develop sustainable energy sources.

Rachel Maddow is providing America, its citizens, and the friends of America a great and valiant service. My hat's off to her! -Kevo

Posted by: kevo on March 26, 2009 at 8:35 AM | PERMALINK

Forgive me for asking the nasty question about "preventive journalism": what did it actually, um.... prevent?

Posted by: anonymous on March 26, 2009 at 8:38 AM | PERMALINK

I think a lot more people saw this present calamity coming than just a random few. I'm no psychic or economist, but I predicted this housing bust in the spring of 2002. I remember listening to some shmuck on talk radio about investing in real estate and how it was a no-brainer. He argued that housing prices would only go up. I vividly remember yelling at that asshole through the radio and saying to myself this whole housing push would collapse.

It's called COMMON SENSE. Over the past 6 years we weren't creating wealth, we were creating debt.

Posted by: palinoscopy on March 26, 2009 at 9:32 AM | PERMALINK

Both interview and comments from this link are helpful in providing additional background.


Posted by: g on March 26, 2009 at 9:52 AM | PERMALINK

Government's primary role is the protection of its citizens. That is reason for armies.

But not all enemies are foreign, some are domestic. And so, internally, we have police, sheriffs & marshals to protect the citizens from thieves & brigands.

Financial service regulations protect the citizenry from those who would steal with a pen instead of a gun & are just as necessary as the martial forces that governments provide.

Further, the regulations serve as a form of institutional memory - because people forget.

Posted by: sidewinder on March 26, 2009 at 10:16 AM | PERMALINK

Proof -- never underestimate the wisdom of a North Dakotan! Actually, the state does have a history of caution, populism, and foresight when it comes to how large corporate financial interests fail to serve the common good.

Posted by: jpeckjr on March 26, 2009 at 10:38 AM | PERMALINK

Sort of like the people who are warning about the Obama profligacy and ballooning debt and are being ignored by Democrats because the Geitner Treasury can still leverage US debt. The Obama team--Masters of the Universe. These leveraged investments in green, health care, energy, illegal aliens, porculus, etc., will pay off handsomely in the future, as safe and secure as if backed by a credit default swap.

Posted by: Luther on March 26, 2009 at 10:39 AM | PERMALINK

I was alerted to the idea that G-S repeal might be a horrible one (and that the potential offsetting upside weren't worth the risks in any event) by an article in the New Republic, back when it was reliably liberal (to be fair, I haven't looked at a number of TNR in over a decade, so I shouldn't characterize its politics lately).

Posted by: jhm on March 26, 2009 at 11:39 AM | PERMALINK

"Sort of like the people who are warning about the Obama profligacy and ballooning debt and are being ignored by Democrats"

Well, sure, it would be just like that if those arguments you refer to made any sense at all given the current conditions. Since they don't, I'm afraid that your point is moot. Nice try, though.

Posted by: PaulB on March 26, 2009 at 11:53 AM | PERMALINK

A glass of water is good for you.

If you take away the glass the water has lots of freedom, but you can't do much with it.

Glass is an excellent material for this as it has transparency.

Posted by: alan on March 26, 2009 at 12:20 PM | PERMALINK

No comment on the video itself, because my script blocking filters only see it as a big clusterfuck of links to harvest538.adgardener.com. Nothing at all to nbc.com.

THAT sounds like a pile of scripts I want to run. Anything with "ad" or "harvest"... Hold me back!

I hate big media sites.

Posted by: Kreniigh on March 26, 2009 at 12:52 PM | PERMALINK

I saw that segment and was impressed. Sen. Byron Dorgan (D-N.D.) should go on an "I told you so" tour on all of the MSM so that the viewing public doesn't get sucked into that Republican "whocuddaknowed?" bull$hit.

That BS was wrong for 9/11 and it's wrong now. Lots of people saw it coming, but Reaganomics overruled all common sense and everything we learned in the Depression.

Posted by: Glen on March 26, 2009 at 3:32 PM | PERMALINK

Just did a quick wikipedia look-up of the Gramm-etc-etc(hereon, GLBAct)and it states that Dems agreed to go along with this act if Repubs agreed to the changes in the Community Reinvestment Act. Sooo, in 1999 Republicans pushed the GLB Act which really is a major cause of our current problems and Republicans in 2009 claim was all the fault of the CRA changes which only passed because Republicans wanted GLB so badly. It's absolutely Shakespearean, with Republicans taking the leading villain roles in all acts. BTW, the bill past overwhelmingly in both houses making a veto purely symbolic. It would have been a nice symbol but we would have had GLB even with it.

Posted by: digitusmedius on March 26, 2009 at 5:09 PM | PERMALINK

Sen Dorgan had an advantage when he made that prediction. Anyone from the midwest, which was particularly hard hit by the Depression and by the banks foreclosing on farms all over the place, would have been steeped in that history. It would have been part of their heritage since before they were weaned. It's sort of like someone from Georgia being able to tell you about the whole "Wah of Nawthan Aggression."

Given his background, Sen Dorgan had to be able to see this coming. It would have been the first thing he thought of whenever the words "Big Banks" came up. What bothers me is that there were a heck of a lot in more in Congress with the same background, and they fell in line. They need a severe talking to, maybe a visit to the woodshed. And Rubin needs to be put in timeout until he admits his responsibility and promises to change.

Posted by: Texas Aggie on March 26, 2009 at 5:59 PM | PERMALINK

Biggest difference between Dorgan and Southerners, of course, is that his history is based on facts and Southerners is based on revisionist fantasies (e.g., the war had nothing to do with slavery but "states rights"--one of which, of course, would be to allow slavery--and that the first act of violence of the Civil War, the South's attack on Ft. Sumter, was not an act of treason but a noble people's assertion of their right--not everyone's right, to be sure--to rise up in arms to free themselves from tyranny).

Posted by: digitusmedius on March 26, 2009 at 6:08 PM | PERMALINK



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