Antecedents to the Financial Meltdown

Bernard Lown, MD

The irony would be delicious if only the victims were other than multitudes of innocent bystanders. The surge in Iraq was meant to tamp down violence and reduce American casualties before Republicans faced a potentially disastrous national election. But unexpectedly a new, even more destabilizing home front has been opened. Nothing is as likely to roil the masses as a loss of jobs, the foreclosure of homes, skyrocketing food prices, unaffordable fuel and heating oil, bankrupting medical costs, and a loss of equity in dealing with mountains of personal debt.

The Bush-Cheney gang may be muttering “et tu, Brute.” After all, the financial crisis is the handiwork of their staunchest allies. The attack on Wall Street’s financial institutions was an inside job. The bankers, the hedge fund managers, the CEOs of financial houses, were recipients of inordinate largesse from the Bush White House. This very administration shed every vestige of regulation and oversight. It enabled a massive transfer of wealth to the upper 1 percent of the population through the sale of subprime mortgages and fraudulent derivatives. Such an orgy of whoopee, greed, and corruption has not been witnessed since the Gilded Age.

Instead of subsidizing the victims, Congress hastened to bailout the very perpetrators of the financial debacle. The mammoth sum of $700 billion was entrusted to the secretary of the treasury, Henry Paulson, though he had been one of the very architects of the financial crisis. Paulson is now anointed as some sort of economic czar to extricate Wall Street from the mire of its own misdeeds. Essentially, the large bailout is an enormous shift of wealth upward. It is to be disbursed by one of Wall Street’s leading speculators to his cronies, while Congress is assuaged with a promise that a few crumbs will trickle down to Main Street.

Totally unnoticed last week was another huge subsidy to the corporate sector. Congress overwhelmingly voted to appropriate $612 billion for the Pentagon’s 2009 budget. The media, though rarely ignoring any triviality, failed to comment on this prodigious sum or note the absence of congressional debate. No editorial of the opinionated punditry inveighed against the lopsided vote, wherein 90 percent of representatives supported the military appropriation.

The large sum provided by Congress is only a fraction what is spent for the military. Much of the budget is hidden. For example, the war in Iraq and Afghanistan has separate, episodic appropriations: Nuclear programs are funded through the Energy Department; the 250,000 victims of posttraumatic stress disorder among the returning military are within the purview of the Veterans Administration; about $100 billion is doled out to 16 spy agencies; other funds for various covert and overt military operations are scattered throughout Washington agencies and government departments. The total military budget is unknown and probably exceeds $1 trillion annually. It is one of the bedrock subsidies of corporate America.

The prodigious investment in the military incurs an astronomical national debt, borrowed largely from abroad. As a result, vital national programs are underfunded, ranging from education of our youth to sustaining a modern industrial infrastructure and to gaining energy independence. These warped economic priorities explain the sad fact that American youngsters are at the bottom rung in science and math among industrialized countries. Starving the public sector undermines American competitiveness in the global market.

The military, which now husbands 761 foreign bases in 150 countries, reflects America’s imperial outreach. The cost is ultimately bankrupting. The diversion of funds to the military accounts for a fractured educational system, for overcrowded prisons, for a collapsing infrastructure, and for unsustainable debt. Paradoxically, the cost of maintaining an empire weakens the economy and America’s global leadership essential for sustaining that empire. Though the subject is largely taboo among the punditocracy, the ugly truth is that the $25 trillion spent on the military since the onset of the Cold War is an important factor in the present economic meltdown*

*See Prescription for Survival: A Doctor’s Journey to End Nuclear Madness –Bernard Lown Publisher Berrett Koehler, San Francisco, 2008.

3 responses to “Antecedents to the Financial Meltdown

  1. Dr. Lown:

    Thank you for writing this article. I most certainly agree that priorities need to be restructured in order to ameliorate the current economic crisis.

    I have a request for you that is largely off topic. I am having difficulty recalling the individual who presented the defibrillator in the Soviet Union, I believe during the Cold War, and was met with resistance to the idea of accepting device there. However, when an audience member coincidentally suffered a myocardial infarction, the very device that the audience criticized saved this person’s life. Do you have any details regarding who the presenting doctor may have been and if, in fact, this occurred during the Cold War?

    Thank you

  2. Bernard Lown has again belled the cat – the melt down is not only a creation of greed and mismanagement and favoring the elite – it is a result of the inexorable advance of a war machine that is insatiable, perhaps even unstoppable. somehow the public has come to believe that the US militarism is designed to advance freedom and equity while the reality proves that the US is the largest terrorist organisation in the world, reeking havoc globally and suppressing efforts to bring peace and health to all. Until the war machine, long disguised in benign rhetoric as a “defense department” is dismantled, the US will be feared and condemned as the major impediment to peace on earth. Hopefully, President Obama will recognise the great opportunity to reverse this sad history (read Howard Zinn’s Peoples History)and assume genuine moral leadership in the world.

  3. vicki generelly fnp

    I am in practice with my husband. We left a large hospital owned group so we could get toknow our patients. I often spend 45 minutes with each patient, getting updated on their families, their fears, their suffering. Iknow them, they know me. It’s this sharing that allows them to relax, and make the decision to heal.

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