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March 1, 2013 |
The President’s “sequester” offer slashes non-defense spending by $830 billion over the next ten years. That happens to be
the precise amount we’re implicitly giving Wall Street’s biggest banks over the same time period.
We’re
collecting nothing from the big banks in return for our generosity.
Instead we’re demanding sacrifice from the elderly, the disabled, the
poor, the young, the middle class – pretty much everybody, in fact, who
isn’t “too big to fail.”
That’s injustice on a medieval scale,
served up with a medieval caste-privilege flavor. The only difference is
that nowadays injustices are presented with spreadsheets and
PowerPoints, rather than with scrolls and trumpets and kingly
proclamations.
And remember: The White House represents the
liberal side of these negotiations.
The Grandees
The $83 billion ‘subsidy’ for America’s ten biggest banks first appeared in an
editorial from
Bloomberg News –
which, as the creation of New York’s billionaire mayor Michael
Bloomberg, is hardly a lefty outfit. That editorial drew upon sound
economic analyses to estimate the value of the US government’s implicit
promise to bail these banks out.
Then it showed that, without that advantage, these banks would not be making a profit at all.
That
means that all of those banks’ CEOs, men (they’re all men) who preen
and strut before the cameras and lecture Washington on its profligacy,
would not only have lost their jobs and fortunes in 2008 because of
their incompetence –
they would probably lose their jobs again today.
Tell
that to Jamie Dimon of JPMorgan Chase, or Lloyd Blankfein of Goldman
Sachs, both of whom have told us it’s imperative that we cut social
programs for the elderly and disabled to “save our economy.” The elderly
and disabled have paid for those programs – just as they paid to rescue
Jamie Dimon and Lloyd Blankfein, and just as they implicitly continue
to pay for that rescue today.
Dimon, Blankfein and their peers are like the
grandees of
imperial Spain and Portugal. They’ve been given great wealth and great
power over others, not through native ability but by the largesse of the
Throne.
Lords of Disorder
Just yesterday, in a rare burst of candor, Dimon said this to investors on a quarterly earnings
call: “This bank is anti-fragile, we actually benefit from downturns.”
It’s
true, of course. Other corporations – in fact, everybody else – has to
survive or fail in real-world conditions. But Dimon and his peers are
wrapped in a protective force field which was created by the people, of
the people, and for … well, for Dimon and his peers.
The term
“antifragile” was coined by maverick financier and analyst Nassim Taleb,
whose book of the same name is subtitled “Things That Gain From
Disorder.” That’s a good description of JPMorgan Chase and the nation’s
other megabanks.
Arbitraging Failure
Dimon’s comment was another way of saying that his bank, and everything it represents, is
The Shock Doctrine made
manifest. The nation’s megabanks are arbitraging their own failures,
and the economic crises that flow from those failures.
These
institutions are designed to prey off economic misery. They suppress
genuine market forces in order to thrive, and they couldn’t do it
without our ongoing help. The Treasury Department and the Federal
Reserve are making it happen.
We who have made these banks “antifragile” have crowned their leaders our Lords of Disorder.
Once Dimon told reporters that
he explained to his seven-year-old daughter what a financial crisis is –
“something that happens … every five to seven years,” which “we need to
do a better job” managing.
Thanks to fat political contributions,
Dimon manages them well. So do his peers. Misery is the business model.
And by Dimon’s reckoning another shock’s coming any day now.
Money For Nothing
Bloomberg’s
use of the word ‘subsidy’ in this instance can be slightly misleading.
Public institutions don’t issue $83 billion in checks to Wall Street’s
biggest banks every year. But they didn’t let them fail as they should
have – through an orderly liquidation – after they created the crisis of
2008 through fraud and chicanery. Instead it allowed them to prosper
from it, creating that $83 billion implicit guarantee.
As we
detailed in
2011, the TARP program didn’t “make money,” either. Banks received a
free and easy trillion-plus dollars from our public institution, on
terms that amounted to a gift worth tens of billions, and possibly
hundreds of billions.
That gift prevented them from failing. In
private enterprise, this kind of rescue is only given in return for part
ownership or other financial concessions. But our government asked for
nothing of the kind.
Unpaid Debts
Breaking up the big banks would have protected the public from more harm at their hands. That didn’t happen.
Government
institutions could have imposed a financial transaction tax, whose
revenue could be used to repair the harm the banks caused while at the
same time discouraging runaway gambling. They still could.
They
could have imposed fees on the largest banks to offset the $83 billion
per year advantage we’ve given them. They still could.
But they haven’t. This one-sided giveaway is the equivalent of an $83 billion gift for Wall Street each and every year.
Cut and Paste
$83
billion per year: Our current budget debate is framed in ten-year
cycles, which means that’s $830 billion in Sequester Speak. You’d think
our deficit-obsessed capital would be trying to collect that very
reasonable amount from Wall Street. Instead the White House is
proposing $130
billion in Social Security cuts, $400 in Medicare reductions, $200
billion in “non-health mandatory savings,” and $100 billion in
non-defense discretionary cuts.
That adds up to exactly $830 billion.
No
doubt there is genuine waste that could be cut. But $830 billion, or
some portion of it, could be used to grow our economy and brings tens of
millions of Americans out of the ongoing recession that is their daily
reality, even as the Lords of Disorder continue to prosper. It could be
used for educating our young people and helping them find work, for
reducing the escalating number of people in poverty, for addressing our
crumbling infrastructure, for giving people decent jobs.
It’s going to Wall Street instead.
Trillion-Dollar Tribute
The right word for that is
tribute. As
in, “a payment by one ruler or nation to another in acknowledgment of
submission …” or “an excessive tax, rental, or tariff imposed by a
government, sovereign, lord, or landlord … an exorbitant charge levied
by a person or group having the power of coercion.”
(Courtesy
Merriam-Webster)
In
this case the tribute is made possible, not by military occupation, but
by the hijacking of our political process by the corrupting force of
corporate contributions.
The fruits of that victory are rich: Bank
profits are at near-record highs. Most of the country is still
struggling to dig out from the wreckage they created but, as Demos’
Policy Shop puts it, “for the banks it’s 2006 all over again.”
On Bended Knee
“Millions for defense,” they said in John Adams’ day, “but not one cent for tribute.”
Today
we’re paying for both. That doesn’t leave much for the elderly, the
disabled, the impoverished, the children, or anybody else who doesn’t
“benefit from disorder.” Nobody’s fighting for them in this budget battle.
That
leaves the public with a clear choice: Demand solutions that are more
just and democratic – or submit willingly to the Lords of Disorder.
Richard Eskow is a writer, a
senior fellow with the Campaign for America's Future, and the host of a
weekly radio show, "The Breakdown."
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