Posts Tagged ‘bankers’
Wall Street……………………….Henry Adams
Yes, it is certainly easy to be a Monday morning quarterback once the game is over. But the game is far from over for the Democrats and Obama. Brown’s victory in Massachusetts—won in part because Obama supporters sat out the election or actually voted for Brown because they were upset about Obama not being progressive enough on health care—is indeed the proverbial wake-up call. Obama now knows that his administration is going to have to take a more political turn. What does this mean? Harnessing the populism that propelled Brown and Obama into office. Of course those who supported them aren’t all the same populists, but there is an overlap.
People feel ripped off and they should. They have been ripped off by Wall Street and now they are worried that the government will rip them off with new health care legislation. That the former is true, and the latter is not, makes little difference to current politics. What should have happened, and what now must happen, is that Obama must harness the outrage against Wall Street into outrage about how the insurance companies have ripped people off and will continue to do so unless stopped. This doesn’t require that Obama become a flaming radical. But it does require that he worry less about what the big bad banking system will do to us if we don’t cater to its wishes.
American capitalism will not go down the tubes if we make prudent decisions about what banks can and can not invest in. It’s now clear, once again, that commercial banks that take deposits should not become investment houses. This was the law of the land for more than sixty years until Republican Senator Gramm, and Republican Representatives Leach and Bliley, helped change things in 1999 with the the Gramm-Leach-Bliley Act. While there are of course numerous reasons for why stocks are not worth any more today than they were back in 1999, it does seem that GLB’s legislation has not helped to protect us from bad times. As a matter of fact, it undoubtedly was a major factor in the banking crisis.
No doubt Obama was worried that if he didn’t cater to the banks the American economy would recover more slowly. But the political risk, and the risk to our economy in the future, is simply too great now not to harness the populist sentiment in the country. And you know Americans have had a long distrust of bankers. Writing at the turn of the twentieth-century about his reaction to bankers in the 1860′s, Henry Adams, grandson and great-grandson of presidents, said the following. (He speaks about himself in the third person.)
He [McCulloch] was a banker, and towards bankers Adams felt the narrow prejudice which the serf feels to his overseer; for he knew he must obey, and he knew that the helpless showed only their helplessness when they tempered obedience by mockery. The Education of Henry Adams, Chapter XVI
So enough jokes on late night TV and more teeth in actual measures to reign in the fat cats, especially since the Supreme Court has decided to make money the undeniable king of our future elections by unleashing corporate wealth to finance elections.
And Adams would have a warning for Obama as he proceeds.
The most troublesome task of a reform President was that of bringing the Senate back to decency. The Education of Henry Adams, Chapter XVII
(Print, Southern Labor Archives. Caption: History Repeats Itself–The Robber Barons of the Middle Ages, And The Robber Barons of To-Day)
Guess what? The fat cats on Wall Street not only think that they will be doing as well or better this year than last, they think that any attempt to limit their outrageous salaries and bonuses will stifle innovation. The following is from a Bloomberg.com story, “Bankers Expect Rising Bonus Pay to Break Records in Global Poll,” (Oct. 30, 2009).
Having shaken off the biggest economic decline since the 1930s, almost three in five traders, analysts and fund managers believe their 2009 bonuses will either increase or won’t change, according to a quarterly poll of Bloomberg customers. Only one in four see a decline. Asians are the most optimistic about pay and Americans and Europeans somewhat less so.
“The large banks are knocking the cover off the ball,” said Daniel Alpert, managing director of New York-based investment bank Westwood Capital LLC. The industry is “making money, though with government help.”
Worldwide, a majority of market professionals in the survey also turn thumbs down on government attempts to limit compensation, with 51 percent saying restrictions will stifle useful innovation. Only about 38 percent think pay limits will control excessive risk-taking.
In the U.S., where President Barack Obama has chided Wall Street for being “motivated only by the appetite for quick kills and bloated bonuses,” 65 percent say the restrictions will damp innovation.
So, we are supposed to believe that if “market professionals” lose some of their bonuses, it will decrease their capacity and motivation to think about new ways to make money. This claim is as lame as it is self-serving. You would think that some loss would only drive them to new heights of creativity, given their alleged professionalism. Yet they keep managing to get away with offering ever weaker rationalizations for why they need ever increasing salaries and bonuses. Laughing all the way to the bank(s). It seems that we have our own version of the Robber Barons. They may oppose tariffs, but they have the equivalent of monopolies in many areas. They work for institutions that are, after all, too big to fail. Yet these “professionals” should remember that Americans have a limited tolerance for aristocrats, and they are beginning to skate on the thin ice of class: they are becoming an entrenched moneyed aristocracy.
If you question my assumption about Americans’ limited tolerance for self-inflated moneyed folks, I ask you to take the Gilligan’s Island test. Which character or characters on Gilligan’s Island do you least trust: Gilligan, the skipper, the millionaire and his wife, the movie star, the professor or Mary Ann? (Hint: notice that there is only one character not looking at you.)
1934 movie poster, United Artists
For reasons that you might easily be able to infer from our present collective financial woes, I recently had an urge to read (and listen to) a book that I have never read, The Count of Monte Cristo. My more philosophical side says, avoid revenge. No good will come of it. My gut says, go, go, go.
Here is a short passage you might enjoy. The Count is speaking to the banker Danglars, one of the guys who “done him wrong,” but is unaware of the Count’s actual identity.
“But what is the matter with you? You look careworn; really, you alarm me; for a capitalist to be sad, like the appearance of a comet, presages some misfortune to the world.” The Count of Monte Cristo, Modern Library Edition, 2002, p. 887.