It is becoming increasingly apparent that our economic recovery measures are being designed and implemented exclusively from Wall Street's point of view. The needs of investment bankers, stock speculators, corporate bankers, hedge fund operators, and insurance moguls are taking total precedence over the needs of the American taxpayers and the American people, particularly including those who have led frugal, responsible lives and have much of their assets in savings. A day of reckoning will come in response to the printing of almost $3 trillion in greenbacks that have been given to these institutions, and the effects of this behavior will hit hardest on those whose holdings are primarily in American dollars -- the "prudent" savers among us -- and on working Americans whose salaries are not adjusted according to fluctuations in monetary rates. It will hit hardest on those with fixed incomes.
Summers and Geithner (and to a slightly lesser extent Bernanke) seem to be striving to return Wall Street to the "good old days" of business as usual c. 2005-2006. They seem intent to measure our economic performance by the Dow, and wish to restore the health of our megabanks and mega-brokerages. I do not believe this to be the solution.
They are not trying to design a new, stronger, more resilient financial system less vulnerable to bubble-and-bust. I do not believe that Summers and Geithner are the guys for that job, but that's the job we need to have done. Instead they are trying to rehabilitate the current system, and it is the current system that has failed. Geithner is a bean-counter and might make a better Treasurer than Secretary of the Treasury. Summers, through and through in his heart and in his mind, is an investment banker -- it is all he knows and all he sees. He completely identifies with their needs and aspirations and will do everything he can to make life good for his colleagues in that field. But it is regulating, and indeed governing, in the exclusive interests of these very people that have caused our ruin and that will prevent our recovery if we continue to do it.
The AIG debacle is just a big red flashing light -- important to deal with, but not the actual danger. We are absolutely right to be outraged by those bonuses but we are ignoring the greater lesson of them -- the "bonus system" of compensation itself that encourages exactly the kind of dangerous behavior that has given us the current disaster. Think: What are those bonuses granted for? Designing and marketing innovative financial instruments; hawking the greatest volume of high-risk investments to unsuspecting investors; selling the most snake-oil insurance policies; outsourcing jobs and entire industries to overseas firms; and in more industrial fields, closing manufacturing plants and laying off the most employees in the name of "productivity." Are these the things we really want to reward at the level of a winning lotto ticket (another recent abomination created with the purpose of shifting the tax burden onto the backs of the poor)?
And yes, our economic policies should move sharply to the left. No more Chicago school, neoliberal, or Friedmanite nonsense.
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