Today Matt Taibbi asks us to consider this and other issues in examining the role former Treasury Secretary Henry Paulson played in creating and prolonging our current recession. As you might expect, Paulson’s record on such matters is appalling. Take, for example,
his non-intervention last summer when gas prices hit $4.50 a gallon thanks again to his old buddies at Goldman and Morgan Stanley, who juiced the commodities market with so much speculative cash that oil prices soared despite the fact that supply was up and demand was down all year? Do you remember that part? How about the way food prices soared thanks to the same commodities speculators? According to the World Food Program at the UN, about 100 million people joined the ranks of the hungry last year during the commodities spike.
Though the topics he addresses deserve attention on their own merit, Taibbi writes today in response to a recent piece on the Wall Street Journal’s website. Taibbi is responding to Evan Newmark’s Mean Street blog where Newmark asks that we reconsider the legacy of Paulson, and in doing so appropriately remember him as the national hero he is. No shit; dude really said that.
It's 20 years after he left office and we still bathe in a tub coated with a ring of filth left as a reminder of Reagan's disastrous economic policies. Twenty years is not a long time to shrug off the impacts of an ideology and accompanying policies so heavily weighted to favor the rich and powerful at the expense of the now endangered middle class, let alone those who live in poverty. If Reagan's policies are still so difficult to scrub clean, what can we reasonably hope for when it comes to ridding ourselves of the shit stains that were the W years?
Perhaps the most we can hope for in the immediate future is a more realistic and honest assessment of what happened over the past few years. After all, in order to have a plan for the future we must understand where we are today, and that requires an understanding of where we were in the past and what got us to this moment. But everyday we see evidence this even this doesn’t appear to be plausible.
Evan Newmark’s dillusional worldview merely serves as a representation of the battle to manipulate and control our collective memory, constructing it in ways that suit political purposes but do nothing to take responsibility for past errors and make things better going forward.
We all know that the Wall Street Journal is just like any other publication – it’s created by human beings, thus it inherently reflects a certain political and ideological perspective. But that’s OK. Usually the paper tilts to the right while remaining outside of the realm of get the fuck outta here with that overtly politically motivated, acritical, adolescent hero-worshipping bullshit trying to pass for journalism. But there are exceptions for every rule and Evan Newmark is one of those exceptions.
In his praise of Paulson, Newmark conveniently omits that he once worked at Goldman Sachs, where his boss was none other than Henry Paulson. Shocking, I know. Maybe it’s because he forgets to mention to this previous relationship that he also fails to mention that in 2004, while working for Goldman Sachs, Paulson successfully advocated for the abolition of capital requirements for the nation’s top five investment banks. This meant that these institutions no longer needed to have any actual money on hand to conduct their business. It worked out swell as Lehman Brothers and Bear Stearns saw their debt-to-equity ratios balloon to 32-1 and 33-1 respectively. You remember these companies, right? You have to remember because the policies that Paulson advocated for played a significant role in these supposedly indestructible institutions becoming nothing but memories. Newmark probably just forgot about this period of his life – a period that saw his personal wealth rise exponentially.
You can read more about the laundry list of offenses that Paulson and the policy changes he pushed for pull us further down the economic abyss by reading Taibbi’s piece. I’d like to just focus on the issue of how these issues impact the poor.
Speculators manipulate the price of oil and other commodities with a futures market (such as wheat, rice, soybeans, and precious metals) by pouring incredibly large sums of money into these futures markets. They are betting on the future prices of these commodities, but by dumping as much money as they do into these markets, they actually control and set the prices. Some might call this hedging your bets; some might call it cheating and immoral. Guess where I stand?
This is why last summer the price of gas at the pump rose to almost $5 a gallon while demand was low and supply was high. The price had nothing to do with supply or demand; it had to do with the behaviors of those who controlled the markets on which the commodity was traded. And this seems to be playing out again today in much the same way it did one year ago, as we’re seeing the price of gas once again rise, in a seemingly artificial manner.
Gas prices rising are bad enough, but when you compound that with the rise in food prices that usually follows, you see how these rich fucks’ personal game of monopoly impacts the lives of real people in dramatic ways.
Economic hardships impact those with less more than they do those with more. This sounds like common sense, but we construct a great deal of our economic policies in a manner that contradicts this. A uniform sales tax is but one example of a regressive means of imposing taxation in an equal yet inequitable manner. Paying a set percentage in taxes simply impacts those with less more than it does those with more. That is why this may be seen as an equally imposed tax that acts in an inequitable, and thus unjust, manner. It disproportionately impacts those who already have less. This is exactly the same as when oil and food prices rise.
People who are scraping to get by feel the slightest changes in gas and food prices in a way middle class (if there still is such a thing) and wealthy folks do not. The impacts of incremental price increases of essentials, when not matched with an increase in wages, is not merely a pain in the ass or even a hardship for poor folks. Such seemingly small changes can serve as the proverbial straw that breaks the camel’s back. And as the stress and strain increases, as it has for lower income folks in the US for decades, it’s much more likely that every straw you throw on will be that final one.
This is made all the more troubling when you consider that many of the hardships that folks feel are caused by the actions of others not simply seeking wealth, but more wealth. It is the actions of those who can never have enough that push the already marginalized further into debt and closer to financial ruin, despair, and even extremes like homelessness.
It’s sad that we need to regulate our economy. I wish I viewed the world in a way that made it possible for me to join the cause of limited government conservatives who insist that government is the problem and people need to simply be left alone. Their argument is that when left alone to make their own decisions, without interference from the government, most people do what’s right. But it’s hard to embrace this view when we trace the problems we have today to their sources and discover that people being left alone, to do what they think is best, often results in behaviors that are solely focused on and driven by individual wealth accumulation, regardless of how they negatively impact others.
Recognizing Henry Paulson as a national hero takes us one step closer to a becoming a culture that is completely devoid of any commitments to caring for others. Paulson’s professional life has been defined by a series of actions that do nothing more than promote the idea that there is no we, only me. His life is an instruction manual of steps powerful and affluent folks follow to take care of themselves and other privileged folks, and how these use these practices are then vaulted to the status of something akin to a guiding moral philosophy. Paulson’s staunch commitment to making it easier for those who already have more than they could possibly ever spend to accumulate even more, while simultaneously making it all the more difficult for those without enough to simply meet their needs is a symbol of everything wrong with unregulated capitalism. Come to think of it, maybe Paulson is a perfect candidate for national hero.
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