PrintDecember 3, 2010
Dems Fume over Wall Street Trillions
All of a sudden, liberal pundits are getting worked up about the influence of Wall Street. From the concern expressed, one would think that the contributions from Goldman Sachs have suddenly dried up now that the Republicans have taken over the House of Representatives. Here's William D. Cohan in The New York Times worrying about "The Power of Failure."
Despite the very dire consequences of the latest financial crisis that Wall Street perpetrated on the world, America cannot seem to shake its infatuation with Wall Street bankers and traders.We continue to shower them with riches, prestige and glory...The question is why? Why do we tolerate the questionable morality and behavior that too many on Wall Street get rewarded to exhibit?
Perhaps the purpose of the article is merely to buttress the narrative, copyrighted by Sgt. Schultz of Hogan's Heroes, that liberals know nothing -- nothing about Fannie and Freddie. But really, what does Cohan expect? This is not that hard. Big Government equals Big Debt, and when government wants to borrow, it needs Wall Street.
It's not just the feds that need money. The United States has a huge bestiary of governments, special-purpose districts, and state and local governments, and they all need to borrow money. Whom do you think they call?
Closer to the truth is Charles Gasparino and his Bought and Paid For. He tells Shawn Macomber that Wall Street is actually not that capitalist, but that "The people at the top have political beliefs that are strongly aligned with progressivism."
In any case, politicians -- founding father Alexander Hamilton excepted -- are clueless about money. Here's an example, from The Merchant Bankers by Joseph Wechsberg. It's a story about the French. You'd expect the country of John Law and the assignat to need serious advice from a good finance professional, and you would be right to.
After their victory in the Napoleonic Wars, the victors -- the Brits and the Prussians and their hangers-on -- demanded an indemnity of 700,000,000 francs from the defeated French. Newly installed Louis XVIII and his courtiers didn't have a clue what to do. But Paris investment banker Gabriel-Julien Ouvrard had an idea. Don't borrow from the rich in France with a compulsory loan, he said. Don't raise taxes. Float a bond issue in London and borrow the money from the victors. Everyone thought the guy was crazy. But he wasn't. British banker Barings and Amsterdam banker Hope & Co. were happy to syndicate a loan for the French in the city. The bond issue sold out, and the prices of French rentes went up. Everyone made lots of money, and best of all, Louis XVIII got himself and the French people out of a jam so they could go on to lose three wars to the Germans in less than a century.
When a politician wants money, whom does he turn to? He turns to a friendly investment banker, maybe the one who gave him a helpful investment tip a while back. He always has, and he always will.
Want to know why Wall Street honchos make so much more money that you do? It's because the money men are essential to the politicians, and you are not.
Also, the bankers take care of politicians in other ways. Guess who got to marry Chelsea Clinton: a son of politicians who had worked as a banker at Goldman Sachs and 3G Capital.
Here's an idea for all those liberals who want to reduce the influence of Wall Street. Cut back on government. Especially cut back on government debt. And that includes all the funny money that floats around quasi-government operations like Fannie and Freddie. If Wall Street weren't making all that easy money servicing the government, they would have to figure out how to service the private sector. They might even end up accidentally creating good jobs and reducing inequality.
From a conservative point of view, the flap over Wall Street and its travails is not all bad. We hate the bailouts, but we love the political opportunity. Without the financial meltdown, the nation might have swallowed ObamaCare. Without the financial meltdown, we could have put off the moment of truth with entitlements longer. Without the financial meltdown and the Obamanomic knee-jerk Keynesianism, the Tea Party movement might not have gone critical.
We've got the Wall Street we deserve. Decades of reckless government finance have created the monster that is too big to fail. All the liberal bluster will not change the real problem with meltdowns and bailouts, for it will be the little people, not Wall Street, who pay the price for the failures of the big boys.
Christopher Chantrill is a frequent contributor to American Thinker. See his usgovernmentspending.com and also usgovernmentdebt.us. At americanmanifesto.org he is blogging and writing An American Manifesto: Life After Liberalism.
