Patrick J. Buchanan July 10, 2012, 1:53 am Comes now news from across the pond that executives at one of the world`s most respected banks, Barclays, rigged Libor. Even the venerable Bank of England is apparently being investigated.
For sports fans, this is like fixing the Super Bowl or doping a horse in the Derby. But it is rather more serious. For the London Interbank Offered Rate is the benchmark interest rate for trillions in loans around the world.
Manipulate Libor a small fraction of a point, and lenders reap millions more in interest income on hundreds of billions in loans.
How many more such blows to their credibility can the financial elites sustain before people turn on the capitalist system itself?
Recall. Three years into the Great Depression, the Republican Party— America`s Party since Abraham Lincoln`s time—was crushed by FDR. Socialist Norman Thomas won 900,000 votes in 1932. Communist William Z. Foster won more than 100,000.
Charging “money-changers in the temple of our civilization” with moral culpability, FDR became the century`s most successful politician.
Demagogic, perhaps, but in 1936 FDR would carry every state but Maine and Vermont.
In recent decades, a series of shocks has fertilized the ground for a populist assault on global capitalism. In Europe, radical parties of the right and left are rising—to overthrow the establishment center.
Manifest incompetence is but one cause of the sinking confidence in our financial elite. In the Latin American debt crisis of the 1980s, our idiot- bankers had to be bailed out with Brady bonds. In 1995, one year after NAFTA passed, Mexico threatened to default. Goldman Sachs was bailed out of its huge Mexican exposure by a loyal alumnus, Treasury`s Robert Rubin, who dipped into the U.S. Exchange Stabilization Fund.
Mexico devalued and began dumping winter vegetables into the United States, wiping out Florida producers, as U.S. plants moved south to exploit the newly cheapened Mexican labor.
In the Asian debt crisis of the 1990s, Rubin and Alan Greenspan led the bailouts. Asia`s nations devalued and began exporting heavily to the United States to earn the dollars to pay back their loans.
Who paid for that bailout? U.S. workers who lost manufacturing jobs when cheap Asian goods poured into the U.S. market, forcing the closure of U.S. factories.
The Great Recession of 2008-2012, too, is the creation of a financial elite and political class who have largely escaped its consequences.
George W. Bush and Congress pushed banks to make home loans to individuals who were credit risks. Fannie Mae and Freddie Mac bought up the subprime mortgages and bundled them together into securities. Big banks traded them like gilt-edged bonds. When the whole house of paper collapsed in 2008, the banks screamed: “We`re too big to fail. If we go down, the country goes down.”
They were rescued. The Fed bought up the bad paper, tripled the money supply and lent at near zero interest to the banks. Profits soared.
But Middle America was not rescued. Middle America has gone through four years of deprivation without precedent since the 1930s.
But now something beyond the incompetence of the financial elite and the big banks may be putting capitalism in peril—an unmistakable odor of amorality, sleaziness and corruption.
With the “Robber Barons,” one could see a connection between the wealth of the Rockefellers, Harrimans, Carnegies and Henry Ford, and their contributions.
Railroads were tying America together. Oil was fueling industry. America was surpassing Britain in steel production. Ford was putting the nation on wheels. When J.P. Morgan took to the floor of the New York Stock Exchange in 1907 to issue a buy order, he stopped a panic.
There was perceived to be a connection between the wealth of these men and their achievements. They were helping make America the most awesome industrial nation known to man.
But as scholar William Quirk writes in his essay “Saving the Big Casino,” our big banks now seem to rise and fall on profits and losses from the trading of “derivatives,” “credit default swaps” and “exotic securities” that not one man in a thousand understands.
Fortunes are lost and made overnight. Names appear on the list of richest Americans no one has ever heard of. Cheating and corner-cutting are constantly being unearthed. Broker- and banker-gamblers in their 30s amass and flaunt nine-figure fortunes.
Were the rest of America doing well, this might not matter.
But America is not doing well. And Americans are coming to believe that a system where high-rollers rake in tens of millions playing Monopoly while workers who build things and make things never see a pay raise is rigged and wrong.
Few begrudge a Bill Gates his fortune. But where vast wealth accrues to people whose actions seem unrelated to any contribution to society or country, and to have come simply from rigging the system for their own benefit, that system will not endure.
Our casino capitalists are playing with fire.
Poster Comment:
Article was written exactly 3 years ago. Thought it worth a second read. The left wing globalist billionaires have funded the onslaught against Eisenhower's America. They've turned the economy into a roulette wheel that is rigged in their favor. Best way I know of to tax the liberals is to tax the left wing globalist billionaires.
