Wall Street Paints a Target on Main Street’s Back
As if looting Main Street of its savings, pensions, and that precious thing called trust weren’t enough, now Wall Street paints a target on our backs.
The unease begins with the title of the lead story in The New York Times: “Banks bet Greece defaults on debt they helped hide.”
Uh-oh, my instinct for survival alerts me: Sounds like double-dealing, an invitation to retaliation. I hope American banks aren’t involved. I read on and my fears of double-dealing and American involvement are soon confirmed: Banks—including notably the American mega-bank Goldman Sachs—that for the past decade helped Greece mask its spiraling debt with creative refinancing, may now be pushing Greece “closer to the brink” by betting it will default. How? With credit default swaps, the instruments that “nearly toppled” AIG, the mega-insurance company. Why oh why, I wonder, aren’t these ruinous ‘instruments’ outlawed or at the least very tightly regulated? Straining to keep its prose grey, the Times writes that these swaps “effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire.” Effectively? By now my hair effectively catches fire. The story goes on, “If Greece reneges on its debts, traders who own these swaps stand to profit.”
But before I can ask myself again the question that never gets answered—How can Wall Streeters who do these things live with themselves?—a more urgent question intrudes:
Don’t these traders—these American traders—also stand to trigger retaliation on the United States…..?
If the stated motivation of those perpetrating September 11 was to strike at the heart of money Capitalism—New York City—as well as the symbolic seat of the superpower’s power, Washington, D.C., this new proof of Capitalism’s unquenchable lust for money only multiplies that motivation and even justifies it. Given the universally acknowledged truth that Wall Street started the financial crisis now upending the globe, America needs to demonstrate a sincere commitment to reform its financial institutions, especially if it presumes to lead in reforming the international system.
But actions like Goldman Sachs’ make it appear that, rather than reforming, Wall Street is doubling down on its usual double-dealing and, moreover, that Washington is helpless to stop it, or is unwilling to and thus complicit.
The question becomes: How patient can we expect the world to be with America’s continuing irresponsibility? When does patience jump the rails of protocol and give way to revenge and payback? Revenge and payback, moreover, targeted not only at New York but, like last Christmas’ attempted airplane bombing over Detroit, aimed at Main Street too?
For refreshing the bull’s eye on our backs, I could be ironic and say, “Thanks, banksters,” but why state the opposite of what I feel: unease?
What is especially unjust about this state is that, yet again, the responsible public is being set up by the irresponsible. Yet again, the responsible citizen—we who enjoy our rights but are also scrupulous about our responsibilities to community and nation—are treated with heedless contempt by the irresponsible, who by definition don’t consider community or nation, who, in Wall Street’s case, consider only profits—even to the point of imperiling us on Main Street.
Much is made of the public’s growing anger. I submit that, more than the Tea Partiers’ anger at all things government, the anger of the responsible public at being literally held hostage to fortune by Wall Street and left unprotected by government is the anger that counts. (I wrote earlier about my fear for the nation if the responsible citizen should finally be forced to ask, Why be responsible, why be ethical?)
What is to be done? Ben Bernanke, Fed chairman, has announced an investigation into Goldman Sachs’ role in Greece’s debt; if the bank is found at fault, he says, it would be “counter-productive.” (Well, yes, it would be.) Greece’s new prime minister, George Papandreou, in Washington recently, acknowledged his country’s fiscal laxness while calling for regulation of “unprincipled speculators.” It remains to be seen if the financial reform bills now brewing in Congress will close down Wall Street’s casino and return it to utilities status. This week’s bill introduced by Christopher Dodd, Senate Banking Committee chairman, holds the promise, among other substantive reforms, of imposing regulation on derivatives, including those ruinous credit-default swaps.
But: Of the national security dimension of Wall Street’s irresponsibility and its capacity to trigger retaliation, there’s been little discussion. Should not this be an agenda item for Congress’ foreign affairs and national security committees? Here’s the perfect opportunity for bipartisanship—Republicans, who constantly beat the drum about “keeping America safe,” working with Democrats for the common defense.
Meanwhile, our culture must reform, too. The cover of the current Vanity Fair trumpets “Greed is still good,” with actor Michael Douglas still smirking as the monstrous Gordon Gekko of the 1987 movie, Wall Street. Time to push back, America: “No, greed is not good.” A good-neighbor policy, it’s definitely not.
Finally, Wall Street itself, in its eternal acquisitive push, might acquire a sense of responsibility for the nation’s welfare. Instead of pondering superfluous things like branding—instrumental in the Greece deal was the Goldman Sachs-backed outfit, iTraxx SovX Western Europe Index, a handle too hip by half—it might ponder deeper things, like how its operations impact the ultimate, human bottom line.
For, to expand on Shakespeare’s famous soliloquy: “To be responsible or not be responsible, that is the question.” The question is not only the imperatives of equity and stability, but also—connecting finally all the dots between “over there” and Main Street—the imperative of national security.