Who Rules: Politicians or Wall Street?
Want to get the voters riled up for the next election? Blame the banksters. The politicians had a grand old time blaming the greedy bankers for the Crash of 2008, and President Obama was still at it last week with his Five Year Anniversary Speech. You know the kind of thing: "tough new rules on big banks... new protections that cracked down on the worst practices of mortgage lenders and credit card companies." And not a word about the CRA. What is not to like?
Now Scott Rasmussen is all riled up that the politicians serve Wall Street over Main Street. They rescued the big banks in 2008 with TARP & Co. even though the average Main Street American hated it. The financial and political elite just ignored public opinion and saved Wall Street over Main Street. So Wall Street rules. And I suppose that the Republican Party is the party of Wall Street.
If that is so then why does Nancy Pelosi complain that "Democrats put forward 140 votes, while just 65 Republicans supported President Bush's approach" in the initial vote on TARP? Wouldn't that suggest that the Democrats are the party of Wall Street and the Republicans have to be dragged kicking and screaming into voting to bail out the banksters?
I get into all kinds of trouble with this, because I maintain that it's the political class that owns Wall Street and not the other way around. Why is that? Because the money that politicians borrow through Wall Street gives them power: power to buy votes, power to finance world wars, power to pay off supporters. Look at the most successful borrowing operation in world history.
Using the Bank of England and selling the National Debt to everyone from Dukes to naval lieutenants in nautical fiction, the Brits went from a National Debt of 10 percent of GDP to 250 percent of GDP in a little over a century. Why did they do this? Because the Jews on Lombard Street were importuning them like Shakespeare's Shylock? Because the bankers had the Whig grandees in a head-lock? Not at all.
Britain's grew its gigantic National Debt to finance a century-long war against the French, ending, as we all know, in the Battle of Waterloo. The battle wasn't won on the playing fields of Eton, by the way, it was won with credit, sound, solid credit that could sustain a National Debt at 250 percent of GDP.
We all know what happens when the ancien regime doesn't have good credit. You get inflation, riots, and bloody revolution.
Now you know why the political elite, to Scott Rasmussen's dismay, ignored public opinion and bailed out Wall Street in 2008. It was not because they "served" Wall Street, but because without Wall Street there is no credit, and without credit there is no government. As long as the government can sell its debt, and spend money on its wars and its supporters, then all is well, and the ruling class can pat the bankers on the head and indulge them in their country estates and their beautiful wives.
Of course, any government understands the importance of beating up on the bankers after a financial crisis. Big fines was the usual policy back in 18th century France, and today nothing has changed. But don't forget that all the Wall Streeters ever get are those estates in the Hamptons and the right to contribute at political fundraisers. It is the politicians that get to be president and win the world wars and spend the government into insolvency. The bankers are just the middle-men.
Last week Bubbles Ben Bernanke choked on his forward policy guidance about "tapering" the Fed's bond-buying program, and decided not to taper after all. Is the Fed "serving" Wall Street? Probably not. Most likely Bubbles Ben is worried about Main Street. So we have the delicious spectacle of left-liberal President Obama -- who really only cares about hosing money at the Democratic Party faithful -- reduced to hosing money at Wall Street in order to keep Main Street from collapsing. Now we learn that in the first four years of the Obama economy the rich have prospered and the median American has lost ground, with the young, minorities and single women hardest hit.
Nobody is proposing that the bankers are really choirboys. Here's a story about Goldman Sachs cashing in on the ethanol scam. You want a war on fossil fuels? The bankers will be right there at your elbow, like innkeeper Thénardier, with their "Reasonable charges / Plus some little extras on the side!"
But if you have a problem with the economy, get a clue. Blame the politicians, not the bankers.
Christopher Chantrill (mailto:email@example.com) 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. Get his Road to the Middle Class.