Wall Street Moves in for the Kill

[Jefferson23]

*Michael Hudson is a former Wall Street economist and now a Distinguished Research Professor at University of Missouri, Kansas City (UMKC), and president of the Institute for the Study of Long-Term Economic Trends (ISLET). He is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy. He can be reached via his website, [e-mail]


By MICHAEL HUDSON

February 17, 2010


Former Treasury Secretary Hank Paulson wrote an op-ed in The New York Times yesterday, February 16 outlining how to put the U.S. economy on rations. Not in those words, of course. Just the opposite: If the government hadn’t bailed out Wall Street’s bad loans, he claims, “unemployment could have exceeded the 25 per cent level of the Great Depression.” Without wealth at the top, there would be nothing to trickle down.

The reality, of course, is that bailing out casino capitalist speculators on the winning side of A.I.G.’s debt swaps and CDO derivatives didn’t save a single job. It certainly hasn’t lowered the economy’s debt overhead. But matters will soon improve, if Congress will dispel the present cloud of “uncertainty” as to whether any agency less friendly than the Federal Reserve might regulate the banks.

Paulson spelled out in step-by-step detail the strategy of “doing God’s work,” as his Goldman Sachs colleague Larry Blankfein sanctimoniously explained Adam Smith’s invisible hand. Now that pro-financial free-market doctrine is achieving the status of religion, I wonder whether this proposal violates the separation of church and state. Neoliberal economics may be a travesty of religion, but it is the closest thing to a Church that Americans have these days, replete with its Inquisition operating out of the universities of Chicago, Harvard and Columbia.

If the salvation is to give Wall Street a free hand, anathema is the proposed Consumer Financial Protection Agency intended to deter predatory behavior by mortgage lenders and credit-card issuers. The same day that Paulson’s op-ed appeared, the Financial Times published a report explaining that “Republicans say they are unconvinced that any regulator can even define systemic risk. … the whole concept is too vague for an immediate introduction of sweeping powers. …” Republican Senator Bob Corker from Tennessee was willing to join with the Democrats “to ensure ‘there is not some new roaming regulator out there … putting companies unbeknownst to them under its regime.”


http://www.counterpunch.org/

[inna]

1. Michael Hudson is one of the best ones. I'm recommending this before even

reading the article (marked for further reading).

[Jefferson23]

2. He wrote about the mess early on, I'll post his earlier work for anyone who may be interested.

Thanks for the response.



The Insanity of the $700 Billion Giveaway
September 25, 2008

http://www.counterpunch.org/hudson09252008.html

[Grand Taurean]

3. NPR had an "editorial" by Michael Frum, yes that Michael Frum

who stated that we have to accept a meager "welfare" state and entitlement cuts. In this same editorial, Frum defended the sham bank bailouts and opposed any re-regulation of the banks. :argh:

[Wilms]

4. Here's the permalink for the story.

Wall Street Moves in for the Kill
http://www.counterpunch.org/hudson02172010.html

[Vidar]

5. K&R.