(Published at Counterpunch.com) Former Treasury Secretary Paul O’Neill recently described the freeze up of world credit markets as ten unmarked bottles of water and one is poisoned.
I disagree with the number of poisoned bottles.I’ve written at length how the American public is not getting the story, by half, from the mainstream media of the biggest bailout of Wall Street industries since the Great Depression. To the contrary, the news cycle is being massaged within an inch of its life.
Yesterday Fed Chief Ben Bernanke testified before Congress, saying that a recession is “possible”. “Better education and less reliance on oil” mumbled Bernanke, in the stagecraft that now passes for government.
The operation of the scenery from the wings and the flies, the hoists and pulleys wherein financial institutions are bailed out to the tens of billions, icons of industry hauled off and on tipping their hats like capuchins, toxic debt foisted off on taxpayers in the hundreds of billions: are we in the first, the second or third act?
No one knows, says Bernanke.
But we do know. In the past decade the wealth of the nation has been plundered and will not be recovered in the foreseeable future. When the Spanish finished with Inca gold, the Inca gold was finished. It didn’t matter that hundreds of ships, financed by speculators in Madrid, Balboa, and Barcelona, were wagering on more.
A much poorer United States, with its exhausted army of Walmart consumers, now faces the hungry classes of India, China and Southeast Asia. Where is the fresh meat for the wealth producers of Russia and the Mideast? In Akron or Shanghai? In Sacramento or Mumbai? It’s not in Fort Pierce.
The volume of real debts that that cannot be settled until someone assumes repayment in much higher than O’Neill’s one in ten. But this distinction, really, is quibbling.
The fact is that good faith and credit of the United States has been blasted; that elected officials have taken the bitter fruit of rampant greed and excess and shoved it into the pockets of US taxpayers.
That’s right: Uncle Sam is your ne’er do well relation who shows up unbidden with a broad smile and Chamber of Commerce handshake. The one who will steal a bit of silverware to remind you of his staying power, who would sell the clothes of your children’s back, or come up with gimmicks that just require just a little investment on your part.
The debt and toxic waste of a building and housing boom are wrecking the economy and the dollar. It is a real form of taxation without representation, and it just got worse.
Bottled up in committee for months, and countless dinners and drinks at DC waterholes, today’s news is that Congress will pass new legislation to allow homebuilders to count current losses against past profits-profits that stretch all the way into the heyday of the boom. It’s one of those Monopoly “Get out of jail free” cards you can’t believe apply in real life.
It’s also a form of quintuple taxation: first you bought the dream, then you paid the taxes on the dream. Now you are subsidizing-a third time-the purveyors who were egged on, relentlessly, by Wall Street financiers and lawyers taking down billions in fees and bonuses for structured finance, CDO’s, CMO’s, and derivatives on derivatives as the whole house of cards built to gargantuan size, spreading suburbs into ten thousand valleys, wetlands, and watersheds, now imposing the quintuple costs of law enforcement to bring in the fraud and courts swamped by the volume of illegal activities.
The only difference between the two dominant political parties in the United States, today, is the size of their bailouts.
But the true barometer of the nation’s health is widening income disparity.
According to IRS files analyzed by the Center on Budget and Policy Priorities (“New Data Show Income Concentration Rose Again in 2006”, March 27, 2008), “not since 1928, just before the Great Depression, has the top 1 percent held such a large share of the nation’s income.” Between 2005 and 2006, the average income (before taxes) of the top 1 percent of households increased by $73,000 (or 7 percent) after adjusting for inflation, while the average income of the bottom 90 percent of households increased by just $20 (or 0.1 percent.).
If you were a paying customer to this spectacle, you would want your money back. What part of the promise of democracy shields, protects and insulates economic and political elites, or, tolerates taxation without representation?
“In God we trust”, we better.