I don’t usually post twice in one day, but there is a story which requires our immediate attention (hat tip, Mish). This post’s title is riff on Arthur Fullerton’s Only poor people can be allowed to fail. His story is short & sweet. I believe it speaks for itself.
Reading Lawrence Summers in the Financial Times yesterday I came across this statement as his third principle of dealing with the Euro crisis:
…there must be a clear commitment that, whatever else happens, no big financial institution in any country will be allowed to fail. The most serious financial breakdowns – in Indonesia in 1997, Russia in 1998, and the US in 2008 – came when authorities allowed doubt over the basic functioning of the financial system. This responsibility should rest with the ECB, with the requisite political support.
And so we have a clear unambiguous statement of the principle of socialism for the rich and powerful, and capitalism, red in tooth and claw, for the poor. Notice that too big to fail has now gone global.
I felt the need to publish this immediately because Fullerton notes that coverage has been lacking.
Over the past 24 hours this has been sitting out there with no push back or comment from the media. Is it simply an accepted fact that governments around the world — including our own — will now maintain a system where no large financial institution — no matter how corrupt or incompetent — will be allowed to fail?
My regular readers surely remember George Carlin’s Great Big Club, the one you’re not in. The club’s members are the elites who have a large say in how the U.S. (and world) economy is run. They often come from the world of Big Finance. Usually they are former (and future) employees of the big Wall Street banks. There is no overt conspiracy to run the world. Instead, there is a loose but incredibly effective coalition of common interests. Washington politicians, at least the important ones, are often in their pocket.
Larry Summers carries water for those interests. He is their mouthpiece and back in 1999 under Clinton, he was their enforcer. There he is (far right) on the cover of Time Magazine in February, 1999 along with Bob Rubin and Alan Greenspan. And how was this 3-man committee to save the world going to accomplish this great feat? By deregulating derivative securities, repealing Glass-Steagall, etc.
When Barack Obama won the election in 2008, the meltdown of unregulated derivatives (like credit default swaps) had only recently brought the financial system, and the U.S. economy, to its knees. One of Obama’s first acts before he actually assumed the presidency was to appoint Larry Summers to be his chief economic adviser, and Tim Geithner to be his Treasury secretary. (See the video below.) Thus, the Change You Can Believe In was thrown out with the trash even before it had a chance to begin.
I have a small problem with Fullerton’s title. It is incomplete with respect to the true wishes of the financial elites. Perhaps it should read something like this—
Only poor people should be allowed to fail, and if they don’t fail, we should rip them off, just pound the shit out of them, until they do
When you watch this video, and you really should watch it, sit up and take notice at the 3:00 minute mark. You’ll see what I mean. Americans have been f&*ked over to a far greater extent than most of them will ever know.