William Greider: Wall Street's False Armistice

from The Nation:



Wall Street's False Armistice
Comment

By William Greider

June 10, 2009



The best names in Wall Street banking have announced victory. Their crisis is over, back to business as usual. So why isn't the Obama White House celebrating this good news? Because this may not be a lasting peace for the president and his lieutenants. They are left standing in the mudhole of financial ruin, still surrounded by the failing economy and gradually losing their control over events. The leading bankers worked out a rare deal for themselves that essentially says to the government in Washington "heads we win, tails you lose."

If Jamie Dimon of JPMorgan Chase and Lloyd Blankfein of Goldman Sachs turn out to be correct about the financial crisis, their institutions emerge unscathed and restored to their old dominance over the US economy. Minus a few old rivals who went bust.

If the bankers are wrong, Barack Obama will be the big loser--compelled to rescue them again with still more public money. The big dogs of banking know this, so does the president. That's why he didn't throw his hat in the air when ten of the largest banks were allowed to pay back the emergency aid they received from the feds, some $68 billion. The financiers could thus declare themselves free and clear of the heavy hand of government meddling. Another triumph of free-market capitalism. A brilliant success for Goldman Sachs socialism. Barack Obama is holding the bag for what happens next.

There is rough justice in his predicament. The essential bet Obama made as president was to insist on a "voluntary" approach to rescuing the financial system, picking up the main policies launched by his predecessor. An odd-lot chorus of left and right critics (myself included) urged Obama to step up and employ the full force of government's emergency powers to take charge of the troubled system and direct their behavior. Heal the wounded banks or liquidate them, use government financing to insure the lending and investing needed to finance economic recovery. Don't leave it to the bank executives who will naturally take care of themselves first, maybe the country later. ........(more)

The complete piece is at: http://www.thenation.com/doc/20090622/greider2