It's going from obscene to disgusting. Each day reveals how we've traded away our sense of decency and the common good in exchange for pure, unadulterated greed.
Unemployment is a statistic. We hear it so often that, unless we are without work, it loses its meaning. Even when we learn that the U6 jobless rate hit 17.5 percent it doesn't really register. After all this isn't the 1930s. We have few bread lines or Hoovervilles. We're not lined up outside of banks praying we can get our savings. We've come a long way...or have we?
We learn today that unemployment still means hunger. The Department of Agriculture reports that 49 million Americans don't have enough food. That's up 13 million over the last year and is the highest number ever recorded since the survey began 14 years ago. Next time you hear people blame the crisis on poor people buying houses they couldn't afford, think about skipping meals because you don't have a job.Meanwhile, unemployment and hunger are rising because the very banks we bailed out are not lending money. As Ben Bernanke put it just yesterday:
"Banks' reluctance to lend will limit the ability of some businesses to expand and hire. Because smaller businesses account for a significant portion of net employment gains during recoveries, limited credit could hinder job growth."
And if that isn't enough, the TARP special inspector general reports that Tim Geithner completely botched the AIG negotiations, thereby showering billions of our dollars onto Goldman Sachs, JP Morgan Chase and other large banks. This one is a beauty.
If you recall, AIG was about to go under last fall and take down the global banking system. In response, the NY Fed, under Geithner, arranged for an $85 billion emergency loan. AIG got into trouble by insuring $450 billion dollars of toxic assets held by the largest banks in the worlds. Goldman Sachs alone was due $12.9 billion from AIG. But if AIG folded, Goldman Sachs and the other banks would have received pennies on the dollar, which in financial circles is called a "haircut." Geithner tried to get the big banks to take a voluntary haircut. Credit Suise was willing to take 98 cents on the dollar, which hardly seems like much of a compromise but at least showed some twinge of good faith negotiation. But not Goldman Sachs. No way. Goldman Sachs knew that Geithner was bluffing and didn't have the spine to really let AIG go into bankruptcy. Besides, "voluntary" and "Goldman Sachs" are two words that do not belong in the same sentence. As a result, Goldman Sachs did not have to visit the barber. Instead, we taxpayers got the haircut and the big banks got a "backdoor bailout."Here's how the New York Times put it:
"There have been suggestions that the Fed chose to negotiate weakly, Mr. Barofsky said, to give a "backdoor bailout" to A.I.G.'s banks. He said Mr. Geithner and the Fed's lawyers had denied this, but added that "irrespective of their stated intent," there was no doubt about the result: "Tens of billions of dollars of government money was funneled inexorably and directly to A.I.G.'s counterparties."
Now think about this as we head into the holiday season: The big banks that we bailed out (and that are not making loans, which is driving up the unemployment rate and hunger) are making record profits as a direct result of our bailouts, and are about to award themselves record bonuses--again! This what the chairman of Goldman Sachs calls "doing God's will." He really did say that.
In a just world, Congress and the President would be all over this. They would immediately pass a 90 percent windfall profits tax on the large banks that would go to feed the hungry right now. But we know that our leaders don't have the will or the guts to take on the Wall Street billionaires.
In my own fantasy Christmas pageant, Wall Street would become haunted by the specter of 49 million Americans, mostly kids, going without the food they need. And in that dream, if there is a shred of decency left on Wall Street, they would decide to do God's will by donating their bonus pool to feed the hungry.
But back in the real world, we know that Wall Street doesn't take haircuts even if the entire world economy is collapsing. They will continue to ignore the anguish of our own people until we force them to take notice.
Welcome to the Billionaire Bailout economy.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.
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