If Memory Swerves: The 1 Percent Laughs Last, as Wall Street Wins Again -- Thomas Frank
If Memory Swerves: The 1 Percent Laughs Last, as Wall Street Wins Again
Five years after wrecking our economy, the big banks are back. Here's why we need real government regulations
by Thomas Frank
One of the very few healthy effects of September 2008 was that it momentarily disrupted Washington’s consensus of permissible opinion. For years, correctness in the capital had been determined by how deftly a given idea could triangulate between the two parties. The more closely it approached the dead center of the political spectrum, the righter it was. Financial deregulation, as an agreed-upon tenet of both parties, was holy writ, something questioned only by cranks. The social beneficence of Wall Street was equally self-evident.
And then suddenly this modern-day scholasticism, so sensitive to the city’s subtle shades of orthodoxy, seemed as futile as phrenology. The Washington world was shaken to its very foundations as the events of September 2008 momentarily revealed that its pet ideas about Wall Street were nothing but an illusion projected by people whose main object was to stuff their pockets. Could it be that the cranks had been right all along, with their apocalyptic moaning about predatory lending and the repeal of Glass–Steagall?
Not to worry, reader. The walls soon stopped shaking, the planets snapped back into their ageless orbits, and the birds resumed their songs. During the Great Depression, the structure of society and the economy were permanently changed — but this time around, life for the well-situated quickly recovered its delights. Today, the banks are bigger than before, given the wave of emergency mergers and buyouts that followed the crisis. The march of inequality slowed briefly during the disaster, but has since continued its robust progress toward the social arrangements we remember so fondly from the days of the McKinley Administration. As the historian Robert McElvaine recently pointed out to me, a talented hedge-fund manager contrived to make $2 billion in 2012. If you do the math, figuring that he worked eight-hour days and took two weeks of vacation, you will discover that this fine fellow earned more than $1 million an hour.
Yes, the center holds — per the title of Jonathan Alter’s new book about the Obama Administration and the election of 2012. And what a triumph that is. The center came close to ruining us with decades of blind economic consensus, but now it has won an election, and in Washington that is all that matters.
There is one way, however, in which the changes brought about by 2008 have been permanent — one way in which the center will probably never hold again. We are a society that watched as those who obeyed the rules got played by Wall Street and Washington. And it has not only hardened us, made us more blasé about corruption; it has corrupted us. We beheld our powerlessness at the hands of the mighty, and we decided that the thing to do was to make Wall Street even stronger. We accepted our powerlessness and then magnified it. Today we all know that another bubble will soon inflate and burst, but we have chosen to live with that — five years from the last, five years to the next! Just grab your cash and hang on.
http://www.commondreams.org/view/2013/12/29-0
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