Last week the Wall Street Journal published a bombshell of an Opinion article by former Federal Reserve official, Andrew Huszar. You may not have heard of it.
“I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.”
And what has been the result of this policy to aid Wall Street at the expense of Main Street? Glad you asked.
The New York Times has a heart breaking story detailing the effects of the economic downturn caused by the Wall Street crash, “It has been a painful slide. A five-year spell of unemployment has slowly scrubbed away nearly every vestige of Ms. Barrington-Ward’s middle-class life. She is a 53-year-old college graduate who worked steadily for three decades. She is now broke and homeless.”
However, the architects of the Wall Street bailout are doing just fine. For example, former Treasury Secretary, Timothy Geithner, has joined Warburg Pincus, a 47-year-old private equity firm that oversees $35 billion in assets.
As William K. Black, professor of economics and law at the University of Missouri-Kansas City, reminds us, “Mr. Geithner follows in the path of past Treasury secretaries who, after leaving government, have accepted lucrative Wall Street posts. After leaving the Clinton administration, Robert E. Rubin joined Citigroup. And John W. Snow, a Treasury secretary in the George W. Bush administration, joined the private equity firm Cerberus.”
But, he earned this high paying job, for a lifetime of public service. Hah, hah, hah.
In the same article, Professor Black explains why Little Timmy is so valuable to the owners. “Geithner is not a financial expert, but that was no bar to making him the head of the NY Fed or Treasury. The bankers and their political allies put the Geithners of the world in positions of increasing power not despite their weaknesses and failures but because of their willingness to aid the bankers even when doing so will betray their office.”
In an unguarded aside, a banker confided how he really felt about Little Timmy.
“For Washington to not demand anything when it saved us, even stuff we know is good for our long term good was one of the stupidest moves in modern times. I figured Obama understood that – it wasn’t a nuanced point – and that he didn’t act as we started to pull out of the abyss six months ago. But he didn’t, and I don’t know who to thank. I feel like I should go over and hug Tim. It’s a shame we can’t pay him, ‘cause that’s a guy who really earned a big time bonus.”
If you want to understand why we have the policies we do, this revolving door between finance and government is a good place to start. We aren’t a fully corrupt Third World country where bribes and payoff are openly tolerated. No, we do it differently in the USA. Here, if you’re a good little boy or girl and go along with the plan, when your tour of duty in government is through, you’ll be taken care of.
I had serious doubts about Obama before the election but once he named Little Timmy as his Treasury Secretary, I knew the fix was in. There might be hope but there damn sure wouldn’t be any change.