If you're not angry yet, this may do the trick

April 03, 2009|By RON SMITH

It's hard to decide which part of the establishment to despise the most, the corporate or the political. I say it's fair to divide your disdain equally, since the political class and the corporate cutthroats are co-conspirators in the creation of the world's most powerful oligarchy, the one that has leeched mountains of money from the masses for the oligarchs' own hedonistic pursuits, sparking the financial forest fire now engulfing the world economy.

Lead us not into temptation, says the prayer. How tempting is the idea of being one of the "Masters of the Universe," as Tom Wolfe dubbed Wall Streeters in his novel Bonfire of the Vanities? Tempting enough that when Michael Lewis wrote of Wall Street's excesses in his masterpiece, Liar's Poker, he was bombarded with requests from young, bright people for advice on how to get into the game he had described in such unflattering terms.

In a piece for Portfolio.com a few months ago, Mr. Lewis proclaimed the end of Wall Street as we have known it. He said, "To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grown-ups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital - to decide who should get it and who should not. Believe me when I tell you that I hadn't the first clue."

He walked away from this temptation, richer but stunned at how the game was run. In the last decade or so, things really got out of hand. Here is just the most extreme proof of how the inmates in the financial asylum led us all to the sad situation the political honchos are contentiously contemplating at the G-20 meeting in London. The money wizards created instruments called credit swaps and derivatives and sold them to each other for fun and profit. By the end of 2008, these things - which Warren E. Buffett correctly identified as financial weapons of mass destruction - were valued at more than $530 trillion, 7 1/2 times the estimated gross world product last year. As you know the derivatives detonated and the destruction commenced.

In the meantime, our government and the governments of the other Western economic powers were occupied with enforcing their politically correct agendas and collecting their contributions from the financial industries, payments that guaranteed the pols would dance to the Wall Street tune.

If you're not angry yet, chances are you will be soon when you learn how the scam now works. The government keeps sending your money to the big banks, tens of billions of dollars that are supposed to "rescue" these institutions from the disaster caused by their ineptitude. There is little or no oversight of these special programs, and nobody knows whether they are working.

According to testimony before a Senate panel this week, the Government Accountability Office doesn't know. A special congressional oversight panel doesn't know. Even the fanatically pro-Obama New Yorker magazine worries about populist rage erupting when people learn that five big funds are to be designated to be buyers of "legacy securities," formerly known as toxic assets. There is a chance the plan will work for the funds and the billionaires who run them while failing to save the banks. Says Nicholas Lemann for The New Yorker, "As long as it works for the funds, some very, very rich people are going to get much richer, thanks to once-in-a-lifetime favorable terms provided by the federal government and unavailable to the rest of us."

Are you angry yet?

Ron Smith can be heard weekdays, 3 p.m. to 6 p.m., on 1090 WBAL-AM and WBAL.com. His column appears Fridays in The Baltimore Sun. His e-mail is rsmith@wbal.com.

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