Trying To Understand The Financial Crisis
To The Editor:
Two centuries ago in 1802, Thomas Jefferson said, "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."
Maybe you are like me, struggling to understand how our great country has become so dangerously financially weakened and vulnerable. Much of the time, I feel like a gawker driving by a bad accident. There seems to be nothing I can do, except examine the wreckage.
But I am truly trying very hard to grasp why our leaders continue to bail out large, failing banks, the same ones guilty of causing so much harm to our country's economic well-being, essentially rewarding them for failing their shareholders and the American people. Not to mention the global markets, all of which have been negatively affected.
Well, Americans were told these banks are simply "too big to fail." Taken at face value, it sounds like a logical reason to float them huge "loans." But while the large banks use the money of future generations to pay out huge executive bonuses, right before our very eyes, to undeserving execs, they wrestle with the decision whether or not to extend loan opportunities to businesses and individuals in trouble today, which is precisely why the government used our tax money to bail them out in the first place. They argue such loans may not be "in the best interests of their shareholders." Unfortunately, the enormous loans had no conditions on them, which means this is all perfectly legal.
It's hard to turn one's attention away from this formidable level of greed that is reported on daily in the media because no one is going to jail for it. It seems like the scene of an unbelievably bad accident, the worst we've ever seen. Which authorities can we call upon to stop the bleeding? The closer you examine the current financial crisis, the worse it looks. But we must look and try to understand, and lobby our government to move in the right direction. I do not believe we can sit by and just hope that our government will do the right thing. So far, either those in power have made some unbelievably poor mistakes in judgment, or they are somehow involved with the banks at a personal level and stand to gain personally from the banks' bad faith behavior.
Last night, on Bill Moyers Journal, the evening news program on PBS, I caught an interview with MIT economist Simon Johnson (www.baselinescenario.com) about the state of our U.S. economy and the stimulus package before Congress. First, he said that he sees strong and frightening evidence that United States is becoming an oligarchy, or "a government run by the extremely powerful few" which, in our case, would be the large banks that the government will not allow to fail. In his career, he has observed similar trends in third world oligarchies and in his studies of the governments of ancient Greece. His second point was that the large banks must be allowed to fail in order to restore our economy and ultimately, our democracy.
This is not the first time someone has brought up the subject of America's demise. I think, to the big American corporate banks, it is just the fall of another great empire. Obviously they worship money over democracy and cannot be trusted to act in our country's best interest, in good faith. They have made that painfully, embarrassingly, clear. No one wants to believe that our country could fail and disappear, but that possibility can never be ruled out. It is just hard to think that our banking institutions may possibly be the worst terrorists we've ever seen.
If American citizens don't take it upon ourselves to understand what is happening to us and protect our own democracy, it is starting to look like those in power stand to become more powerful, with our money, and those of us standing on the sidelines may, unfortunately, "wake up homeless."
Sarah Schoen Duvall,