Billionaires and the 'Great Recession'
From Bob Feldman:
Should ‘Great Recession’ Burden Be Borne By U.S. Billionaires?
As more layoffs of U.S. working-class people and U.S. middle-class people are announced by the transnational corporations, the local, state, or federal government agencies and the tax-exempt “non-profit” sector private institutions of the United States in late 2008, it again looks like the burden of a U.S. economic crisis is being placed on the backs of U.S. working-class and middle-class people–instead of on the Super-Rich folks who most profited from the global and U.S. economy during the 1990s.
Yet in an authentically democratic society, the economic burden of the “Great Recession of 2008 and 2009″ would be borne by the upper-class people who are most able to afford to make some economic sacrifices in their living standards: the U.S. Billionaires and Multi-Millionaires whose daily business activities helped cause the current global economic crisis.
In written testimony submitted by the Executive Director of the Foundation for the Advancement of Monetary Education, Lawrence Parks, before the House Banking and Financial Services’ Subcommittee on Capital Markets, Securities and GSE’s on May 24, 2000, for example, the multi-millionaire “principals” of hedge funds and billionaire George Soros were mentioned as having played a role in contributing to the global economic crisis of the late 1990s and early 21st century. According to the Foundation for the Advancement of Monetary Education’s executive director’s May 2004 testimony:
For several years John Meriwether’s Long-Term Capital hedge fund garnered many hundreds of millions, perhaps more than a billion, dollars annually in ‘profit’ from currency and derivative trading. Consider the 3,000 other hedge funds along with major banks and brokerage firms doing the same thing. All told…I reckon these folks are pulling around $50 billion out of the markets each year. Citibank alone, according to its 1997 annual report, garnered $2 billion from this activity.
Since currency and derivative trading are zero-sum games, every dollar ‘won’ requires that a dollar was ‘lost.’ But who are the losers that not only sustain but continue to tolerate these enormous losses year after year…?
The answer is that the losers are all of us…Every time one of these fiat currencies cannot be defended, the workers, seniors and business owners of that country…suffer big time.
Indeed, as their currencies are devalued, workers’ savings and future payments, such as their pensions, denominated in those currencies lose purchasing power…Through no fault of their own, working people lose their jobs in addition to their savings. There have been press reports that, after a lifetime of working and saving, people in Indonesia are eating bark off the trees and boiling grass soup. While not a secret, it is astonishing to learn how sanguine the beneficiaries have become of their advantage over the rest of us. For example, famed financier George Soros in his…The Crisis of Global Capitalism plainly divulges: ‘The Bank of England was on the other side of my transactions and I was taking money out of the pockets of British taxpayers.’
To me, the results of this wealth transfer are inescapable. At the end of the day, a Malaysian worker has lost his life savings so that a Wall Street bond trader can buy a $1,000 bottle of wine in an expensive restaurant in East Hampton. And what benefit to society could possibly justify Long-Term Capital’s other hedge funds’ and particularly banks’ and brokerage firms’, ability to reap so much money from this activity?…
All the more outrageous is that ordinary taxpayers subsidize this gambling through the ‘lender-of-last-resort’ bailout facility at the Federal Reserve…Whenever their reckless over-leveraging goes against these firms, the rest of us are called upon to bail them out! Even more incredible is the size of the bailouts. In the last twenty years, bailouts around the world have consumed almost $600 billion of taxpayer money, with about a trillion yet to come in Japan alone. This represents wealth transfer from ordinary people to financial firms, plain and simple.
I would like to think that the principals of Long-Term Capital, George Soros, and the principals of other hedge funds and the proprietary trading departments of banks and brokerage houses are not evil..However, it is extremely unlikely that those who are on the receiving end of so much unearned wealth will cooperate in changing the system.
More imperative than the injustice of the wealth transfer is the fact that this malevolent system has brought us all to the precipice of a complete monetary collapse…The danger is that our jobs, savings and pensions may be wiped out as well…