[Note: Here is Juan Cole's take (a blogger I have a great deal of respect for) on the Greg Palast story. DLH]
Is the US Government the Managing Committee of the Pirate Banks?
By Juan Cole
Aug 23 2013
Greg Palast at Vice exposes the way that Larry Summers, Tim Geithner and others in the Treasury Department conspired with JP Morgan and other pirate investment banks not only to destroy Glass-Steagall in the US but throughout the world, removing the difference between commercial banks. and investment banks. Basically, they used US financial muscle to leverage the world into letting banks play poker with your money and forcing regulators to treat toxic bad loans as ‘assets’.
It is not normal for moving money around, often in very shady and unsafe ways, to account for a fifth of the profits of the S&P companies,more than high tech, which actually makes something. Only a few decades ago, that sector was 10% of profits. In essence a small number of corrupt investment bankers (not all are) gained control of the Dept of the Treasury and then used it to ‘deregulate’ the whole world. In layman’s language, deregulating banks means firing the guards and unlocking the vaults.
Palast notes that Argentina, Greece and Spain are among the victims of this ploy, not to mention The millions of Americans who lost their mortgages in 2008 and after (if you see someone blame homeowners or consumers for 2008, know of a certainty that person is on the take.)
Deregulation fundamentalism in banking had already contributed to the 1997 meltdown in East Asia, where unregulated currency transfers were allowed and speculators just bounced billions around the world, leading to Thailand’s and then others’ vast currency depreciation. Malaysia refused the arbitrageurs and so weathered the storm well.
Palast explains why Obama never moved against Wall Street (we’re just about as vulnerable now as in 2008) and is even considering the sleazy Larry Summers to head the Federal Reserve.
One of the questions that Palast’s expose raises is the old one of how much autonomy the state really has in a society dominated by the business classes. The de Tocqueville tradition, revived in the 1980s by Theda Skocpol, emphasizes the government as an independent actor. The Marxist tradition famously sees the state as “the managing committee” of the rich.