There must be people on Wall Street who understand the magnitude of the financial sector’s screwups, and therefore also understand the profound popular anger about bailouts and seven- or eight-figure compensation packages. Right? But if they do exist, we have yet to hear them speak up. On the other hand, it’s no trouble at all to find savants and functionaries of finance who are mad at hell at the suggestion that their bubble-bred paychecks and lifestyles will have to be downsized. Their whining, imperious voices are featured this week in an entertaining New York magazine feature titled “The Wail of the 1%.”
“‘No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?’ e-mails an irate Citigroup executive to a colleague.
“‘I’m not giving to charity this year!’ one hedge-fund analyst shouts into the phone, when I ask about Obama’s planned tax increases. “When people ask me for money, I tell them, If you want me to give you money, send a letter to my senator asking for my taxes to be lowered. I feel so much less generous right now. If I have to adopt 20 poor families, I want a thank-you note and an update on their lives. At least Sally Struthers gives you an update.”
If you ever doubted that Wall Street counts itself another country, just linger a while over that last sentiment–its pitch-perfect contempt, yes, but also its conviction that the plight of America’s un-rich could hardly be more remote or trivial. Now of course the bailout culture offers proof, in the form of several trillion dollars’ worth of lending, spending, and guarantees ultimately underwritten by taxpayers, that it’s actually the poor families who have been dragooned into propping up the rich ones. But then longtime beneficiaries of privilege rarely distinguish themselves through their sense of perspective.
Never mind the calls for secession from demagogues and fringe political elements; the most dangerous secessionists among us are the economic secessionists who see no connection between their wealth and self-interest on one side and the fate of their country on the other.
By way of postscript to the New York story, a couple of notes on the good works these aggrieved titans of financial engineering have wrought. First, Paul Krugman notes the utterly perverse impact of hedge positions and credit default bets on banks’ first quarter earnings statements: “Citigroup is profitable because investors think it’s failing, while Morgan Stanley is losing money because investors think it will survive. I am not making this up.”
Second, as Dean Baker writes at his American Prospect blog, “The NYT alluded to the AIG bailout in the context of the GM negotiations without giving readers the full context. Representative Thaddeus McCotter, a Republican from Michigan, complained that it would be outrageous if the government were to honor credit default swaps (CDS) issued against GM bonds for creditors who are refusing to accept a deal for a write-down on their GM debt.” Yet that’s exactly what happened. Just obscene.