The Pantheon of Capital
A Links entry from Tuesday, September 23, 2008The Pantheon of Capital
Premediation:
So where does the agency of the market to prompt the federal government to hand over nearly $1 trillion to bail out Wall Street come from? This agency, I would argue, in some sense comes from, participates in, the agency of premediation. The tone of this mediation is urgency. We are to be on the alert, to be concerned, and ultimately to be scared. The agents that we should fear are called “the market” or “Wall Street” or “the Dow.” “The market will not be happy if too many limitations are put on this bailout.” “Wall Street is worried that unless the Fed acts, more turbulence lies ahead.” “The Dow is demonstrating its concern about the terms of the bailout.” Not unlike the pantheon of Greco-Roman gods, these powerful creatures need to be feared and respected and pacified. The mediasphere is filled with the priests and votaries of these gods, warning the public of the danger that could come if they are angered or their will is flaunted.
…But the gods of Wall Street are in turmoil and they are still at the present moment more powerful than the collective voices of Main Street. Only when the premediation of Main Street’s agency begins to compete with the premediation of Wall Street’s agency will it be possible to imagine an economic future in which the US government acts to bail out the overwhelming majority of the American public who are threatened by this financial crisis, not the minority of those whose investments and livelihoods depend upon the financial markets.
Jason
Why do you act as if the survival of Wall Street firms is only the business of big investment bankers? Every single American is affected by financial markets.
Bryan Klausmeyer
Jason, if I “acted” as if the survival of Wall Street was only the business of big investment bankers, I wouldn’t bother posting about it on the Howler, because it wouldn’t even be an issue of my concern. No, what’s happening on Wall Street “affects” everyone, but to be affected, as I’m sure you know, does NOT mean that every single American has the SAME INTEREST as Wall Street.
There is such a thing in this crazy world as “class interest”: the bailout is in the interest of the financial elite class, and fighting against the bailout is in the interest of ordinary Americans. Why is this? Because the bailout comes to the aid of CEOs and not the janitors employed by their companies. Money, supplied by “ordinary Americans,” should go towards benefiting them — helping to pay for mortgages, lessening their share of the financial burden.
I’m all for the spirit of debate here, but I think it’s tired and boring to reply to apologias for financial capital. I’m also for criticism, but not when it simply repeats talking point doxa.
Jason
What about money supplied by “financial elites” paying taxes? They share disproportionately more of the tax burden. Should money, supplied by “elite Americans” go to help the elites, or are you opposed to that?
As far as the regular Americans, the janitors so to speak, it actually is in their interest to have a functional stock market. I suppose the janitor would be better assisted by a check directly to himself and not the company itself. However, I don’t think the janitorial sector of the economy is in trouble. The bailout is designed to fix the affected sector, and that’s so called elites on Wall Street.
I’m not apologizing for the financial sector. I think the bailout is bullshit, but not for some equally bullshit reason of class warfare. If America has a dysfunctional financial sector, then it’s going to have a poor allocation of capital. It’s awfully difficult to estimate the importance of capital accumulation and allocation. It seems to me like you’re opposed to fixing Wall Street period, simply because rich people work there. Oppose the bailout because it’s the incorrect cure for the financial crisis, but not because it’s an attempt to fix the financial sector.
For the record, I’m not so sure I care if all of these regular Americans pay of their mortgages for their own sake. Not everyone in America deserves a home because not everyone in America has produced enough wealth to own a house. On the other hand, if all of the delinquent borrowers paid off their debts, that might have the ruinous effect of saving Wall Street.
I apologize for the shitty organization of this post.
Mark Elliot Cullen
I can’t find a graph, but a percentage of total income tax revenue supplied by tax bracket or class would be helpful here.
Really a bank is supposed to determine who can afford what loans. When they stopped doing background checks on people’s incomes and overvalued their houses to stretch the mortgages (especially in bubble markets like Florida and California) they lost my sympathy. A lot of people in those areas now have houses that are worth less than their mortgages so it makes more sense to default or foreclose.
I can’t imagine a bank being surprised when a variable interest rate mortgage doesn’t get paid after increase the monthly payment by 50-75%. I also can’t imagine why securities made up of bundles of sub prime loans would have such high ratings and be considered so safe.
Jason
This is one of the first results I googled: http://www.allegromedia.com/sugi/taxes/
I realize it’s a bit outdated, but the gist hasn’t really changed. In fact, from what I’ve read, the disparity has increased. On net, a lot of lower income people in fact pay net negative taxes. I’m not necessarily complaining about this system, but it is naturally a function of a progressive tax system and the simple fact that more money means more taxes. I was merely responding to the idea that tax money should help regular Americans since they pay the taxes.
As far as making shitty loans, banks were often under a great deal of pressure to do as much, since the Community Reinvestment Act made things like income verification “unfair.” The mortgage backed securities had high ratings for…well, for a lot of reasons, not the least of which was that they had an implicit government backing. Naturally, Fannie and Freddie had huge roles in this. As long as housing prices kept going up, those mortgage backed securities actually were good investments. If they went down, investors assumed that the government would bail them out. They proved to be 100% correct.
Also, there is something to be said about the responsibility of now delinquent borrowers. You should really not lie about your income or sign a contract that you can’t possibly hope to fulfill. I think what a lot of people quickly forget is that it’s actually BAD when a borrower defaults. I don’t like the constant talk about lenders “swindling” homeowners, as if the homeowner has no responsibility and the bank actually wants them to default.
Bryan Klausmeyer
On the subject of the ethics of “not lying.”
Bryan Klausmeyer
bryklaus@umich.edu
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