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Monday, October 14, 2013

Wall Street Undercutting the U.S. Government When It Is Down

Irony can sting. During the week or so leading up October 17, 2013—“Armageddon” or “zero hour” for the default of the U.S. Government absent any increase in the debt-ceiling (even though the next big payment would not be due until October 21st)—Wall Street banks were already bailing on short-term treasury bonds even as governments around the world were holding on. Patriotism and corporate citizenship apparently collapse when money due may be delayed. Meanwhile, foreign governments—even big creditors like Japan and China—were taking a long-term view. “There’s no other way than for the U.S. government itself and the U.S. Congress to sort it out,” Japanese Finance Minister Taro Aso optimistically told Bloomberg Television.[1] Apparently Fidelity and JPMorgan Chase did not get the memo. In over-reacting out of an excessive desire to collect as stipulated, big American financial houses were not so subtly undercutting the U.S. Government’s waning credibility. It is ironic that Washington’s best supporters were foreign governments.

 The underlying debt-burden would again surpass 100% GDP in Obama's second term.  Image Source: Wikimedia Commons
Perhaps Wall Street’s bankers do not understand political theatrics whereas foreign government officials do. Maybe the bankers were privy to the real politics going on in Washington and the situation threw a beam of light on the bankers’ greed and selfish insistence that things go their way without exception. Either way, what is good for Wall Street is not necessarily good for America. Put another way, the Wall Street bankers who had been prospering so under the American hypertrophic value on economic freedom (e.g., no amount of wealth is too much) felt no gratitude or sense of obligation against even a chance that interest might be delayed a bit. In return, vast numbers of Americans strangely continued to defend the right of the super-rich bankers to pile on even more to their existing skyscrapers of wealth. If the bankers were merely being themselves in shedding short-term treasury bonds, the puzzling question may pertain not to them but to how a people could be so beguiled.  



[1] Mark Gongloff, “The Rest of The World Still Claims Faith In America (Even If Wall Street Doesn’t),” The Huffington Post, October 14, 2013.