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December 11, 2016


Congratulations to the winner of the recent election: Goldman Sachs. Remember how Trump vilified the big Wall Street banks (Goldman Sachs in particular) and intimated that they were part of an international cabal (read Jews) who controlled the world’s wealth? Well, now he has appointed the number 2 executive of Goldman Sachs to be our Secretary of the Treasury and another from its ranks to be his chief economic adviser as well as yet another denizen of that bank to serve in his administration – not bad for a bank that shared his stump wrath but some of whose executives now are to be his close advisers on, you guessed it, money matters generally and management of the nation’s debt in particular. Thanks, Don. You lied, but since that is the new norm we should have known you were lying when on the stump putting down banks, trade treaties and various other forces of evil designed to destroy America, and should have voted accordingly. We didn’t, but it’s our fault, never yours as you live out your narcissistic fantasies in a world alien to us where blame is unknown.

To be fair, Democrats are not without fault in this connection. Bill Clinton appointed Bob Rubin as Secretary of the Treasury out of the ranks of Goldman Sachs, and while Bob was a very friendly and approachable individual, he did not forget his banking roots while serving the public. It was Bob and Alan Greenspan who advised Clinton to sign repeal of the Glass-Steagall Act, the worst mistake in my opinion Clinton made in his eight years in office, a mistake which allowed big Wall Street banks to once again consolidate commercial and investment banking which in turn led to reckless banking investments in repackaging of subpar mortgages and credit derivative hedges which led to Bush’s Great Recession, bailouts and other horrors of 2008-2009.

Clinton has since said that he wishes he had not signed the repealer but I have not heard any post-mortems from Bob, who returned to Wall Street after his public service, though not back to Goldman Sachs. He joined forces instead with Citigroup, one of Goldman’s competitors and which, along with Goldman and others, were the recipients of hundreds of billions in bailouts you and I provided for such insolvent institutions to save them from failure, a situation which, in my opinion, was directly related to opening the under-regulated floodgates of reckless investment by the big banks with the repeal of the Glass-Steagall Act of 1933, legislation designed to prevent the very disaster that happened, whose negative effects we still see in the economy today.

We know who the winner in this sorry exercise of banks versus the people was some 8 years ago, and it wasn’t the people, though it was the people who very generously bailed out the then insolvent big banks on Wall Street, five of whom now control more than 50% of the nation’s entire money supply and are more profitable than ever, which, I suppose, gives credence to the mantra of “too big to fail,” among other “don’t tread on me” mantras peddled by big bank apologists and propaganda meisters.

These banks have shown their gratitude to us who bailed out their institutions by spending over a billion dollars on lobbyists and lawyers to stall final rule-making of the Dodd-Frank Act of 2010, which was designed to stop banks from making reckless investments like they did that brought on bailouts and Bush’s Great Recession. One of the provisions of that act ended the banks’ use of FDIC-insured money for investment purposes so that our deposits are not at risk. Republicans have since removed that provision out of the act by attaching an amendment to a spending bill which Obama had to sign or shut the government down. He signed it, so your money and mine is once again subject to reckless investment by Wall Street banks as before as we continue our role as guarantors of the big banks’ investment risks in all but name while having no say in crapshoot risks taken by the banks.

So now, years later, and to add insult to injury, Trump has appointed heavyweight executives from Goldman Sachs to run the Treasury and give him economic advice in managing our money, our debt and proposals for tax reform, among other things. This goes beyond inviting foxes into the henhouse; these people might better be described as wolves. I think it unlikely that these advising wolves will spend much time “bringing good-paying jobs back to America again;” given their identity I think it far more likely that they will counsel less regulation and reduced taxation of corporations and a larger role for public guaranty of banking investments than the risk we already have with our FDIC-insured funds exposure to loss (as noted above).

Finally, as the rich get richer with the help of government and the poor get poorer because of such policy, wage inequality, competition from automation and cheap foreign labor, I foresee a further drop in already tepid demand and a recession, or worse. Thanks again, Don, for choosing bankers over the hundreds of qualified economists and financial experts found in academia who have no fish to fry and offer only expertise in managing the nation’s money and debt. We appreciate your help.     GERALD       E



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