During his reign as the King of France (1643-1715) Louis XIV is said to have remarked, "L'État, c'est moi" ... or "I am the State." The implications were clear: Bestowed with the divine right to rule, as head of state Louis XIV could draw on the resources of the state (to go to war, for example) because his best interests, it was believed, served France's best interests.
There were no countervailing powers to speak of domestically. Merchants vied for royal favors. Commoners sought out the benefits of the royal touch. In many respects, whether he actually uttered the words "L'État, c'est moi" Louis XIV was the French state.
Fast forward almost 300 years and we find ourselves in a not too dissimilar - albeit twisted - situation. Today our Too Big To Fail (TBTF) financial institutions can draw on the resources of the state, almost at will. This has especially been the case when they make poor decisions. From legislated bailouts to long-standing subsidies, and trillion dollar market guarantees, we can no longer kid ourselves. Industry lobbyist have captured Congress; Wall Street owns the state.
The ability of our TBTF institutions to push Congress around, and to secure what they need after making a mess of things, is discussed at the end of chapter 10 in my book:
Think about it. Wall Street now has the power to raise revenue (from bailouts), tax our resources (through subsidies & write-offs), and to secure favorable legislation (from legal protections to off-shore gimmicks and other market guarantees).
Worse, they can now scare off legislation designed to reign in their excesses because members of Congress are afraid of Wall Street's moneyed wrath. Campaign donations withheld, or sent to political opponents, is a powerful weapon.
It really doesn't matter how many times the President, or members of Congress, say "never again." We all know they're lying to themselves, and to America. Under the current mind-set, any TBTF financial institution will always be able to tax the resources of the state to serve it's interests. The threat of economic meltdown has become a politically accepted form of financial extortion.
This helps explain why we've embraced market subsidizing debt and other market activities that do little more than extract wealth from the economy, while putting the nation deeper into a debt-drenched mud pit.
The demands of Wall Street, and their TBTF financial institutions, have moved beyond the control of the modern nation-state. In many respects, Wall Street can now declare "L'État, c'est moi."
- Mark
There were no countervailing powers to speak of domestically. Merchants vied for royal favors. Commoners sought out the benefits of the royal touch. In many respects, whether he actually uttered the words "L'État, c'est moi" Louis XIV was the French state.
Fast forward almost 300 years and we find ourselves in a not too dissimilar - albeit twisted - situation. Today our Too Big To Fail (TBTF) financial institutions can draw on the resources of the state, almost at will. This has especially been the case when they make poor decisions. From legislated bailouts to long-standing subsidies, and trillion dollar market guarantees, we can no longer kid ourselves. Industry lobbyist have captured Congress; Wall Street owns the state.
The ability of our TBTF institutions to push Congress around, and to secure what they need after making a mess of things, is discussed at the end of chapter 10 in my book:
It’s at this point they have the power to “raise revenue” by imposing on the state ... taxing it's resources through credit extensions, bailouts, transfer payments, and favorable legislation, among others. This type of control and influence over the state ... is akin to the systematic poaching of state prerogatives. History and common sense tell us this should not happen. Recent developments, however, tell us it is now an accepted practice that raises few eyebrows.
Think about it. Wall Street now has the power to raise revenue (from bailouts), tax our resources (through subsidies & write-offs), and to secure favorable legislation (from legal protections to off-shore gimmicks and other market guarantees).
Worse, they can now scare off legislation designed to reign in their excesses because members of Congress are afraid of Wall Street's moneyed wrath. Campaign donations withheld, or sent to political opponents, is a powerful weapon.
It really doesn't matter how many times the President, or members of Congress, say "never again." We all know they're lying to themselves, and to America. Under the current mind-set, any TBTF financial institution will always be able to tax the resources of the state to serve it's interests. The threat of economic meltdown has become a politically accepted form of financial extortion.
This helps explain why we've embraced market subsidizing debt and other market activities that do little more than extract wealth from the economy, while putting the nation deeper into a debt-drenched mud pit.
The demands of Wall Street, and their TBTF financial institutions, have moved beyond the control of the modern nation-state. In many respects, Wall Street can now declare "L'État, c'est moi."
- Mark
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