Saving Wall Street

I have been disturbed by the bravado of Hank Paulson's "I saved Wall Street" headlines-and the snideness in the subtitle 'and could have saved Lehman if it weren't for those smarmy Brits'. Now if Hank cared he would have couched his saving of Wall Street in terms of explaining how government and finance are intertwined and that there is actually a political economy. Hank doesn't care. Why should he. He saved Wall Street. If there were any benefits to anyone else, great, but the main thing was to save Wall Street.

I will admit that at the time I agreed with Hank's decision. We were in a real mess and something had to be done. I don't think he got it all wrong, nor did he get it all right. The Treasury is a powerful organisation, but in the US it still is part of the Executive and so is kept in check by the Legislative and Judiciary. That helps explain some of his actions. Still I believe Hank comes from that school of thought which thinks that what's good for Hank is good for the Nation; not that what's good for the Nation is good for Hank.

The problem is that the Nation is at stake. Wall Street is not the Nation. Wall Street is the embodiment of Milton Friedman's Free Trade view of the world. Of course it's always nice that the big boys on Wall Street tend to be American, but make no mistake, they are multi-National. Their push to globalisation has lined their pockets as capital, and much more disconcertingly, employment flows like water to the most "advantageous" locations.

Hank might have saved Wall Street, but it is President Obama's Stimulus Package that has saved Main Street-for the moment. The Congressional Budget Office estimates that without the stimulus, growth would have been anywhere from 1.2 to 3.2 percentage points lower in the third quarter of 2009. Despite this we still have over 10 million unemployed citizens and there are a number of commentators highlighting that the impact of the Stimulus is essentially spent and that we have years of high unemployment ahead of us and that the future average rate might well be 50% higher than our current "average" of 5%.

As a child growing up in the US we were leaders; a vibrant, innovative nation. We were happy to export low-skilled jobs because we would keep the skilled, technological jobs. It's not happening. Even skilled jobs are being outsourced, and our innovation seems to focus on how to make money rather than how to make things.

Hank Paulson is worried about how he will be viewed in history. I would have thought he were more concerned with the fate of the United States rather than Wall Street.

Maybe I've been gone to long.