When the House of Representatives rejected the $700 billion Wall Street bailout proposal on Sept. 29, it was hard to tell who was more upset — the typical investment banker of lower Manhattan or the typical pundit of corporate media.
The response from high-profile journalists and media commentators, whether “conservative” or “liberal,” was apt to be quick and aggrieved. A failure of leadership! The center did not hold! The extremes of right and left made it impossible for cooler heads to prevail!
One of the more bitter attacks came from New York Times columnist David Brooks on Tuesday as he condemned in no uncertain terms the “nay” sayers in the House.
“Let us recognize above all the 228 who voted no — the authors of this revolt of the nihilists,” Brooks wrote. “They showed the world how much they detest their own leaders and the collected expertise of the Treasury and Fed. They did the momentarily popular thing, and if the country slides into a deep recession, they will have the time and leisure to watch public opinion shift against them.”
Brooks insisted that “the 228 House members who voted no have exacerbated the global psychological free fall, and now we have a crisis of political authority on top of the crisis of financial authority.”
On the same day that Brooks’ outraged column appeared, a much-less-noted New York Times item — with the headline “Among bailout supporters, Wall St. donations ran high” — indicated that more respect for “political authority” exists among House members who have received lucre from corporate interests. “The Center for Responsive Politics, a Washington nonprofit group that studies money and politics, reports that on average, lawmakers who voted in favor of the bailout bill have received 51 percent more in campaign contributions from sources in the finance, insurance and real estate industries ... over their congressional careers than those who opposed the emergency legislation.”
Though you might not know it from the dominant news coverage, a wide range of economists don’t buy the storyline that tells us a bailout of Wall Street is essential to stave off economic disaster.
“Many of the nation’s brightest economic minds are warning that if the Wall Street bailout passes, it would be a dangerous rush job,” McClatchy Newspapers reported in late September. For instance, economist James K. Galbraith called the warnings of economic disaster in the absence of a swift bailout “more hype than real risk.” He added: “A nasty recession is possible, but the bailout will not cure that. So it’s mainly relevant to the financial industry.”
A big problem is the spin that has presented Treasury Secretary Henry Paulson as — so to speak — an honest broker. We’re led to suppose that he has the public interest at heart. But his background and approach strongly indicate otherwise.
“Paulson is the ultimate investment banker,” says author Nomi Prins, a former investment banker who ran the European analytics group at Bear Stearns. She notes that “his negotiation, merger and acquisition skills propelled him to the top at the world’s most powerful investment bank, Goldman Sachs.”
When the House rebuffed the bailout package on Sept. 29, Wall Street was horrified, and most media commentators voiced strong disapproval. But what’s at stake goes vastly beyond the short-term fate of the Dow or the fulminations of pundits. With or without a bailout, the handiwork of the protracted deregulation frenzy remains largely in place.
Clinging to an ideology discredited by reality, the Republicans in the House voted against the $700 billion Wall Street bailout for the wrong reasons. Their brand of political doctrine has been scorned by France’s conservative president, Nicolas Sarkozy, who pointed out: “The idea that the market is always right is a crazy idea.”
But, for the most part, it’s an idea that the corporate media are still crazy about.
