V is for Volcker - Spear's Magazine

V is for Volcker

“President Obama! The bankers on Wall Street are running off with the Punch Bowl of Excess, all over again!”

“President Obama! It’s 2010. It’s time to wake up! Stop dreaming about universal health-care and carbon emissions, and do something about the deficit! And the bankers on Wall Street are running off with the Punch Bowl of Excess, all over again!”

Obama’s wake-up calls have come from two people. First, from his economic adviser Paul Volcker, aged 82 and standing 6ft. 7in., who tamed the 1970s’ stagflation in the early 1980s through an unforgiving high interest rate strategy, and who has now been dubbed with the sobriquet applied to the major banks, namely he is “Too-Big-To-Fail”.

President Reagan, the B-Movie actor who could always read the lines that were written for him, left all financial control of the economy to his Chairman of The Fed, and Volcker’s Vaccination did the trick, just so long as he, Reagan, had enough cash to play Star Wars with and blow up Communism as we knew it, and cleverly too, without even firing a single missile.

Thirty years on the savvy Volcker surveys an even more dangerous situation, one of macro-economic structural problems, where Dubya has bequeathed a banking system out-of-control and welded to the taxpayer’s backside. So Obama has taken a big bite out of the bankers bonuses to repay the taxpayers’ bail-outs, of $90.0 billion over 10 years to cover the anticipated TARP losses. (No one has said anything about the interest due, about another $90.0 billion).

So war has been declared on Wall Street. And with Volcker standing firm, the next and necessary issue will be the enactment of Glass-Steagall II, where the President has already fired his first salvo by ordering the big commercial banks to divest their high-risk activities, from private equity and hedge fund activities to principal trading.

The next wake-up call came from the late Teddy Kennedy’s “safe” Democrat seat in Massachusetts: Obama lost it, to a naked magazine-gigolo who’s strap-line was “I’m your candidate and this is my truck!” The men and women of Massachusetts went as wild as if Leonard Cohen was singing Closing Time.

So, as Obama surveyed a budget deficit reaching to the stars, of $1.56 trillion, he took a swipe at another Republican totem pole, called NASA as in “This is my rocket!”, and closed it down. The cost of an extra 30,000 troops in Afghanistan and a truck-driver on steroids was enough to cancel the “Apollo on Steroids” trip to Mars.

“We simply cannot continue to spend as if deficits don’t have consequences,” preached the President, as his own budget office increased planned spending by $187.5 billion in the same week. And Obama’s 2010 has only just begun, as mid-term elections loom as early as the autumn… Time perhaps to reach for the presidential steroids.



 

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