Jun 18, 2007
“This growing inequality is not the type of thing that a democratic society can really accept without addressing.” Alan Greenspan, then chairman of the Federal Reserve, made this point to a Congressional Joint Economic committee hearing in June 2005.
Inequality? The word didn’t even begin to paint reality’s picture in 2005. And it’s worse today. The richest 300,000 people pocket as much income as do the poorest 150,000,000 people – one half of the population.
The only thing Greenspan and his ilk have done, other than talk about it, is help the inequality grow. Government policies threw money at Wall Street. And Wall Street financiers turned around and used it to buy and sell whole companies as though they were pieces on a board game.
Cerberus buys up Chrysler in a closed-door deal with Daimler. Before all the papers are even signed, Cerberus takes out a monster group of loans worth 62 billion dollars – using Chrysler, itself, as collateral.
What’s Cerberus going to do with all that money? No one knows, since the company is a “private” company – it doesn’t even have to produce any books to show what it does with all the money. But it’s a safe bet that the top guys in Cerberus are going to pay themselves a very tidy sum for working out this deal. In fact, it’s the purpose of such deals – buy up a company, take out a loan to finish the deal, rake off ten or so billion in profit and then dump the company. All behind closed doors.
And what’s Cerberus going to do when the loans come due? Take out an even bigger loan until the interest payments get so big that Chrysler is strangled – and then dump it. Just like interest payments made on other loans strangled big companies like Bethlehem Steel or Kmart.
Yes, big companies like Ford, GM and Chrysler have always falsified their books. It’s not a different system today. It’s just worse.
Fighting to maximize profit, high finance is no longer interested in buying up companies in order to manufacture products that return a profit. Now they just buy up companies in order to sell them, making billions on the deal – even if they have to take the companies into bankruptcy to do it.
So, yes, it’s worse today. Worse because these wealthy so-and-so’s have been getting away with it for so long, they keep getting more outrageous in their demands.
The auto companies actually dared last week to spread the word they intend to cut wages and benefits by nearly 40% in the contract coming up. What arrogance!
Almost exactly 30 years ago, the then mayor of Detroit explained that the riots that had struck other cities would never hit Detroit, since things were fine in Detroit. People were content.
He couldn’t have been more wrong – and the rocks, bottles and flames that drove him out of the city proved it.
Workers are not content today. And every one of us knows it. We simmer, waiting for our pot to boil over.