Follow the money

This last week, along with everyone I know, I’ve been watching with interest as political events unfold in the US. Unlike others, I am far from convinced there will be any real change in the bankrupt policies that impact every one of us, regardless of geographical location. Here’s why.

Earlier in the week, Sam Winsier suggested I watch Zeitgeist – the movie. It’s 2 hours long and makes powerful points. In order to understand its central message, you’ve got to be prepared to set aside everything you think you know about money, credit, debt and banking. It’s message is very simple. Money equals debt. When you think about the logic of that statement, it is obvious in a system that centrally loads debt with interest from day one. What is less obvious are lasting solutions. Commenters are already taking positions making all manner of suggestions.

Paul Krugman of the New York Times captures well the extremes of argument when he talks about the no-spend/spend alternatives. Regardless of your position, the fundamental flaw in all arguments is a continuance of the banking system status quo.

Increasingly, I am seeing warning after warning that sooner or later, the US dollar will collapse. I am no economist – the only thing I learned about during training was elasticity of supply and demand – but it seems to me that if you continue to print money at interest then ultimately you create an unsustainable position.  What I didn’t know until today is that in the US, people don’t want to hear bad news. That’s frightening but at least in part explains the euphoria with which Obama’s victory was greeted. So why, despite all the talk about caring and evocation of the Kennedy’s and Franklin D Roosevelt am I less than optimistic? Follow the money.

When I look at the top contributors to the Obama campaign I see that at positions 2, 6 and 7 are Goldman Sachs, JPM Chase and Citigroup. When I then look at the total lobbying contributions by industry sector, finance, insurance and real estate outstrip all other sectors by an order of magnitude to the tune of $123 million. When I look up the ‘Heavy Hitters‘ Goldman Sachs is there again at some $29 million. Finally, when I look up payback, guess what’s at the top of the pile? You got it – accounting industry reforms.

When Obama takes power, the big institutions are going to want payback on policies that are looking increasingly unsustainable but which have the whiff of conservatism the US psyche holds dear. The fear of the American people is that the alternatives look like a form of socialism they abhor. They have a choice. Watch in disbelief as the economy continues to unravel or accept that radical root and branch reform isn’t just necessary, it is vital. What will that mean?

No-one can tell, but if sustainability is to be meaningful then perhaps politicians would do well to listen to folk like Tom Raftery. He has consistently argued that investment in alternative energies as opposed to bailing out Wall Street will do far more for the welfare of us all. The Venus Project talks about radical forms of transportation using MagLev technology. There is no shortage of people offering alternative ideas. It’s a question now of which voices will carry the arguments.

As an aside, while in London next week, I hope to gauge how SAP UK customers feel about the price hike in their maintenance fees. If the indignation I have recorded elsewhere was translated to the corridors of power I wonder how long people would put up with the financial systems under whose weight economies seem to be buckling?

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Tagged as: Barack Obama, Goldman Sachs, JPMorgan Chase, Wall Street