They left behind their golf clubs, their weekend plans with their families, their gyms, and their jogs in the park. One by one, they arrived at the somewhat dark offices of the New York’s Federal Reserve Bank, one of the 12 government banks that together make up America’s central banking system.
Indeed, they did not arrive at these urgent meetings overjoyed and over-confident, as they did in the past. Those who until yesterday were the masters of big money were seeking indirect access routes, side entrances, and underground parking lots, just so the public won’t see them.
Under the auspices of the New York Police, which sealed off the area, they made their way into the bank’s massive building as if they were thieves at night. They came out of there exhausted, tired, and much poorer. Yet it’s one thing if it was only them; it’s also us.
The heads of America’s leading financial corporations, the leaders of Wall Street, were urgently summoned over the weekend for meetings with senior US officials not in order to celebrate, but rather, in order to bury. They were not attending a festival, but rather, a funeral.
It was the funeral of a system and a method, rather than one investment house. They were called on to defend “Wall Street state,” but failed in their mission. Indeed, Wall Street state fell on the night of September 14-15, 2008.
Crisis premised on superstitionThe fall of Wall Street state was written on the wall as far back as the dramatic day in March of this year, when the Administration in Washington nationalized (or rather, bailed out,) another investment house, Bear Stearns. It was clear to everyone back then already that the Bear Stearns precedent was just that: A precedent. The US secretary of the treasury and Fed governor took command of Wall Street and assumed the power of decision on who shall survive and who shall die, and on what conditions.
The heart and soul of the “Wall Street method” in the past 15 years was not provided by banks, but rather, by non-banks, which are mistakenly referred to as “investment banks.” Those are in fact financial companies that are not subjected to strict supervision, and therefore are able to accumulate assets and debts to the tune of thousands of billions of dollars. They use other people’s money and employ the brightest and most gifted financial experts, in order to produce investment and savings products that are so complex that even their own creators have no idea how much they’re really worth.
Indeed, the current financial crisis is premised on a superstition. In the Middle Ages, alchemists believed that they would be able to turn sand into gold; in the first decade of the 21st Century, we saw the emergence of a new generation of financial alchemists, who were certain that they would be able to turn paper into gold. Yet as it turned out, they were not able to do it; the sand was still sand, and the paper was still paper.