Big Banks Call for Wall Street Deregulation to "Fight Coronavirus"
As Naomi Klein laid out in her bestseller "Shock Doctrine," the wealthy
elite use the confusion caused by economic and other disasters to quickly
force through pro-free-market legislation.
by Alan Macleod
March 06th, 2020
By Alan Macleod
As coronavirus panic hits the U.S., a financial lobbying group is attempting
to use the crisis to push through the deregulation of its industry. The Bank
Policy Institute (BPI), a Washington-based lobbying organization
representing many of the nation's largest banks, released a set of proposals
this week, the most important of which recommends that the Federal Reserve
lower capital requirements to zero. This would mean banks could lend an
unlimited amount without having any assets or wealth to back it up. It also
advocated relaxing the so-called "stress tests" that force banks to show
that they can withstand economic shocks. This, it claims, would help America
fight the COVID-19 virus. The report's lead author was BPI CEO Greg Baer,
former Managing Director of JP Morgan Chase.
The recommendations have been condemned as incoherent and "transparently
opportunistic" by Jeremy Krass of the University of Michigan School of
Business. "The whole idea of capital requirements and stress-testing banks
is to make sure they have enough cushion to absorb losses" in a period of
economic crisis, Kress told the Washington Post. Now that the economy has
gone into a sudden shock, Wall Street wants those regulations lifted.
The government itself is also trying to force through measures that it
dubiously claims would help fight the coronavirus. Earlier this week
President Trump called on Congress to enact a large tax cut and pushed
Democrats to support it.
These efforts perfectly encapsulate the idea of the "Shock Doctrine" that
author Naomi Klein laid out in her 2007 book of the same name. Klein argued
that the wealthy elite use the confusion caused by economic and other
disasters to quickly force through pro-free-market legislation that would
otherwise meet with widespread and coordinated opposition. As she said, "the
idea of exploiting crisis and disaster has been the modus operandi of
[economist] Milton Friedman's movement from the very beginning - this
fundamentalist form of capitalism has always needed disasters to advance."
"Some of the most infamous human rights violations of this era, which have
tended to be viewed as sadistic acts carried out by antidemocratic regimes,
were in fact either committed with the deliberate intent of terrorizing the
public or actively harnessed to prepare the ground for the introduction of
radical free-market 'reforms,'" she explained.
Klein cites Hurricane Katrina - where the Bush administration rushed through
privatization and charter school bills for New Orleans while residents were
reeling from the devastation - as a perfect example. Going further back,
Chilean dictator Augusto Pinochet used his coup against President Salvador
Allende to turn Chile into a free-market, neoliberal experiment almost
overnight, over the protestations of ordinary Chileans, whom he suppressed
with overwhelming force.
Dean Baker
@DeanBaker13
There are many things to worry about with the corinavirus, but a plunging
stock market is not one of them, unless you are one of the minority who owns
a large amount of stock
https://cepr.net/coronavirus-the-stock-market-and-the-economy/ ;.
Coronavirus, the Stock Market, and the Economy - Center for Economic and
Policy Research
Many people have become very concerned about the economy because of the
stock market's plunge in the last two weeks. While the spread of the
coronavirus gives us very good reason to worry about the...
cepr.net
36
7:30 AM - Mar 6, 2020
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The stock market is in serious decline amid fears that the coronavirus will
disrupt international supply chains; the Dow Jones index plummeted nearly
1,000 points yesterday. Yet, as the Center for Economic Policy Research's
Dean Baker has noted, the stock market is a very poor indicator of the
economy's current and future health. It is, however, a great gauge on how
the top one percent are faring. Stocks also tend to surge after natural
disasters (like the 2004 Indian Ocean tsunami) or when conservatives win
elections (in December, British banks and weapons manufacturers' share
prices jumped after Boris Johnson beat Jeremy Corbyn). This is because
corporations, ignoring the devastation, expect big orders to rebuild or to
destroy.
Existential Comics
@existentialcoms
News that will cause stocks to go up:
- a minimum wage increase is struck down
- employees are prevented from unionizing
- corporate taxes are reduced
- labor laws are relaxed
The stock market is not the economy, it's an estimate of how much wealth can
be extracted from workers.
12.1K
7:52 PM - Jan 11, 2020
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Today the number of COVID-19 cases worldwide reached 100,000, with 3,461
recorded deaths. In response, the Himalayan nation of Bhutan closed its
doors to tourists altogether, Starbucks announced it would no longer allow
customers to use their own cups due to concern about contagion, and the
world's smallest country, the Vatican, recorded its first case of
coronavirus. In the U.S., 259 people have been infected, and 14 have died.
While emergency funding to combat the virus will be passed today, the
American response has not been swift. Workers have not been guaranteed full
sick pay while quarantining, leading to a situation where many poorer
citizens will have to choose between doing the right thing and going broke.
A Miami resident returning from China was presented with a $3,500 bill after
reporting his flu-like symptoms to medical staff, leading to fears that a
lack of universal healthcare will help the virus spread. Analysts, however,
appear more concerned about the health of stock prices than the health of
the nation. CNBC's Rick Santelli suggested infecting the entire population
with COVID-19 so nobody would have an excuse to miss work, thus effectively
sacrificing the country for the sake of the economy. While there are many
economic steps the United States could take to help the situation,
deregulating Wall Street might not be the most necessary.
Feature photo | A pedestrian wears a surgical mask on a busy street in
mid-town Manhattan, as concerns grow around coronavirus, March 3, 2020, in
New York.
