The so-called “end-game” memo authored by Timothy Geithner and recently brought to light by investigative journalist Greg Palast certainly is interesting, but does not “prove” that a secret cabal set up the world for a financial collapse. The present-day neoliberal misery has far deeper roots than a handful of officials, no matter how odious.
Last week, a memo written by former U.S. Treasury Secretary Geithner in 1997, when he was assistant secretary for international affairs in the U.S. Treasury Department, was published by Mr. Palast. The memo asked Lawrence Summers to directly call the chief executive officers of five key players in the financial industry — Bank of America, Citibank, Chase Manhattan, Goldman Sachs and Merrill Lynch — to discuss “the end-game of [World Trade Organization] financial services regulations.”
In his accompanying story, Mr. Palast gets a little hyperbolic:
“When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it. The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet.”
It isn’t a secret that the finance ministries of governments in the world’s advanced capitalist countries are captives of the global finance industry, nor that the U.S. Treasury Department is Wall Street’s personal branch of government. It’s no secret that industrialists and financiers hold decisive influence over governments. The system is called capitalism. Mr. Palast has done excellent investigative work for years and he has once again provided a valuable service with his publication of the Geithner memo. But interesting as the memo is for its confirmation of the close collaboration between financiers and government, it would be a mistake to place too much emphasis on personalities.
Mr. Palast himself seems to realize this, writing:
“Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game-plan for checkmate.”
But then we are back to personalities:
“And the memo reveals a lot about Summers and Obama. While billions of sorry souls are still hurting from worldwide banker-made disaster, [Robert] Rubin and Summers didn’t do too badly. Rubin’s deregulation of banks had permitted the creation of a financial monstrosity called ‘Citigroup.’ Within weeks of leaving office, Rubin was named director, then Chairman of Citigroup — which went bankrupt while managing to pay Rubin a total of $126 million.”
Personal interest, yes, but ideology looms large
I’ve no argument against the accusation that Secretaries Summers and Rubin have personally enriched themselves to the tune of many millions of dollars. The facts speak for themselves. I am not suggesting that there is no personal interest at stake here; but the larger issue is that these Wall Street consiglieres are acting for ideological reasons. The logic of an entire economic structure led to deregulation and the disastrous consequences that flowed from it. The steps that culminated in the 2008 collapse that we continue to live with go back decades, before the careers of any of today’s capitalist mandarins.
The capitalist system has evolved into the present-day situation under its own inexorable demands. Our unholy Democratic triumvirate are merely the human material that fulfilled the necessary roles.
The problem isn’t greedy bankers, the problem is the system that enables the greedy bankers.
If those three hadn’t been there, someone else would have been and done the same. Has the switching between Democratic/Republican, or Liberal/Conservative, or Labour/Conservative, or Social Democratic/Christian Democratic, or Socialist/Union for a Popular Movement, made any difference in economic matters? The same dynamic that governs all enterprises under the capitalist system — expand or die — applies to the financial industry.
Enterprises that produce tangible goods and services compete for market share, swallowing each other as a natural strategy to become bigger. Ultimately, only a handful of corporations will dominate an industry, creating an effective monopoly that puts an end to competition and grants the executives and institutional shareholders who control them extraordinary wealth and power. The financial industry is no different, and deregulation is critically important to financiers’ ability to increase the size of their banks and hedge funds.
Relentless competition goads them (not reluctantly, of course) into demanding more deregulation, more privatization (to gain control of public wealth) and the opening of borders to capital. If a capitalist enterprise does not do this, its competitors will and put it out of business. As more wealth is amassed, the more power enterprises have to bend laws and rules more in their favor. The wealthier and more powerful the executives and financiers who control these enterprises become, the harsher the conditions they can impose on their employees.
A ventriloquist has to learn his lines
To put the “end-game” memo in perspective, Secretary Geithner was seeking to ensure that the U.S. government’s negotiating position was fully in alignment with the country’s largest financiers. His memo speaks for itself on this:
“Industry’s assessment of the prospects for success in December  can be characterized as cautiously optimistic. … I believe the securities industry is broadly satisfied with the outlines of the deal.”
Secretary Geithner evidently believed that Secretary Summers would be the best person to discuss final negotiations with the pirates of Wall Street. Indeed, the latter speaks as a ventriloquist for the financial industry. I had low expectations for Barack Obama following his election, but when Secretary Summers’ selection as lead financial adviser was one of the president-elect’s first moves, I realized the Obama administration was going to be worse than I thought.
The World Trade Organization’s financial services regulations were implemented. The WTO announced in February 1999 that the regulations would go into effect because governments that accounted for more than 90 per cent of the global financial services market ratified the agreement. WTO rules forbid governments from limiting the size of financial firms; forbid “firewalls” that would separate commercial banking from risky speculation; and limits government oversight by subjecting domestic regulations to WTO review.
At that time, the WTO, as a global organization to which nearly all countries belong, was the primary treaty vehicle for imposing control over the world’s economies. The “Battle in Seattle” in late 1999, and subsequent global resistance, brought the process of using the WTO to further tighten control to a halt. As a result, there is now more stress on trade agreements such as the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership. The European Union also exists to impose corporate dictatorship through erosion of national sovereignties and imposition of market “discipline,” which is nothing more than imposing the aggregate interests of the largest industrialists and financiers.
The ideas of the world’s industrialists and financiers have become the dominant ideas of the world — these are continually disseminated through endless repetition through mass media, schools and a plethora of other institutions. Promoted political leaders will be be drawn from among those who positions replicate the dominant ideas and they can’t take office without dependence on the money of industrialists and financiers. The “end-game” memo opens a window into this process, but we shouldn’t mistake the window for the edifice.