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18 February, 2017

Neoliberal 'logic' recruited to justify Trump's Goldman Sachs picks

by system failure

Although a number of Trump supporters appear to be particularly puzzled, if not disappointed, with his obscurely scandalous inspiration to flood his administration with Goldman Sachs executives, others are trying to justify his picks through the usual neoliberal 'logic'.

Therefore, a usual, overwhelmingly simplified response is of the type 'what did you expect, hire a simple worker to run the economy?'

Despite that such a response implies that you have to succumb to the current financial status where banksters should always control the economy and rescued in times of financial meltdowns no matter if they are responsible for them, the response itself is actually a logical leap.

This way of thinking through logical leaps is heavily propagated throughout the Western societies by the dominant neoliberal doctrine, whether people support this doctrine or not. In previous article we referred to some "logical leaps" that the establishment uses to force the individual to bypass a certain rational hierarchy.

In this case, the logical leap is equally obvious, once you take a closer look. Because between a top Goldman Sachs executive and a simple worker, there are millions of other options for a president. A very good example of such an option, is the Nobel prize economist, Joseph Stiglitz.

The case of Joseph Stiglitz is particularly interesting because it shows how such brilliant economists were literally undermined by former Goldman Sachs executives inside US administrations during the 90s fast growing bubble economy.

The large laboratory, chosen by the gurus of the free market to conduct their new experiment in the late 90s during the Clinton administration, was South-East Asia. Under the American pressure, countries like South Korea and Thailand, withdrew all their restrictions allowing the inflow of capital from the West. This helped for the so-called “Asian miracle” in the economy.

But a group of economists in the White House, headed by Joseph Stiglitz, worried that, the flood of money from the West, would fund a massive speculative bubble in property, and when the boom collapsed, the money would flee, leaving countries like Thailand and South Korea decimated. According to Stiglitz, all this flow of money was not for the interest of Korea or US, but for the interest of a very small group of people making money from these medium-term capital flows, i.e. some bankers and hedge funds.

However, the group faced the opposition of Robert Rubin, which was the Secretary of Treasury at that time, and former co-chairman in Goldman Sachs. Rubin was preventing the warnings of the group to reach the president.

Stiglitz and his team turned out to be right. The Asian crisis began in Thailand. Hundreds of thousands of offices and apartments were built, but nobody wanted them, and brokers went bankrupt under the weight of loans. Investors from the West panicked and rushed to get their money out of the country. The panic began to spread first in South Korea.

Providing billions of dollars in loans, the IMF rescued western investors and pushed the taxpayers of the countries deeper into debt because they had to repay the IMF. The result of the cuts was the destruction of the area. In Indonesia, the government subsidies were removed as instructed by the western bankers. Prices soared and within a few months, in a country of more than 200 million, 15% of the male workforce lost their jobs. Economic output fell by 14%. The economy collapsed and ethnic and religious strife began. The same happened in Thailand and South Korea. Millions of people went back into poverty from which they thought they had escaped forever. By the mid 1998, the Asian economies collapsed. It was the biggest disaster for countries since the big recession of the 30s.

The whole story shows that there are plenty of options for a president other than former Goldman Sachs executives who will only seek to empower the Wall Street cartel. Donald Trump did it straight. He literally hired Goldman Sachs to run the US economy and his first move was to deregulate the financial system as the vampire bank and the Wall Street mafia wanted. The gates of hell have opened again for another financial meltdown and the American people will be called again to pay for it.

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