National Commentary

The Moral Crisis Of Our Time

There is plenty of evidence out there, noodling its way into the news almost every day, that the world is heading into a new phase of the financial collapse that began five years ago. Your stock broker and the smiling faces on CNBC and nightly news notwithstanding, the so-called recovery is not fragile, it is teetering on the brink of an even worse dive than the first time.

The politicians, including our well-meaning President, are the last ones to be indicating this, because now they’re presenting everything about the world in the context of how it will play in the upcoming election. Mitt Romney stands to be punished as much, if not more, than President Obama, by a sharp worsening of the global financial situation, because he and his party, and not Obama and his, contributed enormously to the cause of it all in the first place, and at this stage the educated American voter is not confused about that.

Why is all this happening? The answer lies in the piece-meal revelations that make it into the headlines every once in awhile about the level of duplicity and deception of major Wall Street and international financial institutions. The latest scandal involves $453 million in fines slapped onto the Barclay’s Bank of London for deceptively manipulating interest rates against the London Interbank Offered Rate (Libor) for illegitimate gain.

As former U.S. Treasury Secretary Robert Reich wrote on his blog this week, this points to “the Wall Street scandal of all scandals,” since, as he points out, there is no way this problem is confined to Barclay’s without also deep involvement by major U.S. institutions like J.P. Morgan Chase, Citigroup and Bank of America. Now that officials at Barclay’s are “singing” in the face of their penalties, more about this might surface sometime soon.

Reich points out that this latest evidence of gross and widespread malfeasance in the Wall Street and international banking community involves a direct rip-off of average citizens, anyone holding debt, because the interest rates charged on that debt are a function not of an honest assessment of the future worth of money, but on sleazy manipulations by bankers at high levels using insider information to bet against future projections.

It is a complicated business, and it is meant to be, because that makes it harder for the average citizen to figure out. If you go to the Wikipedia entry on the Glass-Steagall Act of 1932, for example, the amount of minutia entered by competing interests is dizzying.

Yet the basics are very simple. Glass-Steagel was passed in the first year of the FDR administration to prevent the investments, including the bank deposits, of ordinary hard-working Americans from being used for wild-eyed gambling by bankers. Such actions had caused the Crash of 1929 and the Great Depression as the life savings of average people went up in smoke when the gamblers’ fortunes went south.

So, there has been an on-going, unbroken effort to repeal the Glass-Steagall Act ever since, by the same craven greed-lust interests that had caused the crash with their recklessness before. The long convoluted history comes down to an effectively-successful repeal of the essential contents of the act just as George W. Bush came into office.

Low and behold, within seven years of its effective repeal, the world financial markets became unhinged again, even more massively than in 1929, because any link between the core instruments of debt, such as mortgages, and the speculative horse-trading of those instruments was removed. Greed so overtook reality that the 2007-2008 crash occurred.

The world hasn’t recovered because the greed has not been reigned in, as the latest Libor scandal suggests. Recent efforts, such as Dodd-Frank and the Volker Rule have been insufficient against the obsessive zeal of Wall Street and global speculators.

The most basic problem is that unchecked greed violates the natural laws of science. Selfish postmodern thought hates science whenever it impinges on individual entitlement, but in the end, natural laws inevitably prevail, and unfortunately usually through catastrophes that are indiscriminate and hurt us all.

This is the moral crisis of our time, and who will have the resources and resolve to rise up to meet it?