Book Trailer For Madam President

Wednesday, January 21, 2009

Titanic and the Economics of Class

Titanic hit an iceberg and sank. When they rescued the fifteen hundred people from the icy Atlantic they found a disproportionate amount of first class people. There were some from second class, further down in the ship, but very few from steerage down in the bowels. It seems the Captain and his crew had concentrated on saving the wealthy over the the middle class and lower class passengers. When a crisis occurs there is a run for the boats and those of privilege usually get in. Recently, there was an interesting quote from a banker in the New York Times. He said they were going to use the bail out money to shore up their accounts and invest in "banks of interest". In other words, the bankers are going to buy other banks with the bail out money and make sure they have enough reserves to weather the storm. They are going to make sure they are in the boats and well away from the ship. The real tragedy of Titanic was the fact that over a thousand people drowned in the frigid waters in range of people sitting in half filled boats. Yet, no one returned to help them. They were afraid, they later said, of being swamped. At the Bankers Association Meeting other bankers reiterated the mantra that they were going to concentrate on opportunities but that they had no real plans to lend the bailout money to consumers. So the American middle class, strangling on a lack of credit and asking for this needed money, will not get it. The boats will not return. When the inquiry into the sinking convened in New York, there were many who cried class warfare. The immigrants in steerage mostly died while the upper crust of the world managed to get into the few lifeboats. The officials of White Star said there was no choosing between classes of passengers, but there were simply not enough boats. The banks are still hemorrhaging. Bank of America just asked for another twenty billion and experts say that still won't be enough. Seems all that speculating in derivatives and mortgage backs was kept off the books. So they will continue to suck up all the bail out money and the middle class will get none of it. The gilded top will sail through for a while but will falter because the coal of any steam engine is the lifeblood and the middle class is the coal of our economy. Even the bankers must know their ship is taking water faster than they can bail now. Like Captain Smith, who asked his ship's architect about Titanics fate with four of her watertight compartments gashed open, the bankers know the words floating up from the depths of our economic distress...she will founder.

Books by William Hazelgrove