The Link Washington-Wall Street is more Alive than Ever Before
While voters reject further liberalisation via transnational treaties, the Democratic administration, under pressure from large corporations, aims to force the Transpacific Agreement on the fast track.
To understand why many voters in the United States -and not only those who support Trump- believe there is a corrupt nexus of interests between Washington and Wall Street, you should follow the history of the Transpacific Agreement (TPP), the liberalisation treaty led by multinationals in the US, Canada and Mexico with nine Asian countries as well as Australia and New Zealand.
This treaty, just as its twin, the TTIP, was negotiated behind closed doors by the powerful CEOs of multinational corporations and banks, international lawyers specialising in corporate law, and liberalisation of trade as well as experts of the various governments.
The heavyweight of the US team was Michael Froman, former president of the insurance division of international bank Citigroup -where he met with former Bill Clinton’s Treasury Secretary, Robert Rubin- who dismantled much of the financial regulation in the nineties and, now, the representative for trade in the Obama administration.
To date, to the great frustration of multinational lobbies in Washington, the TTP does not have enough support from the public or Congress to become law.
That’s not surprising. If you travel America during these moments of tension and rejection of globalisation, you will not find many voters who support the agreement.
Those white men, former blue-collar workers, who are distrustful of Mexican immigrants, reject the TPP as much as the Free Trade Agreement with Mexico. But Mexican workers settled in US -as well those who remain in Mexico- will not go to the streets in defense of TPP or NAFTA, either.
After all, since Bill Clinton signed the treaty with Mexico in 1994, Mexican wages in many industries have fallen below their Chinese counterparts.
Most economists support these treaties, even the Keynesians, Paul Krugman and Larry Summers.
Wall Street banks, the billionaires of the new “tech” oligarchy in Silicon Valley and other large corporate lobbies in Washington, see the treaties as essential for economic growth and job creation.
Multilateral institutions such as the IMF or the World Bank fear global growth stagnation if the agenda of cross-border liberalisation does not continue.
Journalists who cover the IMF meeting three weeks ago in Washington witnessed endless lamentations by the emergence of populism led by Trump in American politics and those embittered voters and nostalgics who “only know how to look inward”.
But the truth is that treaties are seen from the street in the US as a set of secret rules that go beyond national laws to facilitate an even greater internationalisation of transnational corporations and banks to boost their profits.
Like the TTIP, the TPP is not even an agreement to promote trade in goods such as cars or washing machines.
“Trade is liberalised between those countries; the TPP is for multinational companies,“ says Dean Baker of the Center for Economic Policy Research (CEPR).
Protect patents and intellectual property rights guarantee super profits and monopolies like Google or Microsoft, are not a priority issue for many voters whose wages are below 1975 levels in real terms.
Neither is of their interest to pave the way for mining companies to frack wherever they want. For years the agreed agenda by global elites does not convince the ordinary citizen but in times of Brexit, Trump and European demonstrations against the treaty, it becomes very difficult to win elections cleanly if the candidate defends these agreements in favor of corporate globalisation.
There is, however, a geopolitical component in an agreement cornering China, the biggest trading partner of all.
According to a hawk of the new cold war in the Pentagon, approving the TPP would serve to show support for countries like Japan, Vietnam and South Korea in their struggle with Beijing. But this does not translate into votes in the US outside of the oldest residents of Chinatown.
For all that, Donald Trump rejected the deal, knowing that it would allow him to gain support from people in states with a dying postindustrial “working class”.
Socialist, Bernie Sanders, almost beat the invincible apparatus of the Clinton machine in the Democratic primaries thanks to his supposed unconditional rejection of the Davos globalisation model, embodied in treaties such as the Transpacific agreement. As we now know, Sanders is one more of Clinton’s supporters.
In politics there is a “need to have a public position and private position,” said Hillary Clinton at a secret meeting with the international bank Goldman Sachs, a tireless lobbyist in favor of treaties such as the TPP and TTIP.
“Politics is like a sausage factory,” Clinton said according to a transcript of her speeches leaked by Wikileaks. And it is that a problem exists when responding to public opinion in the United States in these times of rebellion and breaking models.
In the Wall Street-controlled world, where major decisions are made by the corporate leaders at Apple, JP Morgan, General Electric, Facebook, Wal-Mart and others, it is necessary to dance with these corporations to get funding for election campaigns.
Everyone knew that Hillary had her public and private position. But perhaps the most shocking reality on this issue is the response from the Obama administration as it faced the rejection of the TPP by the public and some presidential candidates.
According to the Wall Street Journal, the president “is working hard to achieve a vote in favor of the agreement.” Only two months away but it is a matter of legacy for the president.
Obama is aware that a defeat of the TPP “would deprive him of an important legislative achievement,” says the Wall Street Journal.
Therefore, the administration “is doing everything possible to get it passed,” said Michael Froman. That includes all kinds of favors and incentives to congressmen who may be willing to vote in favor.
By the way, Froman, when working for Citibank on Wall Street, was a powerful operator of the revolving door that connects Wall Street to Washington. This can be checked by anyone looking into the email archives from the Democratic Party leaked by Wikileaks using “Froman” as a search word.
For example, three weeks before Obama’s victory in November 2008, Froman had already drawn up a list of candidates for senior positions in the new administration, some of them from Wall Street.
While emails were exchanged between Froman and some bigwigs of the Obama campaign, the “candidate of change” pronounced hard words against banks for their speculative excesses before the collapse of Lehman Brothers that had just shaken the world economy.
That right there is how the link between Washington and Wall Street works.