Weather Afternoon: 9°c Sunny spells Tonight: 5°c Partly Cloudy Night

Business

Barack Obama
Bankrolled: don't expect Obama to rein in Wall Street if he is elected president

So you think Obama is a reformer. Dream on

Simon English
12 Aug 2008


Perhaps you've been imagining that if Barack Obama becomes President of the US, he will impose tough new rules on Wall Street, sweep away the economic inequalities of the Bush years and demand that the gigantic banks that created the present mess are broken into a hundred powerless pieces. In which case, prepare to be disappointed.

On paper, the Democratic candidate sounds like a reformer.

He called the last Bush tax cuts exactly what they were: "The Paris Hilton tax break. It's about giving billions of dollars to billionaire heirs and heiresses." Stirring stuff.

He claims that if elected he would increase the tax rate on capital gains to 25% and go after hedge-fund managers with venom.

Under Obama, the speculators would see gains on their income taxed at 35% rather then the measly 15% they currently enjoy. Other corporate taxes are also supposed to rise.

In practice he is unlikely to do any of those things for one simple reason: Wall Street owns him. Each year The Centre for Public Integrity in Washington DC compiles a list of the donors to top politicians for its annual book The Buying of The President.

Each year the same conclusion is reached: Wall Street funds the elections, paying for all of the viable candidates. Then it tells them what their policies are, if the politicans haven't already worked that out.

Even by these usual standards, Obama is a popular boy in lower Manhattan. Republican candidate John McCain has seen the cheques fly in but he can't compete with Obama's millions. So far, the bigwigs at the big banks have paid $5.3 million to the McCain campaign and $9.5 million to Obama's.

This doesn't mean that they prefer the Chicago senator particularly, just that they think he is more likely to win and that McCain is assumed to be on side anyway.

Asked to explain the rush to fund Obama, Wall Street cheerleader and motormouth TV presenter Jim Cramer offered: "Wall Street wants change and wants a curtailment in spending."

That's right - the financiers are relying on Obama to cut government spending, not increase their taxes.

Maybe all this is a cunning plan by Obama - he takes the money he needs to win, then blows raspberries at the tycoons. History suggests it is more likely that, come inauguration day, he will have begun to see things the "right" way.

Wall Street will by then be in recovery mode, a beacon of entrepreneurial spirit, leading America out of some dark economic times. This is not the right time to impose extra taxes, says the new President. You can hear the speech already.

If you want to argue that extra regulation or more taxes on banks and hedge funds are not the solution to any problems anyway, that's a fair enough point of view, but it would be nice to think the debate that leads into the policymaking is at least genuine.

Instead the impression left is that the candidates put on a show, paid for by the exactly the same bankers and corporations, then everyone carries on as before.

In theory, much of the funding is individual donations from bankers who just happen to work for the same company (Goldman Sachs folk are everywhere on the election disclosure forms).

In any case, even if the bankers aren't acting in concert, it's clear they've worked out a way to keep getting what they desire.

Wall Street would want from Obama the same as it always has - a free lunch, followed by a government stomachpump once it has finished overeating.

There is no reason to think that Obama is likely to take the fork away.

Reader views (0)

 Add your view

No comments have so far been submitted.


Add your comment

 

Terms and conditions Make text area bigger You have  characters left.

We welcome your opinions. This is a public forum. Libellous and abusive comments are not allowed. Please read our House Rules.

For information about privacy and cookies please read our Privacy Policy.


 

 

  • Moody's threat to Europe's banks sparks fury in City Euro problem graph Moody's has sent shockwaves through the global banking system and sparked fury in the City, as the ratings agency threatened to slash the...
  • Bank's China bond call Peter Sands One of London's most senior bankers is calling on the government to issue a renminbi-denominated bond as part of a charm offensive to boost...
  • Seven Olympus bosses held over £1bn fraud Olympus "After going to hell and back this is a day to remember," said fired Olympus boss and whistle-blower Michael Woodford after seven executives...
  • Spain pays for rating cut Struggling Spain has managed to prise another €4 billion (£3.3 billion) from jittery bond markets today but was forced to pay more for the privilege
  • Kingfisher bonus time as targets are smashed B&Q Ian Cheshire, B&Q owner Kingfisher's chief executive, and his top team are set for bumper payouts after smashing its bonus scheme's targets
  • Greek impasse hits euro Greek protesters European stock markets were jittery and the euro has dropped to its lowest level in four weeks as the brinksmanship between Greece and its...
  • PPR thrives as luxury brands remain strong Handbag Add £1000 python skin Gucci handbags to the list of things that remain popular despite the economic gloom
  • BAE set to axe more jobs as profits go into retreat BAE BAE Systems has raised the prospect of further job cuts as Britain's biggest manufacturer announced a disappointing set of results for 2011...
  • Reed Elsevier sees growth despite tough economy Anglo-Dutch publishing and events group Reed Elsevier reported a rise in full year profit and said it expected to generate more revenue and profit growth in 2012
  • Frothy profits at Heineken Beer The economy might be in dire straits but Brits still love a pint down the pub
  •  
    Market Roundup
    THURSDAY UPDATE

    Unilever urged to go for a break-up after food disappoints

    Is it time for Unilever to consider breaking up?

    More