Thursday, May 8, 2008

The Chutzpah of Profiting from Poverty

This morning's Business section on the BBC News Web site included the following item:

Discount firms Wal-Mart and Costco saw sales rise in April, as consumers sought cheaper options to counter the rising cost of essentials.

The world's largest retailer, Wal-Mart said same store sales, except for fuel, were 3.2% higher in April year-on-year.

Retailer Costco also said same-store sales were better than expected, up 8% in April on a year earlier.

As the cost of food and fuel climbs, consumers are finding ways to spend less on other goods.

One has to wonder whether or not these figures from Wal-Mart and Costco played a key role in motivating Treasury Secretary Henry Paulson's comment to the Associated Press this morning that "We're closer to the end of this [financial crisis] than the beginning." If so, then I have to wonder whether there was any room in his reasoning that documentarian Robert Greenwald developed in his 2005 film, Wal-Mart: The High Cost of Low Price. One take on Greenwald's thesis is that Wal-Mart has succeeded by increasing the population of the impoverished, who, in turn, are then increasingly dependent on shopping at Wal-Mart for the low prices they offer. In this light it would appear that, when Paulson says "we," he is referring to a first-person-plural of shareholders (of which I am sure he is one), who continue to live in a world that abstracts away the day-to-day existence of those who work on the production side of the economy and those on the consumption side who are on the brink (if not over it) of making ends meet.

In this respect his first person plural pronoun also includes his boss, President George W. Bush, who has been taking a more antagonistic approach towards the current financial crisis, directing his antagonism at his favorite bête noir, the separation of governmental powers, embodied in this case in the House of Representatives. Here is how David Stout reported the story for the International Herald Tribune:

As the House prepared to vote on a housing-relief bill offered by Democratic leaders, President George W. Bush on Wednesday told the lawmakers, in effect, not to bother.

"I will veto the bill that's moving through the House today if it makes it to my desk," the president said at the White House, after meeting with Republican House leaders. "I urge members on both sides of the aisle to focus on a good piece of legislation that is being sponsored by Republican members."

The president's remarks were not surprising, given that the administration issued a statement on Tuesday evening declaring its opposition and saying that White House advisers would urge the president to veto it.

But Bush's personal pledge to veto the measure championed by Representative Barney Frank, the Massachusetts Democrat who heads the Financial Services Committee, made it less likely that a bipartisan housing deal will be achieved soon, especially in this election year.

The House is expected to vote on the Frank bill, which would expand access to federally insured mortgages to help troubled homeowners refinance their loans, on Wednesday or Thursday. Under the bill, lenders would be required to reduce the principal balances for borrowers at risk of default. The troubled loans, typically with high, adjustable interest rates, would then be refinanced into more affordable 30-year fix-rate loans insured by the Federal Housing Administration. The new loans would be limited to 90 percent of a property's value, based on an updated appraisal, and the government would retain a stake in any future sale of the property.

Stout reported the President's motivation as follows:

The president on Wednesday repeated his opposition to a bill "that will reward speculators and lenders" who have suffered because of their own foolishness. More modest measures are pushed by Republicans leaders, and Bush said those steps "will do the right thing for the American people."

This language, of course, blithely overlooks the extent to which just about everything done by both the Treasury Department and the Federal Reserve in response to the housing crisis has done more to "reward speculators and lenders" than to address the needs of victimized homeowners.

All this language is, of course, building up at the end of the week, which is when I have to home in on a decision for the Chutzpah of the Week award. This has become a week of chutzpah volleys that would rival those of the Battle of Balaclava immortalized by Alfred, Lord Tennyson. Nevertheless, in the interest of Harry Truman's (whose birthday today happens to be) principle that the buck always stops at the desk in the Oval Office, I have concluded that is it time for the President to receive his eighth award, thus widening his lead over his closest competitor, Condoleeza Rice. At a time so close to when the American public will be voting for their next Administration while thinking about the impact that their government has had on their lives, the President seems more interested in exhibiting what Stout described as an "unwillingness to surrender power before he has to." Perhaps that is what Bush really saw, when he was talking about looking into the soul of Vladimir Putin; but, while I still have the freedom to do so, I would prefer to call what he saw an immense capacity for chutzpah just waiting to be tapped!

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