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It’s 2 o’clock in the afternoon in Piazza Duomo where I sit listlessly procrastinating at an outdoor café, consuming large quantities of coffee and toying around with my first 21st century phone (yes, I finally caved). Time stands in the corner glaring at me while I play spider solitaire, on the difficult level, and watch tourists and locals interfacing like two galaxies colliding in a far part of some star-trek worthy universe. I figure people-watching whilst sipping a caffe should somehow conform to my current studies of the modern history of the world and perhaps somehow metaphorically illustrate the random walk theory of the securities market.

For the record, trying to win at difficult level spider solitaire is like trying to catch a cab on Saturday night anywhere below 42nd street! Either that or Apple’s rigged the game for failure as part of its plan for world domination.

I’m pushing the limit of dilatory procedural tactics now but the obesity-sized portion of homework that looms over my head isn’t helping.

I shouldn’t complain, I’ve just read a delightful exposé from Rolling Stone magazine for my corporate finance class entitled “The Great Big American Bubble Machine”, written by Matt Taibbi. The article fashionably annihilates corporate finance succubus Goldman Sachs for its vast portfolio of sleazy underwriting, sneaky short sales and graceful spinning shenanigans.

While any piece of writing can be exaggerated, I tend to have very few doubts as to the legitimacy of this article in particular, although I’m sure Goldman Sachs, whose company motto is “long-term greedy”, was not the only factor contributing to the tech, oil and housing bubbles. That aside, there has been a wealth of articles lately chastising Goldman Sachs for its naughty behavior.

In Taibbi’s synopsis, Goldman stands accused of not only contributing to various financial bubbles, but of having a direct hand in their intentional creation. Goldman’s out of control, leverage-based investment techniques back in the 20s (Goldman backing Goldman backing Goldman) helped contribute to the crash of the Great Depression. During the tech bubble, Goldman engaged in serious “spinning”, or corporate bribery, for underwriting deals. They further engaged in “laddering”, or tampering with IPO share prices. Robert Rubin, former Goldman CEO was acting as Treasury Secretary in the nineties when all of this was taking place; in fact, he is responsible for much of the dis-regulation that allowed the housing bubble to inflate to the size it did. In the mid-nineties, the Commodity Futures Trading Commission suggested tight regulation of CDOs and Credit Swaps, a move drastically opposed by Rubin, who eventually persuaded Congress to listen to his side; the Commodity Futures Modernization Act was passed shortly thereafter, leaving firms free to trade default swaps.

The best part of all of this however, is all-American corporate luminary Henry Paulson, notoriously well-known for his controversial government bailouts in 2008. Paulson had been in charge when Rubin was Treasury Secretary; he was the one who took Goldman Sacks public in 1999. During the housing bubble, Paulson had taken Rubin’s place in the White House and Lloyd Blankfein was Goldman’s acting CEO. When Goldman blatantly engaged in short-selling its own securities, or betting against its own mortgage bundles, no one cried security fraud. Instead, our favorite financial behemoth made sure (allegedly, though not that much) that AIG got the bailout, from which they received 13 billion, while their biggest competitor, Lehman Brothers filed for bankruptcy.

Another article from the New York Times cited phone and schedule records affirming that Paulson spoke with Goldman CEO Lloyd Blankfein 26 times between 2007 and 2008 prior to receiving the ethics waiver from the government allowing him to be involved in  “conflict of interest” affairs, or contact with his former firm. Furthermore, between 16-21 Sept 2008, there were 24 phone conversations between Paulson and Blankfein, more than there were between Paulson and AIG; hey, they were probably discussing the weather.

In my opinion, and based on principles learned in economics and investment classes taken this and last semester, financial firms seem to have become the biggest authorities on the allocation of assets in any given free-market country. This is not a bad thing if only the market could actually follow freshwater theories like the Efficient Market Hypothesis allowing stock prices to reflect all available, not to mention real, information regarding a company and its prospects. Unfortunately for calculus buffs, in the real world there exist companies like Goldman Sachs, who are also calculus buffs but armed with a “long-term greed” (i.e. short-term greed) motto; not to mention rash investors who never learned what logic meant, thus making a rational and efficient marketplace unlikely.

If you have any doubt about the irrationality of mankind, spend an hour people watching at the Duomo of Florence or at the leaning tower of Pisa.

I think I’ve got to side with Krugman on this one; saltwater pragmatists may just have it right!

Nina Michael is in her junior year in the BS in Business program at CUNY School of Professional Studies. Nina has been all over the world and loves traveling; she currently  lives between Italy and New York where she works as a professional English teacher and translator. She loves languages, food, coffee, wine and a good book; she is also a first-rate bartender.

Recently, I got into a Facebook comment exchange with a longtime friend of mine from back home in Providence, RI.­  He identifies as a conservative.  I had posted an article that argued that a portion of the reason for the Republican Party gaining so many seats in Congress was that youth of color did not come out to vote in the same numbers as they did in 2008.  This, I argued, was another factor supporting the argument that the election results did not signify a conservative shift in the American populace; rather, it reflected the disillusionment and anger of voters who felt that President Obama and the Democrats did not deliver on the progressive change they had voted for.

This topic warrants its own post, and I probably will dedicate one to it. We’ll see.

What I want to discuss here is a comment that he made about taxes and the size of the government.  He decried the size of the government, and how they are becoming ever more invasive into our freedoms, mentioning as one example an excise and sales tax on alcohol.  I don’t know much about the size or extent of the tax he was talking about; however, it made me think about all of the recent hoopla over whether or not we need to cut taxes, and about the larger role of the government in all of it.

My friend ain’t no millionaire (Sorry, that’s how we see it back home!).  He comes from a working class family, and from 6th grade to 12th grade he went to the same public schools I did.  The point is, he is not benefiting from corporate tax breaks and cutting income taxes for the rich.   Leaving the rest of his political beliefs aside, some of that concern is valid—it’s not merely right wing blabber.  We are in an economic crisis, and we are being hit hard.  For the latter, I don’t include everyone in society. That “we” is regular working class people. Higher taxes on things that affect our everyday life are going to unfairly burden us with the brunt of paying for state and federal deficits.

Now, let’s take a look at two of the recommendations of the National Commission on Fiscal Responsibility and Reform—a “bipartisan” panel appointed by the President and charged with the task of coming up with solutions to the nation’s long-run fiscal problems.  They proposed eliminating the deductibility of health benefits and mortgage interest.  These are tax breaks that Nobel Prize-winning economist, Paul Krugman, says, “whatever you think of them, matter a lot to middle-class Americans.” Krugman goes onto point out that the gained revenue will not be used to reduce the deficit, “but to allow sharp reductions in both the marginal tax rate and in the corporate tax rate.”

I take issue with the use of that term, “middle-class,” which most often just refers to “middle-income” working class people; however, the picture is clear. Here, Krugman is spot on again:

It will take time to crunch the numbers here, but this proposal clearly represents a major transfer of income upward, from the middle class to a small minority of wealthy Americans. And what does any of this have to do with deficit reduction?

What we have is yet another example where working Americans has to bear the brunt of the economic crisis, while the wealthy consolidate their wealth.  It is measures like these that give can validate the calls for “smaller government” and fuel anti-tax hysteria.  It also, if implemented, will probably contribute to a weakening of the economy and an increase in the budget deficit because: 1) working class people will have less money to spend, thereby lowering demand; 2) the rich people are less-likely to put that newfound money into the economy; and 3) tax flows from the wealthy will diminish leading to a decrease in government revenue and probably increase long-term deficits.

The problem is that measures like these are pursued because the Democrats are not willing to do what is necessary—due to them being controlled by financial and corporate interests—and after the midterm elections, they do not have the ability to even if they wanted.   Absent of increased taxes on the wealthiest 1-5% and a massive fiscal stimulus, the tab has to be picked up by us.  Republicans are able take advantage of this fact—though once they also fail, or even make things worse, it could be a different story.

This is what people like my friend do not get. It is not a matter of “small government” or “big government”—do those preaching small government speak out against the massively funded military industrial complex or militarized borders?  It is a matter of whose interests the government is serving; it is about political power. And the reality is that our economic system of capitalism relies on a strong government to rescue the elite that run it when they overplay their hand.

Until we can mount a counter-force to corporate interests controlling government by building a social and political movement, and eventually think beyond the limits of our current economic arrangement to imagine a system based on equitable cooperation and true freedom, working people will always be the hand that holds the silver spoon.

John Cronan Jr is a restaurant worker, organizer, and a masters student at the Murphy Institute for Worker Education and Labor Studies.  Currently, he is a volunteer organizer for the Restaurant Opportunities Center of New York (ROC-NY). John is also an avid Boston sports fan.