Wall Street and Anti-Semitism

When times get tough, Jewish people in finance become targets. Needless to say this goes back a long way. As I wrote in The Looting of America:

"At the height of the Middle Ages, when the church ban was strongest, sovereigns encouraged specific Jewish merchants to go into the money trade. The Jewish money traders were permitted, even encouraged, to charge high interest rates. But there was a catch: The sovereign could and did seize the wealth accumulated by the Jewish lenders either during their lives or upon their deaths."

During the Great Depression the idea of the insidious Jewish Wall Street banker was trumpeted by the American Nazi party and by various demagogues like Father Coughlin, the right-wing "radio priest" of that era.

Goldman Sachs, for many, is the latest target, viewed as master manipulators of any and all crises. But while Goldman Sachs, indeed, is too large, powerful and connected, it did not cause our crisis on its own, nor would eliminating the bank tomorrow, solve it. Our entire financial system failed and that system rests on an oligopoly of institutions that are still too big too fail -- Goldman Sachs, Morgan Stanley, JP Morgan Chase, Bank of America, CitiCorp et al. Only a systemic response can stop the financial profiteering that is emerging once again.

I hadn't given anti-Semitism a second thought while hammering away at The Looting of America, my book about the current financial crisis -- nor in writing my Huffington Post blogs on the subject. But some recent discussions with neighbors and colleagues have forced me to question my complacency.

In Montclair
My current view of Wall Street is deeply colored by where I live -- Montclair, NJ, the home of many finance people. It turns out that every Wall Street person I know in our town is Gentile. So in my mind modern Wall Street decidedly is not Jewish.

While on a recent book tour to Wisconsin, I was told by Matt Rothschild, the thoughtful publisher and editor of The Progressive, that he'd been picking up more and more anti-Semitic remarks about the economic crisis. I took his concern seriously, and I became worried for the first time that my relentless pounding of Wall Street in my book and in my blogs might inadvertently be feeding the beast.

Matt's comment make me rethink a conversation I'd had with a concerned neighbor not long before. He had theorized that Goldman Sachs was so smart and so powerful that it created and manipulated the entire crisis for its own purposes. I laughed because I was quite certain that no one bank caused the crisis and that no one alive, ever, was that smart. I didn't think the comment had any anti-Semitic overtones at the time. But now I wonder if the subtext of "smart," and "powerful" might have been "Jews."

Next I noticed a reader review of my book on Amazon that railed away at Madoff, Goldman Sachs and the Rothschilds (though I never mention the Rothschilds at all in my book and Madoff has only a minor cameo). And this reviewer was praising my book!

In Rolling Stone
Then came Matt Taibbi's gonzo-journalism piece in Rolling Stone on the great Goldman Sachs conspiracy. About a dozen people sent it to me, including my cousin, because they thought it reinforced the themes in The Looting of America. I was looking forward to another inspired piece in the tradition of Hunter Thompson.

But I had a trouble getting past the first paragraph as I heard echos that I'm sure he didn't intend.

"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

(Taibbi later wrote that he wasn't thinking about religion at all and I believe him since, in my own way, I had being doing the same. See "Ludicrous: Matt Taibbi Accused of Being Anti-Semitic for Goldman Sachs Article.")

When my parents were young adults in Germany, they were taunted with that imagery. The Nazi propaganda machine hammered away at the "blood-sucking Jews" who were controlling and destroying the Aryan world. While that imagery had been around for centuries, the Nazi's amplified it like never before. (Paradoxically, the Jews also were accused of being Communists and followers of Rosa Luxemburg, while at the same time called parasitical capitalists.)

Here's a typical example from a 1940 Nazi film, Der ewige Jude (The eternal Jew)

"In this century of industry, Jewish business blooms as never before. The House of Rothschild is but one example of the Jews' tactic of casting their financial net over the honest worker..... While millions of established Germans were unemployed and in misery, immigrant Jews acquired fantastic riches in a few years - not by honest work, but by usury, swindling, and fraud."

Although my parents escaped, they were singed forever by of the fire of anti-Semitism. Our generation rarely encountered it, as we assimilated with ease into the New World. But we inherited the antenna for sensing the innuendos and the slights, intended and unintended.

I'm not implying that we should pull our punches in dealing with a financial industry that has become not only potentially dangerous but proven to cause harm. Taibbi should swing away at the barons of Wall Street, and there is no one who packs a bigger whallop. Unfortunately, I think his high-spirited analysis is aiming in the wrong direction.

What Caused the Crash?
Our financial system as a whole crashed not because of one bank. Goldman Sachs certainly played a major role as did JP Morgan Chase, Morgan Stanley, and CitiCorp, along with the many dead and gone players like Bear Sterns, Merrill Lynch, Lehman Brothers, WaMu, Depfa, Glitnir, Landsbanki, Kaupthing and down the list we go. We had a systemic breakdown because nearly all of our policy makers, academics, politicians, and pundits promoted and clung to a failed ideology of self-correcting financial markets. They believed that we should promote a skewed distribution of wealth and financial deregulation in order to create an investment boom. It didn't work as advertised. Instead we created a vast Wall Street casino full of fantasy finance instruments. There are plenty of croupiers of all races, religions and creeds who walked off with big bucks while doing their part to crash the system.

As a result, I'm advocating policies that all of Wall Street hates -- I want to cap their total compensation at $400,000 a year, tax away their windfall profits taxes, and slap financial transaction fees on all their trades. But I don't hate the people on Wall Street. This is not about good guys and bad guys. Rather it's all about a very flawed financial system that John Maynard Keynes and later Hyman Minsky warned us was fragile and prone to collapse.

With unemployment rising to depression-like levels, we should be mindful of depression-like hatred. Wall Street needs to be radically changed and deserves to be put in the spotlight. We've propped it up with trillions of tax dollars and deserve much in return. If only it were a matter of a few bad individuals and companies, the crisis would be relatively easy to solve. But indulging in fantasy conspiracies won't end fantasy finance. Our task is much harder. We will need to undo the failed experiment by halting the redistribution of income from the majority into the accounts of the top few and, by dramatically reducing the size of the financial sector. It doesn't get much harder than that. But we've never had a better moment to try, provided it doesn't devolve into darkness.