Tag Archives: wall street

2008 Bailout of Wall Street

Uncle Sam struggles to bear the burden of Wall Street while distraught President George W. Bush assures Wall Street, not Uncle Sam, that everything will be okay.
Uncle Sam struggles to bear the burden of Wall Street while distraught President George W. Bush assures Wall Street, not Uncle Sam, that everything will be okay.

 

In the early fall of 2008, America’s financial system nearly collapsed. Some of Wall Street’s biggest corporations had engaged in what President George W. Bush called “irresponsible actions” that caused widespread panic. Eventually, the situation became precarious enough to warrant action by the federal government in the American free-enterprise system. The federal government’s plan was to use $700 billion dollars of taxpayer money to resolve the crisis and bailout Wall Street. President George W. Bush addressed the nation on September 24, 2008 to propose the bailout through a joint congressional bill. The federal government promised that the bailout, while costly to American taxpayers, was essential to the maintenance of the financial system, and that the “irresponsible actions” of Wall Street executives would not be ignored (C-SPAN 2). Many American taxpayers begrudgingly agreed in 2008 that the federal government’s plan to bailout Wall Street was necessary; however, the burden of funding the bailout and empty promises made by the federal government eventually led to a high degree of taxpayer dissatisfaction.

In Daryl Cagle’s humorous depiction of the 2008 bailout, Uncle Sam struggles and sweats under the weight of Wall Street. Uncle Sam, a symbol of American taxpayers, is depicted as small and skinny. He holds the entire weight of a fat pig, representative of Wall Street corporations, on his back. The Wall Street pig is dressed in a formal business suit and is accessorized with features of stereotypical Wall Street wealth, such as a large bag of money, a ring, and a cigar. President Bush, representing not only himself but the federal government at large, worriedly screams “Don’t worry! You’re going to be okay!” (Cagle) The President Bush character worries about the pig instead of Uncle Sam; this cartoon reflects the American taxpayer sentiment of dissatisfaction about the actions by the federal government and the consequences of the bailout.

The financial crisis of 2008 spurned the need for government action and the bailout after Wall Street made some risky investments. President Bush explained the crisis started when Wall Street lenders, including banks and insurance companies, began giving credit to individuals who could not afford the mortgages on the homes they purchased during the good housing market. When the housing market fell, many homeowners were left with mortgages they could not afford and homes worth very little. As a result, the institutions that had lent the homeowners the money began to fail. In addition, many of these institutions had invested in mortgage-back securities which are risky investments. According to President Bush, these securities allowed the investors of Wall Street to borrow “huge sums of money, fuel the market for questionable investments, and put our financial system at risk”. He then told Americans that action by the federal government was now vital and explained his administration’s proposal that Congress pass a bill for a bailout funded with $700 billion dollars in taxpayer money (C-SPAN 2). Congress passed H.R. 1424, called the Emergency Economic Stabilization Act of 2008, in early October 2008 (United States).

President Bush placed the blame of the crisis on Wall Street, which satisfied Americans. The unsatisfactory part of the bailout for taxpayers was that they were expected to cover the expenses of Wall Street’s mistake. While many middle class taxpayers opposed having to pay $700 billion dollars to protect what they saw as money-hungry businessmen, President Bush promised that there would be consequences for the Wall Street executives responsible for the crisis (C-SPAN 2). Regardless, many taxpayers felt that an unfair burden was being placed upon them as reflected in Cagle’s struggling Uncle Sam character. The Los Angeles Times released a poll in late September 2008 that showed fifty-five percent of Americans opposed the use of taxpayer dollars to fund the bailout (Bensinger). Other Americans showed their dissatisfaction through protest. On September 25, 2008 protestors gathered outside of Wall Street to demonstrate their opposal to the federal government’s plan. AFLCIO president John Sweeney told reporters, “We want our tax dollars used to provide a hand up for the millions of working people who live on Main Street and not a handout to a privileged band of overpaid executives” (Weissner). This statement by Sweeney reflects the sentiment of Cagle’s cartoon Uncle Sam who struggles to bear the burden of Wall Street.

As earlier presented, President Bush promised that the bailout was not a handout to Wall Street but rather a way to save America’s financial system (C-SPAN 2). This perhaps made it easier for some Americans to agree to support the bailout. However, this sentiment changed greatly in the aftermath of the bailout. President Bush relayed to Americans in his 2008 speech that top executives on Wall Street knowingly made risky investments, were responsible for the crisis, and would face consequences for those actions; However, The New York Times released an article in 2011 addressing this very issue: “no senior executives have been charged or imprisoned, and a collective government effort has not emerged” (Story). Three years after the bailout, no executives had been criminally prosecuted. In fact, many of the institutions that had received money from the bailout actually gave their top executives large bonuses in 2008 (Bernard). A joint poll released by CBS and the New York Times five years after the bailout in 2013 showed that over sixty percent of Americans did not support the bailout and over eighty percent felt that Wall Street had not faced harsh enough consequences for its risky actions and investments (Kopicki). Americans felt that Wall Street was not only saved by the federal government at the expense of regular taxpayers, but that it also faced practically no repercussions for its actions.

As similarly depicted in John Knott’s 1937 cartoon, “How About Sharing The Load”, American taxpayers are depicted in Cagle’s cartoon as struggling to carry a burden of government. In Knott’s cartoon, a figure labeled “taxpayer” struggles to carry a large bundle labeled “expenses of government”. Another man labeled “public jobholder” looks on while smirking because he has a piece of paper in his pocket labeled “income tax exemption” (Knott). This cartoon refers to the nation-wide public dissent from American taxpayers concerning federal tax exemptions for government job holders in the midst of The Great Depression. While both these depictions reflect strikingly similar sentiments and widespread dissatisfaction from Americans, these two situations in American history have reaped different outcomes. In the case of the 1937 federal income taxes, President Franklin Delano Roosevelt’s sentiments reflected those of the American population; therefore, he was able to use his influence as president to help ensure change in the form of ending the exemptions. In the case of the 2008 bailout, however, President Bush felt that the burden placed upon American taxpayers was not as great as the importance of the financial crisis on Wall Street, so he was able to use his influence as president to perpetuate the passage of the Emergency Economic Stabilization Act of 2008 despite public dissent.

The financial crisis of 2008 was a large source of public dissatisfaction for average Americans in the early 21st century. While some Americans agreed to support the federal government’s plan to use $700 billion dollars of taxpayer money to bailout many Wall Street corporations in 2008, many Americans later felt that they faced the consequences of Wall Street’s risky actions.  Cartoonists John Knott and Daryl Cagle both reflect public dissent in their respective cartoons by depicting American taxpayers as struggling under a financial burden set upon them by the federal government in a time of economic trouble. Unfortunately, public dissent and frustration did little to reap any kind of change in the 2008 bailout compared to the way it did in the 1937 federal tax exemption issue. Despite this unfortunate outcome, Americans should still voice their opinions to federal government officials in order to keep the average American spoken for as the 21st century progresses.

Works Cited:

C-SPAN 2. “George Bush Wall Street Bailout.” 24 Sept. 2008, Washington D.C., White House.

Cagle, Daryl. “Wall Street Bailout Pig.” DarylCagle.com, darylcagle.com/2008/09/23/wall-street-bailout-pig/.

United States, Congress, Cong. House, Energy and Commerce; Education and Labor; Ways and Means. “Congress.gov.” Congress.gov, 110ADAD. 110th Congress, bill H.R. 1424, www.congress.gov/bill/110th-congress/house-bill/1424.

Bensinger | Times Staff Writer, Ken. “Masses Aren’t Buying Bailout.” Los Angeles Times, Los Angeles Times, 26 Sept. 2008, articles.latimes.com/2008/sep/26/business/fi-voxpop26.

Weisner, Christian. “Labor Leaders Decry Bailout.” National Post, 26 Sept. 2008, www-lexisnexis-com.ezproxy.lib.utexas.edu/hottopics/lnacademic/p. A10.

Story, Louise. “In Financial Crisis, No Prosecutions of Top Figures.”The New York Times, The New York Times, 14 Apr. 2011,   www.nytimes.com/2011/04/14/business/14prosecute.html.

Bernard, Stephen, and Business Writer. “Bailed-out Banks Gave Millions in Exec Bonuses, NY AG Report Shows.” ABC News, ABC News Network, abcnews.go.com/Business/story?id=8214818&page=1.

Kopicki, Allison. “Five Years Later, Poll Finds Disapproval of Bailout.” The New York Times, The New York Times, 26 Sept. 2013, economix.blogs.nytimes.com/2013/09/26/five-years-later-poll-finds-disapproval-of-bailout/.

Knott, John. “How About Sharing The Load?” Dallas Morning News 10 April 1937, sec 2: 2. Print.

Watch Out for Greek Debt!

The cartoon Watch Out for Greek Debt! depicts the famous Greek statue Discobolus by Myron with “Greece” written on it, ready to throw a discus symbolizing debt at other, cowering European countries.
The cartoon Watch Out for Greek Debt! depicts the famous Greek statue Discobolus by Myron with “Greece” written on it, ready to throw a discus symbolizing debt at other, cowering European countries.

The political cartoon Watch Out for Greek Debt! depicts the famous Greek statue Discobolus, with the word “Greece” written on it, ready to throw a discus, which symbolizes debt, at other cowering European countries (Sooke). The statue is posed as if it is about to hurl the discus, and all of the statues around it are ducking to avoid getting hit. This cartoon symbolizes how the other countries are avoiding getting “hit” by the negative consequences of Greek debt and having all of their political-economic progress regress (“Watch out for Greek Debt!”). The cartoon emphasizes the potentially devastating effects of Greek debt for other European countries in the Eurozone.

The European Union (EU) is an economic and political partnership between twenty-eight European countries that was created in the aftermath of World War II. The intent behind the creation of the EU is that countries that trade with each other become economically interdependent and therefore more likely to avoid conflict. The establishment of the EU brought about the creation of the euro, the single currency used across the twenty-eight countries (“The EU in brief”). Greece is one of the many members of the EU, along with Ireland, Austria, Italy, Spain, France, Germany and Portugal, to name a few (“Countries in the EU and EEA”). Greece in particular, however, is singled out in this cartoon as the most vulnerable as well as the most threatening member of the bunch.

Greece is in the midst of a debt crisis that could potentially crumble the economies of its European neighbors. After Wall Street crashed in 2008, Greece became the center of Europe’s debt crisis. Greece admitted that it had been understating its deficit figures for years and suddenly found itself shut out from borrowing in financial markets, leading the country toward bankruptcy. This sudden decline put Europe on the verge of a new financial crisis. To avoid collapse, the financial troika – the International Monetary Fund, the European Central Bank, and the European Commission – issued the first of two international bailouts for Greece, which would eventually total more than $264 billion in today’s exchange rates. “Greece’s relations with Europe are in a fragile state, and several of its leaders are showing impatience” (“Greece’s Debt Crisis Explained”).

The other countries depicted in the cartoon are not chosen at random either. Portugal, Ireland, Greece and Spain – collectively called “The PIGS”– are known for having “binged on cheap debt” and “allowed citizens’ benefits to go well beyond the means of their governments.” In 2010, the PIGS were going bankrupt at a fast rate and threatened the continued existence of the euro and the entire European project. However, since then, all of the PIGS except for Greece are returning to economic health (Dawber). Now Greece is putting them at risk of relapsing into economic instability, threatening the euro in the process. This is symbolized in the cartoon as “Greece” throwing a discus of “debt” at its neighboring European countries.

There is coincidental irony in the name of the statue, Discobolus, and the subject matter involved. The suffix “obolus” means “a silver coin or unit of weight equal to one sixth of a drachma, formerly used in ancient Greece” (“obolus”). It is ironic that a discus that symbolizes a Greek drachma has “debt” written on it, as if foreshadowing that Greece being a part of the EU and using the euro as its currency has a formidable future of debt crisis.

The issues illustrated in Watch Out for Greek Debt! have a lot of similarity to the issues depicted in the political cartoon If They Would Exchange Presents by John Knott (Knott 2). Published on Christmas Eve 1931, Knott’s cartoon shows Uncle Sam of the United States offering a Christmas gift of war debt revisions to a queen representing Europe; and in the generous spirit of the season, she is offering the gift of disarmament in exchange.

In the twenty-first century, Greece is in debt to other countries much like Germany was in the aftermath of World War I. In the 1930s, the United States wanted Germany and the rest of Europe to disarm so that the funds going toward armament could instead go toward debt repayment; thus, in If They Would Exchange Presents, Europe’s gift to the U.S. was disarmament. In Knott’s cartoon, Germany, along with the rest of the indebted European nations, was asking for war debt revisions so that their debt load wasn’t so crippling. Germany was blamed for the damages and costs of World War I and was required to pay back the costs to the Allied nations. Repayment obligations were so onerous that they needed a moratorium and debt revisions to ever back on their feet. Similarly, in Watch Out for Greek Debt!, Greece is held responsible for threatening Europe’s economy, and needs bailouts for its crippling debt like Germany was asking for war debt revisions. “The bailout money mainly goes toward paying off Greece’s international loans, rather than making its way into the economy. And the government still has a staggering debt load that it cannot begin to pay down unless a recovery takes hold” (“Greece’s Debt Crisis Explained”).

The humor of comparing these two cartoons, and particularly comparing twenty-first century Germany and Greece, is that Germany is now the poster-child for Greece to model itself after. “Germany has fewer outstanding tax debts than any other country in Europe, while Greece has more than any other. That difference not only helps Germany enjoy a far more fiscally sound position than Greece, but it offers a stark contrast between a disciplined government and one that historically has been hardly disciplined” (O’Brien). It is ironic that Germany, which once was economically unstable and deeply indebted to other countries, is now an example of European economic health, the example to which Greece aspires.

Lastly, in Watch Out for Greek Debt!, Greece has the potential of putting contemporary Europe in as much debt and economic instability as in the 1930s because of the region’s shared economic interdependence on the euro. The Knott cartoon shows Europe of that era requesting war debt revisions because it is in an economic rut. Contemporary Europe could potentially descend into similar economic turmoil because if Greece were to collapse, then the euro could collapse with them, causing a domino effect.

Works Cited

“Countries in the EU and EEA.” GOV.UK. Gov.UK, 24 July 2015. Web. 17 Nov. 2015.

Dawber, Alistair. “While Greece Flails, Are the Rest of the Stricken Pigs Taking Off?” Independent. Independent, 19 Feb. 2015. Web. 17 Nov. 2015.

“The EU in Brief.” Europa. European Commission, 15 Oct. 2015. Web. 16 Nov. 2015.

“Greece’s Debt Crisis Explained.” The New York Times. New York Times, 31 Oct. 2015. Web. 10 Nov. 2015.

Knott, John. “If They Would Exchange Presents.” Cartoon. Dallas Morning News [Dallas, Texas] 24 Dec. 1931, sec. 2: 10. Print.

“Obolus.” American Heritage Dictionary of the English Language. 5th ed. N.p.: Houghton Mifflin Harcourt, 2011. The Free Dictionary. Web. 17 Nov. 2015.

O’Brien, Matt. “7 Key Things to Know about Greece’s Debt Crisis and What Happens Next.” The Washington Post. N.p., 5 July 2015. Web. 10 Nov. 2015.

Sooke, Alastair. “The Discobolus: Greeks, Nazis and the Body Beautiful.” BBC. BBC, 24 Mar. 2015. Web. 17 Nov. 2015.

“Watch out for Greek Debt!” Cartoon. Enikos. N.p., 16 Feb. 2015. Web. 10 Nov. 2015.