This was left as a comment but it’s so well done I promoted it to a full post
Thank you to the commenter…Im proud of the intelligence of my readers.
The OWS movement is about a lot of very straightforward practical things. First and foremost, it is about this: The financial sector (wall street firms, big banks, and various shadow banking institutions (money market businesses, etc.)) fought tooth and nail to DEREGULATE financial markets. Derivatives markets were completely deregulated; SEC restrictions on how high big banks’ leverage ratios could go were relaxed; Glass-Steagall was repealed, and so forth.
The financial sector spent literally BILLIONS of lobbying dollars to effect these changes–all in the name of some airy “free market” ideology, i.e., let the financial markets just regulate themselves, everything will be fine, etc.
But when they finally got everything they wanted–what happens? They immediately go about creating incredibly risky investments and instruments (given AAA ratings by the ratings agencies that are in their pockets), all for the sake of making SHORT TERM profits. Without ANY concern towards anything long term.
Perfect example: credit default swaps. The firms selling these “insurance policies” made millions upon millions of profits in the short term. But of course, they did not have sufficient capital set aside to pay in the event that the defaults they were insuring against took place. And why? Because they LOBBIED Congress to make sure that they didn’t HAVE to have any capital set aside. Thanks to fucks like Phil Gramm, the derivatives market went completely unregulated. And then, after getting what they wanted (a deregulated market), they immediately went about making absurdly risky investments that would be guaranteed to make money in the short term, and also pretty much guaranteed to cause massive failure in the long term. They didn’t care.
Why didn’t they care? 2 reasons. First, because the compensation structures on Wall Street and in investment banks do NOT reward long term success or punish long term failure. They ONLY reward short term success. Second, Wall Street knew they could count on the Fed and the government to bail them out in the event of a crisis–just like they had over and over again for the past 20 years.
Oh yeah, the people in the risk management departments in these firms, the ones who saw what was perfectly obvious to anyone who cared to look, and who raised red flags and tried to warn the executives of the crisis in the offing? They were FIRED. To a man.
Oh yeah, the people who made the decisions to raise the banks’ leverage ratios to 30:1, and to sell the credit default swaps with no capital set aside to pay in the event the underlying assets defaulted, and to stop investing in the productive aspects of our economy and to engage entirely in speculation–those people, the ones who fucked us ALL…they got rich. Obscenely rich. They didn’t go to jail; they didn’t lose their jobs; they got rich. And they’re getting richer.
And all this is just a perfect example of the ongoing trend over the past 20 years: Banks are participating less and less in actually GROWING the economy (making loans to businesses, etc.), and are using more and more of their capital on speculation (the mere trading of commodities, financial instruments, etc.).
Meanwhile, as a result of this, the spending power of the middle and working classes has declined enormously. And as anyone who knows anything about economics can tell you–if the middle class has no spending power, then we go into depression. It’s as simple as that. I am a small business owner; I need a robust middle class to buy my products. If they go, I go. And so do thousands of other businesses.
But Wall Street doesn’t give a shit about the U.S. economy. That is the thing that OWS is trying to communicate to anyone who will listen. After all, Wall Street is dealing with a GLOBAL economy. As long as money is moving around SOMEWHERE, Wall Street can get rich. It doesn’t need to be in the U.S. They couldn’t care less about the U.S. middle class; those people aren’t the ones buying Wall Street’s products anyway.
So what is the big lesson we learned in 2008, and the one that OWS is trying to spread? First and foremost that the right-wing ideology of Let-the-financial-markets-regulate-themselves DOES NOT WORK. Wall Street firms are designed to make money–they are motivated by greed. Which honestly is fine–people wanna make a buck, you can’t fault them for that. BUT that doesn’t mean we have to let them use OUR money in whatever reckless ways they want. They need to be thoroughly REGULATED.
So yeah, lets bring back more vigorous regulation of all these financial markets; lets require banks to use a certain percentage of their capital for making loans to businesses to help GROW the productive aspects of our economy; lets outlaw compensation structures on Wall Street that reward only short term success, and allow someone to become a multi-millionaire because he designed a financial instrument that makes a short term profit, even if that same instrument ends up costing the firm twice as much in losses down the road; and when we hand trillions of tax dollars to the banks, lets be sure we vigorously regulate how that money is used; lets abolish too-big-to-fail banks; und so weiter…
OWS isn’t about anti-capitalism; rather, it’s opposed to the notion that the financial sector can be left to its own devices, and be trusted to behave responsibly. It cannot be so trusted. 2008 PROVED that.
Honestly, I can’t help but think that the complete IDIOCY of the current Republican candidates arises like a death gasp of that now proven-false ideology. They know that their philosophy of deregulation has been PROVEN to not work. So they are all desperately trying to justify that ideology with more and more extreme and weird justifications…culminating in the remark of Herman Cain, probably the most pure mystification ever heard in a presidential debate: If you’re poor, it’s your fault.
One Response
Whoever wrote this is full of shit. First of all, while it is true that the “financial sector” (and can you believe the arrogance of that term, by the way? As if the livelihoods of certain individuals is simple a cog – a “sector” – in some larger, more organized entity) …it’s true that it did engage in unprecedentedly risky behavior, they only did so because they had no other choice (ie: every other, less risky form of making money on Wall Street is so heavily regulated and/or taxed that it isn’t worth doing per se). The only way you could think otherwise is if you regard profit as optional; which means you regard the people who research and execute the actions of the “financial sector” as superflouous; which means you believe in the labor theory of value; which makes you a Marxist economically and an altruist morally (ie: you believe that the purpose of participation in the economy is to serve the needs of other, more needy people rather than your own happiness). It doesn’t matter even if this writer doesn’t think that he’s these things; the nature of his opinions make him so. Oh, and lets say nothing of fact that, in reality, big business like Wall Street firms pay most of the taxes that their bailouts consisted of anyways – so, technically, they weren’t bailouts, but refunds.
But I understand. I realize that the OWS movement – and the populist opposition to business bailouts in general – isn’t about these particular bailouts, but the issue of bailouts per se. The opposition to these particular bailouts is just the excuse to have a referendum on this kind of behavior, and thus determine the course of America’s political future. Let’s look at what the OWS people would have that future look like.
Unlike the typical member of the “Tea Party”, the typical OWS protestor isn’t opposed to bailouts *on principle*, but simply bailouts to rich people at the expense of poor people. If it were the other way around – if the government had taken money from rich people and given it to some poor person to “bail him out” from a life spent buying menthol cigarettes and shiny 18″ wheels when he should have been paying for groceries – they would be all for it. In fact, that’s what they’re advocating. They aren’t saying that “bailouts”, period – no matter who the “bailer” and who the “bailee” is – are wrong; they’re saying that all of the money the government refun – er, gave – to rich people could have been spent on poor people. In other words: unlike the Tea Partiers – who were appealing to the principle of LIBERTY – the OWSers are appealing to the principle of COLLECTIVISM.
They aren’t saying “Don’t tread on me” as a general expression of notion that man – individual man – is not be tread on. They’re saying it, but with the addendum “… tread on him, instead” slipped in implicitly at the end.
Financial markets don’t need to be regulated (even more than they already are; the repeal of Glass-Steagle notwithstanding). They need to be freed from taxes, regulations, and all the other altruism-motivated government dictates of their business practices (ie: NINJA loans), so that they can make money performing less risky behavior. Of course, in today’s environment, it is true that certain people are attracted to Wall Street that, in any other era, would be common criminals who couldn’t dream of working there. Mice rush in where lions fear to tread. But that isn’t the essence of the problems on Wall Street today. The essence comes from the behavior of the men who WOULD be there even in a completely free economy. The hard-nosed, practical, narrow-minded men who take their fiduciary duty (ie: THEIR FUCKING JOBS) seriously, and who simply react to the rules of the game as they’re set by their overlords in Washington. These men are not inherently evil (as the OWS Marxist-altruists want you to believe), but nor are they inherently good. They’re simply workers like everyone else, and if you want them to perform work that benefits not just themselves, but everyone else – kind of like small business does, the darling of the faux-capitalist left these days* – then set them free to fucking do it.
*Have you looked at a small business these days? Computers, phones, automobiles, plane tickets, office supplies, packages being delivered, etc, etc, etc. Small businesses “are the back bone of America”? Bullshit. Big business is the back bone of small business – and thus the back bone of America.