Occupy Wall Street Demonstrations
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I downplayed this initially, but there's something going on here--OWS is taking a life of its own. A lot of those kids on the street probably understand it more than most. Like it or not, it's a political force that has to be accounted for. Is there any political program or any real organization here? No. But there's a fundamental understanding that the political and financial orders have become calcified by years of corruption and insider dealing. The theft, the fraud, the financial manipulation is what they're charging against. It isn't based on any seated animus/envy/jealousy of the rich. It is an attack on wealth gained by ill means, which amounts to the quadillions, if you consider the full weight of derivative contracts with absolutely no collateral value backing it.
Just to put it in perspective, the entire net worth of all the assets on this planet is only 40% of the $1.5 quadrillion that has been leveraged out over the past 15 yrs. alone. If you want to know why the financial system is collapsing, look no further than here. There's no real money backing these contracts, that governments, businesses, and others have to acknowledge nevertheless!
Pay to play politics, deregulation of key financial institutions (esp. bank capital requirements and leverage limits), and the removal of any type of moral hazard has all contributed to create the current circumstances. The financial institutions did not win in the game of life, they cheated their way there. The game is rigged. People just want a level playing field, and they want Wall Street to give up their government-sanctioned "cheat codes", things like:
Free money courtesy of the FED and Treasury--Ordinary citizens borrow money at market rates. The Goldman Sachs and Citigroups of the world get trillions of dollars for free, thanks to the government printing presses. They borrow at .0010 pct. and then lend the money back to the government at 2-3 percent. These banks are essentially middle men who take a gigantic cut while the government lends money back to itself. Of course, many of the these same large money center banks then go back and lend mortgages to the general public at four pct., or credit cards at 20-25 pct. This is essentially a government license to profiteer on the backs of the taxpayer. But even with all this free money, the banks are still practically insolvent, if not for daily access to the FED's discount window.
Then we have the elimination of "moral hazard"--"Something for nothing" has become Wall Street's official motto. Getting bailed out has been their modus operandi for many years now. Time after time, when big banks get drunk on leverage and make bets that blow up in their faces, it is the taxpayer that is expected to bail them out. Doesn't matter if it's the Mexican currency bailout of 1994 (when the US government bailed out speculators who gambled on the peso), or the World Bank bailout of 1998, a bailout of speculators in emerging markets, mainly in Asia, or the Long Term Capital Management bailout of that same year, where the rescue of a harebrained hedge fund scheme was deemed a matter of international urgency by Alan Greenspan, its all the same story.
Now its much different though. The amounts of the bailouts are getting very large due to the leverage balloon that has been created since the 1990's. The 2008 bailouts have been very costly, but once sovereign states begin to go under, it is going to get mighty interesting. There's not enough money in the world to bail these banks out. Even the IMF is out of money! Bank interlending markets are freezing up, albeit slowly this time, as the full weight of these debts becomes apparent. In the meantime, we will continue to see institutional investors being made whole on their losses. Yes kids, Joe the Plumber buys a house that he can't afford and loses it in the process, but powerful and well connected players get a costly bailout. People see this difference and understand it.
And of course, these same institutions don't pay any taxes either. Goldman Sachs only paid 1 pct. in taxes out of gross revenues, and Bank of America actually got a $1 billion tax credit. Citigroup and CIT won't be paying taxes for years to come either. And to top it off, many of the perpetrators have what really amounts to a "get out of jail for free" card. Look at the Abacus case, where Goldman Sachs helped a hedge fund investor by the name of John Paulson swindle a pair of European banks for a billion dollars. The punishment for the crime tells you the whole story about how bifurcated our justice system has become. As part of the settlement, Paulson had to pay back $500 million, just half of what he stole. Can anyone imagine a common thief being caught by the police and being sentenced to return half of what he stole?
In short, there are fundamental inequities that are driving these protests. People don't really want handouts, nor is it a class uprising in the classical sense, nor is it anarchists/commies stirring up trouble. In many respects it is motivated by a sense of egalitarianism--people want to live in the same country and by the same rules. Is that really asking for so much? Indeed, it can be fairly argued that those who are truly entitled and spoiled within our society are those who sit at the head of the table and have gorged themselves out at the expense of the productive economy.