Underlying the outcome of the recent midterm shift in our political landscape is the almost universal acknowledgement that the electorate is not happy. Down on Congress, certainly, concerned about the direction the country is headed and pessimistic that things will change any time soon. We all seem to understand it’s because our economy is broken and we are broke, and more importantly the remedies we’ve applied are widely unpopular. Looking back to 2008 one is staggered by the cupidity of those whom ‘free market’ theory entrusted with our national economy:
Wall Street has turned the economy into a giant asset-stripping scheme, one whose purpose is to suck the last bits of meat from the carcass of the middle class.
What really happened to [Bear Stern] and [Lehman Brothers] is that an economic drought temporarily left the hyenas without any more middle-class victims – and so they started eating each other, using the exact same schemes they had been using for years to fleece the rest of the country. And in the forensic footprint left by those kills, we can see for the first time exactly how the scam worked – and how completely even the government regulators who are supposed to protect us have given up trying to stop it.
This was a brokered bloodletting, one in which the power of the state was used to help effect a monstrous consolidation of financial and political power. Heading into 2008, there were five major investment banks in the United States: Bear, Lehman, Merrill Lynch, Morgan Stanley and Goldman Sachs. Today only Morgan Stanley and Goldman survive as independent firms, perched atop a restructured Wall Street hierarchy. And while the rest of the civilized world responded to last year’s catastrophes with sweeping measures to rein in the corruption in their financial sectors, the United States invited the wolves into the government, with the popular new president, Barack Obama – elected amid promises to clean up the mess – filling his administration with Bear’s and Lehman’s conquerors, bestowing his papal blessing on a new era of robbery.
To the rest of the world, the brazenness of the theft – coupled with the conspicuousness of the government’s inaction – clearly demonstrates that the American capital markets are a crime in progress.
Matt Taibbi – Wall Street’s Naked Swindle Rolling Stone 15 Oct 09
Could it really be that bad? America seems to think so and the widespread disaffection with both political parties will continue until it is fixed.
Looking back it is tempting to blame the deregulation of the financial sector, a bipartisan effort over three decades, for our collapse but underneath is an endemic culture of self-serving greed which is difficult for the average working American to even comprehend:
…the whole reason everything almost came crashing down in 2008 was twenty-five years of nonstop focus on bonus checks, on compensation. Why did Lehman Brothers go out of business? Because their people kept doing real estate deals long after the market had turned. It produced bigger bonuses for them. Why did AIG keep selling those foolhardy insurance police on CDOs? Because it was easy money and led to bigger bonuses. Why did Merrill Lynch need to be saved in the first place? Because O’Neal let his guys run wild in the CDO market so they all could get bigger bonuses. Bank of America could never have bought Merrill Lynch if the people up there hadn’t been so obsessed with their own bonuses that they were blind to the dangers of what they were doing. The people at Merrill Lynch came crawling to Charlotte because of their own self-inflicted wounds. The whole reason John Thain worked for Ken Lewis, and not the other way around, was that bonus culture they had up there in New York. And even Thain, with all his degrees from Harvard and MIT, couldn’t see it. That’s what twenty-five years on Wall Street would do to a man.
It would seem our ‘masters of the universe,’ having gained the authority to set the course for our national economy, impoverished us all with crippling debt so they could amass huge fortunes at a penny to the dollar. Who could blame the electorate for being angry?:
If we want to understand some of the anger driving Americans to polls today, at least part of it must derive from the fact that greedy Wall Street financial institutions’ executives broke the economy, and didn’t get punished for it. Far from it, their industry was kept on life support at taxpayer expense.
A very simple story, when all is said and done.
Andrew Leonard – How Wall Street made voters angry Salon 2 Nov 10
Indeed. Not only did taxpayers pay for this collapse but the surviving institutions remain crippled with debt at which we continue to throw large sums of increasingly scarce public money. And for all this investment we have a purchased a fragile and slow recovery which has sustained the culture of wealth accumulation on Wall Street as the burden of wealth creation continues to fall on Main Street. It is unsustainable and the electoral rumblings of discontent are a salutary warning to both parties. So far neither of them has been willing or able to adequately address this issue.