OK. We all know that the Occupy Wall Street demonstrations in NYC and around the country are not going to end well. And perhaps we had a preview of coming attractions in Oakland yesterday when the protests turned violent and the photos making the rounds on the Internet pointed more to a third world country than a city in the USA.
My advice to the protesters: fold up the tents and sleeping bags and head for home. You succeeded in getting the news media and others focused on the unethical and in some cases illegal activities of the Wizards of Wall Street and the Captains of Industry who really do abuse our economic and political system for personal gain. And there is no question that the middle class in this country is disappearing, with most heading below the dividing line with a few prospering and heading above it.
Thomas Friedman opines in the NYT, “Did You Hear the One About the Bankers?“:
CITIGROUP is lucky that Muammar el-Qaddafi was killed when he was. The Libyan leader’s death diverted attention from a lethal article involving Citigroup that deserved more attention because it helps to explain why many average Americans have expressed support for the Occupy Wall Street movement. The news was that Citigroup had to pay a $285 million fine to settle a case in which, with one hand, Citibank sold a package of toxic mortgage-backed securities to unsuspecting customers — securities that it knew were likely to go bust — and, with the other hand, shorted the same securities — that is, bet millions of dollars that they would go bust.
It doesn’t get any more immoral than this. As the Securities and Exchange Commission civil complaint noted, in 2007, Citigroup exercised “significant influence” over choosing $500 million of the $1 billion worth of assets in the deal, and the global bank deliberately chose collateralized debt obligations, or C.D.O.’s, built from mortgage loans almost sure to fail. According to The Wall Street Journal, the S.E.C. complaint quoted one unnamed C.D.O. trader outside Citigroup as describing the portfolio as resembling something your dog leaves on your neighbor’s lawn. “The deal became largely worthless within months of its creation,” The Journal added. “As a result, about 15 hedge funds, investment managers and other firms that invested in the deal lost hundreds of millions of dollars, while Citigroup made $160 million in fees and trading profits.”
Citigroup, which is under new and better management now, settled the case without admitting or denying any wrongdoing. James Stewart, a business columnist for The Times, noted that Citigroup’s flimflam made “Goldman Sachs mortgage traders look like Boy Scouts. In settling its fraud charges for $550 million last year, Goldman was accused by the S.E.C. of being the middleman in a similar deal, allowing the hedge fund manager John Paulson to help choose the mortgages and then bet against them without disclosing this to the other parties. Citigroup dispensed with a Paulson figure altogether, grabbing those lucrative roles for itself.” (Last Thursday, the U.S. District Court judge overseeing the case demanded that the S.E.C. explain how such serious securities fraud could end with the defendant neither admitting nor denying wrongdoing.)
This gets to the core of why all the anti-Wall Street groups around the globe are resonating. I was in Tahrir Square in Cairo for the fall of Hosni Mubarak, and one of the most striking things to me about that demonstration was how apolitical it was. When I talked to Egyptians, it was clear that what animated their protest, first and foremost, was not a quest for democracy — although that was surely a huge factor. It was a quest for “justice.” Many Egyptians were convinced that they lived in a deeply unjust society where the game had been rigged by the Mubarak family and its crony capitalists. Egypt shows what happens when a country adopts free-market capitalism without developing real rule of law and institutions.
But, then, what happened to us? Our financial industry has grown so large and rich it has corrupted our real institutions through political donations. As Senator Richard Durbin, an Illinois Democrat, bluntly said in a 2009 radio interview, despite having caused this crisis, these same financial firms “are still the most powerful lobby on Capitol Hill. And they, frankly, own the place.”
Our Congress today is a forum for legalized bribery. One consumer group using information from Opensecrets.org calculates that the financial services industry, including real estate, spent $2.3 billion on federal campaign contributions from 1990 to 2010, which was more than the health care, energy, defense, agriculture and transportation industries combined. Why are there 61 members on the House Committee on Financial Services? So many congressmen want to be in a position to sell votes to Wall Street.
We can’t afford this any longer. We need to focus on four reforms that don’t require new bureaucracies to implement. 1) If a bank is too big to fail, it is too big and needs to be broken up. We can’t risk another trillion-dollar bailout. 2) If your bank’s deposits are federally insured by U.S. taxpayers, you can’t do any proprietary trading with those deposits — period. 3) Derivatives have to be traded on transparent exchanges where we can see if another A.I.G. is building up enormous risk. 4) Finally, an idea from the blogosphere: U.S. congressmen should have to dress like Nascar drivers and wear the logos of all the banks, investment banks, insurance companies and real estate firms that they’re taking money from. The public needs to know.
Capitalism and free markets are the best engines for generating growth and relieving poverty — provided they are balanced with meaningful transparency, regulation and oversight. We lost that balance in the last decade. If we don’t get it back — and there is now a tidal wave of money resisting that — we will have another crisis. And, if that happens, the cry for justice could turn ugly. Free advice to the financial services industry: Stick to being bulls. Stop being pigs.
Still, the demonstrators can huff and puff, but they ain’t going to blow down the house that shelters the bankers, corporate execs and politicians. Better to hit the streets and go door to door collecting names on petitions and getting people to vote for candidates who are committed to change.
And in the end, I agree with Pat Buchanan who argues that the protests will only get more violent — and consequently in my view accomplish nothing — in the months ahead.
On today’s installment of The McLaughlin Group, conservative commentator Pat Buchanan had some strong words for the Occupy Wall Street movement, and in arguing President Obama would not be wise to embrace the protestors, suggested that as it continues to snow and the weather gets colder, they will pursue more violent means to accomplish their goals.
John McLaughlin asked if the OWS movement would serve as a powerful voting bloc in the upcoming presidential election, or if the protest is simply just “transitory.” Buchanan immediately jumped in, comparing the protestors, as so many othersbefore him have, to the hippie protestors of the 1960s.
It’s going end very, very badly with these folks in the winter, and they’re not going to be getting publicity, they’re going to be acting up, acting badly, like the worst of the demonstrators in the 60s… They’re going to start fighting with the cops.”
Time for the Occupy Wall Street crowd to do what the USA should have done in Iraq and Afghanistan years ago: Declare victory and go home.