P***@counter.pun
2009-06-02 13:16:22 UTC
Our Economy Is Going to Keep Tanking Until We Stop Shoveling Billions
to Rich People
By Pam Martens. Posted June 2, 2009.
There's a cycle going on here: if you don't put money in consumers'
hands, you get repetitive cycles of layoffs and growing unemployment.
For the past eight months, we have been a nation focused on bailouts
and bankruptcies. For the past ten years, we have been a nation
ignoring massive wealth transfer and wealth concentration through a
rigged Wall Street.
As simple and clear as this picture is, some of the brightest minds in
this country are unwilling to connect the cause and effect of wealth
in too few hands to bankruptcies and a tanking economy.
Wealth-deprived consumers can't buy the goods and services being
produced. This leads to repetitive cycles of layoffs and growing
unemployment which leads to more wealth-deprived consumers leading to
more overcapacity in production plants, more layoffs, more shrinking
purchasing power.
The accompanying, and equally dangerous, problem is that concentrated
wealth stifles the very innovation that is necessary to create new
industries, new jobs and lead us out of the downward economic spiral.
Let's think about the individuals who tapped into Wall Street's rigged
wealth transfer system and what they have done with their ill-gotten
loot: typically, they own three or more homes, fancy cars, multiple
country club memberships, airplanes, yachts, and numbered offshore
bank accounts. The problem is, they just can't buy enough to
compensate for the purchases they have deprived hundreds of thousands
of other consumers from being able to make.
Goods sit on shelves, new orders get cancelled, leading to production
cuts, layoffs, plant closings and bankruptcies.
In a nutshell, it's the $1 Billion that Sandy Weill extracted from
Citigroup as its former CEO and Chairman that's the problem; it's the
$42 million condo he bought that's depriving 140 other people from
having $300,000 to buy a home ready to go into foreclosure for want of
a buyer. It's the hundreds of millions Weill is throwing around to
plaster his name and his wife's name on buildings that could be in the
hands of 10,000 consumers going out to buy Chrysler and GM cars now
gathering dust on the lots of dealers about to go bust.
It's also that Sandy Weill and his colleagues of that era on Wall
Street did not do anything worthy or smart in exchange for extracting
that wealth from the system. They repealed the regulations that had
kept the system on a more solid footing, then looted the system and
left it a basket case. We have no residual benefits of innovation to
compensate for all that missing wealth.
And that is the real and overlooked attendant danger: too many
billionaires sitting atop too many billions tied up in mansions and
yachts means that millions of budding innovators and entrepreneurs are
being deprived of adequate funds to create the breakthroughs that will
lead to new industries and future job growth.
And let's not forget about the trillions of dollars of wealth that
evaporated in bogus ventures that Weill and his fellow Wall Streeters
brought to market on NASDAQ. Add those trillions to the bailout
trillions and you're looking at a lost generation of funds for
innovation.
What all of this means is that President Obama has precious little
time left to stop rewarding failure and bad behavior before his own
Presidency is deemed a failure. It was difficult enough to countenance
the reappearance in his administration of all those Wall Street faces
who failed to rein in the Wall Street abuses or, worse, aided and
abetted the actual creation of the opaque system that permitted the
looting and pillaging. But this past week's news that the President
might be considering a pivotal role for the Federal Reserve in the new
regulatory structure planned for Wall Street crosses the line, if
true, from hubris to outright contempt for the American people.
The inherent cronyism of the Federal Reserve renders it utterly
useless as a watchdog. (Why is it even necessary to have to state that
obvious fact when no one can shake loose from the Fed what it's done
with trillions in taxpayer dollars or why it failed to police these
Frankenbanks in the first place.) The same thing is true of the U.S.
Treasury, which can't auction its own debt without the goodwill of its
Wall Street primary dealers.
According to March 31, 2009 data from the Federal Deposit Insurance
Corporation, there are 8,246 FDIC insured institutions with total
assets of $13.5 Trillion and domestic deposits of $7.5 Trillion. Four
institutions, Bank of America Corporation, JPMorgan Chase & Co., Wells
Fargo & Co. and Citigroup Inc., four institutions out of 8,246,
control 35% of all the insured domestic deposits and 46% of the assets
according to the March 31, 2009 figures from the FDIC.
Has the Federal Reserve taken steps to reduce this massive
concentration since the financial crisis began? Quite the contrary.
Bank of America was allowed to purchase the investment bank and
brokerage firm Merrill Lynch as well as subprime lender Countrywide
Financial; JPMorgan Chase took over the investment bank and brokerage
firm Bear Stearns as well as Washington Mutual; Wells Fargo & Co. took
over Wachovia.
The Federal Reserve's answer to concentrated wealth is to concentrate
it further. The Federal Reserve's answer to unmanageable,
dysfunctional banking institutions is to make them more unmanageable
and more dysfunctional.
President Obama needs to do three things quickly to get the country
back on course: he needs to separate investment banking/brokerage from
commercial banks. This will restore risk taking and innovation to
where it belongs, in non FDIC insured institutions. He needs to put
new faces that Americans can trust in charge of real regulators with
real powers. He needs to stop funneling money to zombie institutions
that haven't created anything of innovative value in a decade and
channel those funds into innovative research and development projects.
President Obama needs to step up to the plate and stop listening to
conflicted advisors. The fate of a nation, as well as his place in
history, hangs in the balance.
to Rich People
By Pam Martens. Posted June 2, 2009.
There's a cycle going on here: if you don't put money in consumers'
hands, you get repetitive cycles of layoffs and growing unemployment.
For the past eight months, we have been a nation focused on bailouts
and bankruptcies. For the past ten years, we have been a nation
ignoring massive wealth transfer and wealth concentration through a
rigged Wall Street.
As simple and clear as this picture is, some of the brightest minds in
this country are unwilling to connect the cause and effect of wealth
in too few hands to bankruptcies and a tanking economy.
Wealth-deprived consumers can't buy the goods and services being
produced. This leads to repetitive cycles of layoffs and growing
unemployment which leads to more wealth-deprived consumers leading to
more overcapacity in production plants, more layoffs, more shrinking
purchasing power.
The accompanying, and equally dangerous, problem is that concentrated
wealth stifles the very innovation that is necessary to create new
industries, new jobs and lead us out of the downward economic spiral.
Let's think about the individuals who tapped into Wall Street's rigged
wealth transfer system and what they have done with their ill-gotten
loot: typically, they own three or more homes, fancy cars, multiple
country club memberships, airplanes, yachts, and numbered offshore
bank accounts. The problem is, they just can't buy enough to
compensate for the purchases they have deprived hundreds of thousands
of other consumers from being able to make.
Goods sit on shelves, new orders get cancelled, leading to production
cuts, layoffs, plant closings and bankruptcies.
In a nutshell, it's the $1 Billion that Sandy Weill extracted from
Citigroup as its former CEO and Chairman that's the problem; it's the
$42 million condo he bought that's depriving 140 other people from
having $300,000 to buy a home ready to go into foreclosure for want of
a buyer. It's the hundreds of millions Weill is throwing around to
plaster his name and his wife's name on buildings that could be in the
hands of 10,000 consumers going out to buy Chrysler and GM cars now
gathering dust on the lots of dealers about to go bust.
It's also that Sandy Weill and his colleagues of that era on Wall
Street did not do anything worthy or smart in exchange for extracting
that wealth from the system. They repealed the regulations that had
kept the system on a more solid footing, then looted the system and
left it a basket case. We have no residual benefits of innovation to
compensate for all that missing wealth.
And that is the real and overlooked attendant danger: too many
billionaires sitting atop too many billions tied up in mansions and
yachts means that millions of budding innovators and entrepreneurs are
being deprived of adequate funds to create the breakthroughs that will
lead to new industries and future job growth.
And let's not forget about the trillions of dollars of wealth that
evaporated in bogus ventures that Weill and his fellow Wall Streeters
brought to market on NASDAQ. Add those trillions to the bailout
trillions and you're looking at a lost generation of funds for
innovation.
What all of this means is that President Obama has precious little
time left to stop rewarding failure and bad behavior before his own
Presidency is deemed a failure. It was difficult enough to countenance
the reappearance in his administration of all those Wall Street faces
who failed to rein in the Wall Street abuses or, worse, aided and
abetted the actual creation of the opaque system that permitted the
looting and pillaging. But this past week's news that the President
might be considering a pivotal role for the Federal Reserve in the new
regulatory structure planned for Wall Street crosses the line, if
true, from hubris to outright contempt for the American people.
The inherent cronyism of the Federal Reserve renders it utterly
useless as a watchdog. (Why is it even necessary to have to state that
obvious fact when no one can shake loose from the Fed what it's done
with trillions in taxpayer dollars or why it failed to police these
Frankenbanks in the first place.) The same thing is true of the U.S.
Treasury, which can't auction its own debt without the goodwill of its
Wall Street primary dealers.
According to March 31, 2009 data from the Federal Deposit Insurance
Corporation, there are 8,246 FDIC insured institutions with total
assets of $13.5 Trillion and domestic deposits of $7.5 Trillion. Four
institutions, Bank of America Corporation, JPMorgan Chase & Co., Wells
Fargo & Co. and Citigroup Inc., four institutions out of 8,246,
control 35% of all the insured domestic deposits and 46% of the assets
according to the March 31, 2009 figures from the FDIC.
Has the Federal Reserve taken steps to reduce this massive
concentration since the financial crisis began? Quite the contrary.
Bank of America was allowed to purchase the investment bank and
brokerage firm Merrill Lynch as well as subprime lender Countrywide
Financial; JPMorgan Chase took over the investment bank and brokerage
firm Bear Stearns as well as Washington Mutual; Wells Fargo & Co. took
over Wachovia.
The Federal Reserve's answer to concentrated wealth is to concentrate
it further. The Federal Reserve's answer to unmanageable,
dysfunctional banking institutions is to make them more unmanageable
and more dysfunctional.
President Obama needs to do three things quickly to get the country
back on course: he needs to separate investment banking/brokerage from
commercial banks. This will restore risk taking and innovation to
where it belongs, in non FDIC insured institutions. He needs to put
new faces that Americans can trust in charge of real regulators with
real powers. He needs to stop funneling money to zombie institutions
that haven't created anything of innovative value in a decade and
channel those funds into innovative research and development projects.
President Obama needs to step up to the plate and stop listening to
conflicted advisors. The fate of a nation, as well as his place in
history, hangs in the balance.