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7 Ways to Really Take the Ax to Wall Street

As we’ve learned the hard way, the core of our modern capitalist economy is finance, and finance is run entirely by a few large Wall Street firms. But here’s the ultimate irony: while modern capitalism depends on Wall Street, Wall Street no longer depends on capitalist principles. In finance a new system has emerged that makes a mockery of the idea that entrepreneurs should be rewarded for their successes and suffer losses when they fail. Capitalist Values Vanish from Wall Street This week we are reminded again that the ideals of capitalism are a joke on Wall Street, as the heads of the largest Wall Street banks earn enormous incomes while the values of their banks plummet. “According to data from Rochdale Securities analyst Dick Bove, the heads of major banking groups including JPMorganChase (JPM), Goldman Sachs (GS) and Bank of America (BAC) are out-earning their employees and shareholders even as shares of bank stocks as a group lost about 26 percent [in 2011].” (Ron Haruni, “Big Bank CEOs Walk Away with Big Bucks in 2011”) The big boys are raking it in again even while the economy suffers through the highest sustained level of unemployment since the Great Depression. More to the point, these very bank executives were complicit up to their eyeballs in helping to crash the economy in the first place! Chase CEO Jamie Dimon hauled in $41.9 million in 2011 while its bank stock lost roughly 23 percent of its value. Lloyd “I’m doing God’s work” Blankfein, CEO of Goldman Sachs, walked off with $22 million while his bank lost more than 46 percent of its value. But, at this point, why should we be surprised? Before the crash, the heads of too-big-to-fail banks made billions in packaging, selling and then betting against toxic mortgage-backed securities that directly puffed up the housing bubble. When they couldn’t escape the crash they helped to foster, they went down on their knees begging for government help. At the same time they publicly claimed all was well, while privately taking in more than $7 trillion in secret government loans. And then after sucking up all these enormous bailouts, they used these nearly interest-free government loans to buy up other banks and lobby to prevent rules that might constrain their gambling activities. Meanwhile, they paid not a dime in personal restitution for killing 8 million jobs in a matter of months, most of which have not returned. Financial Plutocracy is Real That’s not capitalism. Rather, it’s the very definition of a plutocracy. These banks and those who run them are living off the rest of us and have no intention, ever, of suffering through the ups and downs of capitalist rewards and losses. When you run the casino, it’s always payday for the house. We’ve got a choice. Either we learn to live under their thumbs or we do something dramatic about it. The porous Frank-Dodd bill has no chance of ending the plutocracy. Instead, we’re going to need some bold thinking and even bolder, more massive mobilizations a la Occupy Wall Street. But first, we need to have a better notion of what the democratizing of Wall Street might look like. How to Really Overhaul Wall Street I put this question to Marshall Auerback, global portfolio strategist for Madison Street Partners, a Denver-based fund management group, and a fellow for the Economists for Peace and Security (and an AlterNet contributor). With those titles, he should have an insider’s grasp on what needs to be done. In fact, Brother Auerback is more than willing to take an axe to Wall Street as we know it. Here’s his brilliant wish list: 1. Banks should only be allowed to lend directly to borrowers and then service and keep those loans on their own balance sheets. There is no further public purpose served by selling loans or other financial assets to third parties, but there are substantial real costs to government regarding the regulation and supervision of those activities. Goodbye CDOs, synthetic CDOs and the slew of profitable but dangerous financial casino games banks so love. …Read the rest of this article at AlterNet!

Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It


Why the Idiocy About Unemployment?

This originally appeared on The Huffington Post. My wife, a labor economist, is upset with NPR’s “The Take Away” (and many other news programs) for reinforcing the myth that somehow the unemployed are to blame for not having a job. We all should be angry as well because the jobs just aren’t there. In fact, […] Read More..

Les Leopold: Why the Wall Street – BP Double Standard?

This originally appeared on The Huffington Post. “In reality, credit pollutants pose the same kind of threat to our economy as chemical toxins do to our environment. Like their chemical counterparts, they tend to concentrate in the weakest and most vulnerable parts of the financial system, and that’s where the toxic effects show up first: […] Read More..

The Tea Party Dumps Economic Populism: Where are the Progressives?

The Tea Party sprang to life in response to the financial crash that sent our economy into a tailspin. Until recently, it balanced two tendencies: hatred of big government and hatred of Wall Street. The combination (in the form of the bailouts and stimulus programs) provided a perfect target as economic hardship hit millions on Main Street. Read More..

150 Billion Reasons Why Wall Street Loves Political Gridlock

No, it's not a conspiracy. Goldman Sachs and its minions are not plotting to cripple the government. But it is remarkable how our political system freezes shut just when we need to make serious changes to our economic system. Read More..

The Tea Party: Economic Populists or Wall Street Toadies?

Commentators like David Brooks also are wrong to assume that populism is a movement of the less educated against the educated elites. Of course there are those in the Tea Party who discount the science of evolution and global warming, who think Obama is a foreign-born Muslim agent, and who are racist, sexist and anti-Semitic to boot. But to equate the entire notion of populism with retrograde ignorance is to fall into a dangerous stereotype. Populism is not about education: whether expressed by the left, right, or middle, it's a revolt against concentrated power and economic injustice. Read More..