1. The big banks and hedge funds were in much
more trouble than we were led to believe.
As many of us suspected, all the
big banks were on their knees begging for help - secretly - while
telling their investors, the public and Congress that all was well.
They had gambled and lost.
Under the rules of ideal capitalism,
they should have suffered some “creative destruction,” and seen
their shareholder value eliminated through bankruptcy, and their
managers replaced. The entire banking system should have been
reorganized from top to bottom as well.
Instead, these colossal failures were
secretly rewarded.
2. Wall Street’s secret government made sure the
largest banks would grow even larger, aided by the secret funding.
While Congress was debating
legislation to break up the large banks and reinstitute
Glass Steagall (to separate risky
investment banking from insured commercial banking,) the secret
government was using public funds to grow even larger through
mergers and acquisitions.
Because Congress and the public were
unaware of the secret funding and ill-health of all the banks, the
legislation was easily defeated.
As the chart below makes painfully
clear, too-big-to-fail banks grew even bigger:
3. The bigger Wall Street becomes, the
more government it can buy.
This part isn’t secret.
As the top six banks grew larger, they
spent more funds lobbying to make sure that they wouldn’t suffer any
unprofitable impacts from banking reform legislation.
So after the biggest banks received
hundreds of billions in secret loans, they upped their lobbying
funds to maintain their size and power.
Read ‘em and weep:
4. Wall Street’s secret government
protects its own.
At first, it’s not easy to
understand how Treasury Secretary Paulson, the former head of
Goldman Sachs, could risk attending a secret meeting with giant
hedge fund managers, many of whom used to work at Goldman Sachs.
How could the nation’s highest ranking
financial official dare to tip off these hedge fund elites about the
imminent government takeover of Fannie and Freddie before Congress
and the public were informed? Well, one answer is that Paulson felt
obliged to warn his old comrades of the impeding nationalization.
Maybe, he wanted to get them out of
harm’s way just in case they were heavily involved in those markets.
Or maybe he also wanted to give them a very valuable tip to profit
by.
But the deeper explanation, I believe,
is that Wall Street’s key government officials - Paulson, Summers,
Geithner, Orszag (the former Obama OMB chief who now makes millions
working for CitiGroup), etc. truly believe the following:
-
Wall Street banks are the best
in the world and are the cutting-edge of the American
economy. They are our future.
-
Wall Street bankers and hedge
fund managers are enormously smarter and sharper than the
rest of us. They deserve our admiration.
-
Helping Wall Street to grow and
prosper is precisely the same thing as helping all Americans
and the entire economy. They deserve our support.
-
Secret meetings to provide
insider information are normal on Wall Street. There’s
nothing wrong with warning your friends about upcoming
policy decisions that might impact their profits.
-
There’s also absolutely nothing
wrong with providing trillions of dollars of secret loans to
the best and the brightest and not telling Congress about
it.
It’s all a closed loop of
self-justification and self-deception: Wall Street is brilliant.
What Wall Street does is for the good of
the country. Helping Wall Street profit is good for the country.
Hiding the truth from democratically elected leaders is also for the
good of the country because Wall Street is brilliant and knows
better.
And all this is deeply believed by Wall Street and its secret
government, even though Wall Street, and Wall Street alone, took
down the economy and killed 8 million jobs in a matter of months.
Simply brilliant!
5. Wall Street is a clear and present
danger to democracy.
Usually, I am not an alarmist.
In fact, I often argue against facile
conspiracy theories. I want to believe that our democracy still has
promise. But, the Wall Street-induced crash and the government’s
response to it has me very worried. The Bloomberg News revelations
suggest that Wall Street’s secret government has enormous disdain
for what remains of our democracy.
The financial elites obviously believe
that Congress cannot be trusted to do the right thing even when it
is bought and paid for by the very banks it supposedly regulates.
As for the rest of us? We’re just a
financially illiterate mass to be manipulated through the mass
media. Our minds too can be bought and sold through careful
marketing.
This financial arrogance and corruption is enormously corrosive to
our democratic values. Already, many Americans, and for good reason,
no longer trust their government. Already, many Americans, and for
good reason, no longer vote. Already, many Americans, and for good
reason, believe that democracy as we know it is a sham.
Wall Street couldn’t have written a
better script to maintain its domination.
6. Occupy Wall Street is fundamentally
correct, but we need more.
The occupiers dramatically
attacked Wall Street elites and captured the country’s imagination
with their 1 percent, 99 percent framework.
And the idea is sticking and spreading.
But that’s only the start. To reclaim our country from Wall Street’s
secret government we will need to develop an enormous movement among
the 99 percent.
Although we hope it just happens
spontaneously through Twitter and
Facebook, we all know it will
require hardcore organizing involving millions of us.
At the moment, no one knows what form it will take.
But we do know this: great
concentrations of power and wealth do not give up their power and
wealth without an enormous fight. Wall Street’s secret government is
more than ready to protect itself, even if it means subverting
democracy. Our occupiers have shown great courage in helping us
reclaim our democratic rights.
Let’s hope it spreads…and soon.
