Wall Street Stranglehold On Economy Is Choking Americans

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Dogs_In_A_Pile's picture
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Wall Street Stranglehold On Economy Is Choking Americans

Great article by Shah Gilani

http://moneymorning.com/2010/01/26/downsize-banks/

He approaches this from a greed and cockiness standpoint rather than a conspiratorial one.  No matter what you believe to be the motive force this piece is a pretty good piece of work pulling the whole mess together.

A couple of outtakes

Banks Are the Gamblers ... But You're Taking the Risks

The credit crisis and Great Recession are the unintended consequences of Wall Street's greed. I say "unintended consequences" because - let's face it - Wall Street institutions tipped over their own money pot and bankrupted the public casino they had created to leverage bets with house money.

Where Greed Takes Control

The idea for Wall Street's institutions was to "dance until the music stopped." They all knew they had engineered a housing bubble and that the insane appreciation rates on anything with a roof would eventually fall back to earth. By then, the big players expected they would have found a seat, leaving them to watch the other, less-nimble players stumble and take their lumps.

There was one problem. Wall Street institutions were way too greedy and far too cocky. They believed that they were safe: In their view, they'd either be able to unload their holdings of the junk they'd created, or they had been clever enough to hedge away their risk with their own credit-default-swap-insurance schemes.

Because Wall Street believed it was safe, the institutions didn't see what was really happening. They were all in the same boat ... and that boat was sinking. 

And something we can all agree on.....

We need to break up all the big banks.  And then we need to spread their pieces around the country, placing credit closer to Main Street.  We need to end all proprietary bank trading...to eliminate credit default swaps and collateralized debt obligations... and to instill transparency in all capital markets products, trading platforms, and risk-taking businesses that have any systemic impact.

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Re: Wall Street Stranglehold On Economy Is Choking Americans

Now thats the kind of "conspiracy" that I can believe in. Good read...thanks

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Re: Wall Street Stranglehold On Economy Is Choking Americans

Move your money from banks to credit unions, and then get 2 other people to do it.  That would be true revolution.

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Re: Wall Street Stranglehold On Economy Is Choking Americans
gilani wrote:

Wall Street institutions tipped over their own money pot

I guess he's never heard of JPM Chase and Goldman.

gilani wrote:

It's time to end the tyranny of the banks. And to once again enjoy the financial freedoms that the end of this tyranny will bring.

Now THAT is true.  Too bad he argues against that statement by claiming the banks are just engaging in random greed.  There's a massive difference in tyranny vs. greed.

There was certainly a crapload of greed among millions of people.  But that's the bourgeois class.  He should look higher up the totem pole to the ruling class to find the real reason why the regulatory framework was created back in the 90's and the monetary framework in the 00's which drove the bourgeois class to new levels of stupid greedy pursuits...all running the same race in the same direction.  Rather than looking at the horses running the race, he should look at the people governing the race...and that's not the politicians....they're powerless, corrupt oafs who couldn't have pulled off anything close to the strategic power grab conducted by the financial tyrants (Gilani's word) behind Chase, Goldman, AIG, Citi, Fed, Treasury.  

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Re: Wall Street Stranglehold On Economy Is Choking Americans
strabes wrote:
gilani wrote:

It's time to end the tyranny of the banks. And to once again enjoy the financial freedoms that the end of this tyranny will bring.

Now THAT is true.  Too bad he argues against that statement by claiming the banks are just engaging in random greed.  There's a massive difference in tyranny vs. greed.

Perhaps.......but tyranny with greed as its motive force is still simply greed. 

With balls.

But still only greed.

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Re: Wall Street Stranglehold On Economy Is Choking Americans

Human beings are possessed of all human failings. We we all are greedy, lustful , hateful , full of pride etc. The differences are in the degree to which we are preoccupied with any one or more of them and how we express them in the world.

When a group of predominately greedy people congregate on a certain street it is not really much of a stretch to believe that their greed would become organized rather than random

When you have these same people as members of the same social spheres and business organizations their thinking and actions tend to become somewhat "homogenized". As a way of perpetuating and increasing their share of the pie it would be natural for them to form symbiotic relationship with politicians who in need of campaign funds would be willing to be responsive to the wishes of the greedy individuals who are members of the Wall Street club.

In my view it is through the symbiotic relationship ( which stretches thanks to globalization around the globe) that the liberties and freedoms of this republic and the capitalistic system has been co-opted and been replaced with tyranny. This tyranny is based on a hierarchical system where the people at the top are able to exploit those on the bottom for their own ends. As long as those on the top can through laws and regulations (enforced through police and military force) maintain their stranglehold on those on the bottom we are in effect living in a tyrannical hydra headed dictatorship. This dictatorship more closely resembles the banana republics to our south than the country the founders envisioned.

I think therefore there is nothing random in the universe.

V

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Re: Wall Street Stranglehold On Economy Is Choking Americans

This was a good read.

The entire foundation of capitalism is an acknowledgment of the existence and persistence of greed as an enduringly human characteristic (if not amongst everyone than amongst a significant minority). I still believe in capitalism, because I am certain that greed cannot be eliminated and I have seen how the profit motive and privatization of profits greatly increases quality. The goal here should not be to try to eliminate greed - it can't be done - the goal should be to allow individuals to reward smart decisions and good products and services. And when greed pushes some to the point of taking advantage of others, they should be punished - not for greed, but for manipulation and injustice.

That said, there are some shortcomings of our present system so . Oftentimes, shorter term goals and profits cause society to lose track of the bigger picture (think 3 E's). At the same time, the very premise of capitalism is that everyone will be afforded equal opportunity. But when some players become so large and so institutionalized in their power, then they must be broken apart to give smaller players this opportunity. There are not and should not be guarantees of success, but the "guarantee" of opportunity is turning out to be somewhat strained right now. How can normal banks truly compete with a Goldman Sachs, given all the political clout that company has? When certain institutions become so large as to be insulated from market forces, then it is time to break them apart and/or adjust the regulations that allowed things to get to this point in the first place. That's where I think we find ourselves today.

Quote:

The bigger banks get, the more they rely on a de facto government guarantee. "Too big to fail" is a doctrine pushed by banks that want to be so big that they crush - or at least absorb - their smaller rivals.

Of course, and we should ask ourselves who the biggest proponents of "too big to fail" are...Is John Q. Public pushing this doctrine or are the banks themselves? And the government cronies who have access to the revolving doors?

Mike

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Re: Wall Street Stranglehold On Economy Is Choking Americans
dogs wrote:

still simply greed

agreed.

V wrote:

In my view it is through the symbiotic relationship

True.  It is the Fed and the resulting Wall St cartel that is the basis of this relationship.  But it is more of a dependent relationship than a symbiotic one.  DC is dependent given our monetary system, which makes them hostage to a bank. That system has now bankrupted the country, every state, many banks, many businesses, and most people (when you include the $250k unfunded liability hanging over each person's head) while massively enriching a few cartel members. 

Mike wrote:

The entire foundation of capitalism is an acknowledgment of the existence and persistence of greed

This could be the basis of an awesome debate.  That's Rand's view.  It's how Smith has been mischaracterized given his butcher/baker statement.  But there is a huge difference in greed vs. self-interest, which must also promote community-interest, and therefore other-interest.  Greed is the basis of our current usury-based monetary system on which everything else depends, so you're right unfortunately it is the basis of the capitalism we see today--the most aggressively greedy reap the rewards in our system.  But I don't believe it was the basis of the local commerce we saw in the 18th-19th centuries, or in small towns in the eartly 20th century.  These were just neighborhoods working together in the classic sense of a free market.  Those neighbors used to fight against greedy interlopers who tried to hijack their towns...the greedy were not welcome.  Unfortunately towns can no longer fight against such interlopers because they have found a way to interlope permanently in every community in the US with the power of the federal government standing behind them--the Fed and Wall St. 

Regarding "too big to fail," our monetary system throws out of balance the universal struggle between centripetal and centrifugal forces.  The system is 100% centripetal, as long as there are enough greedy people to fuel it.  When centrifugal forces try to assert themselves and rebalance the universe, the US government steps in, for example the bailouts, and prevents them from counteracting against the centripetal nature of the system.  This is the real purpose behind "too big to fail."  It's Ivy League lingo for opposing centrifugal forces and propping up the centripetal ones pushing us toward ever-increasing scale.  The bankruptcy of Wall St firms that would've happened if the feds didn't save them would've been an example of centrifugal forces.  Iceland's protests are an example of centrifugal forces trying to reassert themselves.  I hope it works.  States declaring and enforcing their 10th amendment rights would be an example of centrifugal forces.  Protests at G20 meetings are another example, which is why they are brutally suppressed by the feds and state police.

 

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Re: Wall Street Stranglehold On Economy Is Choking Americans

I think "greed and cockiness" is a lower level pursuit in the international power pyramid.  Above them are people who organize and plot to take tyrannical power.  Money is not relevant to the top levels as they hold a monopoly to create all the money they want. 

It is their money not ours, we just borrow it to use in commerce.  Ultimately their money is valued by the collateral that we provide through private and public debt guarantees.

In my opinion this is a giant criminal conspiracy that warrants RICO statutes -

The Racketeer Influenced and Corrupt Organizations Act (commonly referred to as RICO Act or RICO) is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. RICO was enacted by section 901(a) of the Organized Crime Control Act of 1970 (Pub.L. 91-452, 84 Stat. 922, enacted October 15, 1970). RICO is codified as Chapter 96 of Title 18 of the United States Code, 18 U.S.C. § 1961–1968. While its intended use was to prosecute the Mafia as well as others who were actively engaged in organized crime, its application has been more widespread.

Under RICO, a person who is a member of an enterprise that has committed any two of 35 crimes—27 federal crimes and 8 state crimes—within a 10-year period can be charged with racketeering. Those found guilty of racketeering can be fined up to $250,000 and/or sentenced to 20 years in prison per racketeering count. In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity." RICO also permits a private individual harmed by the actions of such an enterprise to file a civil suit; if successful, the individual can collect treble damages.

When the U.S. Attorney decides to indict someone under RICO, he or she has the option of seeking a pre-trial restraining order or injunction to temporarily seize a defendant's assets and prevent the transfer of potentially forfeitable property, as well as require the defendant to put up a performance bond. This provision was placed in the law because the owners of Mafia-related shell corporations often absconded with the assets. An injunction and/or performance bond ensures that there is something to seize in the event of a guilty verdict.

In many cases, the threat of a RICO indictment can force defendants to plead guilty to lesser charges, in part because the seizure of assets would make it difficult to pay a defense attorney. Despite its harsh provisions, a RICO-related charge is considered easy to prove in court, as it focuses on patterns of behavior as opposed to criminal acts.

There is also a provision for private parties to sue. A "person damaged in his business or property" can sue one or more "racketeers." The plaintiff must prove the existence of a "criminal enterprise." The defendant(s) are not the enterprise; in other words, the defendant(s) and the enterprise are not one and the same. There must be one of four specified relationships between the defendant(s) and the enterprise. A civil RICO action, like many lawsuits based on federal law, can be filed in state or federal court.  - Wiki Link

We may disagree on how well organized the conspiracy is and we may not agree that is has strong central control; but, at least we should agree that a criminal conspiracy is taking place and crimes have been committed.

Larry

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Re: Wall Street Stranglehold On Economy Is Choking Americans
DrKrbyLuv wrote:

We may disagree on how well organized the conspiracy is and we may not agree that is has strong central control; but, at least we should agree that a criminal conspiracy is taking place and crimes have been committed.

Larry

+27 Larry

And since in many cases one can only be a victim of a crime if one chooses to be - it's time to make new choices to bring about the ends that we desire.

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Re: Wall Street Stranglehold On Economy Is Choking Americans

Has anyone ever traced the large withdrawal of money that started the run on the central bank that started this financial armagedon? I seem to recall it was something like 500 billion in one day. Bank withdrawals leave trails. It is curious that this mysterous entity was never publicized? The IRS can get private records of individuals from about every country in the world but we can't trace 500 Billion? HMMMM

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Re: Wall Street Stranglehold On Economy Is Choking Americans

Hi Larry

Just who would you indict?

V

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Re: Wall Street Stranglehold On Economy Is Choking Americans

V wrote:

Just who would you indict?

Hello V, I'd start with Geithner and Paulson because they were government employees and guilty of collusion and criminal conspiracy.  It may be that treason charges would ultimately be warranted.  I'd seize their personal assets and deny them bail pending a full investigation.

For those underneath them, I would suggest that clemency should be provided for whistle blowers and those willing to co-operate with the investigation.  I'd prepare a large section at Gitmo as others would shortly follow.  Individuals convicted of treason should be hung at Gitmo instead of soiling our nation any more. 

Larry    

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Re: Wall Street Stranglehold On Economy Is Choking Americans
DrKrbyLuv wrote:

V wrote:

Just who would you indict?

Hello V, I'd start with Geithner and Paulson because they were government employees and guilty of collusion and criminal conspiracy.  It may be that treason charges would ultimately be warranted.  I'd seize their personal assets and deny them bail pending a full investigation.

For those underneath them, I would suggest that clemency should be provided for whistle blowers and those willing to co-operate with the investigation.  I'd prepare a large section at Gitmo as others would shortly follow.  Individuals convicted of treason should be hung at Gitmo instead of soiling our nation any more. 

Larry    

 

Larry, I think that is an excellent start.  If Massachusetts got some of their attention, imagine what that would do.  They'd be retiring in droves.

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Re: Wall Street Stranglehold On Economy Is Choking Americans

I agree totally with most comments on this thread regarding unethical activity and the unethical extension of risk many banks took.

But, before this becomes yet another bank bashing blog, think about this for a moment:

I think there is a huge difference in the guy who lives with his wife and two kids in a one bedroom apartment, no car, doing everything he can to make ends meet - but going broke - -- - - and the family who made 60k per year, lived in a 350k house with two cars and took nice vacations every year - and now are foreclosing and broke.  In the later scenario, I just dont care.  You should have lived in a 100k home, and saved up 12 months or more of living expenses.  Greed put you in this stupid situation - not the banks.

Greed created this mess.  Strabes is dead on - deregulation started the fire, and then 90%+ people on mainstreet became crazy greedy.  Deregulation included bank leverage changes, lending standards being lowered for minority home buyers, etc.  That created access for everyone to have leverage.  And, everyone who got over leveraged is NO better than any bank that got overleveraged.  If you were a guy who made 60k and bought 3 homes with 1% down - then you too were taking too much risk on the peoples money - and you are no different than the banks you blame.  You acted the same way as the banks did - you played within the new rules to the max, and you paid the price - as did those who loaned you the money (the taxpayer in the end).  I would go as far as saying people on mainstreet who leveraged themselves over  30 - 1 are no better than those at the banks.

So, ya, banks are greedy, and ya, they knew they were way over their head but continued to take the risk.  But, dont tell me someone putting 4k down on a 400k house with a 65k a year job didnt know the deal sounded crazy.  Everyone I know who did that crap used to laugh and say "I cant believe they let me do that!!!"

Pot, meet kettle.

Just a perspective here....I would say all of us as a people failed.  The banks, the people, everyone.  In the end, its the guy in the one bedroom apartment though who suffers the most.

 

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Re: Wall Street Stranglehold On Economy Is Choking Americans
strabes wrote:
gilani wrote:

Wall Street institutions tipped over their own money pot

I guess he's never heard of JPM Chase and Goldman.

A wise prophet once said,

"One man gathers what another man spills."

I dare say Robert Hunter and Jerry Garcia never envisioned their words from "Saint Stephen" being used in this context.

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Re: Wall Street Stranglehold On Economy Is Choking Americans

To big to fail...I have my own solution to this never ending pillaging of the investors trying to accumulate enough money in their working years to live comfortably during their golden years. Why should the RULE be that you purchase a position in a stock in the hopes that other people will also buy in and thereby driving the price higher. The only way he/she can make any profit is to sell at a higher price and pay some brokers fee for the transaction. Sounds like a pyramid scheme to me. I might also add that who has the right to downgrade a stock.?? Imagine for a moment that GOOGLE had to return a percentage of the billions they have accumulated to the stockholders that went out on that proverbial limb and  purchased  their stock when it was 700 a share and change. The price of the stock plunges, but if the dividend doesn't, since GOOGLE is still making money hand over fist. All of a sudden the dividend in percentages is yielding 18% per cent or better. Now is the time to purchase more. By forcing companies to RETURN A PERCENTAGE to the stockholders of record each and every quarter you assure the stockholder that his investment is still sound. The way things are now, growth of profits are simply used to buy competitors, thereby guaranteeing that the company will continue getting larger and larger and eventually you are in fact TO BIG TO FAIL.. (Google was just an example)

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