Tag: socialism

After greedy banks manufactured fraudulent credit schemes and sold them to the american public the stock market that had traded with and insured these corrupt mortgages collapsed. The government simply credited large amounts of money to these same banks that had ruined the world, in  order to prevent the world from suffering a collapse of the global credit system. Bail outs consisted of the US government using taxpayer money to pay the bloated salaries and bonuses of the big bankers who threatened to resign if not bailed out.

The so-called “bailout” designed to benefit victims of the banking fraud unfortunately followed the exact same logic as fraud itself, which was: paying fat cats at the top promotes wealth by a “trickle down” phenomenon. Our own tax dollars and government championed the world view that the rich deserve to get richer even after having made the poor poorer.

The Federal Reserve credited trillions of dollars to Wall Street firms employing a wide variety of transparent and opaque financial maneuvers with little accountability and even less earmarking. The graph below demonstrates the beneficiaries of the bail bouts by amount received. As you can see the lion’s share went to private firms on Wall Street.  Fannie May and Freddie Mac are officially private institutions however they operate the same way as Wall Street banks.

There is a financial-legal pipeline between political positions in washington and high finance. Financial influence on Wall Street readily translates into legislative power in the senate and vice versa. They are like one currency with two forms of expressions: money and power. Most individuals shuttle back and forth between Washington and Wall Street during their careers. It is these folks that write laws and basic policies that govern our nation, legally and economically. They consult for and advise banks and then go legislate policies that enable things like sub-prime loans. Instead of representing citizens they made bankers billionaires and evicted countless american homeowners and cause an economic Armageddon.

These same wall street politicians proposed and carried out the bailout. This is severe and unregulated conflict of interests. Hank Paulson served as chairman of Goldman Sachs before being hired as Secretary of the Treasure under W. Bush  in Washington. Timothy Geithner was head of the regional Federal Reserve Board in New York (side by side with the heads of all major Wall Street Banks) prior to being asked by President Obama to join his cabinet as Secretary of the Treasury. Many congressmen and staffers hold offers for lucrative Wall Street employment in recompense for work they performed while occupying an office on the hill. Together, this marriage of finance and government has enacted a half-century of policies that rob the middle and working class of their rewards on labor in order to enrich the already wealthy. Is there any more blatant idolatry at the false-god of money than this?

Policy after policy enacted protects big banks and emboldens them in their ways. Even at the time for punishment, the bail out solution takes the form of money paid to big banks to incentivize them to put things back together. This doesn’t count as democracy. This is plutocracy.

The partisan system only exacerbates the dilemma. The election procedure that decides between party candidates often boils down to cash donations for campaign funds. Underlying their time in office, in legislating, in campaigns, and getting elected – money is the real common denominator in what is done. And therefore banks reign supreme.

The current stimulus policy being pursued by the Federal Reserve operates under the presumption that wealth trickles down. They have continuously been reducing interest rates on diverse bonds and securities to facilitate and expedite the flow of money as much as possible into stocks holdings. As money pours into stocks, their value on the market increases, and supports a thriving, bullish stock market. Wealthy investors who profit by their stocks going up  are somehow mysteriously thought to reinvest their earnings into the economy in a constructive way that creates jobs, supports education, fosters research, and bolsters infrastructures. According to this theory, upper class elites rarely spend private finances on offshore investments like cheap labor in Foxconn plants in china, or store it in offshore bank accounts where US taxes don’t apply, and rarely squander their money on useless pastimes such as extravagant, unnecessary lifestyles like sailing yachts, sports cars, private jet planes and esoteric entertainment. This is the trickle down wealth effect theory that is basically a hoax devoid of economic data and dogmatized by people who need an excuse to justify the corrupting influence of finances of government.

Why lower interest rates on securities in the first place? Why give low-interest rates to investment banks? How does giving 0% interest to banks help the citizenry? These Banks have consistently been using that money to make risky investments and loan it to the American people for a usury profit. outlandish interest rates on credit cards, escalating mortgage rates, and a plethora of high-interest credit lines for the public to consume is the result. Why doesn’t the government loan us the money itself at a low-interest rate, taking out the middleman?  Big banks are the middlemen who turn a huge profit peddling our own government cash to us at a higher rate than the government loaned it to them. Then they higher politicians after office to reward them for their favorable policies.

Figure 2 demonstrates that encouraging investments in the stock market is basically giving money to the rich. The top 1% of wealthy americans own 35-40% of all stocks. The top 20% of all wealthy americans own almost 60% of all stocks. Therefore, an investment in the stock market is bypassing the majority of the people in the middle and working classes prima facie. It benefits them not.

In the crash of 2008 Wall Street made millions in a process that is the legal equivalent to gambling and as a result the middle class has been in recession ever since. Over the several months that ensued, the fallout of 8 million jobs lost was noted. The clear paper trail leads directly to Wall Street financiers who, acting on greed, concocted sub-prime mortgages after lobbying for dysregulation of the finance sector under Allen Greenspan and W. Bush and repealing Glass-Steagall. Their aim: to sell more mortgages and maximize short-term profits for their shareholders.

No mention of justice or punitive measures for the guilty parties have ever been mentioned. No one who committed white-collar crimes has been imprisoned, nor have their assets accrued unjustly been confiscated. People who suffered job losses in the middle and working classes have never been appropriately compensated. Ironically, the rhetoric of “moochers” and “free-loaders” and “the 47% of the country who don’t take responsibility for their lives” continues. The federal stimulus package merely slowed the pace of the recession. It has not improved middle class average incomes, let alone reversed the direction of the recession. Only the rich are profiting again from stock market investments. We are facing the highest levels of sustained unemployment since the Great Depression with the lowest number of people seeking employment since 1979, 63%.  Figure 3 shows how the long-term unemployed level, as a proportion of total population, is at an unprecedented high.

The mortgage bubble bursting caused wide-scale business failure and massive layoffs.  Because average middle class incomes plummeted there was less principle to be taxed by state and local governments, robbing them of their primary source of revenue. Justice would require fact-based appropriations of Wall Street private bank accounts to be tapped for compensating people with foreclosures, firings, failed businesses, and slashed government programs. In reality what happened is that we simply allowed government programs and employment levels to take the hit.

This however introduced a vicious cycle. Because people didn’t have jobs and lost major portions of their income, governments couldn’t tax incomes if they no longer existed. So, governments had to slash programs for which funds had already been earmarked, necessitating a further round of layoffs. And so on and so forth.

Secondly, rising unemployment drives up labor supply while the demand remains stagnant or even declines. Price is determined by the intersection of supply and demand profiles. The result is a significant decrease in the salaries offered for labor, further driving down workers wages. The corporate savings on decreased workers wages and collapsed government union bargaining conduces to further profits for the wealthy.

Compared with today, the government has never employed such a low percentage of the total populace before. This is unprecedented in american history. How detrimental to the welfare of the masses this predicament will be is not clear, except for what is obvious in the reduction in public sector employment. Police, teachers, EMS, and air-traffic controllers have been cut and their families destitute or sinking into poverty without new jobs to replace the old ones.  Table 1 below demonstrates teachers employment dropped almost 6%, policeman over 8%, emergency responders down almost half of what it was, and air traffic controllers down almost 30%. (Please note: Air traffic controllers affect congressmen directly. Therefore,  it appears a hasty bill has been passed to mitigate the effects of the sequester on that particular sector of employment.)

The decision to bail out the banks in 2008 was based upon the threat that the global economy was infected with illegitimate credit and would collapse if the banks went out of business. Whether or not this was true, does not imply that the only option for the public is to roll over dead and allow the banks to do as they please. Otherwise they will take tax payer bailout billions, and simply continue their pillaging of public wealth. Nevertheless, that is exactly what happened. Big banks were bailed out, multi-million dollar salaries and bonuses continued to be awarded, gambling on wall street proceeded unabated, in fact with new vigor and boldness. The banks have actually delved deeper into dangerous practices and have grown in size. If they were too big to fail then, there is no description for how big they are now. The LIBOR scandal and other rigging of global interest rates is another outgrowth of this emboldened attitude after the crisis of 2008. Like a child who never receives discipline, bankers are growing in audacity, and are often in collusion with regulatory mechanisms or simply legislate them away.  Practices of gambling with insured deposit money, partnering with loan sharks, money laundering for drug cartels and terrorist organization, and increasing the monthly dues on homeowners forcing them into premature foreclosure have all proceeded unchecked. Figure 5 illustrates just how much since 2008 nothing has changed to break up big banks or to curb the expeditious use of immoral practices.

As an example of the cancerous degree of the growth of big banks, consider their relationship to, and enabling effect on, wealth inequality – which is a well-documented precipitant of social unrest and civil disobedience. The top hedge fund manager in 2012 reports having “earned” in a single hour the equivalent of what a family would make in 21 years, on average in the united states. Now consider the top 10 hedge fund managers “earned” in 1 year the equivalent of what approximately 200k registered nurses working in hospitals in the US would make combined.

The value of a hedge fund to society is similar to the value of a casino. They have an economy of their own that produces and consumes, but it yields no positive effect on society besides enriching the winners and impoverishing masses. Simple gambling is immoral, but at least is currently legal. A hedge fund manager’s expertise is in concocting schemes to bend rules and obscure crimes, to break the law or to buy it. Illegal insider tips hidden without a traced. High-frequency trading without actually caring about the product of the company invested in. Manipulating stocks with rumors or media. Exploiting tax loopholes. Manufacturing and marketing fraudulent financial products or bundles designed to fail so insurance money can be claimed. These are some of the ways that hedge fund managers break the law, make millions swindling hard-working families, and avoid being caught.

In modern times, radicalism doesn’t just increase in Islamic groups, it increases in political partisanship and financiers as well. Rhetoric and doctrines to support particular agendas become popularized through well-funded campaigns and propaganda,  often amongst rural, uneducated, and unsuspecting populations. Fear mongering and prejudice coupled with bigotry and the promised pleasures of materialism sway the minds of the electorate and purchase voting power in the grass-roots. As a war of civilization rages on the international front, a war of financial radicals pitted against the common weal ranges domestically — lobbied by Halliburton, the NRA, and big banks. Their viciousness is matched only by the fanaticism of the extremists who fight with each other overseas to see who will control oil resources. A philosophy that aggrandizes the ego and glorifies violence is used to seduce people, taking them back to fantasies of boyhood compensation sloganized in the works of 1-dimensional thinkers like Ayn Rand.

The erroneous philosophy of seeing competition, struggle, and war in everything. The juvenile outlook that society consists only of individuals and that government has no place in regulating, legislating, and providing infrastructure. These are the ideas of individuals who do not know what they are saying, and in their ignorance have even steeped to hatred of the poor. Rhetoric, such as “moochers”, “f freeloaders, and “the 47% who do not take responsibility for their lives” deserves no place in a society of mature souls, with spiritual insight, and moral integrity.

Individuals must voluntarily ask that their privileges be suspended if it would serve the common weal and ease the travails of their fellow countrymen. But this is not the interpretation given to the Bible anymore. Albeit, these were the sentiments and explicit intentions of Jesus Christ, Whom this Nation of God-fearing people reveres so much. So how could it be that national discourse has overlooked this striking passage from the mouth of Jesus, “go and sell your possessions and give to the poor, and you shall have treasure in heaven; and come, follow Me.”

Rich and engaging discourse from all sectors on these and other issues of collective importance will raise awareness and educate the masses in the nature of what transpires in the economic and political spheres around them. In self-propelling systems of distance education at the grassroots lies our only hope of an irrepressible movement. Knowledge and spiritual transformation are a light that will illuminate the economic-political axis of darkness, and liberate individuals to love their social institutions fully, reduce the extremes of wealth inequality, and nurture all people without prejudice in a system that rests-assured that the surest path to the protection of any one part is to ensure the prosperity of the whole.

Various economic policy suggestions have been proposed by way of solutions to the dilemmas listed above. In addition to spiritual transformation and grassroots education, practical steps to mitigate short-term damage in the present humanitarian crisis of poverty would do well to consider the following activist opportunities. A Robin Hood Tax on Wall Street financial transactions. This is a matter of justice. Every sale or transaction in the US is subject to sales tax, why is high-stakes multi-national gambling not taxed? It is certainly a sale, and it may even be worthy of a vice tax as well. This is a principled starting point. The tax rate can be increased until the rate of day trading slows down enough to represent a legitimate interest on the part of the investor in the product and mission of any given corporation and sufficient time is allowed for products and initiatives to come to fruition before the stock is deemed worthy of sale or withdrawal. Such a posture is more in keeping with the honest and genuine intentions of an investor seeking to sponsor the business of a corporation. The tax rate on stocks, bonds, and derivatives can be raised until high-frequency trading for example is eliminated. These taxes would be used to offset the damages done to the global infrastructure as a result of scams originating from Wall Street. As a matter of fact, eleven nations have already decided to adopt the Robin Hood tax to govern their own internal stock exchanges. For more information please visit robinhoodtax.org.

Another practical solution is state banks that could compete and replace Wall Street type banks in each of the US’s 50 states. North Dakota  has a State Bank functioning in a transparent, honest, and legitimate service model devoid of corporate shareholdings, illegally maintained profit requirements, and other pressures of financiering. We recommend the erection of 50 public state banks to support local city banks with loans to private citizens to mirror the success seen in the State Bank of North Dakota model. Bankers in these banks, as public servants, receive reasonable, and not extravagant, salaries. It makes sense for the government to give low-interest rate credit to these banks because they pursue the interests of the people, not their own selfish interests. For more information please visit the Public Banking Institute which is led by Ellen Brown and Marc Armstrong. Twenty states are currently exploring this idea with their help. It is morally imperative that conscientious citizens become active in the reform that could improve conditions of economic and social justice in our society. This discourse represents one of many constructive ways to reform Wall Street’s influence on the economy and capitol hill. Justice demands that labor be rewarded with wages, and those wages not be taken by corrupt bankers even if they lobby the law to be written in their favor and can’t be caught. Society needs reform.