Wall Street Banks are Robbing Us Blind

President Obama: You have set up a web site and invite comment from your supporters. Here is something we are profoundly concerned about. We your loyal sovereign supporters and voters are being robbed blind by Wall Street. Professor Michael Hudson tells us that Two Trillion Dollars have been given to 15% or so of the wealthiest banks on Wall Street, investment banks like those that Robert Rubin, Senator Charles Schumer, Senator Chris Dodd and Vice President Biden and many other Senators have long supported. Our money is still being poured out to Wall Street. There is no end in sight. The phony rationale has been that we all will fall into a deep economic depression unless we make it possible for these banks again to extend credit, to make loans. First off, they are not doing this. These banks are, according to Professor Hudson, hoarding the money so that they can deal with their huge, but as yet unaudited, liabilities on collateralized debt obligations, credit default stops and the like. The Bank of America even used bailout money to buy a bank in China. Moreover, the stated objective makes no sense. No sane person wants to jump start the real estate bubble, the Silicon Valley bubble or any other bubble. Yet, that is the stated objective. These few banks seek to “solve” the real problem of our insufficient purchasing power in an awkward indirect tickle down way by transferring public money to the top 1% in the hope that the top 1% will find profit making opportunities and lend, invest, create employment, pay existing or lower wages, and thus finally “restore” our purchasing power. If these Wall Street banks mean what they say, this “solution” was not working before the crisis, has not worked since 1980, and especially will not work now. If these Wall Street bankers are spinning the facts to cover an outright theft of our money as appears to be the case, they should be prosecuted. These banks should be allowed to fall into bankruptcy, and a more direct, creative and effective use should be made with our bailouts.

President Obama, we, being some of your sovereign voters who gave you campaign money and who elected you want you to know that we have come to a startling realization: Our national market economy, our capitalism has “blown its engine.” No new inputs of oil or fuel or cash will jump start this blown engine. We must meet the immediate need of getting survival cash in our hands, then analyze why the engine failed, and then fix the defect. There are many among us who because of habit, obliviousness or temporary advantage have not yet accepted the fact that our national capitalism has permanently stalled beyond anybody’s capacity to restore it. We all soon will.

Have you noticed the spin on the real cause of the depression we now face? The main stream media incessantly label it as a “credit crisis,” and a “liquidity crisis” of Wall Street. Ben Bernanke and Henry Paulson were the first users of these words when the investment banks stopped lending because of their vast liability exposure in collateralized debt obligations. The use of these words as obfuscating spin continues inaccurately and inappropriately now that we are in a full blown depression. Their analysis is faulty. They either have not examined the dynamics of capitalism or they find it advantageous not to deal with the dynamics in public. Our diminishing or non-existent paychecks are the cause of Wall Street’s crisis and of our own crisis. Millions of us cannot afford to buy what multinational capitalism produces and attempts to sell at a profit. Naturally, high unemployment does not help. Stephen Lendman reported,

“Economist John Williams corrects it (official statistics) by including what BLS leaves out, and through November reports unemployment at 16.5% or more than double the manipulated government data.”

There is suddenly an “overproduction” of houses that can be sold at a profit although millions are homeless. We do not need more credit in order to buy. We need much more adequate salaries and wages and we need full employment. In capitalism’s gigantic siphoning of money from the production process in the form of CEO salaries and perks, dividends, and interest, capitalism has created a small wealthy group of about 33,000 of us who have as much income and wealth as the bottom 300,000,000 of us. It has left the rest of us with insufficient wages and salaries to buy the houses and cars that capitalism produces. There is a limit to the number of houses the members of the top 33,000 very wealthy want, so their purchases do not keep capitalism going. Five or more mansions spread around the planet for each of them is enough. The Wall Street spin, if honestly presented seeks to preserve the profit making opportunities, salaries, perks, dividends, interest, and power of the top 1%, and for the wealthiest investment banks of Wall Street. We emphasize: This strategy will not work even for Wall Street capitalists because it does nothing directly to restore our employee purchasing power upon which capitalism is so desperately dependent.

Our tax money is thus contributing to the continuation of the very dynamic that caused the crisis and blew up the economic engine we call capitalism. The bailout is not made on condition that employees be paid more so that they can buy what is produced. There is no condition imposed that the profit CEO salaries, perks, dividends, or interest of those who receive this public bailout be curtailed or eliminated. It is analogous to pouring more and more oil into a blown engine of an Indy race car. Pouring more and more oil will not start this blown engine and put it back in the race.

It is significant that the Wall Street spin studiously avoids suggesting an immediate direct solution to our real crisis: the quick transfer of public money to those who will quickly spend it, such as generously enhanced unemployment pay and a negative income tax. It is sad that even the UAW is part of the spin and is marching to Washington offering benefit concessions while forgetting Henry Ford’s dceision that he had to pay his employees more generously so that they could buy the Model Ts that their labor produced on the assembly line. With UAW concessions and support of the “credit crisis,” Ford employees will not be buying many Fords.

These observations are neither left nor right. They are simply observations of Wall Street acts and Wall Street’s stated purposes as communicated to us by the Wall Street owned media.

What underlying truth is this obfuscating spin hiding? In the case of the bailout of Wall Street investment banks and insurance companies, it may be a case of the top 1% getting all of our money they can “while the getting is good,” and hiding it away in their personal accounts overseas before we wise up. The Wall Street spin may conceal the largest theft of public funds we humans have ever experienced.

The rationalizations and justifications for national capitalism have been totally discredited. National capitalism is neither meeting human needs nor its own needs. It is not efficiently managed. It is not innovating. Any economic system whose normal dynamics can take us into the dark ages must be abolished. It is the height of stupidity to support an economic system that creates a few persons with the power to destroy our well-being.

Is capitalism providing society with good efficient management in its search for profit? Robert Rubin, Secretary Paulson and other top bankers of Wall Street were not very efficient in getting us into the subprime and collateralized debt obligation mess, and in their failure to deal with the core defect of inadequate purchasing power that has been with us since 1980. The management of capitalism’s best and brightest in the auto industry has brought the auto industry to bankruptcy.

Is American capitalism providing society with innovation in its relentless search for profit? Certainly not in the auto industry or in the housing industry. What about new products like hydrogen fuel cells? So far as I have been able to find, the main source of innovation is the University of California at Irvine where a public employee, Professor Scott Samuelsen is a world wide leader of hydrogen cell research and applications. Unfortunately for us, Wall Street capitalism has innovated and ineptly managed a large number of ways to make a short term profit without producing anything we need. This management has brought capitalism to its knees and begging for public bailout. Innovation and good management? What about Bear Stearns and Citibank? What about AIG? Lehman Brothers? The coal industry is spending millions in false advertising and PR to sell “clean coal” when no such thing now exists and is not predicted to exist for at least 2 decades. We are experiencing unthinking greed by our brightest national capitalists and not good management and innovation.

The point of all this is not to pick on human beings, misled and oblivious as they may be. Ben Bernanke is a brilliant human being with an IQ far above most of us mortals. He is moral and civilized. Capitalism did not self destruct for the want of human intelligence. The point here is to analyze and recognize the inevitably self destructive dynamic of capitalism itself. Former capitalists and present defenders and revivers of capitalism, Ben Bernanke, liberals like Paul Krugman and Robert Reich, and most importantly our elected Senators must face the facts. Capitalism has now destroyed itself at least at the national and global levels. National capitalists have successfully demanded that we turn over the management of our economy to them. “Privatize” and “let the market handle it” they said. They asked for freedom to invest abroad. We met their demands, loosened regulation, and provided billions and billions of public money to stimulate capitalism. We gave them unfettered freedom to invest and take their production facilities anywhere on the planet Despite this capitalism and capitalists have totally failed us. There is no point in trying to revive this blown economic engine at the national level.

We, through our democratic government, led by our new President Obama must take over the overall management of our national economy and our currency away from the market, away from Wall Street and away from the Federal Reserve Bank. We must use our public money much more directly and efficiently to solve real problems. For example, to meet the tragedy of those whose pensions are now vastly diminished in value, we must use public money to meet legitimate expectations. We must tax the wealth of those who “made out” during the bubbles and bailouts to fund what needs to be done

Our local capitalism in our local communities should not be much affected. A Federal Loan Bank can supply local auto dealers, hardware stores, and grocery stores with routine business loans for innovation. This Federal Bank could supply us with affordable housing loans. We are apparently not ready as citizens and voters to manage our local economies. Local capitalism should continue in our local communities. The civic impulse in us Americans seems to be in relatively short supply. We can barely manifest enough civic energy to vote periodically. Most union members do not attend union meetings. We so far do not have enough civic energy or interest to manage our local businesses through employee ownership and management. If bursts of civic energy should emerge to challenge capitalism on the local level, employees and voters can form Mondragon co-operatives so that they can be owner-managers of local business.

We challenge any and all remaining defenders of capitalism to show precisely how this analysis is wrong. If President Obama’s official advisors, or any one thinks that it is, put forth what you believe to be a more accurate analysis of the inner dynamics of capitalism.

Doug Page is a retired lawyer for unions, a former Democratic politician, and a life long observer of government, unions and business. He can be reached at: dougpage2@earthlink.net. Read other articles by Doug, or visit Doug's website.

6 comments on this article so far ...

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  1. Don Hawkins said on December 13th, 2008 at 10:03am #

    We must use our public money much more directly and efficiently to solve real problems. Well said Doug and on a grand scale.

  2. David said on December 13th, 2008 at 10:49am #

    Mr. Page:

    Thank you for a well written article.

    It seems to me that a fair amount of your presented case rests upon the motives of the wealthiest one per cent of our population . I would like to suggest that it is very difficult to know what these motives are.

    As well, you offer that we should “…through our democratic government, led by our new President Obama [must] take over the overall management of our national economy and our currency away from the market, away from Wall Street and away from the Federal Reserve Bank.”

    I read and hear this basic comment again and again from a great many enthusiastic and hope-filled persons. Sadly, I rarely see written or hear spoken how this can be done.

    This is where the really tough stuff lies; in the details and implementation and the gaining of support for any plan(s) offered. Very hard work, indeed, and likely not to be tackled by most citizens.

    And so, the vast majority of people defer to those with presumed knowledge and experience or public persona or power and the cycle starts all over again.

    Hope is a wonderful thing in its place. But fear and self delusion are most often sitting right next to it.

  3. Don Hawkins said on December 13th, 2008 at 2:00pm #

    David in some way’s you are very right. There are many who are trying there best. The people in control of media and money and power are not what they used to be and that is a good thing. The push will be on in say 10 months and that push will be the truth and knowledge. Stay tuned.

  4. Tommy said on December 13th, 2008 at 4:05pm #

    It is a system, If there was slavery and feudalism in the past, now it is capitalism in action, and it is in its highest stage, the imperialism. A politico- economical system will not change with advice and good intention of individuals. To know why everyone and everything is in the service of big banks, I suggest you to read this article:

  5. Mark said on December 13th, 2008 at 9:29pm #

    Spend some more time with Michael Hudson’s writings and interviews and you will be led to an inevitable conclusion: the most important step we need to take is to take control of our money system, which was privatized by the Federal Reserve Act of 1913. Take away the power of private banks to create play money out of thin air and suddenly you’ve cut off the oxygen supply of our parasitic system–no more FIRE sector consolidation of power, no more manipulation of markets and economies, no more debt peonage. Check out Ellen Brown’s “Web of Debt,” or the American Monetary Institute for details…

  6. Doug Page said on December 16th, 2008 at 6:40pm #

    AN ADDENDUM on December 17, 2008 Notice that the Fed now loans money to banks at .25%. Notice also that few if any banks have loosened up any credit. Notice that Nobody will tell us where any of the loan money or bailout money went, or how it was spent. How much more blatant will the Wall Street Robbery of our money be before we march in the streets? Doug Page