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"Who do you blame more for the bad U.S. economy, Washington or Wall Street?" asked a recent USA Today/Gallup poll.
Wrong question.
In fact, it's the sordid relationship between the U.S. government and the big financial institutions that plunged the U.S. economy into turmoil in 2008 and has hampered its recovery ever since.
"They are brothers-in-arms against the greater good of the American public. They are conspirators," said Money Morning Capital Waves Strategist Shah Gilani. "Who is to blame, is it Wall Street for giving money to Washington to clear a path for their schemes, or is it Washington pandering to Wall Street for money to wage their campaign battles to put themselves in place to repay their paymasters?"
In the USA Today/Gallup poll, 64% of Americans blamed the federal government more for the bad U.S. economy, with just 30% pointing a finger at big financial institutions.
But the poll also indicated that the American public is extremely unhappy with both groups, with 78% saying that Wall Street bears a great deal or fair amount of the blame for the bad U.S. economy; 87% say that of Washington.
"You see the frustration that there's some serious things wrong with capitalism in America, but you also see the conundrum - how do we change it?" Terry Madonna, a political analyst and polling expert at Franklin and Marshall College told USA Today.
Close to half of Americans - 44% - also see the system as unfair to them, with some groups, such as people without a college degree (49%), feeling more mistreated than others.
Gilani couldn't agree more.
"Calling the "system' unfair is like calling the Grand Canyon a ditch," he said. "It's massively, incomprehensively unfair. It's unfair first and foremost on the macro level. The system favors the few at the expense of the masses. If there is class warfare stress in this country, it's because the nexus of Wall Street Washington manufactured it."
That Washington's efforts to fix the bad U.S. economy - very loose monetary policy on the part of the U.S. Federal Reserve and billions in stimulus spending from U.S. President Barack Obama and the U.S. Congress - have changed little is no doubt part of the reason why people remain disgruntled with government.
"The Fed is part of the problem, not part of the solution," Gilani said. "They did what they had to do to save us from going over the financial chasm, but they also helped us get there."
Wrong question.
In fact, it's the sordid relationship between the U.S. government and the big financial institutions that plunged the U.S. economy into turmoil in 2008 and has hampered its recovery ever since.
"They are brothers-in-arms against the greater good of the American public. They are conspirators," said Money Morning Capital Waves Strategist Shah Gilani. "Who is to blame, is it Wall Street for giving money to Washington to clear a path for their schemes, or is it Washington pandering to Wall Street for money to wage their campaign battles to put themselves in place to repay their paymasters?"
In the USA Today/Gallup poll, 64% of Americans blamed the federal government more for the bad U.S. economy, with just 30% pointing a finger at big financial institutions.
But the poll also indicated that the American public is extremely unhappy with both groups, with 78% saying that Wall Street bears a great deal or fair amount of the blame for the bad U.S. economy; 87% say that of Washington.
"You see the frustration that there's some serious things wrong with capitalism in America, but you also see the conundrum - how do we change it?" Terry Madonna, a political analyst and polling expert at Franklin and Marshall College told USA Today.
Close to half of Americans - 44% - also see the system as unfair to them, with some groups, such as people without a college degree (49%), feeling more mistreated than others.
Gilani couldn't agree more.
"Calling the "system' unfair is like calling the Grand Canyon a ditch," he said. "It's massively, incomprehensively unfair. It's unfair first and foremost on the macro level. The system favors the few at the expense of the masses. If there is class warfare stress in this country, it's because the nexus of Wall Street Washington manufactured it."
That Washington's efforts to fix the bad U.S. economy - very loose monetary policy on the part of the U.S. Federal Reserve and billions in stimulus spending from U.S. President Barack Obama and the U.S. Congress - have changed little is no doubt part of the reason why people remain disgruntled with government.
"The Fed is part of the problem, not part of the solution," Gilani said. "They did what they had to do to save us from going over the financial chasm, but they also helped us get there."
How to Fix It
Gilani had several suggestions on what should be done to make the system more fair as well as to prevent another financial crisis like we had in 2008:- Break up all the "too- big-to-fail" banks.
- Regulate derivatives and determine what limitations need to be put on their use, by who, and when.
- Reconvene the Glass Steagall Act. Make regulations simpler but make penalties stiffer -- including jail time.
- Change the Federal Reserve. They need only one mandate, manage money supply commensurate with economic growth.
- Institute mandatory term limits for Congress and put an end to their going to work for companies they either regulate, oversee, or have in any way made more profitable, for five years after leaving office.
"There is a club, in a very real sense, of powerful players who have their hands firmly on the pulse of financial innovations," Gilani said. "It's the men at the top of all those organizations that work to turn profit centers on trading desks into economy-moving - and sometimes economy-ruining - schemes."
Occupy Wall Street
Although the USA Today poll results are telling, one needs only watch the news to see that anger and frustration with the bad U.S. economy and Wall Street's outrageous behavior has already spilled into the streets with the Occupy Wall Street protests.Gilani discussed the movement in a recent column for Money Morning, in which he outlined several points of agreement he had with the protesters, who say they believe the big banks are ruining the economy and unfairly influencing the politicians in Washington.
Now he has additional advice for the Occupy Wall Street movement and anyone thinking of joining it.
"Protesting is a good start. But what they really need to do is create a platform and a political movement, not unlike what the Tea Party did," Gilani said. "There's only one thing that can trump billions of dollars in back-room funding to pay for political power, and that's the raw power of ticked off people -- millions of them."
You can read more of Shah Gilani's inside perspectives on the workings of Wall Street - and how you can profit from it, instead of being a victim of it - on his new Website, Wall Street Insights & Indictments. And you can sign up for his free report, "Blast Profits In the Eye of the Storm: 5 Ways To Trade the Coming EU Crisis - And Make A Killing," by clicking here.
News and Related Story Links:
- Money Morning:
These Three Men Represent Everything That's Wrong with Wall Street - Money Morning:
The Insidious Truth About Federal Reserve Policy - Money Morning:
The New Abnormal: Permanently Engineered Market Volatility - Money Morning:
The Bank of America Settlement: The Latest Travesty in the U.S. Banking System - Web site:
Wall Street Insights and Indictments - Gallup.com:
Most Americans Uncertain About "Occupy Wall Street" Goals - USA Today:
Poll: Washington to blame more than Wall Street for economy
More on this topic
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How to Really Boost the US Economy
(Wealth Daily, 10/24/11)
What's Wrong with the U.S. Economy
(Wealth Daily, 4/28/12)
ECRI says Jobs To Get Worse Under Recession-Bound U.S. Economy
(Kirk's Market Thoughts, 9/30/11)
Where is the U.S. Economy Headed?
(Top Foreign Stocks, 9/3/11)
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(Financial) Power corrupts, and absolute power corrupts absolutely! by ____________?
Greed, control, and fear (of uncertainty) motivates capitalism, which, like death, is never satisfied.
And capitalism is in fear "Men's hearts failing them for fear, and for looking after those things which are coming on the earth;" and anarchistic movements will help – are helping to bring in a righteous government, not of human rule, but of divine rule.
The conversion to this has been in operation since 1914 and earth's first WWI, and the upsetting of the four elements of man's current order — Political, Financial, Social, and Religious — are destined to crumble, indeed, are crumbling, the more so as we approach toward, into, that righteous government.
Understandably, you can't print this, but do file it in your mind, and watch as it proceeds, as it unerringly will and it is unstoppable. The new government is not to be feared, but welcomed, as it will supply all the needs of all the nations, beginning with peace and order, which man is unable to accomplish.
The corrupt and selfish ways of men will/are fighting against this new government, but it will prevail. The end of the old order of things IS coming to pass. This is not dire, but wonderful.
Take care, be alert, and watch, Tom Adams
Have Shah G. contact one of the OWS leaders and offer them his ideas first so that a COORDINATED, WELL-THOUGHT-OUT plan can be part of the "boilerplate" of a unified proposal to Americans.
Love the statements of Shah Gilani. Finally . . . someone who has been in these mysterious, upper rooms of unimaginable power and greed, who understands them well, but who has nonetheless come down on the right side of the right people . . . the common, every-day folk on main street who still to this day make this country worth living in. Right on, David and Shah. Don't stop telling it like it is.
Is the current US recession even the fault of Wall Street? What has Main Street done to contribute to the recession?
First, the off shoring of American productive capacity. There are good reasons for US companies to make direct investments in foreign countries, but there is no good reason for them to move the capacity needed to service domestic markets overseas. We need to develop a sense of nationalism that protects our independence by maintaining good jobs in the USA. Labor generates demand. There is no economic growth or even stability without strong demand.
Secondly, why aren't profits on foreign goods taxed by the US government? Shouldn't products produced overseas be subject to the same tax treatmet that domestic suppliers face? Why does our own government give foreign produced goods this advantage over those produced in the USA?
Main Street banks continue to fail at a very high rate. In five years the number of banks in the US will be much smaller than it is now. If one adds the mergers of local banks into regional banks below the "too big to fail" category into the mix, it immediately becomes clear that the banking crisis in the USA extends far behond Wall Street. The exposure of local banks to the collateralized debt offers caused many of them to fail, too. This is not a call for extending bail out provisions, but calling attention to the fact the US banking cirsis began on Main Street is continuing on Main Street and that Main Street banking's malaise is holding back the recovery.
The author of the this article calls in proposal for regulation of derivatives and in his next proposal calls for simplification of regulation. Which is it? Derivatives by their nature are dense and difficult to understand. Regulating them will require either punishing virtuous activity that doesn't meet some performance standard, or the establishment of something like the college of actuaries to study and devise standards for legal derivitives. The settlement of a malfeasance claim arising from a derivative will involve hearing of complexity and detail that would make an admirality claim seem like a breeze.
Reconvening Glass_Steagal means what? It would have to entail forcing banks to divest their securites and stock divisions. Would this enhance the profitability of those surviving regional banks who have gone throught the trouble and expense of creating such departments? How would they be compensated for the loss of those resources? Simple, direct regulation…..don't you love it.
Term limits for Congress, nothing like making sure the bureaucrats are the only possessors of institutional memory, that should make everything much more transparent and enhance accountability immensely, not.
Forbid retiring members of Congress of working in the industries they regulated for five years. Who would run for Congress then? What evidence is there that such a regulation would create a barrier between Congress and industry? Couldn't a retired member of Congress join a consultantcy and reap the same rewards from an arms length relationship? Some things require political means, punishing retired members" party right dowm the line for using influence in impoper ways reduces the influence they could gain and hence the incentive of business to hire them.
"It's the sordid relationship between the U.S. government and the big financial institutions that plunged the U.S. economy into turmoil in 2008 and has hampered its recovery ever since. They are brothers-in-arms against the greater good of the American public. They are conspirators."
Precsiely. And what do you call a system that features a conspiratorial partnership of the insider banker elite and the government as its basis?
Fascism. Mussolini preferred the term, corporatism. Hitler…national socialism. Same thing…and we suffer under it.
Now, how do we get rid of it? Can we get rid of it? Or is the "silent coup" complete?
We can break the relationship between Washington and Wall Street by going to public funded elections. To accomplish this, we must first outlaw all the electronic voting machines that can not be properly audited. Maybe then our votes will actually count and exit polls will match the final vote tallies once again.
"Change the Federal Reserve. They need only one mandate, manage money supply commensurate with economic growth."
I thought that's what they've trying for 100 years.The Dollar has declined over 98% against money(gold) since the founding of the Fed in 1913.I don't think a dishonest,devaluing fiat currency is the answer to creating prosperity.How can business or individuals plan their economic future when there is nothing stable to rely on?A currency that is not a long term store of value,constantly changing tax regulations and other govt incentives/regulations aren't good for long term planning.
End The Fed!
@ Bob Peiser- you don't get it. There are NO leaders of OWS! Everyone has their say. THAT is what democracy looks like.
How to fix it. I agree with points 1,2 and 3. Point 4- you can't "fix" the Fed. Get rid of it, we don't need it, that is why we have the department of Treasury. We had a revolutionary war in 1776 to get rid of a central bank. BAN central banks, we don't need them! Point 5- there are some statesmen that we should retain regardless of their time in office. Not many, but some and we need them. I agree that people leaving office should not go to work for companies they 'supported' while in office. More importantly would be to set an amount of money everyone can use, and no one can use more, to campaign with. And no one but the candidate can place ads. I.E. get the money out of campaigns.
Would it be legal to require that executive bonuses be allowed only if corporate earnings and/or book value improve without any reduction in non executive jobs? Perhaps, among all the other suggestions made, it could most expeditiously mollify stockholders an labor.
Let's enact the Congressional Reform Act of 2011:
1. No Tenure / No Pension for Congress.
A Congressman or congresswoman collects a salary while in office and receives no
pay when they are out of office.
2. Congress (past, present & future) participates in Social
Security.
All funds in the Congressional retirement fund move to the
Social Security system immediately. All future funds flow into
the Social Security system, and Congress participates with the
American people. It may not be used for any other purpose.
3. Congress can purchase their own retirement plan, just as all
Americans do.
4. Congress will no longer vote themselves a pay raise.
Congressional pay will rise by the lower of CPI or 3%.
5. Congress loses their current health care system and must
participate in the same health care system as the
American people.
6. Congress must equally abide by all laws they impose on the
American people.
7. All contracts with past and present members of Congress are void
effective 1/1/12. The American people did not make or approve these
contracts. Members of Congress made all these
contracts for themselves.
Serving in Congress is an honor, not a career. The Founding
Fathers envisioned citizen legislators, so ours should serve their
term(s), then go home and back to work.
If each person contacts a minimum of twenty people then it will
only take three days for most people (in the U.S.) to receive
the message. Maybe it is time.
THIS ACT WOULD GO A LONG WAY TOWARD FIXING CONGRESS!!!!!
The protesters made some sense, until they came up with the following parts of their program:
Eliminate fossil fuels;
Repeal Citizens United Supreme Court decision;
Free college eduction for all.
These three showed that they had been co-opted by the Socialists of the world, just as the Tea Party was co-opted by the Republican Party.
None of these three ideas will eliminate the problems that occurred in the past decade. They would have actually made some sense if instead they would have used the following three ideas:
End government subsidies/waste to alternative energy;
Repeal Dodd-Frank Financial Deform Law and Obamacare Law;
Separate banking from broker-dealer activities/Re-instate Glass-Steagal.
These three would be much better ideas for real reform than what they proposed.
It is true that devaluing our fiat currency will help us pay off our national debt and maybe bring manufacturing jobs back to the United States but at what costs and where will it end? Lowering the value of our currency is strapping economic growth to the misery of retired and fixed income citizens who will see their buying power decrease. How fair is that? Besides, who wants to compete with Bangladesh for cheap labor where the citizens have no social safety nets, healthcare or retirement? That does not sound like the country I would want to live in.
The "too big to fail" banks got us into this mess because of their greed. Instead of busting up the banks and locking up their CEO's for fraud and selling the "too big to fail" bank assets to smaller better run honest banks, Henry Paulson and Timothy Geithner rewarded them with massive taxpayer bailouts and two Presidents and Congress from both parties blessed it. This made all of them co-conspirators in a massive scheme to steal the wealth of the nation and now they want the taxpayers to pay for the fraud they committed.
The sad part is TN, SC, GA. and twenty states have electronic voting machines that can be hacked to give predetermined results but none of them can be properly audited because there is no paper trail to check…… so the crooks will probably get away with their crime. If you believe your vote counts now go and Google "electronic voter fraud" and read the articles and watch the videos. You will see why California and Florida scraped their electronic paperless machines in favor of machines that printed a receipt for later verification of the machines.
I am on board with Gilani's five ideas for reform listed above,
but doubt the corporatocracy would allow the government regulatory
authorities the power necessary to achieve such poignant reform.
Stand by your gun's to the end.
Eric
Dear…….Sir/Mrs.:
Appreciate be respect to congress but how to do