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Wall Street Has Set You Up Like a Bowling Pin

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW • August 17, 2012

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Shah GilaniShah Gilani

One by one the lights are being turned off in our "shining city on a hill."

And Wall Street's greedy hand prints are all over many of the darkened switchboxes.

Of course, politicians' grubby, filthy fingerprints are everywhere too; but there isn't enough cyberspace to launch into when discussing that black hole.

Today's indictment is about Wall Street.

This time my Wells Notice, titled "industry capture", is going out to the entire Wall Street enterprise.

You've heard about regulatory capture. I just wrote about its dark side earlier this week.

Regulatory capture is when regulators become captives of the individuals and firms they are supposed to be watching, regulating, and disciplining when they break the law.

"Industry capture" is beyond just regulatory capture. Here's what I mean...

Industry capture, which is unique to only a couple of American industries (hint: oil is the other one), is when the industry itself becomes so omnipotent, so all-consuming in our lives, so all-consuming of our money, so filthy rich that it buys and sells government officials, legislators, administrations, and presidents. So powerful that it has effectively captured the nation.

What isn't spoken about, what isn't generally seen (although most of you who read Money Morning see it), is that Wall Street holds our nation captive.

Wall Street's Twists and Turns

Far from being mere unintended consequences on the road to facilitating capital formation and anchoring the capital markets, Wall Street turned a fairly straightforward one-way street leading to more, bigger, and better businesses across the country and the world into a superhighway with more twists and turns than a grand prix course.

And worse, there are no speed limits, and the roads go both ways at the same time, and the toll booths are manned by Armani-clad, Manolo Blanik-wearing bankers, traders and their flame-retardant and blame-retardant suit-wearing managers, and executives that tally the take.

How did an industry that accounted for between 5% to at most 7% of GDP in this country in the 1980s go to being responsible for between 17% and 20% of GDP by 2007?

That's a lot of paper shuffling for some very lofty fees and fringe benefits.

But, of course, our GDP was made all the better and more stable and secure because of the Herculean efforts of all those banksters and pranksters... NOT!

We've been set up like bowling pins. Used like mailboxes in an alley where the Street's bills pile up with public's name on them, special-delivered at the direction of the new postmasters, Jamie D., Lloyd B., and Victor P., or DBP & Company for short.

Yeah DBP as in don't bother pretending you don't know we own your asses. Their mantra is "we make it rain, we bring the pain, we tally the gain, thank you again."

Industry capture is a dead end for us, but a highway to riches for our captors.

If we're ever going to get off this unlucky four-leaf clover interchange where we're going round and round ending up at the same toll booths again and again, we're going to have to fire most of the politicians in America, most of the bank executives, and most of the captured regulators.

And for that matter, the current president, who spoke a tough game but was himself captured by Wall Street money and fiddled with healthcare while Wall Street burned on.

Not that Mitt, whose glove is full of Wall Street money, will be any better. He might be worse.

Ron Paul, where in heaven's name are you? Have you forsaken us?

By the way, I'm not leaving you hanging as to the games that turned Wall Street into easy street.

I detailed the cold, hard facts about the "unintended consequences" that have been planned all along. It's called high frequency trading ( HFT) and it has the potential to kill the markets. To read my article from yesterday about the dangers of HFT click here.

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Join the conversation. Click here to jump to comments…

Shah GilaniShah Gilani

About the Author

Browse Shah's articles | View Shah's research services

Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.

The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.

Shah founded a second hedge fund in 1999, which he ran until 2003.

Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.

Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.

Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.

… Read full bio

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Bonnie Davis
Bonnie Davis
10 years ago

Mr. Galani:

You have a first class mind and a thorough grasp of the facts. I have been investing for approximately two months. I knew nothing when I began, so I did what I have always done: signed up for newlsletters, ordered books, read everything and jumped in with both feet. Thanks to you and others like you I am ahead of the game at a very dicey time in our history. Thank you .

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Sven A Bjorke
Sven A Bjorke
10 years ago

I resist as much as I can, but I am afraid I have to agree with many of Shah Gilani's points. The position of the Western world has been clearly weakened the last years, and sadly to a large part due to reckless financial acrobatics at Wall street – and, of course, paralyzed politicians. We keep hearing about Chinese interests making problems for us. However, I would like to hear mr Gilani's opinion on how much clout the Saudis have on US economic policies.

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Will Harden
Will Harden
10 years ago

Our country faces two enemys that is equally as threatening as the one that the United Kingdom faced in 1940. Then Churchill took over and made a speech saying, "I have nothing to offer you but blood, tears, and sweat." The people got together and with the help of the US and a number of other nations, defeated the Axis Powers.
The first is national debt of almost 16 trillion dollars.
The second is the oppressive control of the "Oligark Bankers," that continually get richer and more powerful.
The most powerful is Goldman Sachs that is rapidly becoming the secret government of the world.

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Jack Lockhart
Jack Lockhart
10 years ago

Like how you translate your Wall Street experience into useful insights and guidance for what to do in today's wacky, manipulated markets that have left me discouraged and wondering if I should just get out.

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Peter
Peter
10 years ago

I am happy about you Shah, about your spacious thinking! Life is a flexible thing, and we shape it with our beliefs. And there is such a great difference if you have an open attitude, it gives you the freedom to ask open questions. And even more – to find a wealth of answers. I am not so sure that all of these WS sharks, politicians and regulators are so happy about the current situation, it gives them money and attention of course, but does it really give them satisfaction? I think many of them are prisoners in their own restricted thinking and that your writings gives them a possibility to see life in a different, more responsible and joyful way. Thank you so much :)
Peter

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