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US EDITOR’S TAKE: Why the Occupy Wall Street protesters have picked the wrong target

It’s easy to see why people who are angry with the current dismal economic state of the country so often mistakenly place the blame for this situation on Wall Street. After all, hasn’t it become the national symbol for greed, wealth and corruption?

It kind of reminds me of the antiwar movement of the 1970s, when protesters would turn their misplaced anger on returning Vietnam Vets instead of those truly responsible for subjecting us to a war we shouldn’t have fought (even the late Secretary of Defense Robert McNamara owned up to that mistake before he died).

And so it is with Wall Street. The problem is that Wall Street isn’t where most of the problems are. In reality, the great majority of people working on Wall Street aren’t super rich just like most of the people working in Hollywood aren’t super stars.

Most of the people on Wall Street are certainly not corrupt. Nor are they greedy. For the most part, they’re generous, hard-working folks just like the rest of us, and a lot of them are losing their jobs too. And that’s because the corporations and companies that sell their stocks and bonds on Wall Street are afraid to do what Wall Street does every day-take risks.

There’s a vicious cycle in the country that goes something like this. Companies are worried about an uncertain future where taxes may go up, new regulation could hinder production and ObamaCare could increase the cost of health benefits to employees, so they’re setting aside trillions of dollars in cash rather than risk hiring someone because they don’t know how much that hire is going to cost them.

Then, if profits aren’t as robust as they once were, some of those companies, at least the public ones, start laying people off because of their so-called responsibility to shareholders, thus adding to the army of unemployed, who then have to stop spending money, which in turn drags down future profits even more and on and on.

So instead of protesting against Wall Street, why not turn your anger to those companies that continue to lay thousands of people off and sit on trillions of dollars rather than take the risk of creating new jobs?

Why not turn some of that anger on Washington and the lawmakers who passed legislation that allowed banks to become “too big to fail”? Get angry at the SEC and other regulators who turned their heads even when the red flags popped up around swindlers like Bernie Madoff, or worse, the unindicted co-conspirators who sold worthless mortgages to unsuspecting investors while at the same time buying insurance against them that would pay off when they failed.

Turn your anger and frustration to your congressman or woman and, like Rolling Stone writer Matt Taibbi Matt Taibbi suggests, demand repeal of the Gramm-Leach-Bliley Act and mandate the separation of insurance companies, investment banks and commercial banks.

In fact, Taibbi has some other good suggestions as well, such as letting the “too big to fail” banks pay for their own bailouts by paying a 0.1 percent tax on all trades of stocks and bonds and a 0.01 percent tax on all trades of derivatives that would generate enough revenue to pay the American taxpayer back for the bailouts.

It would also deter what Taibbi calls “the endless chase for instant profits through computerized insider-trading schemes like High Frequency Trading, and force Wall Street to go back to the job it’s supposed to be doing-making sober investments in job-creating businesses and watching them grow.”

Matt, I couldn’t agree more.

Comments (7)

  1. Wall Street is not meant to make “sober investments” in job-creating businesses.

    I dont know who’s job that is..private equity? Asset managers? But it aint wall streets..

  2. Hey Fred, what planet are you on? the average joe is sick and tired of bankers and such like who have caused all this crap in the first place which is why companies then have to lay off thousands!

    The banking system is a symbol of greed and corruption. To the extent that those superior to the average Joe think they can manipulate their position and commit fraud and get away with it!

    ENOUGH! How many times have we heard of a crime committed by a high flying banker that has connection with a politician of some sort?

    Politicians/lawyers/court rooms etc all convery that they act on behalf of the public and justice will prevail. The truth is there is no justice.

    The public are sick of this which is why actions are being taken- only just.

  3. Most of those protesters are probably stupid recruiters who cannot get a decent job.

  4. Fred.. you have it wrong. Wall street takes risks. But the key is that it takes risks with “other people’s money”. That’s the key here.

    All of us (me too) already know what our maximum downside is… we lose our job, not our savings and investments. If we are lucky we might even get some redundancy pay when we get asked to leave. On the other hand, if we hit the jackpot, we probably get 10% of profits which can easily run into millions.

    So let me say it again. The whole banking industry (in which I also work) is based on risking other people’s money and pocketing a percentage of the profits if we are right OR maybe losing our job if we are not. It’s a pretty good trade as far as a trader or asset manager is concerned, cos the loss is limited but the profits are theoretically unlimited.

    So, it is kind of understandable if some folks are bit cheesed off!

  5. StillTrading@ “it is kind of understandable if some folks are bit cheesed off!” – your comment here is an under statement MATE.

  6. I think the main problem is modern democracy. Leaders were unwilling to put a lid on an out of control boom that kept the the populace happy. Result was weak financial regulation and overly cheap credit. Pandering to the majority trumped making decisions in the long term interest of the country.

    Cheap credit has masked the ever growing gulf between rich and poor in Western democracies. Legislation that encouraged low doc loans to those that clearly couldn’t afford those loans was a core issue. Overly creative financial engineering was just the cherry on top that made working out how stuffed up things had become that much more opaque.

    The West is at a pivotal point. As individuals we need to rein in what we perceive as our “needs” and stop trying to find scapegoats for what was a society wide problem of over-consumption and greed. Our leaders need to start taking the long view and seeking balance in the financial system ahead of the curve, not applying bandaids well after the horse has bolted.

  7. Im no banker but wish to voice my opinion on the matter.

    In the early 1990s there was a huge boom in Wall street and the UK but just like now, we suffered a credit crisis. Promises were made but never delivered.
    Then came another two credit crisis along the way- STILL promises were made but no delivery until now where even if promises have been acted upon, its too late.

    The BIG FAT CATS licking up their bonuses are the winners. The loosers are the little people- the likes of me. And you ask you self “how did get so bad?”- multi million dollar question that even the politicians have’nt been able to tackle.

    And yet, you often hear a banker talking in banking jargon, trying to sound more important than he/she already are and your thinking “Mate, you don’t even know what your talking about!”

    And it is this precise issue that got us to the point we are today. This is the reason why we are in the mess we are today.

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