But now Americans are fighting back and there’s no telling where Occupy Wall Street can lead.
by Les Leopold
When you climb out of the subway at Wall Street, you might wonder why there are no protestors in the cavernous alley by the stock exchange. That’s because since 9/11, Wall Street has been barricaded shut to prevent possible attacks. But up the block at Zuccotti Park between Liberty and Cedar streets, west of Broadway, the party’s on.
There you’ll find a festive group of about 1,000 people, mostly young folks having a good time accompanied by the occasional cluster of old lefties singing songs. People make signs while sitting on the ground then prop them up wherever they can find a space. They gather at tables filled with donated food and browse boxes of donated books. You also can’t miss the swarm of media folks milling around asking questions, taping interviews and taking notes: they’re the ones in dress suits who spend most of their time interviewing each other. My favorite sign held by an occupier is painted on a skateboard: “This is what Freedom Looks Like.” My son would agree.
And my recurring thought is, “It’s about f’ing time.”
What took us so long? How much worse did it have to get before public outrage would finally focus on those who caused the problem and those who are milking us dry? Several of us have been pleading in blog after blog for more than two years to build a broad-based assault on Wall Street. Where was our answer to the Tea Party? Well, here it is.
There’s no telling where this Occupy Wall Street can lead, especially if a virtuous media feedback loop continues: The more protestors, the more coverage, the more protestors. It’s about the only good thing the mainstream media has done in years.
If unions throw into the mix full force, we may have something powerful in the making. It’s far too early to tell, although the October 5 labor march in New York that drew upwards of 25,000 people was certainly a good sign. Will labor come back and do it again each and every week? Will unions mobilize support for the satellite occupiers in city after city? Or will most of their energy go into the Obama/Democratic Party re-election campaigns as if nothing much has happened? (They should listen to protestors, who agree that corporations and the wealthy are destroying our democracy by buying candidates of both parties.)
Already you can hear the chattering classes mumble about the lack of focus, the lack of consensus and the lack of a coherent agenda in this nascent movement. But they have this coherent call: We are the 99 percent, and we demand our fair share. The irrefutable fact is that 99 percent of us really are being screwed by the 1 percent who are looting our country (actually it’s more like the top 1/10 of one percent). So if you still harbor any doubts that Wall Street is the right target, here are 10 reasons to consider:
1. Wall Street caused the crash: Unless you are suffering from financial amnesia, you should remember that it was Wall Street’s reckless gambling that did us in. It was Wall Street banks and hedge funds, not home buyers, who created the enormous demand for high-risk mortgages to pool, to securitize, and to turn into Ponzi-like gambling structures with names like CDOs, CDO squared and synthetic CDOs. It was the money-grubbing rating agencies that blessed these pieces of garbage with AAA ratings. As a result, trillions of dollars of worthless toxic assets polluted our financial system. When the bubble they induced burst, our system crashed, causing 8 million working people to lose their jobs in a matter of months due to no fault of their own. Anyone who still blames low-income home buyers, or regulations or Greece — or anyone other than Wall Street — should be checked for dementia.
2. The Wall Street crash directly caused the gravest unemployment crisis since the Great Depression: We’re three years into the worst jobs crisis since 1937. Upwards of 29 million people are out of work or have been forced into part-time jobs. The number of people who have been jobless for more than 26 weeks is at post-WWII record levels. And there’s no end in sight to this misery. Meanwhile, Wall Street’s representatives in Washington want us to focus on cutting public employment and public services to address the debt that Wall Street itself precipitated. WE wouldn’t have a debt crisis were it not for the bailouts, the crash, the lost jobs and the soaring cost of jobless benefits that can be laid at Wall Street’s door. (The debt was also caused by tax cuts for the rich, and the bankers certainly don’t want to talk about that.) For those diversionary debt tactics alone, Wall Street should be occupied until it pays to replace the jobs it destroyed.
3. Wall Street profited from the bailouts and remains unaccountable: Taxpayers provided trillions of dollars in cash and asset guarantees to the wealthiest bankers and hedge fund managers in the world. But nothing was extracted from them in return. Here’s one egregious example: Goldman Sachs paid $550 million in SEC fines for selling mortgage-related securities that were designed to fail so that a large hedge fund could bet against them. The securities failed as planned and the hedge fund pocketed $1 billion in profits. But after we bailed out AIG, Goldman Sachs picked up nearly $12 billion for similar bets that AIG had insured. Goldman Sachs collected 100 cents on the dollar and those dollars were ours.
4. The super-rich are getting richer: When the economy was crashing during 2008, high frequency traders in hedge funds and banks made upwards of $20 billion from the turmoil. This trading scam provided no redeeming value to our economy. Rather, it was a hidden tax on our sorrows — a transfer of funds from the many to the few. In 2010 the top hedge fund managers “earned” over $2 million an HOUR! The top 25 hedge fund managers took in as much as 650,000 teachers. Young people have the right to question these lopsided values. All of us have the duty to do something about it.
5. The super-rich are paying lower and lower taxes: While the government pleads poverty when asked to create a massive jobs program, our financial elites use every loophole available to avoid taxes. In 1995, the 400 wealthiest families paid about 30 percent of their income in taxes (after all deductions). Today their effective rate is less than 16 percent. And for what? What did society gain from their retained wealth? Not jobs, not debt reduction, only more Wall Street gambling.
6. Financial elites pay lower taxes than their secretaries: Venture capitalists and private equity fund managers, as well as some hedge fund elites, get a fantastic tax break called “carried interest” that allows them to pay a top rate of 15 percent on their income (rather than the 35 percent top rate regular people pay). This tax break, originally designed for small business partnerships, has made the mega-rich even richer. You might be wondering why this outrageous tax break continues for billionaires. The answer is simple: these elites are pouring money into Washington to make sure that Republicans and Democrats alike keep the loophole in place. Even some liberal Democrats are parroting the line that this tax break for billionaires is good for America. So when the occupiers say they are disenfranchised, they’re right.
7. None of those who caused the crash have been prosecuted: Raj Rajaratnam, the hedge fund billionaire, is going to the hoosegow for insider trading. Bernie Madoff is in prison for life for his Ponzi scheme. And about 40 others have pleaded guilty to insider trading crimes. Yet none of these scoundrels, as immoral as they may be, had much to do with the financial crash. They didn’t peddle toxic mortgage-related securities. They didn’t push predatory loans. They didn’t rate garbage securities as if they were gold. None of these perps pumped up the housing bubble. Those who did are still roaming free, financially armed and dangerous.
8. Wall Street is much too big and its salaries are much too high: The financial sector is supposed to be an intermediary that turns our savings into productive investments. It’s not supposed to be a casino and it’s not supposed to dwarf the rest of the productive economy. But after years of deregulatory foolishness, it has metastasized to destructive levels. From the 1930s until the mid-1970s, financial sector employees earned the same as those in other sectors, relative to their skills and experience. That’s the way it should be. But since we embarked on the long march of financial deregulation and tax breaks for the super-rich, people working in the financial sector have seen their incomes skyrocket compared to everyone else. The bigger that gap, the more danger we face. And unless we build a massive populist uprising, it won’t change.
9. Wall Street still owns the regulators: When you put too much money in the hands of the few and when you deregulate finance, you get a financial casino. That’s what happened in the years leading up to the 1929 crash, and it happened again in 2008. During the New Deal we regulated the tar out of finance, ending their reign of speculative terror. And it worked for nearly a quarter of a century as financial crises virtually disappeared. Since financial deregulation reappeared over the last 30 years, there have been over 180 financial crises around the world. So you would think after 2008, we’d be back to reining in the bankers. But, no…our leaders are afraid to stifle “financial innovation” (See next point.) The Dodd-Frank bill is weak and getting weaker, thanks to intensive Wall Street lobbying. High government officials still believe that Wall Street can lead the nation forward. The kids are telling us that we should shut down the casinos now. Right again.
10. Financial innovation is a joke: Washington genuflects before the gods of financial innovation: the adjustable no-money down mortgages with resetting teaser rates, the synthetic collateralized debt obligations that turn garbage mortgages into AAA securities, the credit default swaps that are financial insurance policies without regulation, the nanosecond trading programs that flip millions of stocks per second while milking slower investors, and the myriad of ways to make enormous financial bets using little or none of your own money. They tremble at the thought of whispering anything that might stifle these highly profitable Wall Street inventions. They are wowed by trading measured in nanoseconds, by the alphabet soup of securities, by the dark pools of financial trading and most of all by financial billionaires and their lobbyists. But to paraphrase former fed chair Paul Volcker, the only real financial innovation in the last 25 years is the ATM machine. The rest are simply gambling games designed to enrich Wall Street’s elites who pocket the winnings and pawn off the losses on us. The protesters sense the game is rigged. It is.
Does Wall Street pay or do we? In the end, it comes down to a clear-cut struggle between the few and the many. (There’s that 99 percent again.) Who is going to pay for the jobs we need? Who is going to pay for the debt that was created to bail out Wall Street and prevent another Great Depression? Wall Street wants us to pay in the form of cuts in Social Security and medical coverage, reduced wages and higher taxes (for everyone but them). In fact, they want the kids to pay by working longer before they retire (if they can ever find a job), paying higher medical costs as they grow older, and turning their Social Security accounts into Wall Street playthings no one can rely on. At the same time financial elites are arguing for fewer regulations and lower taxes on themselves and their fellow millionaires and billionaires. Financial interests are hoping we’ll simply forget who caused what and instead focus on debt, more debt and still more debt. They’re hoping we’ll blame government, regulations and taxes, while they laugh all the way to the bank – their banks. Some of us may be old and tired and fatalistic about all this looting, and sour about the chances for change. Thank god the kids still have their wits about them—and a fighting spirit.
Get out there and join them. And if you’re too old to stay overnight (like me), visit often and urge your unions, churches and community groups to join the fray. A progressive populist uprising only works when it’s large, vocal and full of spunk.
Go occupiers, go!
Post originally appeared on Alternet.
Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).