03/28/2009 05:12 am ET | Updated May 25, 2011

Don't Listen to Wall Street, They Are the Ones That Got Us in This Mess

Ben Bernanke speaks to Congress on Monday and declares his opposition to nationalization of banks and the stock market surges 200+ points. The next day, President Obama speaks to the nation and declares that the banks and the wealthy won't be able to prosper without the rest of us and the stock market drops.

Why do cable TV, blogs and proliferating new media still care about how Wall Street evaluates public policy? Why would we listen to them?

They got it wrong -- dreadfully wrong. They bet on their own self-delusional euphoria driven by skyrocketing balance sheet wealth in real estate and the stock market. They failed to see -- either blinded, in denial or trapped by the fear of being left out of the moment -- the coming storm of the obvious housing bubble driven by speculation, the hyperactive market-seeking behavior of banks looking for profits by selling more product, (i.e. loans) and the anxiety of home-buyers that wanted a home for their families and wanted to get in on the myth of ever-rising home prices as a way to increase their families' wealth.

The investor class got it wrong because they failed to see -- blinded again by the moment of profitable SUV sales -- of the coming storm in an auto industry that didn't predict high gas prices and spiking concern about global warming.

Grover Norquist promoted a political strategy that became the Ownership Society, to make Americans investors so they would more likely vote Republican. But it didn't work out that way. First, voters overwhelming people rejected privatization of Social Security because they saw the contradiction between economic security in retirement and the ups and downs of the stock market. Second, the stock market is still controlled by the few. While many Americans have some money in 401k's, pension funds, and their own mutual funds, the vast majority of the assets in the stock market are owned or managed by a relative few. We've got an investor elite class that succeeds and fails on their investment decisions and brings the rest of us along.

There is also a think and talk industry dedicated to keeping the delusions alive. There's an army of global-warming denying think tanks funded by the oil industry and talk shows looking for sources to continue the attack on government. There's an army of think tanks ready to attack any rules and regulations, hell-bent and focused by the Right wing's unified goal to downsize and drown government in a bathtub.

We're told by those with fundamentalist belief in free markets, that the choices of investors, consumers and others will send the market the right signals and create prosperity as the world changes. They say that any action by government -- to set rules or raise resources for public goods -- will create distortions in the natural and immutable laws of the market.

Oops. They were wrong. The choices made by Wall Street investors, banks and auto industry executives were dead wrong and now the economy is in free fall. So when the market reacts against Obama's claim that he will rein in Wall Street and CEO excess, that he will demand responsibility and accountability when we invest public dollars and that we will create rules and regulations to ensure their mistakes don't doom us to future market failures, let's just ignore them.