Stop Whining: Wall Street's Record Profits, Pay, Dow 10,000 Are Great News

For some of us.

It's time to recognize what it means to be part of the billionaire-bailout nation. Citizenship comes in three distinct flavors.

If you are wealthy, it's fantastic to take part in the resurgent Wall Street boom. You are thrilled to see the trillions in taxpayer dollars successfully prop up the financial sector. After all it's not really your money -- your tax shelters take care of that. You love the rise in the markets. You are now reaping the rewards of investing in a sector that rests firmly upon government welfare, and in which the largest institutions are guaranteed from failure. It feels good to see double-digit returns again, which you feel you truly deserve. The gap between your wealth and the average American's is utterly fantastic. Life is good.

If you have a job, you are feeling better than a year ago. Your 401k is coming back from the dead. The stimulus program seems to be helping with your employment. You may even get some relief from health care reform. But you are not seeing your wages increase. (Overall the average production workers real wages are down more than 18 percent since the mid-1970s.) It's not easy to maintain a middle-class existence or get anywhere near one if you're not already there. Layoffs might be slowing down but you are still petrified that your job will soon disappear. You are unsure you can provide for your children's education and your own retirement. The future seems much less secure than it did for your parents' and grandparents' generations.

If you don't have a job you're in deep trouble. You are a "lagging indicator." You are one of the 29 million who are without work or forced into part-time jobs (the BLS U6 Jobless rate stands at 17 percent). You are gobbling up what savings you have or already digging a deep hole of debt. You are hoping other family members can keep the ship afloat until you find employment. You've worked hard all your life only to watch your industry pack up and leave or shut down all together. You've drawn the short straw.

Well so what: life is unfair. And maybe there's nothing we can or should do about it. Then again it's very hard to make the case that we've tried all that hard. Here's the scorecard:

Too big too Fail? The top 20 or so financial institutions got even bigger. No effort is being made or even being contemplated to break them up so that they are small enough to fail.

Risky Derivatives? Still totally deregulated and poised to re-emerge. Bank lobbyists are working hard to block serious reforms. Keep your eye on high fee, high profit specialty derivatives which are likely to remain deregulated forever.

Executive Pay? The Pay Czar has limited powers and seems ineffective. He's even having a tough time reining in AIG's Financial Product group's bonuses, even though that group was responsible for sinking AIG and costing the taxpayer more than $150 billion in bailout funds. (See New York Times and Wall Street Journal "Wall Street on Track to Award Record Pay.")

Shrink the size of Wall Street? President Obama said last May that he wanted a smaller Wall Street with lower pay so that the best and the brightest would be lured into science, medicine and education rather than into concocting new casino games. Fat chance. Record profits will lead to higher pay, which in turn will draw more talent into fantasy finance. PS. Andrew J. Hall, the oil speculator, will get his $100 million payday.

Windfall Profits Taxes on Wall Street? Forgetaboutit. Now that we've given Wall Street upwards of $13 trillion in taxpayer funds and guarantees, they are keeping the profits. Neither the White House nor Congress has the stomach for taxing it away.

Progressive income taxes on the super-rich? Off the table. We have the worst income distribution since 1929. The Eisenhower era 91 percent marginal tax rate on incomes over $3 million (today's dollars) is far too radical for our billionaire-bailout nation.

Programs to employ our people after the stimulus ends? Nada. The unemployed will have to fend for themselves in the marketplace, while the super-rich feast on the Wall Street bailout bonanza. We could go a decade before we come near full-employment again. In fact look for the economics profession to redefine full employment as 7 percent rather than 4.5 percent.

Won't it all work out as long as the markets keep improving?

I think we played that song again and again over the past thirty years. It's a mirage. We deregulated just about everything, crushed the middle class and crashed the whole shebang.

But, complaining about the billionaires and the bailouts (which perhaps was greatest transfer of wealth since slavery) just isn't good enough. We need to recognize that underlying all of these problems is the lack of a progressive response.

Unless I'm missing something, almost all the pressure on Congress and the White House is coming from the right: from banking community and from those who detest government intervention in the economy (which is easy to do, now that such intervention seems to have saved it).

The progressive community has developed no coherent voice, no national movement, no effective lobbying. We are tied up in a myriad of important, yet isolated issues, and seem to have forgotten what a movement looks like. Populism belongs to the tea baggers, not the populists of old. When it comes to finance, the very heart of our economy, we seem to be waiting for Obama to do it all for us. No such luck.

Yet most Americans understand that something has gone terribly wrong. They truly sense that Wall Street is running away with our nation's wealth. It's a precious organizing moment.

We're at the fork in the road: Either we build on this moment to dramatically change the way the super-rich dominate our economy or we'll be leaving to our children a billionaire-bailout nation with a hollowed-out middle class.

Hopefully, we still have a little moxie left in us.

Les Leopold is the 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 Publishing, June 2009.

 

Follow Les Leopold on Twitter: www.twitter.com/les_leopold

Comments

[lwaxanatroi]

To those who indicated they'd love to help with the revolution if only they didn't have day jobs, I might point out that our Founding Fathers had day jobs, too. They all left their farms, businesses, and families for months and even years at a time in order to serve the fledgling Republic. As one of them said when asked what sort of government they had produced in Philadelphia, "A republic, madam, if you can keep it." I think we are being sorely tested right now as to whether we can and will keep it. This time the enemy is not Great Britain but too-fat banks and corporations. The war won't be waged with muskets but with laws. But there will still be barricades and if they aren't manned by someone, we are doomed.

[Maxine]

Just call me a "lagging indicator" or "loser" both describe me to a "t". We ran out of food last week and my daughter had to give us enough to get by for a few days--she has her own family and cannot afford to do this again. This is the first time we have never been able to put food on the table. As I mentioned in another post it has come down to not paying certain bills--house payments, food, medicine, utilities and other necessities. Until then our other creditors are on the back burner. I am sure they will get along without our money just fine but there reaction will be to harrass and threaten legal action until we feel like diving off a cliff.
Ironically, I just finished college classes in 2007 (BA in History) in 2009 I earned my MS in Justice and Security Administra­tion--just as the economy fell into oblivion. I can't find a job, I'm 56 years old, live in a rural area, and my college studies are not specialized. If the economy does come back (before I am to feeble to work) and I find employment those "other" creditors can garnish my wages. They have billions of dollars, the support of Washington and the legal system on their side--not to worry they will be alright. Maybe the government will resurrect debtors prison. You know for our own good, like mandatory health care without a public option.

[MiHi]

I've said it before and I will say it again.

Oil and sharpen the guillotines!

[goodnews7]

Medicare Money Mania - Part 3 - Potential Savings

Yesterday we looked at how Medicare is funded, their current and projected budgets and their assets. If no savings are found, Medicare will run at a loss from 2010 onwards and the trust funds will be depleted in 2019 or 2020. In today’s article we’ll first look at the cuts that President Bush and presidential candidate John McCain proposed and then look at the ideas being debated for inclusion in the health reform bill. In a previous article – “Scams That Target Seniors – Part 2 – Health Care Related Scams” we noted that ” Scams centered on health care cost the nation around $250 billion in 2008, with about $50 billion of it directly increasing the cost of our health care.” If most of that $50 billion and a substantial amount of the overspending can be saved we’ll have covered a substantial amount of the projected $72 billion shortfall in 2016. In 2008 Medicare paid the private insurance companies $177 billion in subsidies to support the Medicare Advantage program. All of that could be [...]http://silverbuzzcafe.com/?p=3720

[mykulbee]

Okay Les, I'm pegged:

"If you don't have a job you're in deep trouble. You are a "lagging indicator." You are one of the 29 million who are without work or forced into part-time jobs (the BLS U6 Jobless rate stands at 17 percent). You are gobbling up what savings you have or already digging a deep hole of debt."

Now what? What am I supposed to do as I try to keep my family 'in society'? I understand that there needs to be change...much as I did in the 60's...but today I don't have the luxury of time I had then. Life has gone from 'rat race' to total chaotic survival. How does my moxie fit into play? I wish I knew.
I see my life's work draining away. The day's coming when my savings are gone and my part time income can't cover my debt. My middle class status will be gone. Maybe that's when I'll have the time...when I own nothing and can supply nothing to my family.

I remember thinking of the possibility of a violent revolution happening in this country back in the days of Kent State and Vietnam...and being glad years later that it didn't come to that. Is that kind of change making event still in my lifetimes horizon? It's ironic that your posting is on the anniversary of Marie Anntonette's comeuppance.
...I'm just sayin'....
Thanks for at least pointing to 29 million situations...

[isjois]

"Life has gone from 'rat race' to total chaotic survival."

Great point.

It doesn't matter if you're a Boomer, Gen-Xer or fresh out of school - if you're not "wealthy", it's hard to live any normal pace of life in our country today!

When I took out student loans and worked three jobs to put myself through college, I thought it would ensure me a place in the middle class. After having two young children diagnosed with health issues and a boss recommend I choose between them and the salaried job that was becoming oppressively hard to balance with home responsibilities - I learned that an "education" doesn't guarantee anything in today's America.

In days long gone, if you were willing to work hard at a full-time job, you could provide your family with a good life. Today, most families live at a break neck pace and have no security. We need to listen to one another and work together to make ourselves be heard. We need to keep contacting our leaders and telling them our views.

[SoCalCynic]

...and a bankruptcy in your credit report makes it VERY HARD to find a decent job! It is sickening how libertarians, repubs, and dem fiscal conservatives continue to empathize with and vote for the interests of the corporations and against those of the middle class.

[williambanzai7]

The GOLDMAN STING:

http://www.youtube.com/watch?v=OxUW0FM6_Us

[research]

Look at the Scandinavian system: regulated free market and regulated capitalism with a cradle to grave safety net for the general welfare. The highest happiness levels, and lowest misery levels in the world.

[brew7676]

"Look at the Scandinavian system: regulated free market and regulated capitalism with a cradle to grave safety net for the general welfare. The highest happiness levels, and lowest misery levels in the world."

High suicide rates, high level of alcoholism, anti semitism, nazi collaborators, political correctness capital of the world, and crappy weather. That's why a Scandinavian is 20 times more likely to move to the US than an American is likely to move to Sweden or Finland.

[research]

prove it, I don't believe a word you said. Back it up.

[research]

Crickets????

Let's start with the old suicide claims:
Here's the list: Try correlating safety net and high taxes with rates, it doesn't work.

Suicide rates plus homicides, is far lower in Scandinavia than the USA.

"An accurate comparison of suicide rates among countries is difficult because of the unreliability of official suicide statistics and varying methods of certifying how deaths occurred."

http://encarta.msn.com/encyclopedia_761555737/suicide.html

http://en.wikipedia.org/wiki/List_of_countries_by_suicide_rate

Your right, the weather sucks, that's why so many leave, adding genetics and SADD explain any real differences in Suicide rates and alcoholism and emigration rates. Scandinavians go everywhere, they are the Vikings, remember?

Scandinavia and Sweden in particular are the plutocrats worst nightmare, and the robber barons think tanks and pr have spent endless time and money smearing anything and everything about Sweden. "Politically Correct" just means they have regulations and laws for everyone, not just the poor and they are a more civilized society. But Swedes love all the same stuff Americans do, from Big Trucks, and wet Tshirt contests, to Opera and ballet. They are Happier, and less miserable overall and you can feel it when you are there. Swedes won't tell you that. It is unseemly for them to think they are superior.

But they are far from perfect, who said they were? I think they have proven that they have a better concept of the balance between banks and business and the democracy.

[research]

The Collaborator comment is ridiculous: Where did Allied Pilots want to escape to if downed???? How about the Norwegians resistance that tracked Nazi ships. The USA had Prescot Bush and the Banktser plot to bring Fascism to the USA.

[rayoflightinaseaoffog]

In the 1960’s during college I studied some communist philosophy and talked with people who had lived in communist countries and came to the realization that communism would not survive. This was because I realized that it operated for the benefit of the few elite who controlled the government and various types of business interests. The rest of society was treated as expendable. Government under communism worked to maintain this lack of social movement. The West did not need to do much else than maintain an open society where all had basic needs covered and a chance to improve themselves and provide a reasonable resistance to its expansion. Most people I told this to didn’t believe me, especially when in the mid-70’s I pointed out that large scale capitalism potentially had the same weakness. Today we can see that weakness becoming the dominant feature of the Western economies.

The vast majority of people just want to lead productive lives where they contribute to society and receive sufficient in return to comfortably and with good health raise a family who will live a better life than they did and which will have a decent retirement after they age. Over the last 30 years this has become less and less an option. It will be interesting to those of us without children to see how this develops. Those who have and love our children should look for ways to correct the current situation.

[isjois]

We need those of you without children to help us correct the current situation.

Many families with children are so overwhelmed with day-to-day "survival" - that they lack the time and resources to change the world around them.

"It's not that we don't care,
We just know that the fight ain't fair
So we keep on waiting
Waiting on the world to change...
One day our generation
Is gonna rule the population
So we keep on waiting
Waiting on the world to change" (John Mayer)

Maybe we're not all waiting for the world to change...but, trying to survive until it does.

[whoskiddinwho]

Mike Malloy said it best when he pointed out he tried to make it change,he didn't wait around.

[SoCalCynic]

"I realized that it operated for the benefit of the few elite who controlled the government and various types of business interests. The rest of society was treated as expendable"

Dang. That sounds real familiar right about now. Quite depressing.

[Harry Tuttle]

The joke is on those who thought Obama would be less generous to Wall Street than Bush. Rubin, Summers, Geithner...what did you expect?

Tip: Contrary to popular belief, your 401K DOES NOT have to be invested in equities.

[Maxine]

Hopefully, you are wrong but I really don't see it as a joke.

[espressobeans]

I don't think terrorists could have done any better job of ruining the American dream.

[vm12608]

Why are so many of the "new" people coming from Goldman Sachs? There is tremendous talent all over this country, but our new gov't can only find Goldman Sachs people to head up the SEC etc?

[Pearlswan]

Didn't you hear? Goldman Sachs took over the US government in a financial coup in 2008, just before Bush left office.

[Maxine]

Putting new blood in the system would ruin the status quo.

[noaxe397]

But Mr Leopold, isn't the pressure from the right for LESS regulation and even LOWER taxes?

Your article implies that the right wants to fix the problems you list.

In fact, they want to exacerbate them for the benefit of their corporate benefactors.

When Congress tried to reign in exec pay all we heard from the right was "socialism, disparaging wealth, it's MY money, we need to KEEP the beat and brightest, etc.)

[Gasparilla]

What article are you reading? H'e saying no such thing. He's saying the right wants to keep up the deregulation that led to this.

[sposton]

Never in the modern times has the government of the Republic been in greater service of the criminal banksters than it is presently.

[beudrep]

Government­+Corporati­ons=Fasism

[drymartini1]

use a spell checker and then post !!

[BlackRabbit]

Corporate America has problems these days, we can all agree. Where people disagree is what the fundamental problems are and how to address them. Here's my take...

(1) It costs too much to run for federal office. This means that politicians must spend enormous amounts of time raising money, and are then subsequently beholding to their benefactors. This puts enormous power in the hands of the wealthy. He who pays the piper calls the tunes.

(2) Corporate America is being run for the sake of the managers, not the owners. Boards of directors are not representing the interests the shareholders. As an example, the chairman of the board is far too often the CEO. This is an abomination, given that one of the prime duties of the board is to ensure that the proper CEO is in place. Also, it is far too difficult to get a member on the board of whom the chairman does not approve.

[Gasparilla]

If you go back in history, the crash of 1929, the savings and loan swindles of the 80s [like Neil and Jeb Bush], and this present debacle, they all came at the end of at least two terms of Republican presidents. And the reason is their philosophy is let business run the country with no regulations and we'll all end up better. I'm not about to suggest we don't need a strong business community, but what we have now is a house of cards where money is moved from one pocket to the other, with nothing produced. And the already super wealthy walk away and leave the taxpayers to clean up the mess.

[sposton]

This is indeed so. I think there is a crucial difference between the past and today. The interests of the thieving elites and the rest of us have been steadily diverging while the policies of our government have been heavily influenced in their favor. In the past we used to hear of the desirability of "capital formation", a euphemism for giving the super rich more money to invest into our economy. This was the rationale for most of the tax cuts. The end result is that we end up with enormous government budget deficits and very little to show for on the benefits of "capital formation" which ended up de-industrializing this country by investing the given capital in China and elsewhere and very little in this country's real economy. The phantom economy of making money by magic tricks is the chosen method today. And the idea that we must first save the engines of phantom economy by pouring trillions into them so that we can have a healthy real economy again sounds to me utterly ludicrous. This was the kind of crisis that should have been put to good use by eliminating these parasitic methods once and for all. This alone would have put our real economy on a real recovery path. Instead, we have Summers and Geithner to make sure the parasites continue to rule and prosper. This is an unforgivable sin Obama has committed and will forever stain his legacy.

[Jannsmoor]

It's called libertarianism. It's very similar to anarchy. Business owns government.