William K. Black
February 21, 2016 Bloomington, MN
Wall Street CEOs are very upset with young adults. They believe you are “clueless” and “voting against [your] own interests” when you support Bernie Sanders. A Wall Street CEO took to the pages of the Wall Street Journal to decry the fact that “Millennials are flocking to Sanders.” It would be cruel to note that one has to be clueless to believe that writing an op ed in the WSJ was a good way to reach millennials supporting Bernie. But at least we can gain an insight into Wall Street’s theory of why Bernie is bad for young adults. It turns out that Wall Street is worried that Bernie is pushing Hillary Clinton to take inequality seriously because younger Americans take inequality seriously. Wall Street, of course, loves and exists to produce staggering inequality.
These young voters appear to be falling headlong for the Vermont senator’s plaintive narrative of economic “unfairness.” His throwaway prescriptions for redistributing income and wealth are being echoed by an increasingly nervous Mrs. Clinton—despite such policies’ having been jettisoned during her husband’s administration in the 1990s.
Notice the devastating nature of the Wall Street critique – Bernie’s discussion of inequality is “plaintive” (which means “sad” and “mournful”). Human beings are sad about the severe inequality in America – and have concluded that the Clintons’ “New Democrat” policies were a major part of the problem. Given what has happened to middle and working class Americans’ incomes under the neoliberal economic agendas of the Clintons and Bushes, the reaction of those supporting Bernie means that they are voting in favor of their economic interests. The Wall Street CEO inadvertently admits this fact, and comes to his real complaint – the public is furious that Wall Street elites made a fortune by leading the three most destructive financial fraud epidemics in history – and did so with impunity. How dare the American people no longer worship Wall Street?
Both Democrats and some Republicans keep blaming it all on “Wall Street” (Bernie Sanders’s all-purpose boogeyman) for “getting away with murder” (Donald Trump on hedge funds). Don’t they realize that the financial markets are the lubricant of the entire economy—that Wall Street’s capacity to provide liquidity and to broker capital is the lifeblood of American companies? History will probably judge the misguided post-crisis regulations like Dodd-Frank and retribution against Wall Street to have sown the seeds of the next financial crisis. For now, the vilification of Wall Street in the presidential campaign is irresponsible.
No, we don’t “realize” that Wall Street is “the lifeblood” of America. We do agree that “lubricant” comes closer – greasing politicians’ hands certainly is part of the problem. Wall Street is vastly too large and it primarily moves capital to uneconomic uses because it is led by frauds and functions largely as a parasite. Wall Street shrinks the “pie” (the overall size of the economy) and takes an astonishingly large share of that diminished pie. The author complains that “governments lack the incentives and resources to effectively allocate and manage capital in the microeconomy.” He apparently was out of town when Wall Street did exactly the same thing for exactly the same reasons – Wall Street’s executive compensation schemes create perverse incentives that Wall Street spreads throughout “Main Street.”
The Wall Street CEO admitted that his goal is to eliminate the already critically weak Dodd-Frank Act and return to an era when there was only a pretense of financial regulation. What “retributions against Wall Street” – not a single leader of the three epidemics has been prosecuted. We agree that this destruction of the rule of law on Wall Street has “sown the seeds of the next financial crisis.” Wall Street is not being vilified – its elites have acted as villains. The business model of far too much of Wall Street is fraud. The author is so desperate that he claims that Bernie wants to recreate the Soviet Union in the United States. Unsurprisingly, the author, who co-founded an “astro-turf” operation in DC purportedly dedicated to “bi-partisan” approaches ends with a partisan plea in favor of Republican candidates.
In an amazing admission, the Wall Street CEO predicts that what Wall Street is about to bring America and Europe is a massive destruction of employment and a staggering surge in inequality that will destroy the American dream. His “solution” is be among the tiny number of winners at the peak of the towering inequality.
[The economy soon] will be displacing service professionals and Ph.Ds just as they have factory workers. The Bank of England projects that 45% of jobs done by people in the U.K. will eventually be performed by robots. ArkInvest expects the U.S. to shed 75 million jobs in the next two decades.
Yep, I can’t think of any reason why a young adult American would not embrace the prospect of shedding 75 million often good jobs and flushing those 75 million Americans into a desperate struggle against each other in the emerging “gig” economy to secure enough scraps to survive. Wall Street CEOs aren’t “clueless” – they plan to get rich by getting paid huge fees to destroy those 75 million American jobs. Wall Street CEOs think that the prospect of them becoming even wealthier by destroying those 75 million jobs should cause “Millennials” to praise them because Wall Street exists “to effectively allocate and manage capital in the microeconomy.” It is, after all, all about “capital,” not people. The Wall Street CEOs think the young should cheer Wall Street’s “effective[ness]” in destroying the middle and working classes in America.
We need to dispense with the Wall Street baloney and push the passage of the NEED Act. It is time to end the Wall Street fraud that allows their private banking system to create our money. This would not only solve the problem of student debt it would solve the problem of government debt, and would put the nation on sound economic footing for the first time in over 200 years. Wall Street represents the oligarchy that rules our nation, time to end it and implement democracy. Any government that does not issue the money and spend it directly into the economy is an anti-democracy fraud. We know this, time to change it.
I am assuming two of the three-most-destructive-financial frauds are the dot-com bubble and the housing bubble. What is the third?
Dr. Black, I hoped that you would appreciate your subject WSJ op-ed author’s (Daniel J. Arbess’) Business/Job Position Title on exhibit at his illustrious Wikipedia page: Founder, Chief Investment Officer, Parasite.
Rob Carter Comments added as a Reply to all:-
GEI Comments :-
“Remarkable for two explosive statements excerpted below, in WBK’s effort to explain why Bernie Sanders has so much appeal to youth. The first addresses the parasitic organization that the financial sector has become”
In my view Wall Street can best be forgotten as an 70-80% HFT Casino Capitalists game with subsidized FED using the general Public money taxes and a ton of “Fiat” Valueless Debt Free Printed pretend currency in USA Stock Exchange. By dumping Wall Street to stand alone as any other Privately owned Shareholder Corporate for profit accounted Company not as a POTUS semi-government organ by merely appointing a chairman/woman dispersing Government creation & Printing of “Fiat” Currency they loan to Banks to re-loan to Investors and supposedly Private Comsumers for additional economic factors of employment creation for growth in Demand and hence Productivity GDP growth a factor that can not materialize when foreclosures like 2008-9 leave the public without equity and visual repay-ability viability to cover loans.
The great mistake of todays 99% Theorist Economists is their failure to comprehend John Maynard Keynes wisdoms of gold standard currency value peg, in favor of Hayek vagaries and Milton Friedman’s “Erroneous Monetary Theories” when pandering to Dirty Dick “Nixon’s 1971 shock” removal of gold standard & it’s $35/oz peg from already sold USD Trade & Petro Currencies circulating in the whole World.
Thus these same economists can not see the practical realities and differences between the 1929 “Great Depression” Wall Street Crash contributions and factors of Professor Kondratief’s prediction wafe suggesting a 2029 depression of similar magnitude. What -will not exist in reality are the identical factors of crashing market prices and demand for share trading because 1929 depressionWikipedia explains was “a serious World Wide Economic Depression” ..[…].. “Originated in USA after a fall in stock prices” ..[…].. thus “Worldwide GDP fell 15% from 1930-1932 in the ‘Great Depression’ reality” by comparison with realities of the Worldwide “Great Recession” in “2008-2009 a mere World GDP fall of 1%”.
Worldwide Trade during the “Great Depression fell 50%”..[…]..”Worldwide crop prices fell 60%,” ..[…].. “in USA Unemployment rose from 25% to 33% ” . RC NB: USA Unemployment was then measured by world same standard components, not as in 2016 some unrelated mere 1 year maximum dole recipients 5-7% today ignoring the real unemployed/under-employed masses a further 15% so I see that today USA is the same 20%-22% equivalent of Spain & some BRICS ( acronym of Brazil, Russia, India, China and South Africa emerging economies ) Even Greece 24-27% unemployment in 2016 and for the same reasons that the 2008 “Great Recession has never recoverd to 2007 norms and will probably end in 2019 Kondratiev Wave predicted Greater Depression.
In 1929 USA unemployment was up 4 to 5 times more than Britain& , France, Germany averages hence domestic consumption as well as export consumption couldn’t keep pace with productivity thus Investors couldn’t justify production facility increases and at the same time their share values fell due to a lacking profitability worse than bank low interest on deposit rates. In 2016 the same is the case but FED is propping Banks and Industry with low cost Interest, QE’s & Fiat Loans for rentier investment in homes for the foreclosed homeless lacking equity for consumption credit. Whereas 1929 Depression was not suffering the automation and resulting low disposable incomes of unemployed as is the 2016 crashing 2019-29 foreseen. Furthermore 1929 wasn’t suffering the foreclosure “fire-sale” loss of public equity for home ownership and/or rentals as is 2016 hence a measure of loans to public existed in 1930-40’ss that does not and will not in the 2010-20’s’.
In 2029 the Wall-Street crash is blamed as the main cause of poverty growth and Market suicide Investing, but in 2019-29 depression Wall-Street crash is of no significance to the already impoverished “Inequality” 80% populous. If Wall-street crash suicides recur today it will mean more cash to the 80% much less FED exposure to new debt, Fiat printing, ending subsidies to righest Wall-Street casino players of HFT funny money monopoly games.
Personally I think Wall-street bull-tosser suicides would help World Economics finally recover.