Posts Tagged ‘financial sector’

The Crisis Of Democracy In Europe

As I’ve blogged before, I’m kinda tired of writing about the eurozone debt crisis. The results of the once again ”crucial” European summit that starts today are fairly predictable: announcements of more, even radical, fiscal discipline and sanction mechanisms across the European Union (or the eurozone), a further integration of tax and labour market policies, and no hopes whatsoever for an expanded role of the ECB in the form of it acting as lender of last resort or as issuer of eurobonds. Everything that Germany wants, happens.

In other words: in order to please the financial markets, only one of the structural deficiencies of the eurozone is being addressed: the disparity in budgetary policies across member states. The other ones - the existence of separate bonds markets and the absence of a true central bank, which leads to Europe’s heightened exposure to the judgment of financial markets and credit rating agencies - are not addressed at all. All this because of Germany’s fear of inflation.

The European debt crisis is now starting to become a democratic crisis as well. This is happening on two levels. First, in order to please the financial markets, “reforms” and budget cuts are being imposed on southern European countries at huge social and economic costs without the population having any say in it. Elected politicians are removed not by elections or the people on the street, but replaced by so-called “technocrats” under pressure of the financial markets. Moreover, across the entire eurozone radically tightened fiscal discipline, which will have a huge bearing on social and economic policies, is being imposed without the population having any say in it; once again, to please the markets. The German, i.e. the conservative/(neo-) liberal policy solution for everything – fiscal discipline, budget cuts and market reforms - is imposed throughout the eurozone by Diktat.

Whether you like this particular economic policy package or not (I’m personally not against it), there’s no escaping the fact that the past months we’ve witnessed a huge shift in sovereignty from democracy to the market. Financial markets dictate what must be done; and it is reinforced by those policy-makers in charge who happen to walk in tune with those markets.

The second level at which democracy is under attack is in the transfer of powers from the national level to the European one. It is by now accepted that the only solution for the eurozone is a further federalization of fiscal, social and economic policies. The European Commission (EC) is likely the institution that will benefit the most from this. Yet, whether you are in favour of the European project or not, the EC is ultimately a technocratic institution; it is a super-regulator that issues “directives” and “regulations” to be imposed uniformly across member states without interference of national parliaments. The European Parliament (EP), the only European institution that is truly democratically legitimized (but only by a minority of voters), does not have the right of initiative; it is the barely legitimized EC that is the one policy ”motor” of the European Union. This situation will only be exacerbated by the current eurozone crisis.

In short, there’s a double crisis of democracy going on: one in the shift of decision-making power from the political sphere to the market, and a second in the transfer of powers from the national level to a barely legitimized European one. In between, the voice of the people is crushed. Particularly worrying is the talk, to be heard here and there, that “democracy” really is just one way to govern a country, that it was a nice experiment, but that it doesn’t really work in an age of globalized financial markets and much-needed technocratic European governance. Have we now really entered a 1930s-style “crisis of democracy”? Is the democratic principle itself being questioned?

To me, the need for a more unified Europe if the single currency is to be saved is clear. But the democratic deficit is getting painful. German solutions mean a half-hearted attempt to create a fully functioning economic zone, but an almost complete transfer of fiscal discretionary powers to an incompletely legitimized supra-European entity. Is that what we want? Do we have any say in that? In my view, the democratic level of the European Union is to be deepened if any of this is the result of current talks. This would mean a broadening of the powers of the EP to become a fully-fledged representative body with legislative powers, as well as finally some concerted effort on the part of European and national policy-makers to promote European democratic institutions amongst the populace. The ECB should also really be allowed to function as a central bank.

Otherwise, the result will be something we have now, but even more overbearing. A soft kind of technocratic regime, composed of an intricate byzantine web of committees, networks, councils and summits and a super-regulator, governed by one particular budgetary philosophy, all the while constricting national discretion to formulate policies, that is whipped from here to there by the financial markets. Even if this solution is, for now, accepted by those financial markets, I don’t think it will hold in the future. And there is no place for democracy in it either.

Tags: Angela Merkel, austerity, bonds, budget cuts, crisis, crisis of democracy, debt crisis, democracy, democratic reform, ECB, EMU, EU, euro, eurobonds, European Commission, European debt crisis, European integration, European Parliament, European Union, eurozone, financial markets, financial sector, fiscal policy, Germany, globalization, integration, legitimacy, member states, nation state, parliaments, reforms, Sarkozy, single currency, summit, supranationalism, technocracy, technocrats
Category Europe, politics |

The Economist Discusses European Bank Runs

One of the most worrying articles I’ve read so far on the ongoing European debt crisis. The Economist is seriously discussing the prospect of imminent bank runs in the eurozone. In fact, in one country, Latvia, this has already happened with a mid-sized bank. That’s the first time I read something about this most scary of economic malfunctions (although Paul Krugman was there first, I’m informed).

With the debt crisis spreading and deepening further to the core of the eurozone – France and Austria are defending their triple-A ratings, Belgium, the Netherlands and now Germany are having bonds issues – and politicians unable (and unwilling) to do something about it, banks are more and more exposed to great financial risks. These stem from the drying up of funds to these financial institutions, which could ultimately lead to one or more of them going down. One of the most worrying signs of this is corporate institutions withdrawing their money from banks. And that’s exactly what’s happening now in Italy, Spain, France and Belgium.

I believe articles like these are called “bearish” in the financial world. Still frightening nonetheless.

- Edit: CNBC is on it as well, referring to the same Economist article. Their message: hoping that customers don’t notice that every other source of bank funding is depleting is not a wise strategy. 

The Economist:

ONE can almost hear the gates clanging: one after the other the sources of funding for Europe’s banks are being shut. It is a result of the highly visible run on Europe’s government bond markets, which today reached the heart of the euro zone: an auction of new German bonds failed to generate enough demand for the full amount, causing a drop in bond prices (and prompting the Bundesbank to buy 39% of the bonds offered, according to Reuters).

Now another run—more hidden, but potentially more dangerous—is taking place: on the continents’ banks. People are not yet queuing up in front of bank branches (except in Latvia’s capital Riga where savers today were trying to withdraw money from Krajbanka, a mid-sized bank, pictured). But billions of euros are flooding out of Europe’s banking system through bond and money markets.

At best, the result may be a credit crunch that leaves businesses unable to get loans and invest. At worst, some banks may fail—and trigger real bank runs in countries whose shaky public finances have left them ill equipped to prop up their financial institutions.

To make loans, banks need funding. For this, they mainly tap into three sources: long-term bonds, deposits from consumers, and short-term loans from money markets as well as other banks. Bond issues and short-term funding have been seizing up as the panic over government bonds has spread to banks (which themselves are large holders of government bonds). This blockage has been made worse by tighter capital regulations that are encouraging banks to cut lending (instead of raising capital).

Markets for bank bonds were the first to freeze. In the third quarter bonds issues by European banks only reached 15% of the amount they raised over the same period in the past two years, reckon analysts at Citi Group. It is unlikely that European banks have sold many more bonds since.

Short-term funding markets were next to dry up. Hardest hit were European banks that need dollars to finance world trade (more than one third of which is funded by European banks, according to Barclays). American money market funds, in particular, have pulled back from Europe. Loans to French banks have plunged 69% since the end of May and nearly 20% over the past month alone, according to Fitch, a ratings agency. Over the past six months, it reckons, American money market funds have pulled 42% of their money out of European banks. European money market funds, too, continue to reduce their exposure to France, Italy and Spain, according to the latest numbers from Fitch.

Interbank markets, in which banks lend to one another, are now also showing signs of severe strain. Banks based in London are paying the highest rate on three month loans since 2009 (compared with a risk-free rate). Banks are also depositing cash with the ECB for a paltry, but risk-free rate instead of making loans.

That leaves retail and commercial deposits, and even these may have begun to slip away. “We are starting to witness signs that corporates are withdrawing deposits from banks in Spain, Italy, France and Belgium,” an anlayst at Citi Group wrote in a recent report. “This is a worrying development.”

With funding ever harder to come by, banks are resorting to the financial industry’s equivalent of a pawn broker: parking assets on repo markets or at the central bank to get cash. “We have no alternative to deposits and the ECB,” says a senior executive at one European bank.

So far the liquidity of the European Central Bank (ECB) has kept the system alive. Only one large European bank, Dexia, has collapsed because of a funding shortage. Yet what happens if banks run out of collateral to borrow against? Some already seem to scrape the barrel. The boss of UniCredit, an Italian bank, has reportedly asked the ECB to accept a broader range of collateral. And an increasing number of banks are said to conduct what is known as “liquidity swaps”: banks borrow an asset that the ECB accepts as collateral from an insurer or a hedge fund in return for an ineligible asset—plus, of course, a hefty fee.

The risk of all this is two-fold. For one, banks could stop supplying credit. To some extent, this is already happening. Earlier this week Austria’s central bank instructed the country’s banks to limit cross-border lending. And some European banks are not just selling foreign assets to meet capital requirements, but have withdrawn entirely from some markets, such as trade finance and aircraft leasing.

Secondly and more dangerously, as banks are pushed ever closer to their funding limits, one or more may fail—sparking a wider panic. Most bankers think that the ECB would not allow a large bank to fail. But the collapse of Dexia in October after it ran out of cash suggests that the ECB may not provide unlimited liquidity. The falling domino could also be a “shadow” bank that cannot borrow from the ECB.

Tags: bank run, banks, Belgium, bonds, capital, crash, credit crunch, debt crisis, deposits, ECB, economy, EMU, euro, European debt crisis, eurozone, eurozone core, financial crisis, financial institutions, financial markets, financial sector, France, funding, investments, Italy, liquidity, loans, meltdown, Paul Krugman, retail, solvability, Spain, The Economist
Category Europe, politics |

What’s Next For Occupy?

So the Mayor of New York, Michael Bloomberg – who happens to be a former Wall Street banker and the 12th most wealthy person in the US – has evicted the nucleus of the Occupy movement from Zucotti Park, where they had been camping for two months. In that process, the NYPD has not shunned violating constitutional rights, including the right to free speech and the right to protest, in addition to preventing the democratic press from doing its job. Books were burned.

This process is likely to repeat itself elsewhere. In the Netherlands, local politicians of the conservative liberal (and, arguably, banking-aligned) VVD party are demanding the exit of Occupy protesters from public places throughout the country. Public attention has declined. So what’s next for the Occupy movement?

In all honesty, personally, while I am very sympathetic to a vocal social movement addressing the immense wealth and especially political power of global financial institutions, the injustices in that sector (such as exorbitant bonuses, the sale of intransparent financial products, and the power of credit rating agencies to almost topple entire economies), and rising economic inequality, I had become a bit disappointed with the Occupy movement. During my (admittedly short) visit to Occupy Amsterdam, what I saw was a shanty town with a lot of pot smokers and squatters, talking vaguely about the need to discuss, not have any organization, etc.

Of course any movement that starts out from a feeling of discontent needs time to organize and formulate demands, but the point of Occupy seemed to be to disavow any kind of organization or concretization. Again: I very much admire proto-democratic experiments, and disagreed with the choir of commentators who kept blattering from the very beginning that it was unclear what Occupy was about (that’s very clear), but even a die-hard communal hippie has to admit that a certain point, you need organization and representation.

Occupy has historical predecessors way earlier than the Tahrir Square protesters. The early labour union movement in the nineteenth century everywhere started out grass-roots democratically; but during the way, they learned to organize, formulate demands, and still keep an internal democratic process. You need a distinction between principles and concrete demands, for instance; or a distinction between a general assembly and working groups; and people who specialize in tasks they’re good at (like creating leaflets, organizing, negotiating, doing practical stuff, etc.). In that way, you can develop from an inspired, resounding but vague movement to an organization that actually works.

Once again, I completely understand the distaste of Occupy protesters for “standard” kinds of political organizaton, like political parties and trade unions, and wouldn’t want them to develop in that way. But any movement that doesn’t develop further than a general assembly that discusses every tiny little detail doesn’t get very far (the meeting reports of Occupy Amsterdam attest to that). And now, public attention has declined, the authorities have zoomed in and it will probably not take long before the physical manifestion of Occupy on squares around the world disappears.

So what’s next for Occupy? Opinion polls are showing that they have struck a nerve – in the US, but I imagine also elsewhere, economic inequality and financial malpractices are on the agenda, and opposed by a majority of voters. In that sense, Occupy has already been a success. Some people are arguing that the forced removal of protesters from squares may re-ignite the movement (it would have been wiser for the authorities to wait for winter). Others are saying that the Occupiers need to penetrate existing movements and organizations to address their (and our!) concerns.

Personally, I would like a vocal and identifiable Occupy movement to remain in existence, get its act together, and start thinking about ways to reform the system while continuing to exert pressure on the political-financial axis. This could be done by spreading awareness (the big pro of this movement) and keep protesting, even occupying places. After all, the big invention of the Arab Spring was the protesting technique of permanently occupying a place, rather than having your average one-afternoon demonstration. However, it is essential (I think) to develop an organization, first to make sure that encampments aren’t turned into shantytowns, trouble makers are fended off, and violence doesn’t spread; second to develop ideas, demands and rallying points, appoint representatives, and create a more focused media outreach.

Will this happen? Probably not, but I hope so. The Tea Party has shown that you can move from a vague movement to something approaching a working organization. For Occupy as well, it’s probably time to move from subcultural self-expression to a fight for political change.

Ezra Klein:

[The] truth is, Bloomberg might have just done Occupy Wall Street a favor. Next week, temperatures are projected to dip down to the high 30s. Next month, they’re projected to dip into the mid-20s. The month after that, as anyone who has experienced a New York winter know, they’re going to fall even lower.

The occupation of Zuccotti Park was always going to have a tough time enduring for much longer. As the initial excitement wore off and the cold crept in, only the diehards — and those with no place else to go — were likely to remain. The numbers in Zuccotti Park would thin, and so too would the media coverage. And in the event someone died of hypothermia, or there was some other disaster, that coverage could turn. What once looked like a powerful protest could come to be seen as a dangerous frivolity.

In aggressively clearing them from the park, Bloomberg spared them that fate. Zuccotti Park wasn’t emptied by weather, or the insufficient commitment of protesters. It was cleared by pepper spray and tear gas. It was cleared by police and authority. It was cleared by a billionaire mayor from Wall Street and a request by one of America’s largest commercial real estate developers. It was cleared, in other words, in a way that will temporarily reinvigorate the protesters and give Occupy Wall Street the best possible chance to become whatever it will become next.

The question is what, if anything, comes next for Occupy Wall Street. The movement has already scored some big wins. As this graph by Dylan Byers showed, they have changed the national conversation. Income inequality is now a top-tier issue. Before Occupy Wall Street, it wasn’t.

And perhaps that will be the legacy of Occupy Wall Street. That would certainly be more than most protests achieve. If they are to go further, however, they are going to have to figure out a way to wield power in a more direct and directed form. The movement has always been uncertain on whether it wants to do that, and if it does, how to do it. It requires a willingness to work with the system that is, in certain ways, inimical to the founding of Occupy Wall Street. The good news, if they choose to make that transition, is that they don’t need a park to do it. The bad news is that, in most cases, it requires more hierarchy, clearer leaders, a more obvious agenda.

Back in October, I asked Rich Yeselson, a union researcher and a scholar of social movements, what he thought Occupy Wall Street would need to do to survive and succeed. “Whether they will grow larger and sustain themselves beyond these initial street actions will depend upon four things,” Yeselson said. “The work of skilled organizers; the success of those organizers in getting people, once these events end, to meet over and over and over again; whether or not the movement can promote public policy solutions that are organically linked to the quotidian lives of its supporters; and the ability of liberalism’s infrastructure of intellectuals, writers, artists and professionals to expend an enormous amount of their cultural capital in support of the movement.”

I still think that’s right. So then: Can the post-Zuccotti Park incarnation of Occupy Wall Street furnish skilled organizers who are able to keep the protesters involved, come up with solutions — or at least problems — they’re willing to agree on and fight for, and attract the sort of media attention that they need if they’re going to be able to continue forcing their issues into the national conversation?

The odds are probably against it. The odds are against any social movement, always. But it’s probably likelier under these conditions, where the occupiers were cleared from the park all at once, under sympathetic conditions, and so all of them can agree that this is the moment in which to decide what comes next.

The Guardian:

Supporters of the Occupy movement are gearing up for a national day of protest and direct action across America, taking in dozens of events from New York to Chicago to Los Angeles.

Thursday has been declared a day of “solidarity” with the Occupy Wall Street activists in New York after their camp in lower Manhattan’s Zuccotti Park was raided and dismantled by police. But it is also aimed at highlighting several of the movement’s broader aims in terms of income inequality and a desperate need for job creation in America’s floundering economy.

The Occupy movement, which began two months ago with the occupation of Zuccotti Park, has since spread to scores of cities and towns across the country, with varying success. It has often rejuvenated left-leaning political activists but also brought down a heavy police response, frequently at the behest of city mayors.

In recent days, police evictions and crackdowns on protesters in New York, Seattle, Berkeley, Portland and other places have caused widespread condemnation of alleged heavy-handedness by police.

In New York, protesters are planning actions all day in each of the city’s five boroughs. A potential early flashpoint will be a rally planned to begin at 7am that will target Wall Street itself, as the protesters seek to disrupt the operations of the New York Stock Exchange before the ringing of the opening bell that signals the start of trading at 9.30am.

Since the protests began, Wall Street has become a virtual permanent protest zone, ringed by steel fences and heavily policed. Later actions are planned to take place across the city’s subway system, as marchers will enter at 16 different stations and begin protesting.

Finally, the day will end with a rally at Foley Square, near New York’s Town Hall, and then a march to the Brooklyn Bridge, where hundreds of protesters were arrested in a previous headline-grabbing mass action.

Bridges will be the focus of some actions in other cities too. In Boston, Detroit, Washington DC, Portland and Seattle, protesters, some allied with union workers and community groups, will march on high-profile bridges in order to highlight the problem of America’s crumbling and underfunded infrastructure.

(…)

The range of activities across America spans a spectrum from the dramatic to the small-scale, including teach-ins, rallies and direct actions aimed at banks and corporations. In Portland, Oregon, protesters plan to target a city bridge and then try to organise flashmobs to go to local banks. In Detroit, protesters are marching from their camp downtown to the city’s municipal centre, where they aim to highlight the brutal impact of government cuts on ordinary citizens.

Tags: Arab Spring, banking, banks, bonuses, democracy, democratic experiments, democratic movements, division of labour, economy, financial crisis, financial markets, financial sector, inequality, injustice, labour unions, Michael Bloomberg, New York City, Occupy Amsterdam, Occupy Frankfurt, Occupy movement, Occupy Wall Street, organization, organizing, OWS, police, political movement, protesters, protests, representation, social justice, Tahrir Square, VVD, Zucotti Park
Category politics |

Occupy Amsterdam

Morgen is het zo ver: de Nederlandse vertakking van de Occupy-beweging slaat haar vleugels uit te Amsterdam. De Occupy Wall Street-beweging in de V.S. is al wekenlang bezig, in groeiende getale en onder toenemende media-aandacht, een progressieve protestbeweging van formaat te worden. Een linkse variant op de Tea Party.

De concrete doelen zijn wellicht nog onduidelijk, maar het van de Arabische Lente overgenomen permanent kamperen op de heilige grond van het financieel kapitalisme blijkt een succesvolle innovatie in protestmethodes te zijn. Evenals in Caïro, en daarna in Madrid en Barcelona, wordt geëxperimenteerd met directe vormen van democratie en participatie, als alternatief naast de vertegenwoordige democratie. Men maakt bovendien – eindelijk - een vuist tegen die sector die de Westerse maatschappij nu al jaren in haar greep houdt: de financiële industrie. De door haar veroorzaakte financiële crisis wordt betaald door de belastingbetaler, die er het oprollen van de verzorgingsstaat voor terug krijgt. Ondertussen worden de bonussen nog steeds uitgedeeld. Gek genoeg zijn het alleen de meest linkse partijen in het parlement die hiertegen ageren.

Er bestaat regionale variatie – in de V.S. staan drommen politici op de loonlijst van Wall Street, in Griekenland is de staat mede debet aan de ellende – maar overal in het Westen kan de financiële sector uiteindelijk verantwoordelijk worden gehouden voor de huidige economische ellende. In de meeste landen buiten Nederland is de (jeugd)werkloosheid afschuwelijk opgelopen; er groeit nu een ‘verloren generatie’ op zonder uitzicht op een baan. Speculanten houden de eurozone bovendien nog steeds in hun greep. Maar ook in Nederland zijn onder dit kabinet, met haar domme mantra van ‘achttien miljard‘, de gevolgen groots: eliminering van zorg voor (jong)gehandicapten, sociale werkplaatsen, speciaal onderwijs, korten op hoger onderwijs, het verdwijnen van openbaar vervoer, bezuinigingen op kunst en cultuur, en ga zo maar door. Terwijl er tegelijkertijd wél een extreem kostbare subsidie voor rijken in stand wordt gehouden: de hypotheekrenteaftrek.

Ik hoop dan ook dat de Nederlandse Occupy-beweging dáárover zal gaan: de Nederlandse issues, die niettemin niet los van de internationale financiële crisis kunnen worden gezien. Het kabinet-Rutte staat evident niet aan de kant van gedupeerden in de crisis. Er is Nederland meer, meer dan genoeg om massaal tegen te protesteren, waarbij het overkoepelende punt zou kunnen zijn: de onrechtvaardige maatschappelijke verdeling van de kosten van de crisis. Dat geldt in alle landen, en dat is waarin in Nederland die waardeloze, onnadenkende bezuinigingen vandaan komen, terwijl de financiële sector op oude voet verder gaat en regelingen voor het niet-hulpbehoevende deel der natie in stand blijven.

Occupy Amsterdam heeft potentie. Tradionele media als Nieuwsuur, 1Vandaag, DWDD, BNR en AT5 hebben er al aandacht aan besteed. De Twitter loopt, en de Facebook-pagina telt bijna 3500 aanmeldingen. Het is te hopen dat men een algemeen aansprekende, op Nederland toepasbare boodschap weet te formuleren; en het is te hopen dat de boel niet, zoals in Nederland vaker gebeurd, door krakers of andere links-radicale figuren wordt overgenomen. Kritiek op de uitwassen van een doorgeschoten kapitalisme en haar vervlechting met politieke systemen is niet per se links of radicaal; het is pure common sense die iedereen aan kan spreken, wat hij of zij ook stemt.

Volgens mij bestaat er onder veel mensen die zich niet vertegenwoordigd voelen door dit kabinet – en met name onder jongeren – al tijden een grote behoefte om de straat op te gaan. Misschien wordt dit ‘m dan…

Occupy Amsterdam

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Occupy Wall Street NYC

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Tags: 15 oktober, Amsterdam, banken, banks, Barcelona, Beursplein 5, bezuinigingen, demonstraties, economic crisis, economy, encampadas, Facebook, financial crisis, financial industry, financial markets, financial sector, financiële crisis, kabinet-Rutte, Madrid, Occupy, Occupy Amsterdam, Occupy movement, Occupy Wall Street, October 15, oppositie, protests, social media, Tahrir Square, Twitter, verzorgingsstaat, Wall Street, welfare state
Category Dutch politics, Europe, U.S. politics |

Paul Krugman On Occupy Wall Street

Check out Nobel Prize winner Paul Krugman in the NYT on the response of both Wall Street financiers and Republican politicians to the Occupy Wall Street protests, aptly titled ‘Panic of the Plutocrats’:

It remains to be seen whether the Occupy Wall Street protests will change America’s direction. Yet the protests have already elicited a remarkably hysterical reaction from Wall Street, the super-rich in general, and politicians and pundits who reliably serve the interests of the wealthiest hundredth of a percent.

And this reaction tells you something important — namely, that the extremists threatening American values are what F.D.R. called “economic royalists,” not the people camping in Zuccotti Park.

Consider first how Republican politicians have portrayed the modest-sized if growing demonstrations, which have involved some confrontations with the police — confrontations that seem to have involved a lot of police overreaction — but nothing one could call a riot. And there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.

Nonetheless, Eric Cantor, the House majority leader, has denounced “mobs” and “the pitting of Americans against Americans.” The G.O.P. presidential candidates have weighed in, with Mitt Romney accusing the protesters of waging “class warfare,” while Herman Cain calls them “anti-American.” My favorite, however, is Senator Rand Paul, who for some reason worries that the protesters will start seizing iPads, because they believe rich people don’t deserve to have them.

Michael Bloomberg, New York’s mayor and a financial-industry titan in his own right, was a bit more moderate, but still accused the protesters of trying to “take the jobs away from people working in this city,” a statement that bears no resemblance to the movement’s actual goals.

And if you were listening to talking heads on CNBC, you learned that the protesters “let their freak flags fly,” and are “aligned with Lenin.”

The way to understand all of this is to realize that it’s part of a broader syndrome, in which wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is.

Last year, you may recall, a number of financial-industry barons went wild over very mild criticism from President Obama. They denounced Mr. Obama as being almost a socialist for endorsing the so-called Volcker rule, which would simply prohibit banks backed by federal guarantees from engaging in risky speculation. And as for their reaction to proposals to close a loophole that lets some of them pay remarkably low taxes — well, Stephen Schwarzman, chairman of the Blackstone Group, compared it to Hitler’s invasion of Poland.

(…)

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.

Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

This special treatment can’t bear close scrutiny — and therefore, as they see it, there must be no close scrutiny. Anyone who points out the obvious, no matter how calmly and moderately, must be demonized and driven from the stage. In fact, the more reasonable and moderate a critic sounds, the more urgently he or she must be demonized, hence the frantic sliming of Elizabeth Warren.

So who’s really being un-American here? Not the protesters, who are simply trying to get their voices heard. No, the real extremists here are America’s oligarchs, who want to suppress any criticism of the sources of their wealth.

What I think the best thing of Occupy Wall Street is is that it finally puts the financial malpractices of an industry very much related to the actual top 1 percent of super-rich people in the US, in combination with their rescue by 99 percent of tax payers (i.e., the public), on the democratic agenda.

But the fundamental injustice in pretty much the entire Western world nowadays is the fact that the welfare state, a scheme for the public good, is being dismantled as a result of costs made to save the financial industry. An industry that through its own corrupt schemes, not beneficial to anyone but themselves, has itself created the greatest economic recession since the nineteen-thirties. They should not be awarded bonuses. And poor, sick and unemployed people should not have to suffer for them. There is nothing ‘left-wing’ about that. It’s common sense. That’s why I would love to see these protests spread to Europe, even though I myself am in favour of a regulated form of capitalism.

Finally – not from Paul Krugman – to point out empirically how disparagingly vast the gap between the top 1 percent and the lower 90 percent in the US is, check out these stats from Mother Jones. The first shows the composition of the top 1 percent; the second shows their wealth.

I mean, seriously. There’s nothing wrong with a bit of wealth inequality. But you don’t need to be a socialist to understand that such a huge gap between rich, middle class (if not already vaporized) and poor is not beneficial to any society, let alone a democratic one. And this gap has widened exponentially in the last thirty years, it wasn’t there before. The most fucked up societies are the ones with sudden, huge material inequalities. With the exception of the UK, Europe’s not as bad as the US in this respect – but getting close.

Tags: 1 percent, 99 percent, bankers, banks, bonuses, democracy, economic recession, economy, financial industry, financial markets, financial sector, inequality, New York City, Occupy Wall Street, Paul Krugman, protests, super rich, the left, The New York Times, the public, United States, Wall Street, We are the 99 percent, wealth
Category Europe, politics, U.S. politics |

Jon Stewart On Media Coverage Of Tea Party Vs. Occupy Wall Street

Check out this fantastic analysis of right-wing responses to the Occupy Wall Street movement, as compared to their coverage of the Tea Party movement. 

The Daily Show at its best, seriously.

Tags: corporations, demonstrations, financial crisis, financial sector, Fox News, Jon Stewart, Occupy Wall Street, protests, Tea Party movement, The Daily Show, Wall Street
Category random stuff |