Monday, October 10, 2011

"Occupy Wall Street" Protestors Have a Valid Point

I wish the protestors weren't so dirty looking. It would make them easier to support.

I wish the barons of the financial world weren't so dirty while looking clean. They are economic criminals, plain and simple. They need to be in orange prison coveralls, not Armani suits.

Wall Street used to serve a predominantly valuable purpose with a few rogue operations on the periphery. That status has flip-flopped. It is now a predominantly criminal enterprise with a side operation providing a valuable service.

When did that happen?

When small investors no longer were allowed to "win" long-term. About 10 years ago.

Up until about 2001, small investors were playing a game the reverse of that at a casino. Yes, they could lose, but given enough time and even a little smarts, the investor usually came out ahead. The "house" still made their "vig", but the game was skewed to the player's benefit. Not any more.

About 10 years ago, the "house" changed its expectations. It was no longer enough to collect commissions. They had to participate in the game to an extent never before thought wise. Not only did they play the game, they started changing the rules of the game in ways even they eventually could not fully understand.

Somewhere along the way, the people who "rate" the safety of investments were co-opted by the "house" and convinced to declare "investment grade" that which was utterly worthless, and they should have known it was, too. Worse yet, that worthless junk was created out of nothing by the "house", not any third party, and sold to investors at exhorbitant prices, mostly through mutual funds of one type or another. It was worthless, they knew it, and they took people's hard earned money for it. What part of this is not criminal?

Then, when the whole house of cards collapsed, not only did the "house" not take a hit, they were gievn more of Joe Average's money to bail out the house, and the Federal Reserve kept the money supply growing at a normal rate in normal growth, hence lowering the remaining buying power of Joe Average's remaining assets not taken yet.

Rush Limbaugh, you could not possibly be more wrong on this - you are excusing organized crime in a business suit. Protestors have a fundamental right and a valid gripe in face of a "heads I win, tails the taxpayer loses" rigged game. Everybody wants a deal where profits are private and losses are socialized, but only financiers get that deal.

Yes, there are other unindicted co-conspirators, too, such as Globalization, Environmentalism and the Digital Revolution, three of the most pernicious factors ever in American macroeconomics, since all three displace more economic activity in more places than they create. Sorry if that sounds harsh, but it's the truth. All three make a few massive winners in a few tiny domestic geographical areas, and create incredible numbers of losers almost everywhere else.

But Occupy Wall Street has a point.

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