Note to OWS: Wall Street Couldn’t Have Done It Alone

Sheldon Richman writes that it takes a government and its central bank, the Federal Reserve System, to do the following:

  • Create barriers to entry for the purpose of sheltering existing banks from competition and radical innovation, then regulate for the benefit of the privileged industry;
  • Issue artificially cheap, economy-distorting credit in order to, among other things, give banks incentives to make shaky but profitable mortgage loans (and also to grease the war machine through deficit spending);
  • Make it lucrative for banks – and their bonus-collecting executives — to bundle thousands of shaky mortgages into securities and other derivatives with the knowledge that government-sponsored enterprises Fannie Mae and Freddie Mac and other companies, all subject to powerful congressmen looking for campaign contributions, would buy them after a government-licensed rating cartel scores them AAA;
  • Inflate an unsustainable housing bubble by the foregoing and other methods, enticing people to foolishly overinvest in real estate.
  • Work closely with lending companies to establish a variety of programs designed to lure people with few resources or bad credit into buying houses they can’t afford;
  • Attract workers to the home-construction bubble, setting them up for long-term unemployment when the bubble inevitably burst;
  • Implicitly guarantee big financial companies and/or their creditors that if they get into trouble they would be rescued;
  • Compel the taxpayers to bail out those companies and/or creditors when the roof finally fell in.

He wrote that no single bank or group of banks could do these things on its own in a free market. It takes a government-Wall Street partnership, the corporate state or the fascist state, to create such misery and exploitation.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s