Monday, June 22, 2009

Break the Power of the Wealth Sucking Financial Oligarchy Now.

There is nothing like hearing or reading reports of top executives - the very same ones who contributed to the current financial crisis - planning to pay themselves the biggest bonuses ever in their 140 year history, to wake Americans up from the cultural trance we've allowed ourselves to succumb, to smell the corruption and hubris that underpins our current financial and political system. Goldman Sachs, according to The Guardian, is having its most profitable year ever, citing lack of competition as the chief reason.

Why is this a problem?

Well, a few months ago, Goldman Sachs, frustrated by federally mandated pay caps imposed on TARP recipients, started plotting and planning to get out from under those restraints. The Obama administration was against Goldman Sachs paying the $10 billion in TARP money back early because they were afraid it would send the wrong signal by encouraging the very thing - "too big to fail" -that contributed to the collapse of our economy in the first place. They feared Goldman Sachs would receive an unfair advantage over all the rest of the banks, because it will appear stronger in the market, while at the same time, continuing to receive government subsidies, including guarantees on debt they already issued, and discounted credit lines from the Federal Reserve, therefore, eliminating the healthy competition our financial system needs to thrive in what is supposed to be a "free market" economy.

Here's the thing. The government (American taxpayers) saved their day, and now that Goldman Sachs and the rest of the banks are back on their feet, at tremendous cost to us, they are deliberately undermining the TARP program, despite the fact that it saved their derriere, and despite the fact that they still rely on government assistance, and despite the fact that they will not have to pay back a good portion of bailout assistance ($13 billion from AIG as a counter party thru AIG bailout and the ability to change their legal forms to access more credit) they received that enabled them to become profitable once again.

We the people must become aware that many of the underlying assumptions we once believed in are no longer valid. For example, the belief that what is good for Wall Street is good for Washington, therefore good for our country must be abolished. The financial sector that started to become more powerful under Reagan, that produces nothing of real value, yet accounts for well over 40% of corporate profits, if allowed to continue, or even worse, grow, will make

The only way to achieve real reform is to break the power and hubris of the financial oligarchy that is currently sucking real wealth from our system and reconstitute the structure of the financial system going forward.

Chart 1: Share of Total U.S. Income Accruing to the Top 10%, 1917-2006

Chart 2: Decomposing the Top 10% of U.S. Income Share into Three Groups, 1913-2006


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