Why we should take down Wall Street

(By Nalliah Thayabharan)

WALL Street is a confidence trick, a dazzling edifice built on paper promises, gambling, bets and rampant speculations. Wall Street doesn't manufacture or produce anything. Wall Street, however attractive it may appear, is built on paper. Wall Street speculation caused a 70 percent increase in the price of wheat from June to December 2010 and severe food crisis in more than 35 countries. However, there was no significant change in the global food supply or in food demand. The total value of Wall Street speculative financial derivatives reached more than US$600 trillion - about 10 times global GDP. Wall Street's speculative derivatives are virtually untaxed and banks often avoid paying tax on profits from selling derivatives. Every consumer is paying more for commodities including food and fuel due to the excessive speculation by Wall Street.

Modern day bank robbers are at Wall Street but they wear gray suits and not masks. Rampant speculators, propagandists and financiers of Wall Street are all given some unfair advantage over the average consumers and taxpayers and the cumulative effect of the people watching selfishness prevail over the public interest has been an undermining of the public's trust in the current US government.

Greed, arrogance and incompetence created a massive meltdown, cost trillions, and still Wall Street comes out richer and more powerful.

There are trillions dollars of new money taken again from Americans to make deals and hand out outrageous bonuses.

And when these trillions run out, Wall Street will come back for more until the dollar becomes junk.

The value of the US dollar declined very significantly during the last 70 years.

The value of the US dollar in 1940 was worth 2,000 percent more than the value of the US dollar now.

In the early 1980s Wall Street began to escape reasonable important regulations of the marketplace.

The US government gradually adopted a "too big to fail" policy for the Wall Street, saving lenders with failing businesses from losses.

The extremely lucrative hedge funds and other risk management derivatives including credit default swaps don't fund or invest in successful growing businesses.

Cause of crash

The credit default swap market was the single biggest cause of the crash four years ago.

Wall Street's suicidal capitalism built on rampant speculation eventually posed an untenable risk to the US economy - a risk that culminated in the trillions of dollars' worth of the US government bailouts and guarantees that the US government scrambled starting in late 2008.

But in 2008 the US government was compelled to replace private risk takers at the Wall Street with government capital so that money and credit flows wouldn't stop, precipitating a depression. As a result, these Wall Street became impervious to the vital market discipline that the threat of loss provides.

Wall Street lenders of the financial markets continue to understand that the US government would protect them in the future if necessary. This implicit guarantee by the US government harms capitalism and economic growth.

The top six US banks had assets of less than one fifth of US GDP in 1995. Now they have two thirds of US GDP. The financial crisis was created by the biggest US banks to consolidate power.

The big banks became stronger as a result of the bailout by the US Treasury. The big banks are turning that increased economic clout into more political power.

Wall Street has undue influence on the US government policies and this situation reflects a failure of democratic representation for the other 99 percent Americans.