Wednesday, October 12, 2011

Why Occupy Wall Street is Angry

This country once had a stable financial system. It was the direct result of the New Deal. The crash of '29 had been created by greed, lax rules, and government institutions unequipped and ideologically unprepared to tame capitalism's most rapacious players.

Enter FDR and the New Deal. With it Americans enjoyed roughly 50 years of prosperity and a largely stable banking system. The good 'ol days, as conservatives seem to pine. And there was good reason why we look fondly at what seems to have been our economic heyday. What conservatives forget is that we had far less income inequality, higher taxes, greater union membership, lower consumer, state and federal debt. We had a trade surplus, a much larger manufacturing base, and little outsourcing. And we did not have job-killing free trade agreements, such as NAFTA!

Underlying all of this was a rigid set of banking rules that, among other things, kept commercial banks out of the stock market and enforced prudent capitalization requirements. Upon assuming office, President Reagan immediately worked to overturn regulations and help Wall Street's rise to dominance, a rise that continues today despite Obama's half-hearted and ineffectual efforts to reprioritize Main Street.

Banks quickly capitalized on the changes Reagan set in motion; systemic banking failure began within a few years. Those failures have been with us in regular intervals ever since, all the while wealth continues to concentrate in the hands of those who created the economic chaos in the first place.

Here is Elizabeth Warren explaining the process.

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