“Those who profess to favor freedom and yet depreciate agitation want crops without plowing up the ground, they want rain without thunder and lightning. They want the ocean without the awful roar of its many waters. If there is no struggle, there is no progress. Power concedes nothing without a demand. It never did and it never will.” – Frederick Douglass
It has been over a year since Americans took to the streets to voice opposition to the established order – in all that vague glory. Many were disgusted by Wall Street’s numerous crimes and a lack of accountability from a corrupt government, others with a poor job market, and some did not even know why they were protesting but for a deep intuitive sense that something was wrong.
So after a year what have we all learned? Five lessons from the Occupy Wall Street movement (feel free to add your own).
Lesson #1 America Is Extremely Unequal
America has always had rich and poor, fat cats and starving dogs, but by 2012 the gap between the rich and everyone else had yawned to levels unseen in generations.
The average annual income of the top 1 percent of the population is $717,000, compared to the average income of the rest of the population, which is around $51,000. The real disparity between the classes isn’t in income, however, but in net value: The 1 percent are worth about $8.4 million, or 70 times the worth of the lower classes.
The 1 percent are executives, doctors, lawyers and politicians, among other things. Within this group of people is an even smaller and wealthier subset of people, 1 percent of the top, or .01 percent of the entire nation. Those people have incomes of over $27 million, or roughly 540 times the national average income. Altogether, the top 1 percent control 43 percent of the wealth in the nation; the next 4 percent control an additional 29 percent.
It’s historically common for a powerful minority to control a majority of finances, but Americans haven’t seen a disparity this wide since before the Great Depression — and it keeps growing.
So the Top 5% control roughly 72% of the nation’s wealth.
To dice it down even further, the top 400 richest Americans have more wealth than the bottom half – 155 million – Americans combined.
Dice it further? Fine. Six members of one family – the Waltons – have more wealth than the bottom 30% of Americans.
(Occupy Wall Street Protester)
This is extreme inequality by any measure and only getting worse as – according to the Federal Reserve – the only class of Americans to increase their wealth post-crash has been the top 1%.
Lesson #2 Property Rights, For Some
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
The statement above from the Declaration of Independence is considered the basis for both the American revolution and the American way of life. The phrase at the end of that famous passage about “the pursuit of happiness” is rooted not in contemporary positive psychology but in John Locke’s theory on the role of government, namely “life, liberty, and estate”.
In other words, property rights are essential to the American ideal of a free society.
So it’s quite distressing to learn, as America has in the course of the last few years, that property rights are not universal nor really applicable at all to middle class and poor Americans – abundantly made clear by both the legislative, executive, and judicial branches of federal, state, and local governments.
While the financial crisis itself was caused by overleveraged financial institutions committing fraud against each other and their clients – the banks received bailouts. But the homeowners whose mortgages were sliced and diced into collateralized loan obligations then sold around the world got next to nothing.
In fact, the middle and lower class homeowners not only got meager to no assistance – after Wall Street got bailouts from the Federal government and trillions in loan guarantees from the Federal Reserve – another predatory campaign began against them by Wall Street.
This campaign known popularly as fraudclosure was motivated both by the typical greed all Wall Street activity is motivated by with a twist – a cover up. Wall Street needed to cover up the fact that in their rush to slice, dice, and reap tremendous profits during the boom they forgot something… the law. Under the law you need documents to verify that you own something, this is part of the legal basis for market activity. It could even be argued this is one of the more progressive aspects to capitalism – the requirement of transparency of ownership.
But here’s the thing, Wall Street didn’t have the documents. So they just made them up.
That strategy – committing fraud – now in place, Wall Street went on one of the largest nationwide crime sprees in American history. It put John Dillinger and all the famous criminals from the last depression to shame, except now instead of criminals robbing banks the criminals were banks and they were robbing the poor and middle class homeowners.
This “rocket docket,” as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and labyrinthine derivative deals of a type that didn’t even exist when most of them were active members of the bench. Their stated mission isn’t to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity…
This is the dirty secret of the rocket docket: The whole system is set up to enable lenders to commit fraud over and over again, until they figure out a way to reduce the stink enough so some judge like [Judge] Soud can sign off on the scam. “If the court finds for the defendant, the plaintiffs just refile,” says Parker, the local attorney. “The only way for the caseload to get reduced is to give it to the plaintiff. The entire process is designed with that result in mind.”…
The meat of the foreclosure crisis is the unopposed cases; that’s where the banks make their money. They almost always win those cases, no matter what’s in the files.
But before you can even have the “rocket docket” you need documents to be “robo-signed.” Robo-signing is when a bank employee signs thousands of documents without verifying the information… something they are required to do in order to sign in the first place.
Page 16-17, Lines 17-25, 2-11
Q: What training have you received?
A: I received side-by-side training from another team leader to instruct me on how to review the documents when they are received from my staff.
Q: Who was that person?
A: That person, at the time, I believe, was a gentleman named Kenneth Ugwuadu. U-G-W-U-A-D-U. He is no longer with GMAC.
Q: How long did that training last?
A: Three days. 2
Q: Were there any written or printed training materials or manuals used as a part of that training?
Page 20, Lines 19-24:
Q.: In your capacity as the team leader for the document execution team, do you have any role in the foreclosure process, other than the signing of documents?
Page 54, Lines 12-25:
Q: When you sign a summary judgment affidavit, do you check to see if all of the exhibits are attached to it?
Q. Does anybody in your department check to see if all the exhibits are attached to it at the time that it is presented to you for your signature?
Q: When you sign a summary judgment affidavit, do you inspect any exhibits attached to it?
Page 62-63, Lines 23-25, 2-6:
Q: Is it fair to say when you sign a summary judgment affidavit, you don’t know what information it contains, other than the figures that are set forth within it?
A: Other than the borrower’s name, and if I have signing authority for that entity, that is correct.
Page 69, Lines 2-20:
Q: Mr. Stephan, referring you again to the bottom line on Page 1 of Exhibit 1, it states: I have under my custody and control, the records relating to the mortgage transaction referenced below. 3
It’s correct, is it not, that you did not have in your custody any records of GMAC at the time that you signed a summary judgment affidavit?
A: I have the electronic record. I do not have papers.
Q: You have access to a computer, is that what you mean?
Jeffrey and the judges did their work well for Wall Street. But fraud on this scale was hard to maintain without someone (anyone) who is supposed to be upholding the law to get involved. Attorney Generals from New York, California, Connecticut and other states began making noise about the criminality going on in their states. That’s when Wall Street played their next card.
Attorney General From MERS Eric Holder and other Wall Street apparatchiks in the Obama administration fast and furiously initiated a federal shutdown of any actual litigation buying off the other AGs with favors and fame.
When it comes to property rights in America, owning politicians is just as important as owning property and should you not have the extra cash to pay off the parasites see you in secret court and make sure you can refute those non-existent documents.
Lesson #3 On Wall Street, Crime Is A Business Model
Now that the LIBOR scandal has broken I wonder how much this section is even needed but lets do a quick rundown.
* Goldman Sachs has agreed to pay $550 million to the Securities and Exchange Commission, one of the largest penalties ever paid by a Wall Street firm, to settle charges of securities fraud linked to mortgage investments.
* Bank of America was also fined $335 million for minority discrimination
Going further into JPM’s trading infractions would take too long and that’s just when they break the rules, never mind when they follow the rules they lobbied for and lose $6 billion.
* Money Laundering: JP Morgan was also fined $88 million for laundering money in Iran and Cuba.
They were by no means alone as Standard Chartered agreed to pay $340 million to New York State for laundering money to Iran.
The list really does go on but America has learned this one well enough and as the LIBOR scandal continues its way through the courts more depraved activity by Wall Street will surely surface.
Lesson #4 Wall Street Does Not Create Value
“Well I know Wall Street is all about greed and they break the law a lot but we need them right?” Wrong.
One of the most surprising revelations from all this focus on Wall Street is how unnecessary and useless (let alone destructive) most of what Wall Street or the FIRE economy does is.
For years, the most profitable industry in America has been one that doesn’t design, build, or sell a single tangible thing…
Lord Adair Turner, the chairman of Britain’s top financial watchdog, the Financial Services Authority, has described much of what happens on Wall Street and in other financial centers as “socially useless activity”—a comment that suggests it could be eliminated without doing any damage to the economy…”It is possible for financial activity to extract rents from the real economy rather than to deliver economic value,”…
Paul Woolley, a seventy-one-year-old Englishman who has set up an institute at the London School of Economics called the Woolley Centre for the Study of Capital Market Dysfunctionality. “Why on earth should finance be the biggest and most highly paid industry when it’s just a utility, like sewage or gas?”… “It is like a cancer that is growing to infinite size, until it takes over the entire body….
Financial markets, far from being efficient, as most economists and policymakers at the time believed, were grossly inefficient. “And once you recognize that markets are inefficient a lot of things change.”…
Even after all that has happened, there is a tendency in Congress and the White House to defer to Wall Street because what happens there, befuddling as it may be to outsiders, is essential to the country’s prosperity. Finally, dissidents like Paul Woolley are questioning this narrative. “There was a presumption that financial innovation is socially valuable,” Woolley said to me. “The first thing I discovered was that it wasn’t backed by any empirical evidence. There’s almost none.”
Even LSE, birthplace of Neoliberalism, is questioning the value of Wall Street and so are Nobel Prize winning economists.
From Nobel Laureate and former World Bank Chief Economist Joseph Stiglitz:
Much of what goes on in the financial sector is this kind of rent-seeking.
The most dramatic example was the predatory lending and the abusive credit card practices, which took money from people on the bottom and the middle often in a very deceptive way, sometimes in a fraudulent way, and moved it to the top.
That is a case where they both affected two of the more important dimensions of our inequality, that is to say, the suffering of those at the bottom and the wealth of those at the top.
Rent-seeking is a formal way of saying gaining wealth through political corruption not providing a useful good or service. But then again what choice does Wall Street have? If what you do is socially useless then rent-seeking is the only way to wealth.
There is also the $7.3 Trillion elephant in the room, China.
If Wall Street is so essential, so vital to a productive economy… how the hell did China become the second largest economy in the world on their way to displacing the United States as first?
China’s banking system is the very definition of an unfree market. 98% of China’s banking assets are state-owned as are most of China’s financial institutions. And if you think the Federal Reserve, the SEC, CFTC, and the other regulators are heavy handed take a look at the People’s Bank of China and the Ministry of Finance which directly controls the financial system under the authority of the state council. Big Government if ever the term applied.
So not only does Wall Street engage in rent-seeking and crime and other socially useless activity, the greatest economic success story of the 20th and 21st century has nothing like Wall Street within its economy.
Lesson #5 Nothing Scares The Government More Than Democracy Breaking Out
(84-year-old Dorli Rainey was pepper sprayed during a peaceful march in Seattle, Washington. She would have been thrown to the ground and trampled, but luckily a fellow protester and Iraq vet was there to save her.)
Last week the FBI cited “National Security” as the reason it denied the request for documents by the American Civil Liberties Union (ACLU) on the bureau’s surveillance of the Occupy Movement. To repeat, the Federal Bureau Of Investigation considers the surveillance of an activity protected under the First Amendment of the United States Constitution a matter of “National Security.”
The documents came after an ACLU-NC lawsuit filed after the FBI refused to release any documents in a Freedom of Information Act request. The documents are significant for two reasons:
* First, they finally confirm what until now have only been suspicions that the FBI was conducting surveillance of the Occupy movement.
* Second, the FBI is refusing to hand over documents “in the interest of national defense or foreign policy.” In other words, to the FBI, political protests about economic policy pose an unspecified threat to national security.
The FBI has a troubling history of spying on political activists. We’re concerned that in 2012, history is still repeating.
And by “troubling history” the ACLU is of course referring to the bureaus illegal activities in the 60s and 70s that involved sabotage, assassination, surveillance and a clearly personal vendetta by then FBI Director J. Edgar Hoover against Martin Luther King most commonly referred to as COINTELPRO (CounterIntelligenceProgram).
What justification and rationale was given by the FBI for such illegal activities? According to the United States Congress:
What Were the Purposes of COINTELPRO?
The breadth of targeting and lack of substantive content in the descriptive titles of the programs reflect the range of motivations for COINTELPRO activity: protecting national security, preventing violence, and maintaining the existing social and political order by “disrupting” and “neutralizing” groups and individuals perceived as threats.
“National Security” being a catchall for anything really but there is another aspect to that rationale that is relevant to the Occupy Movement.
maintaining the existing social and political order by “disrupting” and “neutralizing” groups and individuals perceived as threats.
So keep the existing social and political order and disrupt and neutralize anything perceived as a threat to it…
Then again, what is not a perceived threat to the existing social and political order? Under this absolutism, the constitution can be held hostage merely by the power of imagination.
But let’s move on to our new Orwellian federal agency mandated to protect “the homeland.”
From Rolling Stone:
As Occupy Wall Street spread across the nation last fall, sparking protests in more than 70 cities, the Department of Homeland Security began keeping tabs on the movement. An internal DHS report entitled “SPECIAL COVERAGE: Occupy Wall Street,” dated October of last year, opens with the observation that “mass gatherings associated with public protest movements can have disruptive effects on transportation, commercial, and government services, especially when staged in major metropolitan areas.” While acknowledging the overwhelmingly peaceful nature of OWS, the report notes darkly that “large scale demonstrations also carry the potential for violence, presenting a significant challenge for law enforcement.”
DHS also appears to have scoured OWS-related Twitter feeds for much of their information. The report includes a special feature on what it calls Occupy’s “social media and IT usage,” and provides an interactive map of protests and gatherings nationwide – borrowed, improbably enough, from the lefty blog Daily Kos. “Social media and the organic emergence of online communities,” the report notes, “have driven the rapid expansion of the OWS movement.”
Well, hello there (waves).
The most ominous aspect of the report, however, comes in its final paragraph:
“The growing support for the OWS movement has expanded the protests’ impact and increased the potential for violence. While the peaceful nature of the protests has served so far to mitigate their impact, larger numbers and support from groups such as Anonymous substantially increase the risk for potential incidents and enhance the potential security risk to critical infrastructure (CI). The continued expansion of these protests also places an increasingly heavy burden on law enforcement and movement organizers to control protesters. As the primary target of the demonstrations, financial services stands the sector most impacted by the OWS protests. Due to the location of the protests in major metropolitan areas, heightened and continuous situational awareness for security personnel across all CI sectors is encouraged.”
OK, the feds are taking an interest in a nationwide protest what fool would not expect that outcome?
But why is democracy so dangerous in America. Why are democratic movements a threat to the “existing political order”?
Today, Washington is marked by a combination of bitter partisanship and intellectual confusion — and both are, I would argue, largely the result of extreme income inequality…
Specifically, money buys power, and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties, in the process destroying any prospect for cooperation…
No, the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority. And the key to economic recovery lies in finding a way to get past that minority’s malign influence.
That’s not an Occupier but another Nobel Laureate Economist. It would seem difficult to look at the American economy and political system and not see what the Occupy Movement sees.
So the existing political and social order, as has clearly been articulated by those that know, is structured to serve a tiny plutocratic elite.
No wonder democracy is so scary. And hence the nationwide violent crackdown on Occupy protesters. If 99% of the population got together and understood how royally they were being screwed by a parasitic elite that creates no value… they might want to change the existing political and social order.
Can’t let that happen.
In closing, September 17th has now come and gone but as the movement continues let us all take care to remember what has been learned.
Occupy Wall Street before it occupies you.