The Bankwatch

Tracking the consumer evolution of financial services

Krugman on the real point of OccupyWallStreet

Few were paying much attention to OccupyWallStreet including mainstream media until … the politicians and others stepped in with poorly timed and badly framed criticism.

The oddest was surely Rand Paul, US Senator.

“I see it as inflaming this Paris mob that I hope doesn’t result in a lawlessness where they say, ‘Well, gosh, those nice iPads through the window should be mine and why don’t I throw a brick through the window to get them because rich people don’t deserve to have them when I can’t have one,'” Paul said.

He appears to believe the world will run out of ipads and the ‘mobs’ will keep them all for themselves thus stopping the Pauls of the world from enjoying them!??!

Anyhow, I have been resisting any attempt to comment on OccupyWallStreet given the potential for rhetoric, and obvious comparisons that would create terms such as Banker Spring which shockingly has not turned up yet.

In any event I will leave it for now to Paul Krugman who wonderfully sums up the inherent hypocrisy contained in the criticism so far that as he says attempt to defend the indefensible.  Think derivatives while reading this and the reality that the value of trade in money exceeds actual international commerce by a factor of many times over (10 times to be exact).  This purely speculative activity results in enormous sums owed between banks, that cannot be properly valued, and that is a large part of why banks suffer from such crisis in confidence both in Sept 2008, and Sept 2011 and they refuse to trade with each other.

Sub prime mortgages, and Euro sovereign debts are mere catalysts … this is the root problem with banks.  OccupyWallStreet senses this weakness and the moral indefensibility Krugman illuminates.

Here is Krugman, and its very lucid and clear read if you click through.

Panic of the Plutocrats | NY Times – Krugman

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.

Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

Written by Colin Henderson

October 10, 2011 at 16:19

Posted in Uncategorized

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