The Cruel Criminality at the Heart of America

Here is a bit from an article entitled "The Great Bank Robbery" by Nassim Nicholas Taleb and Mark Spitznagel and published by CNN's Fareed Zakaria in his Global Public Square:

For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years. In the United States, the sum stands at an astounding $2.2 trillion. Extrapolating over the coming decade, the numbers would approach $5 trillion, an amount vastly larger than what both President Barack Obama’s administration and his Republican opponents seem willing to cut from further government deficits.

That $5 trillion dollars is not money invested in building roads, schools and other long-term projects, but is directly transferred from the American economy to the personal accounts of bank executives and employees. Such transfers represent as cunning a tax on everyone else as one can imagine. It feels quite iniquitous that bankers, having helped cause today’s financial and economic troubles, are the only class that is not suffering from them – and in many cases are actually benefiting.

Mainstream megabanks are puzzling in many respects. It is (now) no secret that they have operated so far as large sophisticated compensation schemes, masking probabilities of low-risk, high-impact “Black Swan” events and benefiting from the free backstop of implicit public guarantees. Excessive leverage, rather than skills, can be seen as the source of their resulting profits, which then flow disproportionately to employees, and of their sometimes-massive losses, which are borne by shareholders and taxpayers.

In other words, banks take risks, get paid for the upside, and then transfer the downside to shareholders, taxpayers, and even retirees.

Go read the rest of the article. It has more details.

The authors point out the cruel irony of the situation for average Americans:

So the facts are clear. But, as individual taxpayers, we are helpless, because we do not control outcomes, owing to the concerted efforts of lobbyists, or, worse, economic policymakers. Our subsidizing of bank managers and executives is completely involuntary.

The author's go on to plead with the big investment companies to use their money to try and discipline America's criminal banks. But that isn't going to happen. The investment companies rub elbows with the bankers and go to the same country clubs and own houses around the world at the same locations as the bankers. They live an insulated life. In their world the bankers are "just one of the fellows". For the investment companies and the banks, the real "threat to America" is the bottom 90% of the population who still have a right to vote and an aspiration to wrest control back from the financial overlords.

The rich aren't going to do a favour for the bottom 90% and "discipline" the bankers. The bottom 90% have to seize back control from the criminal rich. The bottom 90% have got to realize that the Barack Obama's are in the pocket of the rich and that almost all the politicians are poodles of the rich. It is going to take a social revolution of immense scope and depth to seize back control from the rich. And this shouldn't be done with the wild-eyed idea of "revolution". That is nutty. It will take decades and it requires the hard world of education and political organizing. It will require discipline. If it is to be effective it must be done through traditional institutions. To try to short cut things simply means replacing one set of criminals with a new set of criminals.