Saturday, November 26, 2011

Should "Occupy Wall Street" Become "Dismantle Wall Street?"




I've been paying close attention to the Occupy Wall Street movement in America and other parts of the world. Could we be experiencing an "Arab Spring" right here in our own backyard?

Well, maybe. But it's hard to figure out what these American kids are really asking for? Mainly because, they won't say. They produce a wide-ranging list of social cures, many which seem to lead towards socialism and away from free market capitalism to the casual observer. For me, that's a non-starter. I love capitalism and, being from Canada originally, am no fan of anything that smells like Trudeau-style socialism.

But what if we refocused on the initially defined villian for a minute - Wall Street. The true extent of the global damage that these clowns inflicted on the world was not apparent to me until I read the book "Boomerang" by Michael Lewis. Wall Street "geniuses" intentionally wound up a giant time bomb of free-flowing money that not only wreaked havoc in the U.S. but in many other countries as well. Iceland tried to remake itself as a investment bank, using the collateralized debt obligations (CDOs) from Wall Street, bankrupting itself in the process. Ireland caught the real estate bubble fever and, using free money from the U.S. investment banks, created enormous debt for its banks, and, subsequently, the Irish taxpayers. And, most damningly, the Wall Street firms cynically played the German banks for suckers right up until the entire debt crisis came crashing down.

So what should we do with these assholes? I, personally, am not a fan of political witch hunts. I have no interest in tracking down "the guy" who is responsible for it all and throwing him in jail for twenty years. There is no "one guy." It's the whole Wall Street system.

I propose that we immediately begin engineering a "Dismantle Wall Street" policy in the U.S.. Here's what we should do:
  • Execute a one-time fine against all the Wall Street firms, the maximum amount that will still allow them to continue operations but that will help bail our federal government out of the mess it is in (at least a drop in the bucket).

  • Break up all Wall Street firms into tiny little shops maybe 1/50th the size they are now. Dismantle the fucking place. Wall Street dudes are so well known for their highly competitive nature, well, let's see it! Compete against one another as 600 or 700 itty bitty firms and let's see you tear each other apart. No investment bank needs to be $45B. If ever an anti-trust break was required in our history, this is it.

  • Increase transparency of derivatives. I know some of this is already in progress, but the 2008 answer of "I didn't know what was in the thing" has got to be fixed. Derivatives must be transparent, understandable, taxed at a high rate and regulated like hell. Derivatives do not add to the benefit of the country, they are just card tricks to try to make some money. That's fine, fiddle away, but we're going to tax your ass and watch your ass, so keep it clean (pun intended).


I think these three steps would really help to change how things work on Wall Street. Thomas Friedman says in his new book "That Used to be Us" that the U.S. needs some "shock therapy" like we've been so eager to administer to other countries that get into financial trouble of their own making. Let's take our medicine. Let's start with Wall Street and make some big fixes. See what happens and incrementally keep fixing our institutions.

Wall Street fat cats will howl. Newt Gingrich will have to cry. But who cares? All Americans want to see something get fixed after the 2008 financial crisis. This is at least a step towards that.