Real competition, modern technology and lack of special government-granted privileges means that most American businesses, especially those on Main Street, have no choice but to adapt and innovate.
However, according to Dylan Ratigan the only apparent skill of many of our Wall Street billionaires is at rigging the game. He continues:
On Wall Street there have always been only two basic ways to make money. The first and most difficult: Be a great investor. To the best investors go the profits; the biggest rewards go to those who are best at being able to recognize and pick the businesses that will win for America, while the punishment of losing money is reserved for those who are not so good at this task.
The second, and now seemingly the preferred method of making money on Wall Street, is to exploit and/or trick those who are kept from knowing as much as you, about current market and company circumstances, and by this means take their money, even if you have to buy politicians, change the laws, or even break the laws to do so.
This second way of making money on Wall Street was much easier to pull off prior to the Internet and 24-hour Exchanges etc. -- such technology is the enemy of any business that makes its living overcharging customers who know no better or are given no other choice. As a result, bankers, facing an onslaught of web-driven transparency and reduced profitability during this last decade, along with an increasingly educated customer-base, were eager to change the laws in 2000 and are even more eager to protect those changes now.
Owing to modern information technology, stock and bond trading had become a very low-margin, modest-profit business -- until the legalization in 2000 of a secretive market for crooked insurance schemes with no transparency or accountability, which then became an absolute boon to the profitability (for some) of stock and bond trading, and especially insurance/derivatives trading.
With credit derivatives, banks and other insurers (with nowhere near enough backup money to ever pay off the claims that might someday be made) offer, for a reoccurring fee, to effectively "insure" financial assets of many kinds. Example: Credit derivatives were used to "insure" much of the real estate and pension liabilities in America over the past decade.
To make big money, the banks exploit two loopholes. First, they overcharge customers by depriving them of the type of competitive pricing that is only possible on an exchange like the New York Stock Exchange or Chicago Mercantile Exchange.
Second, they exploit the lack of transparency and hide the fact that they are keeping little or no money on hand to pay claims -- while, for example, selling insurance and collecting handsome fees on every house and pension payment in America!
The key to success here is that when there is widespread default, and massive claims against that so-called credit insurance, the banks keep all the past payments, and the taxpayer (under threat of system-wide economic collapse) pays off the claims (in the form of a bailout), while getting nothing in return.
This quite simply, is a brilliant way to steal our money, says Ratigan.
But this method of "business" is only possible if the government continues to:
a) allow these crooked insurance contracts to be written in secret,
b) allow the insurance underwriters to hold little or no money in reserve for possible payment, and . .
c) allow them to sell enough coverage on enough vital national assets that if there is a large-scale default, the taxpayer has no choice but to pay.
"Considering the $23.7 trillion of taxpayer money being used to support these Corporate Communists" (Ratigan's words), one would hope they could at least make a few billion in profits with it. But all things considered, making a few billion from risking a few trillion (in taxpayer money) is a rather pathetic return, no?
