As market analyst Paul Farrell recently said , America cannot reset or repair its economy because Wall Street can't and won't give up its addictive behavior.
Let's run through the full diagnosis of why it can't.
What follows here are the 10 characteristics of the self-destructive, addictive personality. As you read each of the ten, and also the paragraph that follows each one, about what's happening on Wall Street today, you'll see why the "Street's" collective mental state is so damaged that it's on track to hit bottom, crash and burn, in a meltdown more damaging than 2008. Yes, the Wall Street crowd will take down the rest of America. And there's no forseeable way to prevent it. Here then are the ten reasons (familiar to patients at the Betty Ford clinic) why that is:
1. Amnesia: Since the 2008 meltdown, Wall Street's memory has been erased
Begin with Tim Geithner diagnosis of Wall Street's addiction: Banks have "no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards that all economies require." Amnesia makes Wall Street deaf. They can't hear. Remember, bank insiders are short-term thinkers who naturally discount long-term costs to zero, by passing them on to taxpayers and future generations.
2. Overly optimistic: Wall Street casino is blowing another megabubble
Since the dot-com crash of 2000, when the Dow peaked at 11,722, Wall Street has lost an inflation-adjusted 20% of your retirement money. And economist Gary Shilling sees no growth through the next decade ... Nouriel Roubini warns of a decade of "dark days" ... Pimco's Bill Gross sees a long "new normal" of lower returns " GMO's Jeremy Grantham predicts "Seven Lean Years" " Famed market analyst Martin Weiss warns that a "historic world-changing event is about to crush the U.S. economy and its stock market." Former Reagan budget analyst David Stockman says, "I wouldn't touch stocks today with a 100-ft pole." And yet, Wall Street continues to live in a fantasy land as it ignores all these warnings and all these signs, as it continues to push mega-IPOs and very risky junk.
3. Immature: Totally narcissistic, the "King Baby' syndrome
Yes, Wall Street's an immature child. Members of AA call this the "King Baby" syndrome, referring to people who never really grow up. They want what they want when they want it. Now. No compromise, like today's politicians. In his book, The Coming Generational Storm, Larry Klotnikoff and Scott Burns warn of the massive debt we're leaving for our "kids." Eventually these kids will rebel against the $70 trillion burden we've passed on to them. Wall Street's gambling addicts will face a revolution that makes the Arab Spring look like a picnic.
4. Greedy: Yes, "greed is still good" " for Wall Street's gamblers
Michael Douglas' famous indictment is truer today than ever. Vanguard's founder Jack Bogle confronted the toxicity of out-of-control greed in his book, "Battle for the Soul of Capitalism." Wall Street has become a soulless, amoral culture that cares nothing about the rest of America. Wall Street has sunk back, deep into their business-as-usual culture of greed, fully blind to the public consequences of their behavior. Ethics? Integrity? Fiduciary duty? It doesn't exist. Investors come second. Insiders first. Always. And nothing will change till Wall Street hits bottom, crashes. Then and only then can we truly reform Wall Street, as we did in the 1930s.
5. Compulsive liars: Never trust Wall Street to tell the truth
Members of AA use a simple test: "How can you tell when an alcoholic or addict's lying?" Answer: "His lips are moving." Similarly, you can't believe anything said on Wall Street. Why this culture of lying? Simple: To create illusions, like "investors come first," "you can trust us," and "we have the best interests of America at heart." All wrong. Their only loyalty is to insiders. Period.
6. Insatiable: Wall Street's hooked on "more is never enough'
Wall Street is past the point of no return; it's an addict incapable of stopping, and so it must hit bottom. In his book, American Mania, psychiatrist Peter Whybrow says we're a nation of addicts, we're insatiable, and that "more is never enough." To wit: Trillions in new debt annually, immense bonuses, zero savings, as bank bailouts roll on, with the Fed forever feeding Wall Street cheap money.
Forget reforms: There will be no change till the banks hit bottom. A return to Glass-Steagall might help, but Wall Street hates that as much as addicts hate the thought of ending up at the Betty Ford Clinic, and since Wall Street owns Congress, there will be no return of anything like Glass-Steagall -- until after the crash.