New York: If you walk through London’s High Gate cemetery and wander over to the grave of the late Karl Marx and then listen closely with your ear to the ground, you might hear a repetitive murmur of the phrase “I told you so” in a distinctly German inflected accent.
You might also see the earth moving ever so slightly as what’s left of the bones below turn over in the realization that capitalists, not the proletariat, are the ones bringing down the system.
Fellow blogger Ian Williams, a former disciple of the bearded prophet, is now chanting, “Shareholders of the world unite” in recognition of the way the world is changing. The fall of Bear Sterns and the collapse of confidence in our financial system is a profound turning point.
When you turn this rock over –and not just England’s Northern Rock bank that failed earlier--- you see a seamy swamp of delusion, and deception, with 'Wall Street worms slithering off to their condos in Colorado or their hangouts in the Hamptons.
This could be the end of an era of legalized greed, aided and enabled by the deregulation policies of the Busheviks with the active complicity of so many bi-partisan worshippers at the temple of the Free Market. Alas, it is not just Republicans who were implicated or who rely on funding from Hedge Fund and FIREcrats: the Finance, Insurance and Real Estate industries.
If you were a fellow banker on The Street this past Sunday, you realized that your master of the universe days may be over. “Layoff Fear in Stox Shocks” was the headline in the New York Post. Prosperity has been displaced by panic.
Eight thousand jobs had been lost before “the Bear,” the nation’s number #5 broker, was sold at a ridiculous discount, bought with $30 billion pumped through JP Morgan who picked up what was left of the firm at $2 a share. (It had been trading a day earlier at $170).
Many more and other dominos are expected to fall.
Some experts believe that JP Morgan overpaid because the shares they bought actually had no value. The money was used to monetize junk sub-prime holdings not yet written off—so much for the doctrine of moral hazard” that holds speculators should not be rewarded. In fact, there is evidence not only of unethical practices but Enronesque illegal ones.
A week earlier, Bear Stern’s former CEO bought a Manhattan condo for $28 million, no mortgage needed. In December, compromised Wall Streeters walked off with $31 billion in bonuses, just a billion below the record set a year earlier.
The resumes are flying now with fears of mass layoffs spreading. The people who will be hurt initially are the lower paid back office workers.
The pain will not remain there.
How you understand these fast moving developments depends on where you sit in our highly stratified culture and how much you know about why a Wall Street crash can ripple into all of our lives.