What we want is a Wall Street that will attract men and women who will seek to be the next Warren Buffett or great venture capitalist -- men and women fairly competing to analyze the countless ideas of our best and brightest and who will invest not in devious schemes to defraud millions of their fellow Americans, but rather invest in the talented people who will best be able to bring their innovations to America and the world.

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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?

Bottom line: We are allowing these outdated and overly large banks to take control of our government and change the rules so that they are protected (communist-style) from the natural competition and reward systems that have created so many innovations in our country. By this means we are allowing them to not only steal from the citizens (communist-style) on behalf of the least worthy, but also to doom our citizenry by trapping and tying up the very capital that could have otherwise been used to generate new innovation and highly productive jobs – just like in the old USSR!

Do we want to continue to allow our government to be commandeered by those in our banking system who have failed and been passed over by technological advancements, and innovation, to the point that they've run their businesses into the ground and have had to be bailed out by a federal government that they have to some very significant extent infiltrated? Well that's the kind of government we now have! Alumni from Goldman Sachs now hold many key positions in key government agencies. Most recently we learned that the SEC has hired a former Goldman hand as its chief operating officer in its enforcement unit. What a perfect example of appointing the fox to guard the henhouse. Wake up America.

The government's job should be to restore the rules of investment, not indulge those who want to unfairly sustain and even multiply their wealth and power at our nation's expense.

What we want is a Wall Street that will attract men and women who will seek to be the next Warren Buffett, or great venture capitalist -- men and women fairly competing to analyze the countless ideas of our best and brightest, and who will invest not in devious schemes to defraud millions of their fellow Americans, but rather invest in the talented people who will best be able to bring their innovations to America and the world.

http://www.msnbc.msn.com/id/33327368/ns/msnbc_tv-morning_meeting/

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William K. Black is a professor of economics and was the senior regulator during the S&L crisis. He recently wrote an article titled, How the Servant Became a Predator: Finance's Five Fatal Flaws. Here's an excerpt:

What exactly is the function of the financial sector in our society? Simply this: Its sole function is supplying capital efficiently to aid the real economy. The financial sector is a tool to help those that make real tools, not an end in itself. But five fatal flaws in the financial sector's current structure have created a monster that drains the real economy, promotes fraud and corruption, threatens democracy, and causes recurrent, intensifying crises.

1. The financial sector now harms the real economy.

2. The financial sector now produces recurrent, intensifying economic crises here and abroad.

3. The financial sector's predation is so extraordinary that it now allows the upper one percent of our nation's income receivers to capture an unprecedented and ever more hugely disproportionate share of our nation's total income.

http://www.newdeal20.org/?p=5330

Black also says that that the government's entire strategy now – just as during the S&L crisis – is to cover up how bad things are (“the entire strategy is to keep people from getting the facts”).

Example: 7 out of the 8 giant, money center banks went bankrupt in the 1980's during the “Latin American Crisis,” and the government's response was to cover up their insolvency.

Black continues:

There has been no honest examination of the crisis because it would embarrass CEOs and politicians . . .

Instead, the Treasury and the Fed are urging us not to examine the crisis and to believe that all will soon be well.

http://dandelionsalad.wordpress.com/2009/10/16/the-ongoing-cover-up-of-the-truth-behind-the-financial-crisis-may-lead-to-another-crash/

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Frank Rich, writing in the NY Times on 10/18/09 concurs:

The less that we the people know, the easier it is for reckless gambling to return to capitalism's casino, and for Washington to look the other way as a new financial bubble inflates.

Economist Dean Baker chimes in, lambasting the Federal Reserve for blowing the bubble, and pointing out that those who caused the disaster are trying to shift the focus and stop any real corrections as fast as they can:

The current craze in DC policy circles is to create a “systematic risk regulator” to make sure that the country never experiences another economic crisis like the current one. This push is part of a cover-up of what really went wrong and does absolutely nothing to address the underlying problem that led to this financial and economic collapse.

Baker continues:

Instead of striving to uncover the truth, Congress seeks to conceal it, essentially telling the banksters that they're free to steal again.

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Economist Thomas Palley points out that Wall Street has a vested interest in covering up how bad things are:

That rosy-scenario thinking has returned to Wall Street should be no surprise. Wall Street profits from rising asset prices on which it charges a management fee, from deal-making on which it earns advisory fees, and from encouraging retail investors to buy stock, which boosts transaction fees. Such earnings are far larger when stock markets are rising, which explains Wall Street's genetic propensity to pump the economy.

NYT columnist Frank Rich agrees: Companies like Goldman Sachs are back to business as usual: making money by high-risk gambling, blessed as they are by all the advantages that the best government connections and cheap loans from the Fed can bring – the Fed being an agency, led by former Goldman execs, that Goldman essentially now controls. Goldman is further blessed by the high-speed trading algorithms their computers employ, and to hell with the legions of sucker investors who try to play the stock market without this huge advantage.

As the Reuters columnist Rolfe Winkler wrote last week, “

Main Street

still owns much of the risk while Wall Street gets virtually all of the profit.”

So, for how much longer are we going to let this gigantic and systematic theft continue? Must we wait until the entire system collapses before we wake up? This would certainly be no problem for most of the Wall Street billionaires; they would eventually pick up the pieces – at bargain prices that were unprecedented. And their power over us would then dwarf anything we know today.

Authors Bio:

Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've always been more interested in political economics and what's going on behind the scenes in politics, than in mechanical engineering, and because of that I've rarely worked more than 8 months a year, devoting much of the rest of the year to reading and writing about that which interests me most.