Wall Street vs. Main Street

It was reported this week that an oil trader at Citigroup will receive a bonus check

for $98 million this quarter. This is not the repeat of a story from two years ago. He will

get this bonus in the summer of 2009. Citigroup only exists today because of billions of

taxpayer dollars used to bail it out. The markets that this trader used were propped up by

billions of taxpayer dollars. Wall Street exists in its present form because of billions of

taxpayer dollars. Yet, when the Obama administration introduces a plan to tighten

restrictions on financial markets, create a new consumer protection agency to oversee

the financial markets, increase transparency in financial trading, and prevent Wall Street

from rewarding people who take disastrous risks for short term gains (like a $98 million

bonus); Wall Street is spending millions to defeat or water down these proposals. It's

actually worse than you imagine. The disconnect between Wall Street and Main Street is

totally perverse and not in a good way.

Recently, the stock market is back over the 9000 mark and enjoying the best

performance since Obama became President. Is this investor optimism based on better

earnings reports from U.S. companies? No. Could the credit for this market run-up go

to the reports that housing starts are increasing or that home prices have bottomed out?

No. Maybe Wall Street is reacting to a downturn in the rise in unemployment for the first

time in sixteen months, or maybe they are buoyed by auto makers reporting a growth in

sales over this time last year? No. It appears that the financial world has renewed optimism

because the Obama administration's attempts to protect you, clean up the financial markets,

re-regulate an out-of-control system to prevent future economic disasters has failed

miserably so far. When asked if President Obama should get credit for the good economic

news, GOP Chairman Michael Steele said "No". He said the economy is "healing itself"

because they slowed Obama down.

Alex Merk is an analyst at Merk Investments, and he is quoted as crediting the

upswing in markets to the failure of the Obama administration to meet it's agenda ("...the

stalled agenda in Congress has also helped the Dow"). Brian Gardener is an analyst at

Keefe, Bruyette, and Woods. When markets cratered in March, investors worried that the

Obama administration would nationalize the banks (to protect your savings), impose

punitive rules on credit card issuers (who were charging over 30% interest, changing your

rates without telling you, raising late fees without telling you, and canceling credit cards

even if your balance was current), and allow judges to lower the principal and interest

payments on mortgages (to prevent you from losing your home, driving the price of a home

into the ground, and allow you to stay in your home, and keep millions of homes from going

onto bank balance sheets). Gardener goes on "...since then, the bankruptcy bill has fizzled

and bank nationalization talk has died out...President Obama did sign a credit card bill,

but it's provisions were weaker than we feared (we dodged that bullet...), healthcare reform

has slowed, while a climate change bill that would have imposed taxes on businesses that

emit pollutants has stalled in the Senate".

Mr. Gardener, Mr. Merk, and Wall Street are thrilled that anything attempted

on your behalf, anything proposed to protect your money, or ideas offered to reign in the

practices that produced the greatest economic meltdown since 1929, were defeated.

Legislation to begin to deal with climate change, so that we leave our children a better

environment than we found, has been blocked in the Senate; and corporate shills are

disrupting town hall meetings across the nation to defeat healthcare reform, and the result

is that Wall Street is thrilled.

It is pretty clear that you are going to have to pick sides. Are you rooting for Wall

Street or Main Street? I used to think you could do both, but I am less and less sure about

that stance. I see nothing that Citigroup, AIG, Goldman Sachs, and the financial world in

general do that has benefitted me. Do they improve the quality of your life as they trade

and sell risky investment vehicles or push paper? They make nothing. They cause nothing

to be made. While the financial markets boomed, American industry was taken offshore

and millions of jobs lost. In fact, practically any time a corporation announced layoffs

(that's people being fired, not downsized), the stock for that company would rise. Wall

Street loves massive firings. Wall Street was ecstatic when corporation after corporation

went into bankruptcy court (something Congress made more difficult for you or me to do

at the urging of Wall Street); and abandoned their employees pensions and healthcare

obligations, leaving millions of people on Main Street without retirement income or

healthcare.

When I worked in Congress and me boss wanted to know about a bill, the first

thing I would check was which side the Chamber of Commerce was on. If they were for it,

it couldn't be good for the average American. It proved to be a valuable litmus test. As you

listen to the debate on energy legislation, financial re-regulation, healthcare reform, and

the rest of the Obama agenda; ask yourself a simple question. Is Wall Street for or against

what the President is proposing. If they are against it, you can bet your last taxpayer

bailout dollar that it will benefit you on Main Street; and that is the last thing they want

to happen. What do you think? I welcome your comments and rebuttals. Please send

them to lionoftheleft@gmail.com