Today I am departing from my normal subject to cover something important to us all

WALL ST IS NOT CAPITALISM


The recent Occupy Wall St and the viral wave of sympathy occupy demonstrations have no finally received global media attention after being virtually ignored and in my opinion suppressed by the main stream.


The message from the Occupy activists is not that clear and cohesive as there are so many different groups involved but I think we can say that the general tenor is that we have let down by governments which have either allowed or in collusion with the bankers created a society where only a tiny proportion " the 1%"  have benefited hugely from the false profits and left billions of people on the side or in the dirt. 


Lloyd Blankfein, CEO of Goldman Sachs received total pay of over $54 million ( yes thats right) in 2006 based on the alleged profits of GS. GS subsequently received $10 billion of taxpayers money in 2009 to bail them out and paid out $19 billion in bonuses that same year! Blankfein kept his 2006 bonus and received yet more in 2009


It is because of this and many other dubious cash handouts that one of the main calls from the Occupy movement is for more socialism and the end or serious control of capitalism. They blame uncontrolled capitalism for the current terrible situation but they are wrong.


The current system is not capitalism. Let me explain why.


Here is the dictionary definition of capitalism


“An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market. “
Source: Dictionary.com


The key part of this is the term FREE MARKET. 


We have not had a free market and here is why.


Successive governments going back decades have used teams of advisors taken from the major financial institutions. In the USA these have been predominantly from Goldman Sachs. These “advisors” have “advised” on a structure of financial regulation that is set precisely to benefit the banks and more importantly its executives. In other countries the story is similar.


In the USA in key areas such as the repeal of Glass/Steagall Act, tax breaks on derivatives and offshore corporate banking, the bankers arranged a framework in which they could make super profits, pay little or no tax and hide billions offshore. In addition they were allowed to leverage to utterly ridiculous levels with no backstop and little real underlying security.


This is what bought down our economies but..


This is not  FREE MARKET CAPITALISM. 


This is a rigged game. In a free market these banks would never have been able to leverage up this much. In a free market they would have failed and gone bust. In a free market the executives and shareholders would have not been able to shield themselves from the bankruptcy and walk with the cash whilst the taxpayer pays the price of their dishonesty.


Lets not forget when Treasury Secretary Hank Paulson ( ex GS ) told the USA that the taxpayer had to bail out the banks to the tune of 800 billion dollars (TARP) because if they didn't the banks would not be there to provide finance to fire the recovery. 


What happened , they took the money “with no oversight” and kept it, paid their big bonuses and didn't lend to anybody.


They have rigged the game from top to bottom in their favor and that is NOT capitalism.


What we need is a return to a true free market where those with capital risk it fairly with no bailouts on the horizon. That way they take calculated risks, with their money, not exponential risks with ours, and this creates sustainable prosperity.


The only way out of the current depression is Free Market Capitalism not Socialism, that just makes us all equally poor!