In what world will the SEC regulate Wall Street adequately? Wall Street’s financial architecture puts it beyond effective regulation. The whole superstructure of modern finance capitalism is designed to enrich the few at a relative cost to the many. Wall Street is a powerful special interest. Powerful interests aim at leveraging congressional legislation so that taxpayers unwittingly provide subsidies — regulatory benefits that produce lucratively skewed takings for the privileged. Wall Street plays this game with extraordinary craft, notwithstanding a few slip-ups of late.
Wall Street’s intent has been to create a culture of loyalty within its ranks by massively overpaying its upper echelon members — people who generally understand the perversive aspects of the game. Consequently, there is little whistle-blowing on Wall Street. People become absorbed into a money-making culture. Their closest friends are there. They hope their children will grow their wealth through patrimonial connections. If they ratted on the system, where could they go to make comparable money? This is a hard environment for the SEC to penetrate, especially when the SEC attracts staffers who have close social connections with the people they should regulate.
The Wall Street blueprint aims at a system capable of siphoning off from productive enterprise — national industry, international labor and commerce — the fruits of ingenuity and resource development. Honorable capital accrues gradually: It is a value added proposition. In contrast, the idea of Wall Street is to develop paper asset products the prices of which can be influenced surreptitiously (i.e., private ‘tag-team’ play by fraternal elites). As the value of various classes of paper assets become inflated by subterranean means (i.e., psychological ploys, clandestine maneuvers, hidden collusion and force of money), these asset categories attract the attention of money managers seeking investments that “out-perform” the market. Thus, mutual fund money rushes in along with retirement money, international money and other sources of wealth — much of it honorable wealth amassed through productive engagements.
As the public buys in with their hard earned money, a path of exodus and counterfeit asset conversion is provided for the holders of the inflated paper wealth. As the bogus wealth is exchanged for wealth gained through productive means, the assets of the many (the productive ones) become the concentrated assets of the few (the leeches and predators). When the masses try to cash in their Wall Street paper assets, they find the assets susceptible to dramatic value destruction. Meanwhile, the Wall Street rich use their expanded wealth to buy title to productive enterprises that “public” capitalists gradually lose. Just look around: Increasingly, the best American businesses (top 20,000 businesses) are owned by people who gained the capital to acquire the enterprises by timely entry and exodus from Ponzi style investment plays. Then, too, some of the money comes in from Amsterdam’s unregulated diamond trade — nicely distributed with hardly a footprint to persons preferred by their Wall Street counterparts.
In sum, the game for Wall Street is to create a largely unmonitored background money supply that consists of inflatable paper assets. The fungible assets in this second track money supply are used to gain acquisition power for raids on the title and ownership of productive enterprises nationwide. The Fed as an institution with a preferential bias toward investment bankers is implicated in these nefarious operations. The Fed is culpable by reason of policies that make the nation’s inventory of expandable capital (i.e., through fractional banking) available to those who offer inflated paper assets as collateral for speculative engagements. Granted, this is only one piece of the Wall Street game: Massive fees for handling the employment and transfer of capital and ownership give Wall Street additional layers of wealth making opportunities.
Is it little wonder, then, that market watchers like Allan Sloan at CNNMoney.com warn us not to expect the Securities and Exchange Commission to protect the American public from large-scale wrongs. Obviously, the SEC is not geared for it. Nevertheless, the U.S. Congress is barking up the wrong tree if they think that by reforming the SEC supervisory functions or allocating more money to enforcement activities they are going to tame the Wall Street beast. There is far too much fast money to be made on Wall Street to regulate the system effectively.
If Congress is serious about regulating Wall Street the only option is to reboot the financial sector, take it away from its soiled trustees, and put it on new footings. Predation must stop. The money Wall Street draws off must be preserved in the public domain. Thinking Americans must found a new financial system that does not pay its managers scores of billions to operate.
Wall Street’s injustices are breath-taking. It is equally stunning that Americans are willing to endure the system. Unfortunately, there are still too many people addicted to playing the market — people who hope for one big killing before the music stops. In this environment there is little hope for adequate congressionally led reform. Too many members of Congress love fast money and are buddies with those who make it — on and off Wall Street. Congress will give us symbolic reforms. We’ll be left holding the bag to pay for them.
Just what is the SEC good at? It seems they’re able to follow footprints when a broker makes unauthorized trades in his clients’ accounts. They’re able to find infractions when mutual funds fail to mail documents to clients on time. They even know how to make themselves look busy by turning into public examples highly visible figures like Martha Stewart. But when it comes to finding the big problems on Wall Street, they’re inept — an observation David Weidner makes while highlighting “the evil genius of ‘The Smirk’”. Indeed, Mr. Weidner’s January 27 Marketwatch article on the government’s bias in choosing regulatory leaders reveals that the problems go higher than the SEC.
What good is a national regulator who can catch shoplifters but can’t identify bank robbers? The biases of the SEC are as glaring as those of the Fed. These people don’t know what justice is because their Ivy League educations steeped them in Hamiltonian doctrines friendly to aristocratic objectives and Machiavellian means.
If the SEC excelled in its duties it would expose widespread Wall Street skulduggery. SEC examiners would find computer spyware programs that monitor trading traffic coming out of 401k accounts and other retirement vehicles. Wall Street’s computer programs massively sample trades, stock holdings, and account balances. Data crunching systems find buy and sell patterns in targeted populations. Infiltration is widespread — a scandal yet to erupt. The public’s investment habits are converted into counter-public strategies for proprietary trading systems employed by hedge firms that investment banks like Goldman Sachs regularly service. It is all about exploitation because that’s where the big trading money is made.
Next time you see members of Congress bailing out Wall Street elites, remember they’re empowering some of the world’s greediest people to play against the working public. Remember, too, that Wall Street will never be adequately regulated by means of the regulatory reforms that Congress hopes to put into effect. Wall Street must be replaced. Congressional reforms will simply buy Wall Street more time and strategic cover in doing what it does best: Exploiting the public and setting up America to lose its economic autonomy to global elites.