Friday, January 13, 2012


Here we are in 2012 and Wall Street’s “structured investments’’ are still out of control. Unfettered free Markets reign!

At a time when political candidates talk about the need for jobs and investment, Wall Street continues to focus on ensuring that its high-stakes poker games go unregulated. 

The SEC defines structured investments under Rule 434 as: “Securities whose cash flow characteristics depend upon one or more indices or that have embedded forwards or options or securities where an investor’s investment return and the issuer’s payment obligations are contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates of cash flows.”

No wonder structured investments are hard to control – nobody really understands them. But that didn’t stop people like MF Global’s Jon Corzine, Lehman’s Dick Fuld, and does not other Wall Streeters from manufacturing these investment “products” to produce revenue for their firms. Do product liability laws apply to these products?

Jefferson, in a letter to Albert Gallatin, Treasury Secretary in 1802, said: “I believe that banking institutions are more dangerous to our liberties than standing armies.”

Everyone should know something about what has happened to our economy and society stemming from all the too complex to explain exponentially leveraged “securities.” And the greed behind all the structuring is still going on without meaningful restraint as we enter a new year. At least Occupy Wall Street is persistently protesting in the shadows of the Wall Street glitzy office buildings.

Protest is the only way to change the essential inhumanity of so much greed. Plutarch said: “An imbalance between rich and poor is the oldest and most common ailment of all Republics.”

Occupy Wall Street has led the way to a new awareness of the feelings of betrayal and being left out of the American Dream caused by the drive to grow net worth by the few against the best interests of the many. Financial products such as structured investments do not lead to capital formation that is required to create jobs.

And in 2012 there is a need to have the right conversation about the right to produce structured investments that may have $600,000,000,000 of leveraged derivatives, which defy rational explanations, just waiting for a new hiccup to explode – or is it implode?

Wall Street was instrumental in the development of our country. Wall Street raised the capital for industrialists to invest in plant and equipment and innovative ideas which created the strongest economy of all time. It helped produce the middle class and could help to resurrect it if it had the will. Why could Wall Street not put risk capital into American manufacturing rather than geometrically leveraged virtual value? Why not stop all the leverage, which generates huge fees in the short run, but puts our entire economy on the line?

Why can’t Wall Street take the lead and make money the old fashioned way – not at the expense of the people but to rebuild the lives of the 99 percent.

How can the Republican debaters’ and the media wonder how to rebuild trust? Trust in what – in a government that has failed to protect the public? Trust in banks that only care about structuring investments – so complex that the SEC definition is so arcane that only a few know what in the hell it could possibly mean?

Samuel Adams said: “It does not take a majority to prevail…but rather a tireless minority keen on setting brushfires of freedom in the minds of men.”

The Tea Party is an example of setting brush fires. However, its mission is to keep brush fires burning to obstruct passing the budget, or to avoid passing Obama’s jobs bill, or to get rid of health insurance for Americans who did not have access. These brush fires have been set to interfere with the freedom to care about the common good and our Government’s obligation to protect it.

Occupy Wall Street is a minority too. But its ethic is a function of restoring equality and fairness to the American Dream. We cannot allow unbridled, unfettered greed to permit the creation of “structured’’ financial products without investing in jobs or in capital formation. OWS certainly does not mean freedom for Congress to continue to be: of the lobbyists, for the ultra rich and by the ultra rich - who are the generals of the Mega Banks and the Corporations that ship jobs and profits off shore.

Jefferson noted: “The legitimate powers of government extend only to such acts as are injurious to others.” This was before germs, or automatic weapons, or nuclear bombs, or planes or the internet, or capitalism or 350 million Americans living on a globe with billions of people, connected to each other by laptops and facebook – and Huffington. So we need to view Jefferson’s profound concern for the public good in terms of today. We did manage to create the American Dream, but the deregulation of greed and the devaluation of ethics has become injurious to the 99 percent.

So now we have a new year, and a new election. And it is time to focus on the needs of the 99 percent and tear down party lines and obstructionist tactics. The truth is simple: It is time for all Americans to come together to understand that all the Greed and self interest is wrong. We need to fix it.

Congress along with Wall Street can step up to the line to do what is right for the people if there is a willingness to understand the reasons behind the brush fires, and go back to the basics that made our country great.


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