The SYSTEM is NOT broke, its RIGGED Pt I

NBC News’s Tom Brokaw has a simple explanation for what’s wrong with Washington.

“The fact is the system is rigged,” he said Sunday on NBC’s “Meet the Press.” 

“Seventy-five percent of the congressmen come from gerrymandered districts in which they’re bulletproof. They only play to one constituency. There are no swing states. They don’t go home and have to prove their case, because they’ve got a choir back home. And that’s a huge part of the problem here.”

Our system is rigged. Unfair. Did you honestly think Washington was going to let it all fail—and for good? After all, who’s backing Fannie Mae (FNMA) and Freddie Mac (FMCC), which are almost single-handedly backing the resurgent mortgage market? Who pumped more than $2 trillion into suppressing interest rates to record lows?

You could—should—go on strike at all the bailouts; the record bank profits that are once again accruing to shareholders and executives; the asymmetry of rescuing now impossibly large institutions when so many individuals had to mail back the keys to their homes.

Chronic unemployment borders on permanence. Real medium household wealth is at a decade low. Equity abandonment hit historic levels well into last year. After the Big Six’s second-most-profitable year on the books, their investors are primed to enjoy more than $40 billion in dividend increases.

Wall Street has disproportionately benefited from the largesse of economic policymakers, from easy TARP terms to a long-stretch of largely free consumer deposits. Corporate profits are breaking records, thanks in no small part to the Federal Reserve—the wealthiest bank in the world.

The Dow would be 20 percent to 30 percent lower, absent the Fed’s finger on the scale. You cannot, understate its impact on corporate earnings.

• In 2010, the top hedge fund manager earned as much in one HOUR as the average (median) family earned in 47 YEARS.

• The top 25 hedge fund managers in 2010 earned as much as 658,000 entry level teachers.

• In 1970 the top 100 CEOs made $40 for every dollar earned by the average worker.  By 2006, the CEOs received $1,723 for every worker dollar.

As the administration and Congress argue over cuts in social programs, inequality in America grows more extreme each day. Even the great financial crash didn’t derail this trend. The richest 400 Americans, for example, increased their wealth by 54 percent between 2005 and 2010, while the median middle-class family saw its wealth decline by 35 percent.

None of this is accidental.
It’s not the result of mysterious global forces, or technology, or China, or structural problems concerning the skills and education of our workforce.  Rather, it is the direct result of policy choices made by Democrats and Republicans alike. Together, they swallowed the Kool-Aid of unregulated market mania, and now we are paying the price.

In exploring this story for my new book, How to Make a Million Dollars an Hour: Why Hedge Funds Get Away with Siphoning Off America’s Wealth , it became clear that New Deal policy makers shared a deep fear that democratic capitalism could not function unless Wall Street was tightly controlled. After all, Europe was sinking into the fascist camp while the new Soviet Union seemed invulnerable to the global depression. As a result, to put it crudely, the New Dealers quickly regulated the hell out of high finance through a myriad of programs including the formation of the S.E.C and Glass-Steagall. The goal was to turn Wall Street into a sleepy place to work, rather than an adrenalin-fueled arena of stock manipulation and fraud.  At the same time income tax rates on the wealthy sky-rocketed with top marginal rates reaching over 90 percent. The results were nothing short of stupendous.

• For more than a quarter of a century there were no financial crises anywhere in the globe (except Brazil in 1964).

• The average wage in the financial sector collapsed so that its compensation was similar to the average wage of non-financial jobs.

• Inequality fell rapidly — the top one percent accounted for more than 23 percent of all income in 1928.   By the 1970s it had fallen to less than 9 percent.

These policies gave birth to middle-class America, as the average income of working families grew steadily during the WWII period.  This was the new America that would out-compete world communism for the support of working people all over the world.

Then politicians sold us out to high priced lobbyist.
After a series of economic mishaps, (largely due, but not limited, to the excessive costs of the Vietnam War and the Cold War), both inflation and unemployment rose simultaneously. This led many economists and policy makers to believe that Keynesian economics no longer applied (meaning that you could not successfully use government spending to combat rising unemployment without triggering excessive inflation.) Neo-liberal economists, led by Milton Friedman, filled the breach by arguing that less government and more free enterprise were desperately needed.  In fact, they claimed that the determined pursuit of profit invariable created the most wealth (and freedom) for all.

The message was well received, especially by the Reagan administration. Taxes were slashed for the super-rich, (with the blessing of the Democrats, as well.) Unions were suppressed. Regulations, especially on Wall Street, vanished. A boom was to follow to make all boats rise.

They stole your job, your pension, your benefits, now they want your Social Security.

The income of the average worker stalled and the top 1 percent flourished. Inequality rose as financial gambling became a way of life. (In fact, after accounting for inflation, real average weekly wages in 1977 were higher than they are today.)

Wall Street, however, sprung to life. As deregulation increased, so did Wall Street incomes compared to the rest of the economy.

With the financial sector leading the charge, non-financial CEOs climbed on board. If 30-year-old traders could make tens of millions of dollars playing financial roulette with other people’s money, then why shouldn’t CEOs get paid more… and more… and more?  “Greed is good” became more than a memorable phrase from a movie.  It became a badge of honor  — a sign of recognition among the highest-paid players who knew precisely how to game the system.

And then we paid the price with another crash. Not quite as bad as 1929, but close. But this post-crash period is remarkably different. Rather than constraining inequality, the bailouts resurrected high finance and the inequality it inevitably spawns. Instead of putting our foot back on the neck of finance, we’re talking about slashing social programs. Rather than dramatically increasing taxes on the super-rich through a wealth tax, we’re debating how to slash Social Security and Medicare benefits.

Must see video- http://www.onetruemedia.com/shared?p=118440be48c880abab0bc7d&skin_id=1602&utm_source=otm&utm_medium=text_url

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