by Ron Olsen
Do you understand derivatives? Still not sure I do , except that they were a term Wall Streeters used so that they could play with other people’s money while the world’s economy crashed. Because I’m not an economist, I looked up the definition. Seems to me, it can mean anything the bankers want it to mean. They come up with these terms like credit default swaps and derivatives, and nobody knows exactly what they’re doing, setting them free to commit economic murder. Which is what they did. And they still are. These people are both clever and ruthless and that’s one hell of a combination.
Because I’m not as smart as the bankers, I tend to lump derivatives in with the sub-prime loan crisis and all their other creative high finance that nearly brought us all down while the banks gorged themselves, extracting money from the poor suckers in the middle class who had no idea what was happening and no adequate government regulation to protect them thanks to the great Republican standard bearer for deregulation, Ronald Reagan.
So they took these things called derivatives (basically a contract to buy something or place a bet on something), bundled them all together and sold them as having great value, when in fact, they were all but worthless. Particularly when they consisted of a bunch of sub-prime loans homeowners would ultimately be unable to pay back, although they were duped into thinking that somehow everything would work out for the best. As I said, clever.
The bankers are also using derivatives to make billions by driving up food prices while people starve. Ruthless.
I believe in a mixed economy, but the sociopathic behavior these guys exhibit is enough to turn any thinking person into a socialist.
It’s runaway greed and it partially crashed the world’s economy, with some of the first warning shots I can recall coming from Iceland, followed by Greece, the birthplace of democracy, which continues struggling to this day, along with the United States, where the middle class has been devastated. But back to Greece, and more importantly, what’s happening there now.
National interests, like the governments of the United States and Germany, who had to float big loans to keep entire countries from going under following all the creative banking hi-jinx on Wall Street and elsewhere, demanded extreme austerity programs be put in place to help them recover their money.
Austerity. Here in the U.S., for the Republicans, that means cutting Social Security, Medicare, Medicaid, Food Stamps, healthcare for women and pretty much everything else put in place as a financial safety net for all but the very wealthy at the top, who, not coincidentally, are represented by Republicans.
And the Democrats? Their current frontrunner for president, Hillary Clinton, is considered to be a darling of Wall Street, picking up huge speaking fees to address their insider meetings. How would you feel if Goldman Sachs gave you $200,000 for just one speech? Connect the dots.
This is all very complicated, and again, I’m no economist, but basically the fat cats who were taking all the money went bust and had to be bailed out by the middle class. Now those same fat cats are demanding that the middle class should have their lives ruined by austerity, while the big guys on Wall Street enjoy record profits.
The Guardian reports for example, that “In 2013 the bonus pay of employees in the financial industry was 65 percent more than the total compensation of all wages for every full-time minimum wage earner in the entire United States. That number does not include wages paid, but simply bonuses paid to the average financial sector employees.”
Get that? A relative few on Wall Street made more in bonuses alone than every minimum wage-earner in the country. And we had to bail these guys out? It’s one big con. This is why Elizabeth Warren keeps saying the system is rigged. Because it is.
But back to Greece. The birthplace of Democracy.
The Greeks, have just elected a new Prime Minister, described as a “leftist maverick,” Alexis Tsipris, who has formed a coalition government to lead the Greeks “out of austerity.”
This could be a very big deal for all of us, because it could signal the beginning of government organized serious international pushback against the austerity movement that followed the crash of 2008. Angela Merkel and Germany, are big proponents of “austerity.” So are Republicans, here in the U.S. Again, I’m no economist, but basically it means cutting back or eliminating government spending to shore up budgets, screwing the elderly, the poor, the middle class and those who are most impacted by hard times, while the wealthy at the top enjoy heretofore unheard of profits. For the wealthy, austerity brought good times back to the Wall Street table. If you were middle class or below, you were forgotten. Cast off like so much rubbish.
No money for food? Eat grass. Can’t afford birth control? Don’t have sex. Can’t afford college? Take out a huge loan and spend the next 20 years paying back the bankers and the federal government. Even though, according to S&P, educating more of our young people will give us a stronger economy. So why make it more difficult to get a college education? Same thing goes for spending on the nation’s infrastructure. Our bridges, roads and sewer systems. Who needs any of that? Oh, and not to worry about not having birth control. Republicans, you can be sure, will be standing in line to pay for thousands of unwanted children.
That’s austerity. It’s working really well for the rich while everybody else gets clobbered and the Greeks, are obviously fed up. There is speculation that their new progressive coalition might drop out of the “Eurozone” altogether, dropping the “Euro” as their official currency and going off to do their own thing. And why shouldn’t they? The austerity program Germany and the Eurozone are imposing on Greece, is making average Greeks miserable.
While Americans are still waking up to how badly they’ve been swindled by the bankers, what is now happening in Greece might very well spread to other countries, as people get sick and tired of being sick and tired, while the wealth continues flowing to the top.
According to Sen. Bernie Sanders, Independent from Vermont, “In America today, the top 1 percent owns more than 35 percent of all of the nation’s household wealth while the bottom 60 percent owns only 2.3 percent of the wealth. The distribution of income is even worse. In 2010, 93 percent of all new income went to the top 1 percent, while the bottom 99 percent of people accounted for the remaining 7 percent. “We have the most unequal distribution of wealth and income of any major country on earth, worse today in the United States than at any time since 1928 before the Great Depression.”
People will put up with eating grass for only just so long. Eventually, they are going to demand some real food.
I have no idea to what degree financial irresponsibility on the part of past Greek governments may be responsible for their current economic crisis. However, things in Greece really went sour after they joined the European Union, and grew exponentially worse due to credit default swaps following the crash of 2008. I’m pretty sure that if you drill down far enough you’ll find bankers and other lending institutions coupled with inadequate regulation are at the heart of their crisis, just as Wall Street devastated the American economy with their creative financial instruments no one was able to fully comprehend until the ceiling fell in.
What’s happening in little Greece, could be the beginning of a major pushback against austerity. Their new Prime Minister says it’s all about returning democracy to Greece.
A representative democracy? Government that represents the majority rather than a wealthy minority? Sounds pretty good. Maybe we should give it a try here in the U.S.?
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Ron Olsen is a Peabody and Emmy award winning journalist who lives in Los Angeles. He left the news business in 09 and now writes essays and poetry in Los Angeles. His website and blog are located at http://workingreporter.com
