Top Leaderboard, Site wide
Truthdig: Drilling Beneath the Headlines
March 28, 2017 Disclaimer: Please read.

Statements and opinions expressed in articles are those of the authors, not Truthdig. Truthdig takes no responsibility for such statements or opinions.

What Is Sex For?
I Am Brian Wilson

Truthdig Bazaar
Cultural Politics

Cultural Politics

Marcy Darnovsky, Barbara Epstein and Richard Flacks

Urban Health

Urban Health

H. Patricia Hynes, Russell Lopez

more items

Email this item Print this item

Fail and Grow Rich on Wall Street

Posted on Nov 24, 2010
AP / Seth Wenig

A banner displaying the name of General Motors covers the front of the New York Stock Exchange last week on the first day of trading in its new shares.

By Robert Scheer

Welcome to the brave new world of post-bailout capitalism. The Commerce Department announced Tuesday that corporate profits are at their highest level in U.S. history, and the Fed released minutes of an early November meeting in which officials predicted a stagnant economy and continued high unemployment.

The lead on the New York Times story read like a line from a Dickens novel: “The nation’s workers may be struggling, but American companies just had their best quarter ever.” What the Times story neglected to mention is that the bulk of the increase in corporate profits was nabbed by the financial industry rather than manufacturing and other productive sectors. A whopping $33.3 billion out of the total corporate profits increase of $44.4 billion went to the banks and investment houses that those same workers had bailed out with their tax dollars. 

Much of the rest of the corporate profit, in the non-financial sector, was also taken out of the hides of workers through increased “productivity” growth—meaning they had produced more for less personal income. Case in point: the plant that GM is reopening in Orion Township, Mich., where, under a deal negotiated with the beleaguered UAW union, 40 percent of the workers crawling through cars on the assembly line will be paid 15 bucks an hour. That’s about half the traditional UAW wage.

The Obama administration now feels totally vindicated for bailing out GM. Such a deal. Let’s offer up half a clap for the news that GM came back from bankruptcy to mount a successful IPO and pay something back to the taxpayers, which is better than nothing. Some jobs were saved, and that prospect was why folks like me supported this bailout in the first place.

Don’t call it a success story: The government unloaded some of its GM stock holdings at a $10.67 loss over the average per-share price it paid for its $49.5 billion investment. As the Bloomberg news service noted, “The Treasury, which is taking a loss on its portion of the sale, will break even only if the shares climb more than 60%,” referring to the GM shares the Treasury still holds. 

Nor should we ignore the fact that GM is a shadow of its former self and its rosier prospects for long-term survival depend primarily on job creation in China, where GM is already a major presence. Or that GMAC, the carmaker’s former credit operation, is still majority-owned by the U.S. government and is busily foreclosing on the homes of people they hustled into subprime and otherwise dubious mortgages.

GMAC was no different from others in the financial industry in securitizing mortgages that it should have known were toxic. Restructured as Ally Financial, the company was split off from GM, taking along its burdened debt obligations and benefiting from $17.2 billion in bailout money. Like the other financial outfits, Ally has enjoyed a range of government support through the Federal Reserve and Treasury. Not so the folks to whom GMAC sold crappy mortgages that are being foreclosed at an alarming rate.

The assumption of both the Bush and Obama administrations was that what was good for the banks would be good for the general economy, but just the opposite has happened. While the financial sector flourishes, the economy stagnates. As The Wall Street Journal reported in its story on the release of the Fed minutes: “Federal Reserve officials downgraded their outlook for the U.S. economy … projecting that the jobless rate could exceed 8% for two more years and that it won’t return to its former vitality for five years or more.”

Guess what? The financial benefits are not trickling down. Throwing money at the banks has been as effective as pushing on a string, and the result has been what former Fed Chairman Paul Volcker has excoriated as a “liquidity trap.” No serious government pressure has been brought to bear on the banks to help homeowners stay in their homes through mortgage payment adjustments.

What has occurred is what former International Monetary Fund chief economist Simon Johnson referred in The Atlantic back in May of 2009 as “The Quiet Coup,” in which the financial industry is fully in charge of the government’s response to our economic problems. The result, he noted, is “the reemergence of an American financial oligarchy” that had been broken by the banking regulations imposed during the New Deal in response to the Great Depression. Franklin Delano Roosevelt’s sensible regulations were gutted by Bill Clinton and George W. Bush, and tragically Obama has failed to restore them. The Wall Street lobbyists got their way and unfettered greed prevails. How else to explain last quarter’s outrageous profit figures?

Click here to check out Robert Scheer’s new book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”

Keep up with Robert Scheer’s latest columns, interviews, tour dates and more at



Square, Site wide
They Know Everything About You -- A new book by Truthdig Editor Robert Scheer. Order an autographed copy now!
Taboola Below Article

Get truth delivered to
your inbox every day.

New and Improved Comments

If you have trouble leaving a comment, review this help page. Still having problems? Let us know. If you find yourself moderated, take a moment to review our comment policy.

Join the conversation

Load Comments

By REDHORSE, November 27, 2010 at 4:51 pm Link to this comment

Pardon the typo. I meant to say HAPPY THANKSGIVING!! And I hope it was.

Report this

By samosamo, November 27, 2010 at 4:13 pm Link to this comment


Hope no one still wonders where the loyalty of
the office of president and all of congress and
our sold out supreme court is directed. Of course
this could change when the newly elected crop of
wannabes start ‘serving’ their terms, couldn’t it?

I also should not leave out law enforcement and
the justice system who are forever ferreting out
the ‘terrorists’ to this country. Good thing is they
are easy to spot and recognize. Bad thing is, they
are the ones in the financial sector who created
and are maintaining this dastardly financial
terrorist attack and who the law enforcement and
justice system protect.

Report this

By Bill Michtom, November 27, 2010 at 3:53 pm Link to this comment

aacme88 wants “two villains” to be held accountable,
but there are not just two.

1) deregulating the financial system into a rigged
crap game happened with the passing of the Gramm-
Leach-Bliley bill with a veto-proof majority. All
three names on the bill are Republicans. But, both of
Clinton’s Treasury secretaries (Robert Rubin and Larry
Summers) had been working to get something like this
done. They were so in favor of it that they allowed
CitiBank and Travellers Insurance to merge BEFORE it
was legal to do so.

2) the first guy who wanted to give money to the banks
was Bush Treasury head, Hank Paulson. He submitted a
3-page plan that would have prevented any oversight of
what the government and the banks did, including
judicial oversight.

A slightly less private version passed with oversight
reporting but without any power to improve problems.

Since then, the two villains are the government and
the financial industry. Way more than two guys.

Report this
Arabian Sinbad's avatar

By Arabian Sinbad, November 27, 2010 at 4:14 am Link to this comment

And finally American capitalism is exposed for what it is: a system of greed, exploitation, financial con artists and a shameless scheme of theft by the one percent of the population abetted by the political establishment!

What a sad story! And yet no signs in sight of a corrective revolution by the crushed masses!

Report this

By garth, November 26, 2010 at 12:42 pm Link to this comment

A young Greek immigrant came to this country with nothing more than the shirt on his back. He took up residence, worked in a low level job, and started using his tea bags twice. 

With the money he saved from that he went to Vassar and then to Harvard Law School. 

After slaving way at a law firm in Boston, he decided to take his wife’s advice and run for Governor of the State of Massachusetts. He won.

His wife was the daughter of the lead cellist in the Boston Symphony Orchestra.

His name is Michael Dukakis. 

And later he ran for President of the United States of America.  He lost.

Oh, yeah! His father arrived on our shores before Michael did with a foot locker full of $50s, but that’s not really part of the story.

Report this

By SteveL, November 26, 2010 at 1:38 am Link to this comment

Not only Wall Street for some time now corporate heads have been getting huge bonuses for taking companies into bankruptcy.  What is the incentive to do anything right and why would anyone want to invest in anything so crooked?  Oh yeah Bush said he was disappointed that he did not get Social Security Insurance funds put in the stock market before it tanked.

Report this

By aacme88, November 26, 2010 at 1:00 am Link to this comment

If ever there is an honest history of these events two villains will stand out above the rest:

1) the guy who deregulated the financial system to allow it to become a rigged crap game

2) the guy who, when the people couldn’t pay their mortgages and were endangering the banks, said “We’ve got to give money to the banks”, rather than “We need to help people pay and restructure their loans so the banks won’t fail and neither will the people.”

Report this

By SkDo, November 25, 2010 at 10:36 pm Link to this comment
(Unregistered commenter)

“How else to explain last quarter’s outrageous profit figures?”

Robert—I’m sure you are aware of this.  Accounting fraud is rampant. So, the
statement “A whopping $33.3 billion out of the total corporate profits increase of
$44.4 billion…”  means zip.  Auditing fraud is rampant, making those figures more
inclined to be false.  Financial analyst fraud is rampant, and therefore simply
playing the industry’s cards for them.

So, to explain an increase, or a decrease in anything, anything coming out of wall
street as somehow “explanatory” by some-and-such “facts,” which are often just
as fictitious, is categorically ridiculous!  Face it, the financial system is completely
and totally rigged.  Rigged.

Report this
Paolo's avatar

By Paolo, November 25, 2010 at 3:15 pm Link to this comment

Robert Scheer gets most of his facts right. However, the title of the article is quite misleading, as it refers to a vaguely undefined “capitalism.”

As a supporter of capitalism, I note that anti-capitalists like to be sloppy with their definitions. So let me start by giving a clear concise definition of what I mean by “capitalism.”

Capitalism is an economic system in which the means of production are privately owned, and the government has no say in picking which companies will succeed, and which will fail.

Scheer somehow makes the fantastic stretch of applying the term “capitalism” to recent government intervention in the economy, in which it bailed out politically-connected companies to the tune of well over a trillion funny-money dollars created out of thin air by its banking division, the Federal Reserve.

This, folks, is NOT “capitalism.”

To be precise with definition, this is a description of fascism, or what Mussolini called “corporatism.” The same benighted system has gone by different names throughout history. In England in the early 19th century, it was called “mercantilism.” Lincoln called it simply “the American system.” Republicans today call it “Business-government partnership.” No matter the name, it reeks of corruption.

A common tactic in criticizing capitalism is to blame it for the faults of its opposite. America is falling apart, and our economy is slowly spinning down the drain, because of the fascist government/corporate alliance, NOT because of capitalism, properly defined.

Report this

By Mark Weatherly, Jr., November 25, 2010 at 11:28 am Link to this comment
(Unregistered commenter)

Good info. I thought I had seen where corporate profits were up. However, this article qualified who among those corporations increased their profits. The banks of course. I did not favor the government’s bailout of Wall Street/Detroit(-)Ford. It is the federal government who is criminally culpable for our economic depression. Corporations such as GM are overtaxed and overregulated which causes their products to be more expensive. How are they suppose to compete with other countries’, whose labor costs are much less and products more subsidized? With the passage of NAFTA and GATT, which helped usher in “free trade,” our trade deficit sky-rocketed and thus the manufacturers of American products had to adjust. One of their great adjustments was to outsource labor and voila!, a tremendous decrease in jobs.

Report this
Mike789's avatar

By Mike789, November 25, 2010 at 9:11 am Link to this comment

When extending unemployment insurance is voted down next year and a million Americans are left to the soup kitchen (Oh, that is going to play well internationally), maybe a leader will emerge who realizes the only way to challenge this rigged system is to blockade K-Street. Let the the banking lobbby leave for their martini lunches and don’t let them back in. I don’t wish for this scenario to play out. Just wish we’d protest and picket where the problem originates.

Report this

By Martial Monk, November 25, 2010 at 3:28 am Link to this comment
(Unregistered commenter)

Dear Moderators;

Your allowing nutcases to post does nothing for civil nor constructive debate and
dialogue.  it allows a bunch of poorly educated anti-intellectual knownothings to
have a pulpit.  perhaps this is a SEO ploy or some such to generate traffic?  I don’t
know, but it is quite appalling to read dribble like patriot10101 (sic) who can’t
form a single coherent thought and less a sentence.

Moderators, you are complicit in dumbing down debate.  You either need to lead
the way of closing or heavily moderating comments culling intelligent posts or you
yourselves will be hypocrites.

Report this

By glider, November 24, 2010 at 11:02 pm Link to this comment

“progressives are hung up looking for a Messianic figure to wave a magic wand”

Look at what they do, and not what they say.

There is not one shred of evidence that Obama would wave such a wand had he one.  His election campaign was a fraud conning the American public into believing that he was on their side, rather than being a representative of the financial elite that he is.

FDR was repeatedly re-elected specifically because he was a champion of the people in actual fact rather than in campaign rhetoric only.

Report this
ohiolibgal's avatar

By ohiolibgal, November 24, 2010 at 10:01 pm Link to this comment

Look at who Obama appointed to be his head financial guys and tell me he isn’t quite culpable. Larry Summers, Obama appoointed this Wall Street shill, enough said.

We here in the US are at a point where it’s becoming apparent that not much substantial is going to change for the better within our current corrupt 2 party system. The “Citizens United” decision makes it all even harder.

The worrisome things is that if true progressives can’t break through and force change to the left we may go hard right all the way to total fascism. People ought to read up on Germany circa 1931.

Report this

By berniem, November 24, 2010 at 7:07 pm Link to this comment

See, it’s true! Socialism DOES work!!!!!

Report this

By garth, November 24, 2010 at 4:39 pm Link to this comment

In some circles it would go without saying.  To the casual encounter, it is a nicety, but on this thread and on this topic, the sentiment seems counterintuitive.

REDHORSE is just that, a horse’s ass.

Report this

By REDHORSE, November 24, 2010 at 3:57 pm Link to this comment


Report this
G.Anderson's avatar

By G.Anderson, November 24, 2010 at 3:40 pm Link to this comment

The diagnosis, was made a long time ago. The illness is terminal, the economy is on
life support. And although it seems that there is no hope at all, the remedies lie in the
awareness by the body politic, that the treatments are being administered by a bunch of
quacks.  Once this economy has completely expired, then those that prey on our
suffering now, will have no place to hide. Ironically, they have destroyed themselves.
The people will live on, the plutocracies future is over, because without money they will
have no power and no influence. With 50 states looking for payback.

Report this

By frecklefever, November 24, 2010 at 3:30 pm Link to this comment


Report this

By M L, November 24, 2010 at 1:53 pm Link to this comment
(Unregistered commenter)

This financial oligarchy is the same as a Cult. These messiahs/puppermasters target and recruit weak minded people to do their dirty work and get what they want: greed, profit, power, and control of our government This fiancial oligarchy bought and paid for politicians, presidents, and lobbyist. They will use, manipulate and then discard people who stop drinking the kool-aid: Barack Obama. Now they want to replace Barack with the weak-minded and easily manipulated Sarah Palin hoping to regain control of the White House and our government.

Report this

By garth, November 24, 2010 at 1:51 pm Link to this comment

Failure is the key to Success? I knew it!  I’m a day late and a dollar short.  I was born before my time.  If anyone could fuck up a wet dream, it’s me. 

Failure is now in vogue?  I used to say in high school that if they turned the grade rankings upside down, I’d be near the top.

I heard it on Amy Goodman’s DemocracyNow! this morning.  The corporations’s profits were something like $1.6 Trillion.  They need a tax break to hire.  What does ‘hire’ mean?

Entrepreneurship is the way to go.  As Dick Cheney and Meg Whitman would say, “Go eBay.”

Success all around.  Sell your shit to a bigger fool. Be a fuck up and win.

The bad news is, though, that the entry requirements to this cabal are that you are a proven Sociopath, like Jack Welch’s 100 Management Sharks of GE fame.

Only the few.  Those few.

Now, get back to work or get back to looking for a yob.  That’s Swedish for job.  That’s where the Democratic Socialist regime seems to be working.

Visit Sweden.  Find out for yourself.

I remember G. Will spouting off about unemployment in the Socialist-Democratic countries in Europe during the heyday of Bush years, 2005.

In those days anyone who wanted a ‘manufacturing’ job making hamburgers could get one.  The schmuck for Bush (I can picture him, but I’ve forgotten his name), said in front of the Senate that making hamburgers was manufacturing.  Senator Nelson quoted the Bible in response to that one.

I guess the Schmuck would add that a making a ‘chee’ burger, chee’ burger’ was a skill.

Does anyone remember, 2005, when the Bush blocking team was in full force, and they would question any criticism with remarks like, “Don’t you want the President to succeed?” 

I remember.

But then again, 5 years, that was a long time ago.

Report this

By balkas, November 24, 2010 at 1:26 pm Link to this comment

supremacists [fascists, if u prefer?] have heeded biblical command: those that do
not have much, even the little they have, will be taken from them.
case in point: life of a soldier, her/his healthcare, right to know, etcetc.

Report this
3rd party voter's avatar

By 3rd party voter, November 24, 2010 at 12:47 pm Link to this comment

what madisolation said @2:52 pm!!

“I think the majority of liberals would just like him to do the damn job he was elected and promised to do”

the losers in Personality politics are the citizens

If Obama is the best representative of a constitutional scholar, we’re all even more farked up than anyone could have imagined

Report this

By felicity, November 24, 2010 at 12:06 pm Link to this comment

Financial companies now get about 42% of their
revenues from fees and only 58% from interest
(compared with 20% and 80% in 1980.)  No longer
responsible for defaults, banks push more
loans…debt, slicing, dicing, repackaging, the loans
are sold and resold.

We’ve paid off the ‘gambler’s iou’s, but we’re not
dealing with their addiction.  Since the ‘80’s the
financial sector has speculated, swindled and cheated
its way to overwhelming wealth.

Under monooply-finance capital an accumulation of
misery is a necessary condition, corresponding to the
accumulation of wealth.  Wealth not accrued in the
productive side of the economy, but on the financial
side which now more closely resembles a casino.

Report this

By hlouisnini, November 24, 2010 at 11:44 am Link to this comment

Congrats Scheer - your are once again off the Prez’s back and on the backs of the real thieves, con men and snake oil salesmen - people I think you should put on your WATCH LIST - Wall Street, Banks, Insurance Companies, most Lawyers, some Pundits, all Politicians and Used Car Salesmen - go get ém tiger!

Report this

By planetax, November 24, 2010 at 11:34 am Link to this comment


Report this

By ghostcommander, November 24, 2010 at 11:19 am Link to this comment

Caviar and Truffles for the Wall St. Fraudsters, but “eleven cent cotton and 40 cent meat” for the citizens of America.

Report this

By madisolation, November 24, 2010 at 9:52 am Link to this comment

“The problem is that progressives are hung up looking for a Messianic figure to wave a magic wand and turn everything around, no muss, no fuss, no mistakes.”
I hate this “people expect him to wave his magic wand” crap. I think the majority of liberals would just like him to do the damn job he was elected and promised to do, which was to defend the poor and the middle class. He’s failed on purpose, with his phony talk of bipartisanship and reaching out, when he really just wants to enrich the wealthy, thereby enriching himself. He’s a total narcissist.
And he ain’t no Roosevelt. Not by a long shot. He’s a combination of Reagan and Hoover on steroids.

Report this
Fat Freddy's avatar

By Fat Freddy, November 24, 2010 at 9:31 am Link to this comment

How else to explain last quarter’s outrageous profit figures?

First, most of the growth in GDP in the past two years, is in the financials. This is mostly due to a change in accounting rules. See: FASB 157, 166, and 167, or “Extend and Pretend”.

More recently, the US Dollar has taken a hit. The growth and profit numbers are not adjusted for inflation.

The government doesn’t control the value of assets, but it does control the value of the currency.  It can do something that actually fools almost all of the people almost all of the time.  The government can devalue the dollar. It can create inflation.  What the government can do is it can take that hundred thousand dollar asset, that wants to fall to $20,000 in real terms, and let it fall, but still make it worth $200,000 in nominal terms simply by devaluing what each of those dollars are worth.  Which means the homeowners are no longer underwater, and the banks are no longer insolvent.

It’s all smoke and mirrors, that’s why there has been no real recovery.

I’m not completely familiar with the GM-UAW contract, but aren’t workers getting a chunk of stock? Doesn’t the UAW now have people on the Board of Directors? I believe that was the trade-off for lower wages. I hear people saying that the workers should own the means of production. Well, which one is it? High wages, or ownership?

GMAC? I paid off my truck loan in January. I have yet to receive a lien release from them, despite calling and complaining twice. I hope they fuck up and come repossess my truck, so I sue the balls off them. I use my truck for business, so I can add up all losses in income, and then some. Fuckers.

There’s no liquidity trap. The banks are insolvent. Lack of liquidity refers to lack of reserves. Insolvency, is lack of capital. There’s a difference. A big one. the Federal Reserve is trying to recapitalize the banks, not just provide liquidity. Currently, liquidity is being provided by TLGP (Temporary Liquidity Guarantee Program) by the FDIC.

Capital requirements are set up and determined by BIS, the Mother of all central banks.

Report this

By Lincoln, November 24, 2010 at 9:22 am Link to this comment
(Unregistered commenter)

Tarp, the bailouts, were trickle down Raygunomics on steroids.  Of course it failed for 95% of the people.  It is what was wrong all along.

Obama isn’t Bush lite, rather Raygun on steroids. So now we see why Larry Summers along with Goldman Sachs and the banksters backed Obama.

Report this

By daggie, November 24, 2010 at 9:06 am Link to this comment
(Unregistered commenter)

Back in the 1960’s, we’d all be in the streets protesting big time.  But corporate America has us just where they want us.  We’re all afraid to lose our poorly paid jobs, health insurance, etc.  America has become a feudal society.  We need huge nationwide strikes to completely cripple the country so that maybe we’ll be heard!

Report this
Fat Freddy's avatar

By Fat Freddy, November 24, 2010 at 9:04 am Link to this comment

so left i am right

That reminds me of an old plumber’s saying to a new apprentice.

“The only thing you need to about plumbing is, shit flows downhill, and you’re at the bottom.”

Report this

By FiftyGigs, November 24, 2010 at 8:56 am Link to this comment

This is a remarkably balanced commentary by Scheer.

He is indeed correct that the data is proving incontrovertibly that trickle-down economic theory is total bologna. He also correctly realizes that President Obama isn’t a proponent of trickle-down theory.

The problem is that progressives are hung up looking for a Messianic figure to wave a magic wand and turn everything around, no muss, no fuss, no mistakes. A Harry Potter spell creating idyllic economic harmony without anybody so much as having to get off their hogwarts is fiction.

Change involves grouping. Grouping is power. Progressives are adverse to power.

FDR didn’t establish his economic plans because he had “backbone”, folks. The man was elected four times.


Report this

By glider, November 24, 2010 at 7:22 am Link to this comment

“Franklin Delano Roosevelt’s sensible regulations were gutted by Bill Clinton and George W. Bush, and tragically Obama has failed to restore them”

This is quite a generous op-ed of the work of Summers/Geithner/Obama.  Obama’s team has cemented the position of the Banksters during the financial crisis, which is the only reasonable time in which they might be controlled.  Obama is the Bankster’s anti-FDR solution to citizen/voter backlash.  He has earned every cent of their bribe money.

Report this
knobcreekfarmer's avatar

By knobcreekfarmer, November 24, 2010 at 6:26 am Link to this comment

Urine “trickles” downhill…

Report this
Right Top, Site wide - Care2
Right 3, Site wide - Exposure Dynamics
Right Skyscraper, Site Wide
Right Internal Skyscraper, Site wide

Like Truthdig on Facebook