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Here’s a Way to Hold Wall Street Accountable
Posted on Feb 13, 2016
By Margaret Flowers and Jill Stein
The year 2016 is off to a rocky start for the stock market, not just in the United States but also globally. Many economists are predicting a financial crash this year or next. Stocks are overvalued without a foundation to hold them up, production is down and debt is high. Central banks, such as the Federal Reserve, have run out of solutions, and investors have run out of confidence in them. The grand illusion of economic recovery is about to be exposed.
Financial fraud is at the heart of the coming crisis. In 2008 when a sector rife with fraud crashed, instead of having to face responsibility the too-big-to-fail banks were bailed out with public dollars. The public, meanwhile, bore the cost not just in dollars but also in lost jobs, lower wages and home foreclosures.
We don’t have to stand by and watch the next crisis, which will hurt millions, unfold. There are steps that should be taken right now by the president to stop financial fraud and stabilize the economy. A new group of financial fraud experts, Bank Whistleblowers United, created a 19-point plan that could be implemented within 60 days, with minimal action by Congress. President Obama could start putting the plan in place now, but so far he has not even prosecuted bank executives responsible for the 2008 crash.
To create a finance system that works for everyone, the next president needs to commit to taking on Wall Street, restoring the rule of law and rooting out corruption. We invite all presidential candidates to join us in endorsing the 19-point plan. And there are additional, essential steps we must take to end Wall Street’s grip on our communities.
In the past 15 years, the U.S. has weathered devastating aftereffects of two financial bubbles: the “dot-com” bubble in the late 1990s, which burst in early 2000, and the housing bubble, which burst in 2008. Many pundits contend that the 2008 financial crisis is over and that we are in recovery, but the reality is that the “recovery” has really been only for those at the top who were bailed out by the Treasury Department and Federal Reserve. Foreclosures and high levels of non-participation in the economy continue, as do underemployment, temporary jobs and wage stagnation.
Half the people in this country have no savings and two-thirds cannot handle an unexpected expense of more than $500, including not being able to borrow what they need from family or friends. The low-wage “recovery” has devastated the middle class, with 51 percent of workers now earning under $30,000 a year. Economist Jack Rasmus describes the current situation:
“The real US economy since 2008 has grown at only roughly half to two-thirds its normal rate. Decent-paying jobs in manufacturing and construction today are still a million short of 2007 levels. Median wages for non-managers are still below what they were in 2007, and households are piling on new debt again to pay for rising medical costs, rents, autos, and education. Retail sales are slowing.”
In fact, major retail chains in the U.S. are planning to close hundreds of stores this year, and many that stay open are carrying low inventories of goods.
Part of the reason for the “recovery” was a massive buyback of bonds and toxic derivatives that were based on risky mortgages that brought on the crash. This was done in the form of “quantitative easing,” through which the Federal Reserve bought up tens of billions of bonds and bad bank debt each month for a total of $3.5 trillion. A 2011 audit of the Federal Reserve found that $16 trillion had been allocated to banks and corporations for “financial assistance” after the 2008 collapse. As a result, the Fed is currently leveraged 77 to 1—more than double what Lehman Brothers was when it failed in 2008.
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