Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Wednesday, May 08, 2013

A Pathological Moral Environment

In a speech recently, the influential economist Jeffrey Sachs made the following statement, one that was both remarkable and yet predictable about the culture of Wall Street:

    I'm going to put if very bluntly. I regard the moral environment as pathological...these people are out to make billions of dollars and nothing should stop them from that. They have no responsibility to pay taxes. They have no responsibility to their clients... to counter-parties in transactions.

    They are tough greedy aggressive and feel absolutely out of control...and they have gamed the system to a remarkable extent. And they have a docile President, a docile White House, and a docile regulatory system that can't find its voice. Its terrified of these banks. If you look at the campaign contributions the financial markets are the #1 campaign contributors in the US now.

    We have a corrupt politics to the core... and both parties are up to their necks in this. The corruption is as far as I can see everywhere. But what it's led to is this sense of impunity that is really stunning... and it very unhealthy. I have waited four, five years now to see one figure on Wall St. speak in a moral language and I've not seen it once.

    And if they won't I've waited for a judge, a President, for somebody and it hasn't happened, and by the way, it's not gonna happen any time soon.

It was predictable because in fact any neutral observer who knows anything about the way the big banks on Wall Street work has been saying it for years. But it was remarkable because Sachs is a tried and true member of the American establishment, a widely acclaimed Ivy League professor and New York Times best-selling author, and not exactly a raving populist in his economic or political views. But even the elites are now acknowledging the utter moral bankruptcy of our financial kingpins.

I have been thinking about the pathological moral environment of Wall Street a lot in recent days because of the piece I wrote on Friday about the connection between the kinds of trading Enron was doing in energy markets that got them in so much trouble, and what JP Morgan Chase is currently doing in energy markets. You know, the executives who destroyed Enron were about as despicable people as you can imagine -- manipulating energy markets in California to drive up prices and create shortages to the point of complete crisis; stealing money from pension, school, church, and charity funds; cashing out early and leaving the rest of the company's employees with nothing (and touting the company's stock to those employees while simultaneously selling off). They destroyed their company (along with the country's leading accounting firm, Arthur Andersen). They got investigated, indicted and convicted of very serious crimes. But the execs at Enron were pikers compared to the big guns on Wall Street, who are doing everything the Enron guys did in terms of market manipulation, but are involved in all kinds of other financial shenanigans as well. They are being investigated or excoriated by at least different government entities, but their stock price has stayed high, their top execs mostly haven't lost their jobs, and no one has been convicted or even indicted.

The most amazing thing in my mind is the difference in terms of political influence. It's not like the Enron team were exactly slouchers in this regard. The CEO was one of President Bush's best personal friends and was one of his top fundraisers. Enron had 54 people in the Bush administration who had been executives, consultants, or lobbyists for the company, including a cabinet secretary and the head of the main agency that regulated Enron, the Federal Energy Regulatory Commission. When Enron needed help with a business matter in India in the first months of the Bush administration, Vice President Cheney himself hopped on the phone with people in India and got it done for them.

Yet with all this incredible political muscle, once things began to unravel at Enron, once the company began sinking under the weight of all its corruption, the Bush administration cut them loose: phone calls stopped being returned, and DOJ was unleashed. The subpoenas and depositions started coming too fast to count, and the indictments started piling up shortly thereafter.

Not so much with the Too Big To Fail or Jail banks. HSBC basically admits to laundering money for the worst drug lords and narco-terrorists on the planet for years, and no indictments are issued and no one goes to jail. Bankers admit to probably a million separate counts of perjury in the robo-signing scandal, and get to settle the case for a relatively modest amount of money and no indictments, and then so blatantly and immediately violate the terms of the settlement that New York's AG has to go to court to try and stop them- but again, no indictments coming. JP Morgan Chase misleads and hides information from regulators, no indictments.

There was a survey done last year that said that 26 percent of senior executives in the financial industry have firsthand knowledge of wrongdoing at their company, 24 percent said they thought people in the financial industry had to engage in unethical and/or illegal activity to succeed, and 30 percent said their own compensation structure created pressure to do unethical or illegal things. Those numbers probably understate the problem, because most people tend to rationalize away such issues, and wouldn't want to admit such things even to themselves, let alone in a survey. When you combine an industry culture where a lack of ethics is practically regarded as the standard way of doing business with an unwillingness by government officials to hold that industry accountable to the law, and then add into the mix that the industry in question has the power to wreck the entire economy, you have the deadliest possible problem. You have Enron-style corruption times ten, with no one prosecuting the crimes being committed.

If this deadly dynamic isn't solved -- if the biggest banks aren't broken up, if the Department of Justice doesn't start prosecuting crime in the financial sector -- our country will in the not too distant future see a financial crisis far worse than in 2008. We need to solve this problem. NOW. Help start the movement.

Original Article
Source: huffingtonpost.com
Author:  Mike Lux

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