Wednesday, March 4, 2020

Wall Street Collapse Caused Eruption of Socialism in America

"Hey, Gary! You know I cheated. I know I cheated.
But let's keep it all in the club and just act like I didn't, ok?"
Many people think that the wave of socialism we see in America today is the product of a very well-planned strategy to take over our educational system by liberals over the past 30 years. 
Which is partially correct. The foundational bricks for the eruption of socialism in America were carefully laid out by liberal strategists long ago. 
Nothing dramatically changed along the way. Socialism stayed pretty much bottled up in academia and in big city elite intellectual salons. 
What happened? 
Friday, Oct. 24, 2008, was the day when a financial bomb hit Wall Street and the major banks. The incorrect response by the federal government and our legal system led directly to the opening of the Pandora’s Box of socialism we are now witnessing. 
Stock prices for financial institutions collapsed on Oct. 24 when it became apparent that after years of executives recklessly selling junk bonds and derivative instruments to investors the world over, underlying mortgages on which those investments were made were collapsing as well and not being paid by mortgage holders. 
Bank of America and Wachovia stock prices fell as quickly as the Twin Towers in Manhattan did on 9/11. Panic ensued. Hundreds of thousands of banking employees were laid off nationwide which spread into the general economy where America suffered the worst recession since 1930. 
Businesses were destroyed because they could no longer get credit anywhere. 401k plans were decimated. Houses were foreclosed upon. Everyone in the economy was hurt by the recession.  
Except the financial titans of Wall Street and the big banks. None of them went to jail for fiduciary malfeasance. None of them were forced into bankruptcy protection when, by every standard of business ethics and justice, they should have been. The end result was that wealthy Wall Street and major bank executives, who caused the financial panic with their reckless investments, were bailed out by you, the federal taxpayer, and the Federal Reserve by expanding their balance sheet, which essentially is making up currency out of thin air. 
A friend of mine happened to be in New York City on that fateful Friday night. An investment banker friend of his, let’s call him “Sam,” who was worth well over $200 million, invited him to a dinner party at his luxurious penthouse in Manhattan. 
He took my friend out on the patio. While surveying the city landscape, he said, “See all this, Dave? It is all gone. Nothing is left. I am broke and so are all my colleagues.” 
A month later, he was worth $200 million again. All with the help of the federal government and you, the American taxpayer. 
This massive bailout of uber-wealthy people on Wall Street did not go unnoticed by the younger generation. Millennials between the ages of 20 and 25 witnessed their parents losing their jobs and financial security while financial titans of Wall Street and big banks skated by unscathed, restored to the lifestyle of the rich and famous and not going to prison. 
It made a lasting impression on Millennials. It was like watching Jack Nicklaus cheat at the Masters and still be awarded another green jacket. Any young golfer would have said to himself: “If Jack Nicklaus can get away with it without any penalty, why can’t I?” 
On Sept. 17, 2011, such pent-up anger revealed itself in the first “Occupy Wall Street” protest in New York City. Thousands came to protest the hypocrisy of bailing out wealthy tycoons with taxpayer money but not the average person who lost their job, nest egg and income security. 
If you were a young person with a lot of student debt, what do you think your reaction might have been? 
It might have been: “These rich guys got bailed out by the federal government. Why not me?” 
Nine years later, avowed socialist Bernie Sanders is leading the Democratic nomination for president.  
We can thank every elected official who let these bankers get re-enriched with taxpayer support for this explosion of support for socialism. 
(first published in North State Journal 3/4/20)

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