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Wall Street & Free Markets

Updated on October 16, 2011
Rubin and Greenspan...  "So... what did your friend Ayn Rand say again about the virtue of selfishness?"
Rubin and Greenspan... "So... what did your friend Ayn Rand say again about the virtue of selfishness?"

It seems that Conservatism has become synonymous with greed. The term free market has almost become a religion by those who preach against "Big Government." But has the mantra of small government in reality become a code word for big business? I believe there are powerful "corporatists" who have taken over our government and use arguments against socialism as a red herring while stealthily ensuring minimal regulation of Wall Street.

Interestingly, it appears Democrats have also been complicit in the deregulation of Wall Street even though many of the troubles of our economy has been predominantly laid at the feet of the Bush Administration. There has been much analysis and discussion about sub-prime mortgages, financial derivatives and other esoteric financial instruments and though I've spent some time researching these things, like most Americans, I find they are difficult to understand.

If you read enough, though, you find one thing that occurred back in the 90's that may have been the root of our economic problems today: the repeal of the Glass-Steagall Act ("GSA"). Simply put, the GSA, enacted back in 1933, ensured the separation of commercial banking, insurance and securities investment. In short, it was a law in response to the collapse of the stock market and was intended to maintain the solvency of our banking industry.

But in 1999, this separation of banking and securities investment (or brokerage) was eliminated by the Gramm-Leach-Bliley Act, which allowed commercial banks, investment banks, securities firms and insurance companies to consolidate (per Wikipedia). Many Democrats have blamed Republicans for this as Phil Gramm, (a former Republican Senator from Texas and a staunch conservative) whose name is on the bill, was seen as a primary driver of this legislation. But,the bill was signed by Bill Clinton, whose Secretary of Treasury was Robert Rubin, who spent 26 years at Goldman-Sachs prior to his tenure with the Clinton Administration and 8 years at Citigroup after he left the government. During his time as Treasury Secretary, Rubin strongly opposed the regulation of derivatives.

We all know the government (you and I) provided bailout money (TARP for instance) to some of the biggest names on Wall Street including the two I mentioned above (Goldman-Sachs and Citigroup). As a point of interest with respect to deregulation and the bailouts, note the names of the following men who have held high-level positions in our government: Robert Rubin (Clinton Administration, Sachs and Citigroup), Lawrence Summers (Clinton and Obama Administrations, The World Bank and high-level ties to Wall Street), Henry Paulson (Bush Administration and Goldman Sachs) and Timothy Geithner (worked under Rubin and Summers in the Clinton Administration, current Secretary of Treasury for Obama and former President of the Federal Reserve Bank of New York). In other words, Wall Street had its men firmly in place for almost two decades regardless of which political party resided in the White House.

So what's this all about? It looks to me that the big money interests in our country are all about privatizing profits and socializing losses (meaning you and I pay). Corporate America has managed to impose its will on the government by minimizing regulation and ensuring bailouts due to the philosophy of "too big to fail." And in light of all this, I believe we are witnessing hypocrisy on the part of both parties. The Republicans (Conservatives) are preaching small government while simultaneously supporting a massive defense budget and earmarks, while the Democrats act like they are Socialists, yet they are stealthily supporting the takeover of our government by Wall Street.

My primary focus on all of this is the Conservative message because I've always been a Conservative. We hear how freedom is won and preserved by a strong military. We also hear how the economy should be minimally regulated by the government. In my view, freedom as individuals is protected not just by the military, but by vigorous enforcement of our laws by the government. Yet, Conservatives only want a strong military. There is no interest in a strong SEC, which in my view, is to the economy what our military is to freedom in the world. Why would a true, philosophically grounded Conservative not want a strong SEC? It makes no sense. Not only do Conservatives appear uninterested in strong regulation (by funding the SEC to relative levels of the military), but in fact, wish to neuter our laws by repealing prudent laws (Glass-Steagall) and obstructing regulation of complex financial derivatives. In my view, there is only one reason for this: greed.

I believe we need a strong defense. But our military is a gold-plated Cadillac with no internal braking mechanism for cost savings. Our military is the greatest machine in the history of the world, but it is extremely costly. They are chemotherapy. They kill and destroy and deter nation-states from attacking us. But how afraid are you of this actually happening? I don't consider 9/11 to be a true attack by another country. Certainly not enough to justify the amount of money spent on weaponry that are not effective against guerilla tactics and zealotry.

I am much more afraid of my small nest-egg being destroyed than I am about being killed by our enemies, yet there appears to be no real deterrent in place for that. We all watched helplessly as our 401k's took a hit in the 90's and in the past two years. But, do we have a "military" guarding our livelihood? Do we have a "military" guarding our financial freedom? No....

What needs to be controlled is criminal activity; but even more, we need to regulate and criminalize some of the behavior that is taking place under the guise of deregulation. Promoting competition means vigorous enforcement of anti-trust laws because the spirit of competition does not exist in the business world. Controlling the market is where the trend lies. The government must ensure too much power is not vested in a single entity. In my opinion, Conservatives who try to convince you that a free market needs very little in the way of rules or enforcement are not true Conservatives.

We need to stop being so passive and reactive and in turn, vigorously demand that our elected officials carve out a significant portion of our federal budget and earmark it for the enactment and enforcement of tough financial laws. Adam Smith wrote about the "invisible hand" of the free market. The problem with the invisible hand is that it's too Machiavellian to wait out the market adjustments. It hurts too many people. Thus, we have bailouts. Another hand, so to speak. Guess where that hand comes from? The government (you and I again). So, if the government is expected to bail out the economy, then it's only fair that the government regulate the market and vigorously enforce the rules. Then and only then can we have a true market where merit and not unfair advantage receives the fruit of our labor.

I don't expect anyone to bail me out for my mistakes. But, I don't want to see someone bailed out who caused my life savings to be cut in half. It makes no sense except possibly one thing: we are being led by corrupt individuals who interchangeably wear the hats of Liberal or Conservative.

"Meet the new boss; same as the old boss..."


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    • The Suburban Poet profile imageAUTHOR

      Mark Lecuona 

      6 years ago from Austin, Texas

      @James - thank you for commenting; I understand there are a lot of rules and regulations; I am in the corporate world and we have to watch our step constantly. The comment about Conservatism being synonymous with greed is not a final verdict; it is an observation of the perception. I would argue that Republicans (now we're veering to party labels which skews ideology at times) are not the party of the working man. You may disagree but that's what I feel. I understand discussions about the job-creating machine (corporations) and how we need to help. But I think at the highest levels (the big money) there are forces in place concerning enforcement and the laws that really matter to them (Glass-Steagall?) that are tilted in the wrong direction.

    • James A Watkins profile image

      James A Watkins 

      6 years ago from Chicago

      This is a very interesting Hub. I agree with much that you say. I would like to see the Federal Reserve dismantled. I am against all bailouts due to the philosophy of "too big to fail," whether it be banks, corporations, or labor unions.

      I do not agree with your assertion that "Conservatism has become synonymous with greed."

      You wrote: "Corporate America has managed to impose its will on the government by minimizing regulation"

      But is regulation minimized?

      The compliance costs of regulations in America are $1.75 trillion according to a study done by the Small Business Administration.

      Regulatory costs exceed the projected budget deficit for FY2011 which is $1.48 trillion.

      In 2010 federal agencies have created 3,573 new rules, while Congress only enacted a relatively few 217 new laws.

      In 2010 the hidden cost of regulations exceeded 50% of federal spending.

      Regulatory costs represent about 12% of Americas GDP in 2010.

    • The Suburban Poet profile imageAUTHOR

      Mark Lecuona 

      6 years ago from Austin, Texas

      @Tom - Thank you for the comment. I guess I'm so cynical that I don't believe anyone has a true economic philosophy anymore; I just think demagoguery is the only thing that matters. Tax the rich; feed the poor; personal responsibility; Big government; small government... these are all buzz words and as you say the facts do change and so we have to change as the facts dictate. As Sting said, "There is no political solution..." but unfortunately it seems the only choice we have is a political solution because nobody will do what is necessary if it means possibly losing an election. I think they would let the government collapse as we almost witnessed this past summer because they are already covered. They have their bunker so to speak...

      @Neil - Thank you for the comment. I'll try to read your hub as I find time...

    • Neil Sperling profile image

      Neil Sperling 

      6 years ago from Port Dover Ontario Canada

      Interesting times we live in. There is obvious reasons for a global paradigm shift to take place. It is not about left vs right... it is about wrong verses right! More of my comments (ideas) can be found on my hub "Corporate Greed vs Government Waste" ... no need to repeat it all here.

      Thanks for a stimulating write Mr Poet!

    • Tom Koecke profile image

      Tom Koecke 

      6 years ago from Tacoma, Washington

      Beyond that, it is largely based on misrepresentation of those from whom we can learn, but who are deemed as "evil beings." When the best argument that can be presented is "we have not tried this, so it cannot be proven incorrect," as is the case with many who profess the free market virtues, I wonder if they are able to think past their prejudices.

      Karl Marx was so incorrect about the virtues of communism, but so correct about the perils of allowing the needy to amass, that it is ridiculous to not learn from his astute prediction.

      John Maynard Keynes is cited by the free marketers as one of the most evil people to have lived, though he correctly predicted that the settlement of WWI would bring on something more horrific than what had just occurred. He is represented as only being in favor of government spending and borrowing. The free marketers disregard that he also believed that growing and shrinking money supply and taxing policies, depending on the situation with the economy, were also essential ways to keep an economy on track. They disregard his greatest quote: "When the facts change, I change my mind." Unfortunately, politicians also seem to grasp the one aspect of his philosophy rather than the totality of it.

      So, will the people who now suggest that we let them eat cake build prisons to keep their heads attached? It amazes me how people who collect entitlements despise entitlements they don't derive direct benefit from with so little regard for the relative cost of feeding a person on the street compared to feeding a person in prison.

    • The Suburban Poet profile imageAUTHOR

      Mark Lecuona 

      6 years ago from Austin, Texas

      @Tom - Thank you for reading. I can't take full credit for that way of describing the situation. It is something that I've sensed from other discussions but I believe it is true in the sense that those who pretend to be about Capitalism and "the American Way" (whatever the hell that means)actually have no intention of playing by the Machiavellian rules that they pretend to admire. They have no intention of allowing a "free" market destroy their prospects. They in fact want to regulate it themselves while simultaneously pretending to abhor government regulation. But they regulate it with their own power; they regulate it in the sense that it is rigged... they aren't about competition and may the best man win. They are about winning and you losing.

    • Tom Koecke profile image

      Tom Koecke 

      6 years ago from Tacoma, Washington

      "So what's this all about? It looks to me that the big money interests in our country are all about privatizing profits and socializing losses (meaning you and I pay)."

      What a profound statement! I wish I had said that!

    • The Suburban Poet profile imageAUTHOR

      Mark Lecuona 

      6 years ago from Austin, Texas

      Thank you Teylina... I'm just tired of the one-sidedness of all the arguments. The political emphasis is hindering the solution....

    • Teylina profile image


      6 years ago

      Well put, no matter where one stands.

    • The Suburban Poet profile imageAUTHOR

      Mark Lecuona 

      6 years ago from Austin, Texas

      Thank you both for your comments. I have a view that Affirmative Action, Abortion and Gay Rights are red meat for the sheep to fight over. These are the very real differences between Democrats and Republicans at the ground-level. But in the clouds where the money is being made they are laughing because the elites can get a job, they can get an abortion and they can have sex with whomever they want. This stuff is for the sheep (you and I) to argue about so that they can get our eye off the ball.

      To me we should end the argument about abortion and gay rights. Just legalize the shit and end it. You cannot regulate morality like that when it comes to adults. Who cares? If it is an issue for you then handle your own life. If you don't want an abortion then don't get pregnant but don't prohibit it. If you are opposed to homosexuality then who's making you do it? These arguments are just killing the country.

      Personal choices in life versus the theft of our money... what is more important? You can control your choices but you can't control the theft unless you prioritize it....

      I guess my point here is that because of issues like gay rights, progressives are looking the other way when it comes to the culpability of Democrats with our economic problems. And lest you think I'm blaming them I'm not. I know who wants deregulation and it's a lie that free markets with no rules is the best way to go.

    • profile image


      6 years ago from Franklin

      You impress me with so much knowledge. I used to work at FSNB Bank in Nashville. A trip. :-) Money hungry, :-)

    • ecoggins profile image


      6 years ago from Corona, California

      Thank you for this personal look at the banking situation. I too am a conservative, but I believe the Occupy Wall Street group has a strong point to make. Bank of America recently did something which I believe was reckless, unethical, and a conflict of interest. Three weeks ago their top two market analysts announced that the S&P 500 could drop by as much as 40% by next May. At first glance this may not seem like anything but a cautionary announcement. But, BofA as we know is struggling mightily and losing money due to acquisitions of CountryWide and Merrill Lynch. They need depositors or they have a real chance of going under soon. So what does such a dire announcement do? Well, for the unsophisticated investor they will pull their money out of the market and find a "safe" place to put it. So where will they put it? Well, probably more than any other place they will put it in the U.S. largest bank, BofA. Analysts should be independent. You make a tremendous point. The haves keep taking from the have nots any which way they can.


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