We, the People, call Jeff Madrick to testify on “The Triumph of Finance and the Decline of America, 1970 to the Present.
[note: the following is a brief summary of Madrick’s “Age of Greed [2011],; 404 pages, 40 pages of notes]
Madrick: “In an op-ed piece..in the Financial Times in mid-2010, Sheila Bair..Republican-appointed chairman of the FDC, wrote Wall street had channeled hundreds of billions..into foolish speculation in housing in the 2000s..”..that capital was misallocated..”
“The same complaint would have been appropriate in each decade of the age of greed. In the 1970s…In the 1980s…thrifts, released from restraints by the Garn-St. Germain bill, spent savers’ money..on one foolish fantasy after another..”
“In the 1990s, an era of deceit helped promote the speculative bubble in high-technology and telecom stocks..Good money was invested after bad in one absurdist dream after another, justified by Wall street analysts…Accounting fraud reached new heights across corporate America..”
Madrick: “The question was not wether Wall Street bankers contributed enough to the economy to warrant their compensations, but how much they cost the economy in the damage done.”
Madrick: “..in the 2000s, capital investment was notably weak, even as corporations made enormous profits and built up coffers of cash of $2 trillion. Many bought back..shares of their own company to drive up their stock prices. Academic finance theory supported such strategies. Stock prices would rise and investors..sell..and..supposedly invest in more attractive corners of the economy, contributing to prosperity. this claim was made time and again..”
“In fact, there are many flaws in this theoretical argument. Capital investment in new ideas has always been risky…Another flaw is the assumption..business executives make decisions to benefit their firms..when in fact, under the tutelage of Wall Street, they often make decisions to make themselves rich..”
Madrick: “The amount of federal money spent to bail out failing financial institutions after a crisis was not the only cost of overspeculation…The money should have been invested more intelligently and productively. The collapse of the thrifts weakened the economy and helped precipitate a credit crisis and the 1990 recession..”
“Similarly, the cost of the $700 billion TARP bailout was small…the Treasury should have made a much better deal…more important, it should have demanded..firms that got the money lend much of it out. Lending remained weak.
“But the largest cost..was the steepest recession since the 1930s. GDP fell sharply. 8 million jobs were lost…Federal tax revenues were and will continue to be reduced..the budget deficit..much higher…None of this counts the severl trillion dollars of debt or loan guarantees made by the Federal Reserve, whose future costs cannot yet be computed.”
Madrick; “Over the four decades of the age of greed, financial assets as a percentage of GDP more than doubled. Revenues of financial firms rose from3% of GDP to 6%, and profits of those financial firms soared from l3% of all profits to 30-40%.”
Madrick: “..recent economic research finds high levels of personal compensation paid to bankers and traders..not remotely deserved.”
Madrick; “The true cost of the financial excesses of Wall Street and what would have happened to the economy were mooted by the federal government’s rescue. But one mainstream analysis by Alan Blinder and Moody’s analytics chief economist, Mark Zandi, estimated the damage that would have been done. In all, federal guarantees and loans came to more than $12 trillion.”…
“..had nothing ben done by Washington..Blinder and Zandi estimated..recession would have continued through 2011, and GDP would have fallen by 12%..rather than the substantial 4% it did fall..greater than any other recession in the post-World War II period…The unemployment rate would have reached 16.5%…a full-fledged depression”……..
Madrick: “..average compensation never grew as slowly in American industrial history than it did over the course of the course of the age of greed…Over this period, productivity rose significantly faster than worker compensation. In the 2000s, typically household incomes actually fell. Productivity gains flowed to corporate profits.”
Madrick: “The 1990s through 2002 was the most corrupt “decade” since the 1920s – and one of the most corrupt in American business history. An infrastructure of corruption..spread in the 1990s across the American establishment into elite professions…Blatant corruption in several enormous companies served by the Wall street financial infrastructure momentarily stunned the nation..leading to criminal convictions..and moderate congressional reforms..”
[note: reread what Madrick related – the numbers, the trends, the corruption, the costs, expert analysis – this, and MUCH MORE!!!! – is the reason for his title: “The Age of Greed”. – perpetrated by, GUESS WHO????? – those same THREATS TO DEMOCRACY – the rich and the corporations!!!!! You can’t make this stuff up – and – it actually occurred, AND – IS CONTINUING TO OCCUR. Wall street. “OWNS CONGRESS” – repeatedly said by people IN Congress. Angry about loss of YOUR purchasing power??? Look no further than the rich and corporations – they do not, and refuse to, suffer, inflation. check their comments on. “margins”. – short for their PROFIT MARGINS. – they maintained them during recent inflation. – THAT. is why YOU. pay more at the grocery store and for everything else.
in the plutocracy America really is, the rich decide what YOU. will be paid, and how much YOU. will pay for their products. If YOU don’t understand this – you are ignorant of what has happened in post-1980 America.]
With Justice For All 