The occupy Wall Street movement is now spreading across the free world, including Toronto, Ottawa, Calgary and Vancouver, this week. You can find out more about these movements on their “occupy [whatever city you want]’ facebook pages.
Critics discount the protestors as being a lazy, feckless mob with nothing better to do than sit around with placards. (Well that is one of the offshoots of mass unemployment, people do have time to protest–has been the lifeblood of social revolutions for centuries). Supporters including Bank of Canada Governor Marc Carney (and me) say they can understand the frustration behind the movement and as Carney attends the G20 Summit in Paris this weekend, he says that the public focus on the protests is “entirely constructive.”
Constructive–let’s hope. The movement is demanding that politicians hear and act on the concerns and complaints of their constituents as opposed to just the sophisticated and well-funded lobbyists from the banking sector who have enjoyed virtually unfettered private influence on law makers. We are all now paying the price for the unholy marriage between governments and the financial sector over the past 30 years. A marriage that has wrought riches for a few, financial ruin for most, and must now end in divorce. The bunting board must be reinserted between governments and bankers and between bankers and risk speculators. In the 30’s they called this necessary division Glass Steagall. We can call it something new today, but it must break down the conglomerates that have become our banks.
In terms of other key demands for the “Occupy” movement and the rest of thinking people everywhere, many independent financial experts are able to articulate precisely what rules must be implemented. The “occupiers” are not alone in the streets. This week John Hussman offered 4 key US issues to focus reform attention on, and these same points are applicable all over the western world where banks have been allowed to follow reckless business models only to be bailed out and rewarded with public tax dollars. Here are four key starting points that must inform the current discussions at the G20 and everywhere:
1. “Failure” of financial institutions only means that corporate bondholders don’t get every penny, it does not mean that depositors will lose their deposits.
2. Central bank and government purchases of many debt obligations were unconstitutional and therefore illegal.
3. Creating shell companies to buy the financial sectors bad assets at par is not “discounting” and is therefore also illegal.
4. The skewed distribution of wealth in our society is worsened by policies that misallocate capital and divert public funds to bail out investments that have already gone bad.
In most cases, we do not need new laws to address these grave policy errors, we just need our current laws to be enforced and for ‘we the people’ to stand together and demand it.