There’s a little known protest that is currently going on in New York City. It’s called Occupy Wall Street. It comprises of a couple of thousand people who are camping out in a part of the city carmmed with all the major banks of the world.
The protesters who call themselves ‘the 99 percent’ are calling for the reform of the system that has enabled 1 percent of the wealthiest Americans to own 50 percent of the wealth in the country.
The thing about this protest is that it is growing – fast. It started on 17 September with a couple of dozen people camped outside the New York Stock Exchange. In a matter of days it grew into a veritable movement attracting thousands of protesters. It has since spread to other cities across the US including Los Angeles, Washington DC, Chicago, Boston, Portland and Denver.
The anger of The 99 Percent can be traced back to 2008 when banks like Bear Stearns, Lehman Brothers amd Merrill Lynch came crashing down. Their demise threatened the lives of the other giant banks like Bank of America, Citigroup, American Insurance Group and Goldman Sachs.
In other words, the world’s entire financial system.
The US Government had no choice but to step in. It printed loads of the greenback and gave it to the banks to stave off collapse. The idea was that the money would also be loaned out to businesses who would then have the means to hire more workers, or at least keep those already working on the payroll.
But instead of loaning out the money, the banks hoarded it for fear of market conditions. Worse, they used it to pay huge bonuses to their top executives.
The people came to know about this and they were, of course, rather unhappy about it. Their unhappiness grew as the months passed because jobs were not being created from all this money that the government had manufactured. Millions were left unemployed. Hence, their occupation of Wall Street.
But The 99 Percent are also mad at something else. They are angry that it was the bankers’ greed and recklessness that brought the financial system to its knees in the first place.
The truth is that Wall Street executives have been playing fast and loose with the monetary system. They turned to predatory lending to make easy money from home buyers which led to the subprime meltdown, they converted debt to stocks through Credit Default Swaps that turned toxic, and they produced money, e-money to be precise, across the globe to conduct their businesses.
Funds are transferred around the world electronically with banks authorising the creation of credit and debt with just a few strokes of the keyboard.
Everything was fine as long as the economy grew. But when it slowed down, as all economies must at some point, borrowers couldn’t pay their loans. And because the banks were over-leveraged, they came crashing down.
Students of finance are still trying to figure out how things were allowed to grow so bad without anyone realising the extent of the rot. The two things that everyone is clear about are ones that we already know: The banking system was driven by greed and as a result became highly unstable.
The instability continues to manifest in the US with the dismal performance of its economy as well as in Europe which is threatening to jump off the financial plane without a parachute.
The world’s financial system is teetering.
At the apex of this system perches Singapore. In the last several years, the PAP has insisted that we become a financial centre. It rewrote our banking laws to make them more secret so that wealthy tax evaders could park their money here, it built casinos so that wealthy gamblers could come and indulge in vice, it built propert enclaves so that wealthy tycoons could buy up multi-million dollar homes.
It is a high-stakes game that is premised on a global financial system that is sound. But as we have shown, the world’s financial system is anything but.
No one quite understands how this system works and to where it will lead us. Even the world’s once most powerful economist and financial analyst, former US Federal Reserve Chairman Alan Greenspan, admitted that he had no idea how some bankers operated:
I didn’t understand what they were doing…And I figured if I didn’t understand it and I had access to a couple hundred PhDs, how the rest of the world is going to understand it sort of bewildered me.
And yet the PAP is betting our economic future on this system. Worst of all, our CPF (now this is real money because they were part of our wages and not loans that banks conjured up from nothing) is tied up in the very banks and financial institutions that we now realise are really a house of cards.
The people at the GIC and Temasek will pretend that they know what their doing but they are just as clueless as anyone else. Otherwise they would not have exposed our money to Western banks and lost hundreds of billions dollars in investments in toxic financial products.
The SDP has repeatedly warned about our quest to become a financial hub (see articles below). The reason is twofold: One, in order to become a leading power in the world of today’s finance, we have to adopt the creed of greed. Greed is humanity’s mortal enemy: it tears families apart, it ruins friendships and it runs societies aground.
Two, the financial system is inherently unstable. There is little regulation as to what bankers do to make profits. Left to their own devices, they have turned the world upside down and caused misery to millions of people.
People in New York and around the world are beginning to realise the con, and they are fighting back. Unscrupulous bankers know that the game is up. In such a scenario, what is it exactly that we are trying to lead?