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Date: 2024-07-24 Page is: DBtxt003.php txt00001206

Social Activism ... USA
Occupy Movement ... Things are wrong

Montreal Gazette ... Looking deeper into Occupy Wall Street ... The protesters are pointing out how sick the world economy is; we should be listening

COMMENTARY

Peter Burgess

Looking deeper into Occupy Wall Street The protesters are pointing out how sick the world economy is; we should be listening

IMAGE The Occupy movement points to lax regulators, greedy investors, overpaid captains of finance, and lobbyists as the heart of the economic malaise. Photograph by: MARIO TAMA GETTY IMAGES, The Gazette

The irritation that has been building against the Occupy Wall Street protesters from the day they first appeared in New York City, urging the world to 'Stop Corporate Greed,' is directed at totally the wrong target.

Instead of being grateful that someone is willing to take to the streets to complain about the loss of trillions of dollars and millions of jobs in the greed-induced 2008 economic meltdown, too many people are annoyed at being reminded of lax regulators, greedy investors and governments in the pocket of corporate lobbyists.

Granted, it's a tougher proposition to think about how to stop political systems from being corrupted by industry than it is to complain about young people in tents. But so what if young people frozen out of the job market by the meltdown don't have answers? At least they're asking questions. At least they're shocked at the idea that the world financial system is so fragile that a burst housing bubble in one country is still rocking the global economy.

Countries around the world continue to struggle with the aftershocks of 2008. The Canadian economy, which lost 54,000 jobs last month alone, is heavily dependant on exports to Europe and the U.S., and those economies are not doing well.

If you find the Occupy Wall Street crowd inarticulate, watch Inside Job, last year's Academy Awardwinning documentary, instead. It lays out in painful detail what led to the 2008 debacle - information everyone who considers himself or herself an involved citizen should know. Thirty years of deregulation of the financial industry in the United States opened the door to untrammelled greed. Investment banks created sub-standard financial products that they sold to unwitting customers while at the same time laying bets that these products would fail. Rating agencies took no responsibility for their advice. A system developed in which 'the people who make the loan are not at risk if there's a failure to pay,' U.S. Democratic Congressman Barney Frank says in Inside Job. Between 2000 and 2003, mortgage loans in the U.S. nearly quadrupled, many of them subprime, yet classified as top value.

Captains of finance were richly rewarded as they presided over the imploding sector. 'It was never enough. They don't want to own one home. They want to own five homes and they want to have an expensive penthouse on Park Ave. and they want to have their own private jet,' social-justice advocate Robert Gnaizda says in an interview in the documentary.

Inside Job ends with a call to arms: 'At enormous cost, we've avoided disaster and are recovering. But the men and institutions that caused the crisis are still in power, and that needs to change. They will tell us that we need them and that what they do is too complicated for us to understand. They will tell us it won't happen again. They will spend billions fighting reform. It won't be easy, but some things are worth fighting for.'

The Occupy Wall Street protesters are in the streets because the institutions that should be leading the charge are not. The U.S. Securities and Exchange Commission, on which the world is dependant to a frightening degree, insists it is on the job. But is it? Last year Goldman Sachs settled with the SEC for $550 million over allegations it misled investors - peanuts for a company that earned nearly $8.5 billion that year.

And two weeks ago, another U.S. brokerage firm, MF Global, filed for bankruptcy, unable to cover its heavily leveraged bets on government debt held by unstable European countries. In a stunning throwback to behaviour that 2008 should have stopped, MF Global had battled against a proposal by a government agency, the Commodity Futures Trading Commission, to bar it and other futures-commission firms from putting clients' funds in foreign sovereign debt, according to USA Today. 'In our view, the CFTC's proposal is unnecessary and will eliminate a liquid, secure, profitable and necessary category of investment,' MF Global and a competitor told the U.S. market regulator last year. This is creepily reminiscent of the battle against regulating derivatives led by former U.S. treasury secretary Larry Summers in the 1990s. The failure to regulate derivatives is blamed by many for the 2008 crisis.

Should cities order the Occupy Wall Street protesters to pack up and shove off ? Not yet. We haven't quite grasped how inter-dependent the world's economies are. Virtue in Canadian banking isn't going to protect us forever from the toxic American fallout. We're all in it up to our necks. That's what the protesters are trying to tell us.


jbagnall@ montrealgazette.com

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