Monday, September 26, 2011

Occupy Wall Street : A Few Thoughts

Really rushed for time today, but wish I had more to go down and see for myself what's happening on Wall Street. I had seen from early reports that it looked like the typical mishmash of characters we typically see at most progressive/left-leaning protests (even gay rights one where the communists handing out tabloids and the anarchists handing out attitude all seem to get along just fine somehow), which quite frankly I've grown accustomed to, not being a stranger to exercising my Constitutional right to assembly.

And, knowing how it can take some time for fledgling protest movements to get on message and vet their best leaders, I expected the early days to be more pageantry than incisive policy debating.

Still, when I turned to The New York Times, my bible for most things New York politics related, I was really taken back by the headline on one article: "Gunning for Wall Street, With Faulty Aim."

Then I saw the same sentiment echoed on Facebook, and, well, I penned the following:

Much of the "adult" response to the wall street protest seems focused on how little the protesters understand about the stock market. I have two responses to that : 1) you don't need to understand how derivatives etc. work to know you're sitting in a world of shit with no job prospects and that no one in a position of power seems to have a clue as to how to help you; 2) as is evidenced by how little effect the world's financial leaders have had in correcting the crisis, I'd say it's rich for anyone, including the so-called experts, to suggest anyone else is undereducated on how the system works. If they truly had a grasp on the system, the solutions to crisis would be more obvious. It's gotten so complex, no one really understands it.
One comment in response to that compared Occupy Wall Street with the more specific goal-oriented protests that ACTUP organized in response to the AIDS crisis. There is no question that the ACTUP tactics were extraordinarily precise and well considered, but in that case, it was fairly more obvious what was needed (easier access to the medication that could slow down the advance of the syndrome's life-ending effects and more awareness about how to avoid contracting the virus).

In the case of Wall Street, no one seems to knows what our best first steps to curbing the damage being wreck by the Great Recession should be. Even Paul Krugman offers more generalities than specific steps. So the idea that the protesters are supposed to do what an army of economists and MBAs can't do strikes me as a red herring.

Yes, it's uncomfortable to have some of the protesters out there prancing around nude or holding up placards with over-generalized statements. But at least they're out there. This photo says it all to me (Michael Kirby Smith for The New York Times).

If I were the head of the NYSE I would send out PR agents to let the protesters know they wanted to listen to why they're there. Not to lecture them or correct their misconceptions about how the market works. Just to listen. The way Wall Street seems to be just holding its nose as it hustles by the protesters now strikes me as a strategic mistake. There probably isn't much that can be said that will help them right away, but this sense that the rich just don't care how hard it is out thee is what sparks revolutions.

If Occupy Wall Street is still going on when we get back from London, I will be making time to go down and listen to the protesters myself.

Labels: politics


Anonymous Anonymous said...

The middle-aged traders + raiders who hurry by the Wall Street protests once raised a similar 'rage against the machine' in the 1960's. But instead of living up to their own youthful hopes and dreams, they became the very people they once despised.

9/26/2011 12:28:00 PM  
Anonymous Anonymous said...

Tyler Durden's Words of Wisdom....

9/26/2011 12:49:00 PM  
Blogger christian said...

"...I would send out PR agents to let the protesters know they wanted to listen to why they're there..."


I was a career Marine Corps officer, and one of my fond memories is of something that happened while I was stationed in Hawaii at the end of the Viet-Nam war. There were anti-war protesters at the main gate, and the post commander was a friend of mine.His response to the protest was to get together donuts and coffee, take off his duty belt and cover [i.e. 'hat']and walk out the front gate with his goodies, introduce himself to the leaders, offer refreshments to everybody and hang around chatting with people while they protested. His attitude was 'this is America' and they have every right to be doing what they are doing, and it would not hurt me if I got to understand them better, and if perhaps they got to understand me too!

9/26/2011 02:41:00 PM  
Anonymous Kurt said...

The solution to wall street is to eliminate the unconstitutional fiat money system. I know Ed, I don't mean to go on about Ron Paul, my apologies, but sound money is RP's core message and it's important for everyone who wants a healthy economy to know this. No other candidate has this platform except perhaps Gary Johnson.

The video below is a 3 minute quickie about our current fiat money system. Also, the upcoming movie associated with it looks very promising.

9/26/2011 03:06:00 PM  
Blogger Joseph Giannasio said...

they finally got themselves some American flags and a banjo playing bearded grayback and his lady singing old time protest songs about two minutes into this video now all they need to do is misspell some of their signs and wear some powdered wigs.

just to be clear only the part about misspelling signs is snark

9/26/2011 05:29:00 PM  
Anonymous Anonymous said...

New Study – Traders are worse than Psychopaths

9/26/2011 07:31:00 PM  
Anonymous Brian said...

It's a typically technocratic position to demand that we who object to their tactics have our own technocratic solution in response. We in fact do not need to have one in order to know that the people tasked with finding these technical solutions do not have the majority of our interests in mind when they are concocting them. That much is obvious. Thanks for the post.

9/26/2011 08:01:00 PM  
Blogger Mark said...

I find the whole deal a refreshing break from the insane debates. If only this could carry on. Imagine real protests in this country, we just may be alive after all.

9/26/2011 08:02:00 PM  
Anonymous Anonymous said...

Hasn't the gallery world of New York shown the same decadence that Wall Street has shown for decades? I'm sorry but galleries in New York are a rich mans game and look at how many young artists had their careers cut short by dealers who tried to pump their prices up only for that to burst when the bubble popped. Those young artists were discarded as if they had never existed.

This is not an attack on you Ed, but you know damn well that some of the most successful gallery owners in the US are in the 1%. They can afford to do more for their artists. I really think it is time for the artist / gallery owner relationship to become a real business partnership or for gallery owners to treat their artists as employees since they take such a large cut of the artists profit.

Maybe it is time for some art world reform? It is a business structure that strongly supports only one side of the persuasion. And galleries have been running like this for decades.

If a gallery owner sells a piece for over a million he or she stands to receive $500,000 from the sale before taxes. That is more than enough to keep the gallery doors open. Yet the owner may potentially receive that and more in just a matter of months.

9/27/2011 02:34:00 AM  
Blogger Edward_ said...


If an artist's work sells for over a million, there are two elements to that you've left out of your calculations. First is how much money the gallery probably invested in that artist over the years above and beyond producing exhibitions (which are expensive enough), in terms of advertising, art fairs, production costs, catalogs, wining and dining collectors and museum trustees, etc. No one's prices get that level without a lot of work on the part of other people along the way.

Second, and more importantly, once an artist's prices get so high it's clear they're bringing in more money that it's taking to promote the work, the artist can (and most do) renegotiate the percentages for the gallery's commissions. I don't know the private details of all such artists, but I can tell you most who sell at that level get much more than 50%. Some as high as 85% of the sales of their work.

I personally don't know a single artist who wants to be treated as an "employee." We view artists as our clients (and friends).

9/27/2011 08:33:00 AM  
Anonymous Franklin said...

An elegant solution was available back in 2008 - do nothing and let the overleveraged banks fail. One wonders how many of these protesters understand that point. If it weren't for bailouts and stimuluses that were cheered on by many of their fellow liberal-leftists (Krugman wants even more of them, and bigger ones!), they would have no one to whom to yell their slogans. They think capitalism isn't working for them, but had capitalism been allowed to run its course, Citbank would be gone, AIG would be gone, and General Motors would be gone, among many others. The financial industry would be a fraction of its size, but so would the auto industry, and the Dow, to the detriment of anyone with retirement savings in a mutual fund. Wall Street would have its just desserts, and much of the country would be suffering along with it. That excess leverage was largely tied up with the fate of the real estate market, which by the mid-2000s had trillion-dollar distortions in it thanks to a liberal idea with bipartisan support, that the government ought to help people become homeowners.

But don't think about all this, o protesters. There are bank employees to be yelled at.

(To be clear, letting the banks fail would have been the right thing to do. The collapse would not have been total and the long-term prospects for the country would have been healthier for it.)

9/27/2011 10:45:00 AM  
Blogger Edward_ said...

I know...all those leftists dictating policy in the Bush administration (when the bailouts were orchestrated) should blame themselves instead.

The issue isn't one of not understanding the austerity-always-makes-right fantasy, Franklin, but in seeing how the obvious solutions to the causes of the collapse are being systematically fought through the banks' purchasing of Congress. For one small example, regulation could have/should have stopped the sort of abuse in which brokers were betting against the same packages they were flogging to their clients.

Housing was a big part of it, you're right, but I heard Bush advocate home ownership for all much more than I ever heard Clinton do so. Your suggestion that the leftists are to blame here seems ahistorical.

9/27/2011 10:56:00 AM  
Blogger Mark said...

It was the seemingly strong Housing market that the Younger squeeked by to re-election. Oh, what a mess that boy made. But we're not allowed to think about that are we?

9/27/2011 11:12:00 AM  
Blogger Edward_ said...

Indeed, it's not some liberal ideal that the government can help people buy their own home that is the real culprit, but rather, as the Times reported "From his earliest days in office, Bush paired his belief that Americans do best when they own their own homes with his conviction that markets do best when left alone."

The liberals would have, at least, regulated the market to ensure compliance with best practices.

9/27/2011 11:18:00 AM  
Anonymous Franklin said...

Edward, what part of "a liberal idea with bipartisan support" do you need me to clarify? And pace Mark, Shrub was a terrible president and we should think about it every day. He was the worst of both worlds: a fiscal liberal who went to pains not to appear as such, and a warmongering social conservative. (Here's a blast from the past for you.) Obama, at least, is an honest liberal.

But I'm afraid there's no evidence that liberals would have regulated the market to ensure compliance with best practices. The executive branch instigated its push into the secondary mortgage market in 1992, under Bush I. By 2004 it owned half of all subprime loans. In the meantime, Clinton had two terms. Towards the end of the second one, in 2003, someone finally complained that the mismanaged Fannie Mae and Freddie Mac were increasing the likelihood of "a painful crash in the housing market." That person was Ron Paul.

9/27/2011 12:06:00 PM  
Blogger Edward_ said...

Edward, what part of "a liberal idea with bipartisan support" do you need me to clarify?

I guess the part that seems designed to obscure the fact that under Bush that liberal idea met its obvious practical limits and yet he still refused to make the needed adjustments to regulation out of ideology.

9/27/2011 12:13:00 PM  
Anonymous Franklin said...

By the time "that liberal idea met its obvious practical limits," the mortgage-backed securities market was wiped out, the banks were sitting on a mountain of bad debt, and Bush was on his way out one way or another. Public contrition was never the man's strong point - I'm saying this as politely as I can - but it's doubtful that Bush had the time or political capital to pass such regulations. Whereas is successor did, and I'm not sure that such regulations were ever passed. In fact, the Obama administration is now pressuring attorneys general across the country to settle with the banks over criminal foreclosure practices for which they should be hauled into court and beaten bloody, in my humble opinion. Is anybody protesting that?

9/27/2011 12:41:00 PM  
Anonymous Franklin said...

It doesn't bear on the argument, but Clinton's second term ended in 2001, not 2003. Sorry about that.

9/27/2011 01:33:00 PM  
Blogger typingtalker said...

Edward said, "The liberals would have, at least, regulated the market to ensure compliance with best practices."

The democrats controlled both the House and Senate for four years ending in 2010.

9/27/2011 02:28:00 PM  
Blogger findingfabulous said...

gotta say I agree with the last part above - when I saw the actual amounts the banks are being forgiven it is ridiculous
"In fact, the Obama administration is now pressuring attorneys general across the country to settle with the banks over criminal foreclosure practices for which they should be hauled into court and beaten bloody, in my humble opinion." There a simple Idea the protesters could grab onto.

9/27/2011 03:08:00 PM  
Anonymous Kurt said...

This is interesting and supports what Matt Taibbi has reported in Rolling Stone in regards to the power of Goldman Sacs. Given the number of Goldman executives in the past two Presidential administrations why even try to pinpoint the causes of our troubles from a partisan point of view. Can we even doubt that the whole mess is going according to plan?

9/27/2011 03:30:00 PM  
Anonymous Anonymous said...

"Those few who can understand the system (check book money and credit) will either be so interested in its profits, or so dependent on it favors, that there will be little opposition from that class, while on the other hand, the great body of people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear it burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests."

- The Rothschild Brothers of London

10/01/2011 06:35:00 PM  

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