Peril and Opportunity Amid Wall Street Turmoil — The McKinney Plan

Longtime readers here may know that I spent the mid-90s working as a computer programmer in investment banking. It was a good experience; I made a living, learned a lot, grew a bit. I lasted about 5 years, then hopped over into corporate media. I actually took up the challenge of working on Wall Street under the advisement of my Buddhist mentor, who told me that the spiritual path had nothing to do with running away from the world. So I chopped my hair, chucked my tie-dyes, pulled on pinstripes and suspenders, and walked straight into the pulsating heart of the beast.

I worked at Morgan Stanley, Bankers Trust, Bear Stearns, Fidelity Investments. I took classes and devoured books about economics, finance, banking, trading. I wrote code and built databases which gobbled up feeds from trading floors and sliced them up into a thousand angular slivers which could be spun in a trader's palm, informing snap decisions which sent money and risk flowing out into the world. I wrote apps which purposely blurred the lines between marketers who sold stocks to investors and analysts who rated those stocks. I became well-versed in the fractal-maze techno-wizardry of those pesky mathematical constructs known as financial derivatives. It was a heady time on Wall Street, a period of booming speculative impunity. Indeed the deregulatory zeal of the Clinton-Greenspan heyday took Reaganomics to the next level of corporatist corruption and led directly to the current meltdown.

In any case, it's really not necessary to delve into the labyrinthian innards of the banking system in order to see the basic contours of what's happening. I think most people intuitively grasp that Wall Street is a hyper-elite hustle so impenetrably elaborate that the hustle sometimes runs away from the hustlers themselves; and that bailing out a hyper-elite hustle with public money does not serve the common good. So in my view, yesterday's defeat of the bailout bill was a good thing. A very good thing. However, I also believe that something needs to be done. Unfortunately, our current financial system has made much of the world dependent on Wall Street institutions for what little economic stability can be had. Many rural folks in the Global South are connected to Wall Street via the International Monetary Fund and World Bank. We're all intricately interconnected in a vast network of currency, debt, resources, services, information and ideas; and we've allowed greedy bankers to hustle their way to the exalted center of the network. I believe this needs to be changed; but in controlled steps that avoid, as much as possible, sending our global network into convulsions even more violent than what we're already seeing.

I see the current crisis as a tremendous opportunity for progressives to agitate for fundamental reform under the mantle of unapologetic economic populism and a more just vision of the world. Domestically, we need a new New Deal; we need to restore the Glass-Steagall Act; we need to revitalize and transnationalize union movements in every sector of the economy. Internationally, we need a new Bretton Woods agreement. This may be the moment to rewrite the international financial system for the 21st century. Progressives need to be vocal participants in the discussion of what this will look like. There are lots of good ideas out there, and there are many organizations like the Neighborhood Assistance Corporation of America doing important on-the-ground advocacy to help deal with the immediate impact of the housing crisis.

Of course, Barack Obama has offered his modest plan, which is a far cry from change I can believe in. So here's something a little bolder which I haven't heard much about: Cynthia McKinney's vigorous 14-point proposal, from the invaluable Dollars and Sense blog:

A Gift for a Generation: A U.S. Financial System of Our Own
by Cynthia McKinney

Last week, I posted ten points (that were by no means exhaustive) for Congressional action immediately in the wake of the financial crisis now gripping our country. At that time, the Democratic leadership of Congress was prepared to adjourn the current legislative Session to campaign, without taking any action at all to put policies in place that protect U.S. taxpayers and the global community that has accepted U.S. financial leadership. Those ten points, to be taken in conjunction with the Power to the People Committee's platform available on the campaign website, are as follows:

1. enactment of a foreclosure moratorium now before the next phase of ARM interest rate increases take effect;

2. elimination of all ARM mortgages and their renegotiation into 30- or 40-year loans;

3. establishment of new mortgage lending practices to end predatory and discriminatory practices;

4. establishment of criteria and construction goals for affordable housing;

5. redefinition of credit and regulation of the credit industry so that discriminatory practices are completely eliminated;

6. full funding for initiatives that eliminate racial and ethnic disparities in home ownership;

7. recognition of shelter as a right according to the United Nations Declaration of Human Rights to which the U.S. is a signatory so that no one sleeps on U.S. streets;

8. full funding of a fund designed to cushion the job loss and provide for retraining of those at the bottom of the income scale as the economy transitions;

9. close all tax loopholes and repeal of the Bush tax cuts for the top 1% of income earners; and

10. fairly tax corporations, denying federal subsidies to those who relocate jobs overseas repeal NAFTA.

In addition to these ten points, I now add four more:

11. Appointment of former Comptroller General David Walker to fully audit all recipients of taxpayer cash infusions, including JP Morgan, Bear Stearns, Fannie Mae, Freddie Mac, and AIG, and to monitor their trading activities into the future;

12. elimination of all derivatives trading;

13. nationalization of the Federal Reserve and the establishment of a federally-owned, public banking system that makes credit available for small businesses, homeowners, manufacturing operations, renewable energy and infrastructure investments; and

14. criminal prosecution of any activities that violated the law, including conflicts of interest that led to the current crisis.

Ellen Brown, author of The Web of Debt writes, "Such a public bank today could solve not only the housing crisis but a number of other pressing problems, including the infrastructure crisis and the energy crisis. Once bankrupt businesses have been restored to solvency, the usual practice is to return them to private hands; but a better plan for Fannie and Freddie might be to simply keep them as public institutions."

Too many times politicians have told us to support the "free market." The unfolding news informs us in a most costly manner that free markets don't work. This is a financial system of their making. It's now past time for the people to have an economic system of their own. A reading of the full text on the Congressional "Agreement on Principles" for the proposed $700 billion bailout reveals the sham that this so-called agreement truly is. Today our country faces an economic 9/11. The problem that is unfolding is truly systemic and no stop-gap measures that maintain the current bankrupt structure will be sufficient to resolve this crisis of the U.S. economic engine.

Today is my son's birthday. What a gift to the young people of this country if we were to present to them a clean break from the policies that produced this economic disaster, the "financial tsunami" that former Comptroller General David Walker warned us of so many months ago and instead offered them a U.S. economic superstructure that truly was their own.

Power to the People!

Cynthia McKinney
McKinney/Clemente 2008
US Green Party

Comments

[Julian]

How can I most responsibly post this post of yours to my blog, Kai? I have one other of your posts, linked to, but I'm imagining that there's a better way. When I click on "share this" there's no blogger option.

Anyway, thanks for sharing this insider's view!

[Kai]

Hey Julian, you can link to and post my stuff in whatever manner is most convenient for you! Long as you stick to creative commons protocol, all of my stuff is in public domain. Thanks for the kind word!

[prof bw]

you are such an optimist. :D Don't ever get old and jaded like me ok. I'll I've done all week is report back the heartbreaking stories and conversations I've heard . . .

[Fal]

Thanks for this post much needed!

[Kai]

Prof, oh I'm pretty sure I'm jaded! but yeah I guess I kinda do see the half-full side of this particular glass, the opportunity to change some of the stuff that's failing. Thanks for dropping in. :)

Fal, you're most welcome, thanks for the kind word!

[nezua]

that is an amazing plan. now if only we could get people with agendas like this elected president!

thanks for breaking this down..i've read some others who are saying thats what we need to push right now, take the moment like was done with the New Deal and push it through when it will meet less resistance. sort of a positive wielding of the "Shock Doctrine" methodology...but i don't trust the "Left" to do it. however, i never mind maintaining hope!

[Country]

Dream on. Zionists run the Fed and dominate all US foreign policy. Don't believe that just look at the Fed board and research AIPAC.

No change forecasted.

[Kai]

Country, thanks but no thanks on that intellectual bridge to nowhere. Luckily I don't need any encouragement or approval to keep on dreaming so it's all good. Keep your veiled anti-Semitism with you in Seattle, I've got other business to attend to. No change forecasted.

[Kai]

Nez, yup, positive wielding of shock doctrine is kinda how I see things these days... and I know it doesn't make much sense but for me, it's not so much about hope as it is about having no choice about how I interact with the world, not so much about outcome as where I stand. Eh, hard to explain. Anyway, thanks for dropping in, 'mano! Keep on keepin on.