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Mon Oct 10 23:19:52 2011
Occupy Wall Street
Marching to close the barn door after the horse has spent the money?

Can we have our seven hundred billion dollars back?
Image courtesy of David Shankbone

The Occupy Wall Street movement continues to grow, with protests in Chicago and other cities, although there is a lot of uncertainty over what its goals or causes are. Some of the better coverage has been from the foreign press, who are also trying to make sense of it.

It's definitely a legitimate movement, though, since Ben and Jerry's have supported it.

In general, people seem to be angry about the depth of the recession, and angry that Wall Street and the rich seem to be doing well, even while others are having problems finding jobs. The bailout of the banking sector was also a theme.

I agree with that! Way back in 2008 I argued that we should not bail out Wall Street ( Just say No), and in fact I wrote an open letter about it to all of my congressional representatives ( Open Letter).

What I said at the time:

Please do not approve the administration's proposed $700 billion bailout plan! ... At worst, it will reward those institutions that took inappropriate risks with their investor's money. And it will tie up funds that could be used to fight a recession or depression more effectively.

Instead, I argued for two measures Congress should take instead:

Restore the separation of investment and commercial banks. ... [and] ... Get the deficit under control.

The Occupy Wall Street movement needs causes--I'd recommend those! And maybe a third--don't allow collateralized debt obligations for federally-backed mortgages.

Wall Street has taken their $700B bailout (actually, it's taken two of them), so that money is gone. But we can reduce the risk of this happening again by stopping banks from taking leveraged risks with Federally-guaranteed deposits. And we need to get our deficit under control so that the government can spend out of recessions, rather than being stuck with near-bankruptcy.

I wish the Occupy Wall Street protesters had woken up in 2008 instead of 2011! But I guess in 2008 people weren't thinking much about a real recession. And I don't have much hope for the movement. I list three concrete proposals here (banking reform, ending CDOs, controlling the deficit) but none of these are on the radar for the protesters. I understand their anger but I haven't seen any practical ideas come out.

But I definitely agree with the protesters that the bailouts were bad for many reasons. My final plea to my congressional representatives in 2008:

But whatever you decide to do, please do not vote for the Administration's plan! It is only likely to reward those who took inappropriate risks, and will not prevent a recession if one is truly coming.

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