Wall Street under seige?

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The Occupy Wall Street cam­paign is now in its 17th day–making it eas­ily the longest polit­i­cal protest of the Global Finan­cial Cri­sis. Unfor­tu­nately, even I wasn’t aware of it when I was in New York two weeks ago, a few days after it started, since it received very lit­tle cov­er­age from the media prior to the arrest of about 700 pro­test­ers on the Brook­lyn Bridge.

Now it’s entrenched, and grow­ing. What­ever its ulti­mate out­come, it is an impor­tant event in this cri­sis, as the first glim­mer of a pop­u­lar revolt against the Ponzi cul­ture of Wall Street.

It was ini­ti­ated by the remark­able mag­a­zine AdBusters, which for almost a decade now has turned the prac­tices of adver­tis­ing against adver­tis­ing. It would have to be the most visu­ally pow­er­ful, image-laden mag­a­zine on the stands today–and at the same time it is sub­ver­sive of adver­tis­ing itself. Hav­ing made a splash in the print media, Adbusters has now shown that it can use the new social media to dra­matic effect as well.

I’m not going to make any prog­nos­ti­ca­tions on how this might pan out, but it is curi­ous that Wall Street is now sur­rounded on the out­side, as it implodes on the inside.

Check out the Adbusters page on Occu­py­Wall­Street.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • alain­ton

    See you tomor­row Steve

    Best arti­cle this year on China from patrick chovanec — if you have been fol­low­ing the prop­erty bub­ble there the details are scary. I like the bit where he says for­get the econo­met­ric mod­els — on the ground investor sen­ti­ment has turned and its get­ting very ugly

  • @ Steve
    “Wall Street under siege?”

    Not so. It is the whole socio-eco­nomic par­a­digm that is under siege. And, it is under siege for that which it has wrought through pur­pose­ful oppor­tunism, theft focussed manip­u­la­tion and applied igno­rance glued con­sen­su­ally together with the false arro­gance of offi­cial­dom elit­ism. It is under siege because the whole social order has allowed and per­mit­ted the sys­tem to be abused through con­sen­sual igno­rance, trust and gulli­bil­ity.

    Human­ity is wak­en­ing; not “lead­er­ship”, but the next gen­er­a­tions. The game is over for many of those that con­tinue their sleep.

    The whole Global socio-eco­nomic sys­tem is now enter­ing a demo­graph­i­cally expressed Dark Age thanks to those of the Unholy Alliance. And this is good news.

    But, on the other side, there is even bet­ter news await­ing human­ity.

    Let the dead bury the dead.

  • Lyon­wiss

    Gov­ern­ments and the main­stream media are doing a good job of fil­ter­ing out any bad news, with the mantra to “main­tain mar­ket con­fi­dence”. Aus­tralian cov­er­age of over­seas devel­op­ments is poor, includ­ing ABC 24. For­tu­nately, the inter­net pro­vides bet­ter infor­ma­tion. “Occupy Wall Street” appears to be a dis­or­gan­ised vent­ing of dis­con­tent:


    As usual, pop­u­lar under­stand­ing of the prob­lem is mis­guided. Free mar­ket fails when par­tic­i­pants can cre­ate and exploit infor­ma­tion asym­me­try, through Ponzi or pyra­mid schemes.

    There are enor­mous free mar­kets for debt every­where, which are ignored by eco­nomic the­ory. By ignor­ing shadow bank­ing, how could eco­nomic mod­els be rel­e­vant? In fact, shadow bank­ing is the source of finan­cial insta­bil­ity.

    In China, cor­rupt local gov­ern­ment offi­cials together with loan sharks have
    suc­cess­fully cre­ated prop­erty bub­bles. In the West, free (or unreg­u­lated) mar­kets for debt are cre­ated off the bal­ance-sheets of reg­u­lated banks through finan­cial engi­neer­ing of mort­gage secu­ri­ties and deriv­a­tives.

    The shadow bank­ing sys­tem is largely cre­ated to scam igno­rant investors or cor­rupt man­agers. In China, ill-got­ten gains come from fleec­ing ordi­nary savers, whilst in the West they come from cor­rupt man­agers of invest­ment funds and pen­sion funds, who are only los­ing other peo­ples money.

    Gov­ern­ments and reg­u­la­tors are com­plicit in the whole scam both ille­gally when they take bribes (or advi­sory fees) and legally when senior offi­cials raise their pay to be “more in line with indus­try stan­dards”, which are known to be grossly inflated.

    For exam­ple, the top Aus­tralian finan­cial reg­u­la­tor earns over $800K, more than five times that of an ordi­nary MP. This only pro­vides a ratio­nale now for politi­cians to dou­ble their pay soon. Mean­while, air­line staff demand­ing a five per­cent yearly pay rise for the next three years, brings on a Qan­tas strike.

    Gov­ern­ments and reg­u­la­tors have vested inter­est in bail­ing out the sys­tem. But for how long can they keep it up? Government’s true job is to ensure the mar­ket works with a min­i­mum of black-let­ter reg­u­la­tion. Is the job that hard?

  • Philip


    I think that Adam Smith pro­vided the most straight­for­ward descrip­tion of the gov­ern­ments’ true role:

    Civil gov­ern­ment, so far as it is insti­tuted for the secu­rity of prop­erty, is in real­ity insti­tuted for the defence of the rich against the poor, or of those who have some prop­erty against those who have none at all.” Book 5, Ch. 1.

    Gov­ern­ments have done a very good job enforc­ing their role.

  • @ Lyon­wiss Octo­ber 4, 2011 at 2:08 pm | #

    Any­body with an edu­ca­tion has had expo­sure to Aristotle’s Nico­machean Ethics and with this tome Aris­to­tle makes it more than abun­dantly clear some ~2000+ years ago, the pit­falls of Usury as the basis of a sys­tem of exchange and nobody can sug­gest that he was against charg­ing inter­est on some exchanges at some peri­ods of the the socio-eco­nomic cycles and I am not going to bore you here with this. Try 1122b to start.

    On my Blog I have also made it abun­dantly clear that ‘time’ was conceived/invented/innovated/developed by man as a lin­ear scale and as such, ‘time’ is just as ster­ile as our fiat cur­rency; which should send a mes­sage since ‘inter­est’ ety­mo­log­i­cally infers “out of” which is a fairly well known term refer­ring to ani­mal birth. Usury as held by Aris­to­tle, and myself, is an as unnat­ural act (as it can­not give life or pro­cre­ate) to most human beings and can only be com­pared to “bug­gery”, also a well known Aus­tralian term and unnat­ural act.

    If we get back to cycles, and drop ‘time’ per se, every­thing becomes clear, even the vagaries of the irrationality’s of human behav­iours.

    For exam­ple, the top Aus­tralian finan­cial reg­u­la­tor earns over $800K, more than five times that of an ordi­nary MP.”

    I believe that the Gov­ern­ment has approved last week, the rais­ing of all the top Aus­tralian Bureau­crats’ salaries by in excess of A$300K pa, up to ~A$800K+ to put them level with Mr Stevens who is now over A$1M per annum. The next salary raises will be the other bureau­crats as well, of course, all the politi­cians. Its called “aus­ter­ity” and reward­ing fail­ure.

    Our prob­lems lay firmly with our­selves, the unwashed, trust­ing and gullible, but then, stu­pid­ity has no racial bound­aries and appears as ubiq­ui­tous and per­va­sive leav­ing to oth­ers such as Gei­d­ji­eff et al to try to wake us in our warm soft beds where we hap­pily sleep through our lives.

    Gov­ern­ments and reg­u­la­tors have vested inter­est in bail­ing out the sys­tem. But for how long can they keep it up?”

    Strangely, they will keep it up until the rev­o­lu­tion is over. It is always like this!

  • Lyon­wiss

    @ Philip Octo­ber 4, 2011 at 2:26 pm

    Indeed, gov­ern­ments have done much more than the defence of pri­vate prop­erty. They have enriched the rich (includ­ing them­selves) at the expense of the rest. Wealth dis­tri­b­u­tion data prove this fact. In recent times, gov­ern­ments were com­plicit in rigged finan­cial mar­kets, which trans­fer wealth to the rich, even after the mar­kets have failed. You are right, the whole social order is under siege.

    Return­ing to the deriv­a­tives theme of this blog, I sus­pect tril­lions of dol­lars could be miss­ing glob­ally, just like Madoff’s $50 bil­lion. Bank reg­u­la­tors could and should ask every finan­cial insti­tu­tion to pro­vide a net profit/loss fig­ure for all its deriv­a­tives posi­tions. I would bet that the sum of all net profit/loss fig­ures for the whole sys­tem would prob­a­bly be in tril­lions of dol­lars, whereas the sum should net out to zero.

    Gov­ern­ment relax­ation of account­ing rules and BIS accep­tance of bank inter­nal mod­el­ling of risk assets pro­vide the free­dom to eval­u­a­tion bank assets by “mark­ing to model” or “mark­ing to myth”. Both par­ties on each side of a trans­ac­tion could legally declare prof­its, because they use dif­fer­ent val­u­a­tion mod­els. Just like Bernie Mad­off who always declared con­sis­tent invest­ment returns, the banks have always declared con­sis­tent prof­its to reward them­selves with bonuses, until they inevitably col­lapse.

    What sort of lead­er­ship allows even the exis­tence such a pos­si­bil­ity? The weapon of mass destruc­tion, a time bomb, is tick­ing.

  • koonyeow

    Title: In The Spirit of Spar­tans, Short The S&P 500

    Dis­claimer: this is not an invest­ment advice but a put-your-money-where-your-mouth-is reflec­tion.

  • Philip


    Dean Baker has a new book out called Loser Lib­er­al­ism. He details how gov­ern­ment and mar­ket out­comes are rigged by pol­i­cy­mak­ers to ensure the upward flow of income and wealth to the rich (freely avail­able online).

    Appar­ently Aus­tralian banks have $13 tril­lion worth of deriv­a­tives, with many likely based upon ever-ris­ing hous­ing prices. What’s your take on this?

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  • @ Philip Octo­ber 4, 2011 at 9:21 pm | #

    Appar­ently Aus­tralian banks have $13 tril­lion worth of deriv­a­tives, with many likely based upon ever-ris­ing hous­ing prices. What’s your take on this?”

    I know that you directed this ques­tion to Lyon­wiss but please for­give me a com­ment.

    Essen­tially, hous­ing, by polit­i­cal appointed design, is almost the only game that Aus­tralia has to serve up money for the socio-eco­nomic agenda of main-stream Aus­tralians, that is ser­vices and infra­struc­tures, etc., and it is the Banks’ feed­ing trough.

    Hence, as I have stated here months ago, the next RBA con­sid­er­a­tion of rates hikes will be a pri­ori, to pro­tect the Banks (and screw the rest of Aus­tralia) and I expect Stevens to hike or at least to remain at the cur­rent level. Stevens has been lust­ing to raise rates dur­ing the last two ses­sions from what I hear but has faced heavy oppo­si­tion. It has been reported that the Aus­tralian Banks have also changed the struc­tur­ing of the bor­row­ing low­er­ing off-shore lend­ing and rely­ing more on local deposits. Expect Stevens to get his way when the hot stench of fear trick­les down the legs of our lead­ers in the days and weeks ahead.

    Now it is being reported that there isn’t enough money to pay­out on Cen­tre­link oblig­a­tions, or that this area is under pres­sure and there­fore tax­a­tion will be needed to be increase. This is called the Gillard Mantra. Expect the Deriv­a­tives held by Aus­tralian Banks and all the other rub­bish that they have — some­where — to put greater pres­sure on increas­ing the tax­a­tion of labour. Higher inter­est rates in the leg­is­lated struc­tures in place to assist the Banks will be seen to attract sup­port­ing longer term hot-money. 

    Des­per­a­tion. ‘A Tax, a Tax, my penal Colony for a Tax!’

    You should look at Aus­tralia as a lag­ging indi­ca­tor of the Global Col­lapse; Lucky, because we can see in advance what is going to hap­pen, as it happens/ is hap­pen­ing to other Nations today, and we could take the nec­es­sary actions to min­i­mize our own flip flop. But we will not, because “we are dif­fer­ent”!

    How many bil­lions has Gillard com­mit­ted to buy all the US mil­i­tary arms, infra­struc­tures, sub­marines and tanks; super jets, etc., that have been / will be signed off when Obama the Flake arrives in Aus­tralia shortly?

    Guess what comes after this? Con­scrip­tion for the Gillard War Machine? Why? We will need to train many tens of thou­sands of addi­tional mil­i­tary troops to sup­port and oper­ate all this crap! And how many addi­tional troops will we need as we “jointly con­front China”?

    Guess again: One fighter requires x2 pilots and 6 grounds LMAE’s plus con­trol tower per­son­nel and sup­port­ing ranks.

    Will Gillard try the Mine Tax again? — No! So, addi­tional tax­a­tion will be put on the backs of the labour, as always as it is labour that must pay for the War Effort!

  • myne

    You really didn’t know Steve?

    Oh, well in that case, keep an eye on:
    red­dit (often crap, but world­news is good)
    Zerohedge.com (Nearly cer­tain a loose coali­tion of rene­gade insid­ers and econ­o­mists con­tribute)
    Max Keiser (RT TV) Hell, you’ve been on his show!

  • myne

    BTW, ZH spec­u­lated as early as May that Dexia would fold and warned less than a week ago that it was immi­nent.