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Taxing Wall Street Down to Size

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David Stockman was Budget Director under President Reagan and known for his prodigous grasp of statistics in the national budget. Here he takes on what he describes as disproportionately large and destructive banking system for the U.S. economy, which he says the nation desperately needs less of. He supports the small tax of 0.15% of the debts other than deposits of financial conglomerates. His words are some of the strongest yet to come from one of the most prominent people on Reagan's economic team about how the nation's banking system has beome unproductive in supporting economic activity which is its reason for existence. The destructive effects on social cohesion and the middle class is emphasized. He says for years the Fed has run an insanely loose monetary policy that has encouraged this behaviour and socially detrimental profit seeking by the banks and other companies. He sees the big banks as dangerous institutions in today's economy engaged in a bull market culture which believes in entitlement and profitseeking behaviours regardless of its detrimental nature for the national economy. The recent profits of the banks in 2009 and the resulting bonuses are a result of the Fed's easy money policy and bank's gambling at the Fed's monetary casino as he puts it, with money obtained at little cost from Fed-controlled money markets. This article helps to eliminate the distorted perspective in today's climate that paints criticism of splitting up the banks, or otherwise restricting banks in engaging in proprietary trading and risky behaviours, as government interference. As Stockman puts it these banks are already in some sense wards of the state and not private enterprises and this issue is not relevant. The question now is how to set things right and this involves possible solutions such splitting up banks that are too big to fail, restricting risky behaviours and preventing proprietary trading, and other actions as unusual steps for unusual times to get things working back to normal. In other times Stockman would not have said this in an op-ed piece if this were not so.

David Stockman, Reagan's Budget Director prodigy, on bank behaviour and solutions to the banking and economic crisis.

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Stockman takes on the banks as instruments of the impoverishment of the U.S. economy and of the American middle class. He derides the loose monetary policy of the Fed, that has encouraged insane and socially unproductive behaviours of the American banks.

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The Fed documents the impact of the financial crisis of 2008-2009 on American families. Half the middle class is dislocated financially by the crisis and minorites fare badly. Median incomes drop 8% and housing asset values drop an average of 42%. Median net worth down 39% taking it back to where it was in 1992. American families work down their debt, reducing credit card balances.

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Phil Angelides, California state Treasurer, heads the commission. The commission will attempt to get at the roots of the financial crisis, keep the public informed about why this happened, and bring those who violated laws to the attention of the nation's law enforcement agencies.

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Income Slides to 1996 Levels

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If only 1.9 million hourly workers earned more than $20 per hour in April 2008, when the deep downturn that hit in October 2008 had not ocurred and the shift to part time employment and lower auto related wages was just underway, what would the numbers look like by 2010? And what does that mean for consumption? Does it prolong the downturn with demand slow to pick up? What does it mean for exports from China?

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America’s Sinking Middle Class

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