Wall Street Is No General Motors: A Missed Opportunity

[marmar]

from the Working Life blog:



Wall Street Is No General Motors: A Missed Opportunity
by Jonathan Tasini

Friday 23 of April, 2010


I applaud the president for trying to impose some new and renewed standards to try to make sure that what happened on Wall Street doesn't happen again. But, we are about to miss an opportunity--perhaps a missed opportunity that will haunt us for years to come--to change the debate about our economy and the role Wall Street plays in our economy. Put simply, Wall Street is no General Motors.

The conventional wisdom--encouraged by the media, the two New York U.S. Senators, and the billionaire mayor of New York City, among others--is that Wall Street is the central engine of the city and state economy, and that it contributes so much to the economy that it must be protected and enhanced. The problem, some of these conventional wisdom folks say, is that things got a little out of hand, regulations were relaxed too much and, thus, we had a terrible economic crisis. And, finally, we are told, if we just put in place some new regulations, things will be fine. The vibe is pretty close to the old slogan that what is good for General Motors is good for America. In this incarnation, we continually are told, essentially, that what is good for Wall Street is good for New York--and, some of the cheer-leading sometimes extends to incorporate the nation as the beneficiary of Wall Street's economic benefits.

This is false. Wall Street is the exact opposite of the General Motors model. And a lot of this false argument is the product of a combination of greed, political power and flawed economics.

....(snip)....

And here is the impact far beyond Wall Street:

850,000 New Yorkers are unemployed, the highest number on record, and 40 percent of them have been out of work for over six months. One in six has been jobless for more than a year.New Yorkers are still losing jobs in large numbers. Each week during the first three months of 2010,
an average of 30,000 workers filed initial claims for unemployment.
• New York has lost 350,000 jobs over the past two years, with the loss of 295,000 moderate- and middle-wage jobs, nearly five times as great as the finance sector employment losses. (The severity of the Great Recession would have claimed another 193,000 New York jobs as of March 2010, according to the President’s Council of Economic Advisers, were it not for the $800 billion February 2009 stimulus package, the American Recovery and Reinvestment Act.)
• The recession has cost New York’s workers $58 billion in lost wages as of the end of March 2010, and is on track to result in a total of $265 billion in lost wages through the end of 2013.
• The official state unemployment rate stands at 8.6 percent, and the underemployment rate—often called the "real" unemployment rate—is now nearly 15 percent.
• Over 100,000 New York families have lost their homes through foreclosure in the past two years, saddling families with the high costs of motels and other temporary housing, disrupting children's schooling, and often resulting in long-term housing insecurity.
• The loss of jobs and wages has increased the number of New Yorkers relying on food stamps to over 2.5 million, a 40 percent increase during the past two years.
• While unemployment insurance provides a critical safety net for people losing jobs, unemployment insurance payments replace at most half of an unemployed worker’s previous wage. New York’s maximum weekly unemployment payment has been frozen at $405 since 1999, a lower level than all neighboring states.
• Credit remains highly inaccessible for New York’s small businesses, and business bankruptcy rates are running three times higher than three years ago.

The emphasis added is quite critical: for all the loss of jobs on Wall Street, the job loss outside of Wall Street is five times higher. .........(more)

The complete piece is at: http://www.workinglife.org/blogs/view_post.php?content_id=14823