Lately, the business headlines have been shocking and deceptive. Each day, I’m going to pick a few off the cover of the Wall Street Journal and Financial Times, and try to explain, briefly, what’s really going on.
The Goldman Sachs ultra-fast computer-transaction scandal: Big fast computers connected to the trading floor allow “connected” financial firms like Goldman Sachs to see our stock trades before they are actually executed. They can then take action based on our actions, by going back in time and buying what we want before we do, and selling to us at a higher price. By “regulating” this activity, the SEC simply perpetuates the illusion that this is a level playing field. It never was, it never will be. Retail traders are the patsies. This is just one of many methods used by a system that was not created to provide companies with investment capital, but rather the provide certain capitalists with the means to extract value from every transaction we make with each other.
Oil speculation blamed for high oil prices: Duh. We all knew this two years ago. That’s why filled tankers were sitting idly in New York Harbor during the height of last year’s energy crisis. The story here is that the speculative economy has been driving the prices of the things people really need for decades. Why admit this now? That’s the interesting part – they’re using it to explain why oil is so low now, rather than revealing that oil is low because demand has truly dried up: industry has stalled.
FDIC about to split banks into “good parts and bad parts”: The government split GM into an “old bad GM” and a “good new GM.” This left existing bondholders, shareholders, and employees owning the dreck, while favored investors got the new company. Now, in their ongoing effort to promote the interests of the biggest banking players, the government is helping them acquire more local banks by officially shifting the bad assets to existing shareholders, while letting the major banks buy the good ones. Incapable of learning the lesson that “too big to fail” means “too big,” we’re once again dismantling what is left of local banking in order to pump up the most truly failed financial institutions of our time.