Don McNay: Wall Street and Washington Dissing Main Street, One Year Later

In the pool halls, the hustlers and the losers
I used to watch em through the glass
Down on Main Street.

-Bob Seger

We’re at the one-year anniversary of when Wall Street collapsed and Washington politicians bailed them out.

All the events of the last year proved at least one point: Wall Street and Washington don’t understand what is happening on Main Street. The people in Washington are pushing the line that they saved us from “something even worse. Like what?

No one on Main Street is buying it.  Watch a Main Street crowd boo when a politician
defends the bailouts. Wall Street firms are calculating their next big bonuses.  In the meantime, people on Main Street are suffering.  Unemployment is high and uncertainty is higher.  All the “happy talk” from the elites of Washington and Wall Street is not going to make it go away.

People are not going to buy houses and cars until they feel secure about their jobs and their
futures.  Unemployment remains near 10%, but the people in Washington decided to go on to other topics. If you get people back to work, the economy will fall into line.

It always does.

I get upset at the mantra that Ben Bernanke is some kind of savior.  President Obama, like many Washington insiders, bought into this farce and into giving Ben another term of being
Federal Reserve Chair. Maybe Ben has learned from his mistakes and maybe we won’t get another depression/recession next time.

I was critical of Bernanke long before he was appointed.  I wanted someone in that post with real life experience.  Bernanke missed all the signs that a recession was coming.  He followed in the footsteps of his predecessor, Alan Greenspan, in assuming that Wall Street would regulate itself.

I liked to ask Ben and Alan, “How is that working for you?”

Actually, it worked out for Bernanke.  He’s getting another four years.  The rest of us will be paying for his mistakes long after he is gone.

All of the people in charge of the economy have one thing in common: they have never run a business. Geithner, Bernanke, Dr. Lawrence Summers (and even President Obama, for that matter) have never met a payroll or had a business loan that they were personally responsible to repay.

All spent a lot of time on Wall Street.  I wish one of them had spent a few minutes on Main Street. On Main Street, you don’t get to use the taxpayers’ money as collateral. If you screw up, your own money is riding on the outcome. Like many people on Main Street,  I was  opposed to all the government bailouts. If my small business goes broke,  we close the door and find another way to make a living. I want everyone to play by those rules.

I have a buddy who works in construction.  He hasn’t built a house since February.  His family is struggling and he is behind on his bills.  I don’t see anyone on Wall Street weeping for him. Bailout recipient John Thain dropped  a million dollars decorating his office at Merrill Lynch.  Maybe he will hire my friend when he wants to install another  $35,000 commode. 

You can blame the economic crisis on bad decisions.  But those decisions were influenced by Wall Street trying to legislate its way into easy profits.

I heard a lot of talk about campaign finance “reform” during the campaign.  I have not heard a word since then. Washington does not want the easy money from Wall Street to stop. There’s even a Supreme Court case recently argued that could open even more the spigots of big money from corporations to politicians.

Robert Kaiser wrote a great book about Washington lobbyists called Too Damn Much Money.  If you want to see how we wound up with “too big to fail” companies, read that book.

It was already hard to defeat an incumbent congressman or to change the regulatory process.  The flow of Wall Street money makes it even harder.

We can’t pass a law that will stop the flow of money.  They tried  it with public funding of presidential campaigns and it  became a joke.  President Obama opted out of the system and suffered no negative political ramifications.

I usually don’t  agree with my fellow Kentuckian, Senate Minority Leader Mitch McConnell, but we both are opposed to the concept of campaign finance limits and public financing. 

I don’t want people to think that “reform” is being accomplished when it is not. People who want to get around the system will figure out how to do it. If candidates can’t accept political action committee money,  like-minded people will  give individual checks. If candidates can’t receive individual checks, contributors give to a political party. If corporation’s can’t give money directly to a candidate, they start a political action committee. No matter what the roadblock, someone finds a new solution. If Wall Street wants to give to a candidate, some smart lawyer is going to figure out how to make it happen.

Funneling money is the ultimate “too big to fail” business. I sound pessimistic, but I’m not.  Bad economies eventually become good economies. The bailouts prolong the pain.  It would have been better to take the hit on the economy all at once, rather than racking up trillions in deficits.

I can see signs that people on Main Street are paying closer attention to what is happening in Washington.  It could be that getting money from Wall Street will cost politicians an election, instead of greasing the skids to victory. It’s like any fight.  Main Street will get Washington’s attention the first time someone is knocked to the canvas.

People are still being distracted.  I’ve seen more publicity about Michael Jackson, death panels, Taylor Swift and the guy who yelled at Obama than why businesses can’t get loans.  

As we get nearer to the election season, it will be in Washington’s interest to find out what the people on Main Street are saying. 

It will be in Main Street’s interest to make sure their voices are being heard.

Don McNay, CLU, ChFC, MSFS, CSSC is one of the world’s leading authorities in helping injured people and lottery winners deal with complex financial issues.McNay is also an award winning,  syndicated financial columnist. McNay founded McNay Settlement Group, a structured settlement and financial consulting firm, in 1983. The company’s primary office is in Richmond, Kentucky. McNay has Master’s Degrees from Vanderbilt and the American College and is in the Eastern Kentucky University Hall of Distinguished Alumni. McNay has written two books. Most recent is Son of a Son of a Gambler: Winners, Losers and What to Do When You Win The Lottery You can write to Don at don@donmcnay.com or read his column at www.donmcnay.com. You can reach him on Facebook at www.facebook.com/donmcnay and on Twitter at twitter.com/Donmcnay. McNay is a lifetime member of the Million Dollar Round Table and has four professional designations in the financial services field.

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