Shorting The Middle Class: The Real Wall Street Crime
Arianna Huffington

 

The press is all abuzz with news of the SEC suing Goldman Sachs for fraud. While this is certainly big news in itself, even more important is what it says about what the financial elite has been doing to America for the last 30 years: shorting the middle class.

The SEC's action is a perfect moment for us to look at the bigger picture of how the American people were sold on the promise of never-ending prosperity while Wall Street was overseeing a massive transfer of wealth from the middle class to the richest Americans.

The results have been devastating: a disappearing middle class, a precipitous drop in economic and social mobility, and ultimately, the undermining of the foundation of our democracy.

Thirty years ago, top executives at S&P 500 companies made an average of 30 times what their workers did -- now they make 300 times what their workers make. And between 2000 and 2008, the poverty rate in the suburbs of the largest metro areas in the U.S. grew by 25 percent -- making these suburbs home to the country's largest and fastest-growing segment of the poor.

I recently came upon a story that struck me as emblematic of where America's middle class finds itself these days. It feels like a dark reboot of the American Dream. Think Horatio Alger rewritten by O. Henry.

It's the story of Dean Blackburn of Alameda, Calif. The first part of his life was a classic American success story. Raised in Minnesota by a single mom, a teacher, he was "middle class by default." Through a combination of smarts and hard work, he made his way to Yale, then took a succession of jobs in the growing Internet world that had him steadily progressing up the economic ladder.

Then came February 2009, when he was laid off on the last day of the month. His boss chose that day because it meant the company wouldn't have to pay for another month of his health coverage.

Fourteen months later, he is still looking for a new job. As he, his wife, and their 2-year-old daughter deal with the immediate financial struggles his extended unemployment has brought, Blackburn has become acutely aware of the broader implications of the shorting of the middle class.

It's one of the reasons he's decided to try to start his own company, NaviDate, a data-driven twist on online dating sites: "It's no longer a trade-off between doing what you love and having stability. Stability is long gone, so you better do something you love!"

Achieving middle class stability and having your children do better than you, the way you had done better than your parents, has always been the American Dream, but, as Blackburn notes, mobility now is increasingly one way: "The plateaus of each step, which can be a great place to stop a bit and catch your breath, are gone. Now, it's climb, climb, climb, or start sliding back down immediately." The result: "The odds are you're going to wind up at the bottom eventually, unless you get lucky."

Luck. That's what the American Dream now rests on. It used to be about education, hard work and perseverance, but the system is rigged to such an extent now that the way to keep your head above water is to get lucky. The middle class life is now the prize on a scratch-off lottery ticket.

The evidence that the middle class has been consistently shorted is so overwhelming that even bastions of establishment thinking are on alert. In a new strategy paper, The Hamilton Project -- the economic think tank founded by Robert Rubin (a big beneficiary of the shorting of the middle class) -- argues, in the Project's own words, "that the American tradition of expanding opportunity from one generation to the next is at risk because we are failing to make the necessary investments in human, physical and environmental capital."

After reading the details of the SEC's filing against Goldman Sachs, it's hard not to come away thinking: "Why would anyone ever do business with that firm again?" Likewise, after even a cursory examination of the treatment of the middle class by the Wall Street/Washington class, one should also wonder why anyone would ever do business with that crowd again. And yet, there they are, still running things at the Treasury, the Fed, and the National Economic Council.

The urgent need for the reorganization of our financial system goes far beyond the upcoming debate on new financial regulations. And it goes far beyond the media's right-versus-left framing. It's a question about the future of our country, and whether we are going to stop the slide toward a Third World system in which there are just two classes: those at the bottom and those at the top.

A lot of people at the top of the economic food chain have done very well shorting the middle class. But the losers in those bets weren't Goldman Sachs investors -- they were millions of hard working Americans who had heard the pitch and bought into the American Dream, only to find it had been replaced by a sophisticated scam.

 

 

Can SEC Beat Goldman Sachs?
Rob Silverblatt

News that the Securities and Exchange Commission filed a civil suit against Goldman Sachs has sent the investment bank's stocks reeling. But are investors overreacting? To be sure, the case is bad news for Goldman, which has come under fire recently for its handling of mortgage-backed securities during the downturn

Shorting The Middle Class: The Real Wall Street Crime

 

(c) 2010 Jesse Jackson