America used to be the land of opportunity and optimism. Now opportunity is seen as the preserve of the elite: two-thirds of Americans believe the economy is rigged in favour of vested interests. And optimism has turned to anger. Voters’ fury fuels the insurgencies of Donald Trump and Bernie Sanders and weakens insiders like Hillary Clinton.

The campaigns have found plenty of things to blame, from free-trade deals to the recklessness of Wall Street. But one problem with American capitalism has been overlooked: a corrosive lack of competition. The naughty secret of American firms is that life at home is much easier: their returns on equity are 40% higher in the United States than they are abroad. Aggregate domestic profits are at near-record levels relative to GDP. America is meant to be a temple of free enterprise. It isn’t.

– From the recent Economist article: The Problem with Profits

In the 1970’s, Goldman Sachs CEO Gus Levy famously encouraged his employees to be “long-term greedy.” In order to understand how far we have fallen as an economy and culture, it’s important to understand the meaning of the phrase and reflect upon it.

“Long-term greedy” implies two very important principles that define a well functioning and ethical free market economy. First, is the unrepentant belief that earning a good profit and striving for financial success is a reasonable and admirable goal for both individuals and corporations. Second, is the understanding that such financial success should be earned, not stolen. If one’s focus is the long-term, the implication is that you’re committing yourself to building something real, and that the marketplace will ultimately reward you handsomely for your product or service.

Throughout my childhood, and much of my adult life, I naively assumed this was the way the U.S. economy functioned. This was partly a result of propaganda, and partly a result of it still being somewhat true. What’s become abundantly clear; however, is that from my birth in 1978 to the present day, the U.S. economy has been, gradually at first, and then rapidly transformed into a rigged, oligarch-dominated, crony Banana Republic system.

Goldman Sachs and other TBTF banks gave up on the “long-term greedy” philosophy long ago. In fact, it was Wall Street’s maniacal obsession with short-term greed which led to a systemic culture of fraud in which being even remotely ethical meant sacrificing tens of millions in bonuses and promotions. While a cycle of such greed and criminal behavior is inevitable within any economic system where enormous profits are available, what is not inevitable is how Obama’s Justice Department responded to the criminality.

By appointing Covington and Burling attorney Eric Holder to head up the DOJ, Obama was building a moat around the TBTF banks to ensure they would never be brought to justice. As I’ve highlighted previously, many of the largest Wall Street banks are clients of Covington and Burling, and acute observers doubted Holder would prosecute these firms since he was likely to spin right back through the revolving door after shielding the mega-banks from prosecution. This is in fact exactly what he did.

Written by Michael Krieger

Full report at Liberty Blitzkrieg

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