Hannah is one special person in my life who inspired this blog by asking "Occupy Wall Street: your thoughts, Steve?" Well, that was enough to get this old geyser to blow some steam.
Having experienced first hand the ways of Wall Street exposed me to the unprecedented greed and relentless pursuit of financial gain, where ethics and morality remained a blurred consideration. Back in the the mid-nineties I witnessed the power of that greed manifest itself in ways beyond my comprehension.
My assignment was within a publicly held company reporting directly to the CEO. We were a Wall Street darling growing exponentially with a young, aggressive, Wall Street savvy CEO who convinced the Street (investment banking community), that our model was kickass and something to sell to their clients. Business to business ( B to B ) internet related companies were the buzz word and the investment bankers were hammering for start-ups to take public. It didn't make any difference if the start-up had revenue or profits as long as it could be labeled B to B. The new company's initial public offering was slated to raise 100 million dollars for a company that had no revenue. The prospectus, which is the document describing the chief features of a new business, favored the parent company and our CEO who was to become its CEO also.
In fact, the document specifically gave the new company complete control over discretionary expenditures and the parent company would maintain a 51% majority holding. After reading the prospectus in detail, my conclusion was that an investor from the public would have be crazy to give their money away to this unproven company which had no sales, no building to speak of, no phone numbers, etc.
Here is where the fun begins. You see, up until now it sounds like Wall Street as percieved by the "Occupy Wall Street" crowd, was the hideous beast of greed that would stop at nothing to line its pockets with the poor little guy's money. What we all seem to forget is the blame needs to be shared by everyone including the little guy on the street. Intitial public offerings (ipo's) were the talk of the town during that era. If the individual was lucky enough to get some shares at the offering, they could double or triple in value overnight. Demand from the Street, you and I, was so high the bankers couldn't meet it. Wall Street was simply giving greedy people what they wanted. Everyone gained and everyone was to blame including the guy on the street. Similarly the real estate bust of the late 80's and our current boom and bust can't be blamed on any singular entity or process. Banks specifically have always been the scapegoat for populist angst. Currently, the same politicians that forced banks to lend to non-qualified borrowers publicly chastise these institutions, driving public sentiment away from their failed policies. Now the banks are no longer encouraged to weaken their underwriting standards but to strengthen them,and they are once again the popular scapecoat.
To the Occupy Wall Street crowd I say this: Be careful what you wish for when casting these stones. Capitalism, and banks as a purveryor of capital, allow us as individuals to make choices as to how our money is spent and invested. The other choice is more taxes, believing goverment can decide where investments should be made.. Do you really want the goverment deciding how to spend and invest all your money? I, for one, value my independence and freedom and hope this division of class perpetuated by our current adminstration reverses in the upcoming elections.
Later my friends,
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