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Poll: Conservatives Blame Washington, While Liberals Blame Wall Street

A new poll by The Hill shows that voters assign blame for the financial crisis depending on party:

In the minds of likely voters, Washington, not Wall Street, is primarily to blame for the financial crisis and the subsequent recession.***

The Hill poll found that only one in three likely voters blames Wall Street for the country’s financial troubles, whereas more than half — 56 percent — blame Washington.

***

The split on the question of apportioning blame for the nation’s economic travails corresponds closely with voters’ political ideologies: More than 7 in 10 conservatives blamed Washington for the recession, while more than 5 in 10 liberals blamed Wall Street.

But self-identified centrists, importantly, appear to be siding with the right on economic issues, with nearly half blaming Washington for the recession.

The difference also reflected voters’ views of Obama: Among those who “strongly” or “somewhat” approve of the president, most blamed Wall Street, while those who “strongly” or “somewhat” disapprove of the president blamed Washington.

Interestingly, those who described themselves as “not sure” about Obama nonetheless blamed Wall Street over Washington by a more than two-to-one margin, 55 percent to 23 percent.

The poll – conducted for The Hill by Pulse Opinion Research – asked the question of who is “more to blame for America’s recent financial crisis and recession”, Washington or Wall Street? But as shown below, that is the wrong question.

Who Is Really To Blame … Wall Street Or Washington?

So who is really to blame … Wall Street or Washington?

The answer – which can only be seen if we take of our partisan blinders long enough to look around – is both. But because both mainstream parties benefit from the fake left-right dog-and-pony show – because it keeps Americans from realizing that Wall Street and Washington are working together to screw the 99% – there are many loud voices on both sides trying to keep us from taking off our blinders.

As Matt Taibbi pointed out yesterday:

Take, for instance, the matter of the Too-Big-To-Fail banks …. These gigantic institutions have put millions of ordinary people out of their homes thanks to a massive fraud scheme for which they were not punished, owing to their enormous influence with government and their capture of the regulators.

This is an issue for the traditional “left” because it’s a classic instance of overweening corporate power — but it’s an issue for the traditional “right” because these same institutions are also the biggest welfare bums of all time, de facto wards of the state who sucked trillions of dollars of public treasure from the pockets of patriotic taxpayers from coast to coast.

Both traditional constituencies want these companies off the public teat and back swimming on their own in the cruel seas of the free market, where they will inevitably be drowned in their corruption and greed, if they don’t reform immediately. This is a major implicit complaint of the OWS protests and it should absolutely strike a nerve with Tea Partiers, many of whom were talking about some of the same things when they burst onto the scene a few years ago.

The banks know this. They know they have no “natural” constituency among voters, which is why they spend such fantastic amounts of energy courting the mainstream press and such huge sums lobbying politicians on both sides of the aisle.

Indeed, it is really the malignant symbiotic relationship between Big Government and Big Corporations (what Mussolini called “fascism”, numerous economists have called “socialism”, and others have called “crony capitalism”) which is the problem:

Both liberals and conservatives hate the malignant, symbiotic relationship between big government and big corporations:

Conservatives tend to view big government with suspicion, and think that government should be held accountable and reined in.

Liberals tend to view big corporations with suspicion, and think that they should be held accountable and reined in.

***

Conservatives hate big unfettered government and liberals hate big unchecked corporations, so both hate legislation which encourages the federal government to reward big corporations at the expense of small businesses.

Most Americans – whether they are conservative or liberal – are disgusted that virtually all of the politicians are bought and paid for. No wonder people of all stripes have lost all trust in our government.

And everyone hates government-enabled fraud. The big banks, of course, committed massive fraud. But the auditors, rating agencies and regulators also all committed fraud, which helped blow the bubble and sowed the seeds of the inevitable crash.

Indeed:

Both liberals and conservatives are angry that the feds are propping up the giant banks – while letting small banks fail by the hundreds – even though that is horrible for the economy and Main Street.

The Dodd-Frank financial legislation wasn’t a compromise where things landed somewhere in the middle between liberal and conservatives ideas. Instead, it enshrines big government propping up the big banks … more or less permanently.

Many liberals and conservatives look at the government’s approach to the financial crisis as socialism for the rich and free market capitalism for the little guy. No wonder both liberals and conservatives hate it.

And it’s not just the big banks. Americans are angry that the federal government under both Bush and Obama have handed giant defense contractors like Blackwater and Halliburton no-bid contracts. [And Solyndra and other solar companies]. They are mad that – instead of cracking down on BP – the government has acted like BP’s p.r. spokesman-in-chief and sugar daddy.

They are peeved that companies like Monsanto are able to sell genetically modified foods without any disclosure, and that small farmers are getting sued when Monsanto crops drift onto their fields.

They are mad that Obama promised “change” – i.e. standing up to Wall Street and the other powers-that-be – but is just delivering more of the same.

They are furious that there is no separation between government and a handful of favored giant corporations. [Indeed, Ben Bernanke has handed out more presents than Santa Claus to McDonald's Harley-Davidson, hedge funds and others.] In other words, Americans are angry that we’ve gone from capitalism to oligarchy.

As I noted Sunday:

The corrupt, giant banks would never have gotten so big and powerful on their own. In a free market, the leaner banks with sounder business models would be growing, while the giants who made reckless speculative gambles would have gone bust. See this, this and this.

It is the Federal Reserve, Treasury and Congress who have repeatedly bailed out the big banks, ensured they make money at taxpayer expense, exempted them from standard accounting practices and the criminal and fraud laws which govern the little guy, encouraged insane amounts of leverage, and enabled the too big to fail banks – through “moral hazard” – to become even more reckless.

Indeed, the government made them big in the first place. As I noted in 2009:

As MIT economics professor and former IMF chief economist Simon Johnson points out today, the official White House position is that:

(1) The government created the mega-giants, and they are not the product of free market competition

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(3) Giant banks are good for the economy

And given that the 12 Federal Reserve banks are private – see this, this, this and this- the giant banks have a huge amount of influence on what the Fed does. Indeed, the money-center banks in New York control the New York Fed, the most powerful Fed bank. Indeed, Jamie Dimon – the head of JP Morgan Chase – is a Director of the New York Fed.

Any attempt by the left to say that the free market is all bad and the government is all good is naive and counter-productive.

And any attempt by the right to say that we should leave the giant banks alone because that’s the free market are wrong.

The [corrupt, captured government "regulators"] and the giant banks are part of a single malignant, symbiotic relationship.

Indeed, while most Americans are in favor of free market capitalism, we don’t have capitalism at the moment. Instead, we have socialism, fascism or crony capitalism, where the government allows a handful of companies to succeed by propping them up, covering up their fraud and handing them guaranteed profits … but allows everyone else to struggle.

For these reasons, a better poll question might be:

Do you know that the unholy alliance between Big Government and Big Government has destroyed the American economy and political system, or are you stuck in some partisan fog of ignorance and blaming one side or the other?

My train reading this evening:

• Inequality, leverage and crises (VOX)
• 95% Cancer, 5% Alpha? (World Beta)
• EU ban on ‘naked’ CDS to become permanent (FT.com)
• French credit review threatens euro zone rescues (Yahoo Finance)
• No Financial Armageddon (Daily Beast)
• The Tax Reform Act of 1986: Should We Do It Again? (Economix)
• The Never-Ending Primary? (TPM)
• How David Beats Goliath (New Yorker)
• Apple’s Core Question: Whither Its Cash? (WSJ)
• Another View of Patents From James Dyson (NYT)

What are you reading?

Do you really know what your taxes are paying for?

Click to see interactive version:

The chart above shows what your taxes went towards in 1987. The chart below shows what they went towards in 2010:

Source:
Google Charts What Your Taxes Pay For
FastCode Design, February 2011

Bloomberg on the Volcker Rule:

“This Bloomberg Government Briefing finds that only 25 bank holding companies will have to report the quantitative measurements required under the proposed Volcker rule that eliminates proprietary trading. Such trading, which occurs when a financial company risks its shareholders’ capital by trading in the market, was banned in the Dodd-Frank law.

Regulators on Oct. 11 released a 298-page proposed rule1, named after former Federal Reserve Chairman Paul Volcker, detailing the quantitative measurements2 banks must use to evaluate all trading. These reporting measures include calculating future risk of loss, net profit and fees earned by each trading unit and the company itself. Banks with less than $1 billion in trading assets and liabilities are exempt from the disclosures, though they are still banned from proprietary trading. Reporting is mandatory for firms with $1 billion or more in trading account assets and liabilities3.

The rule allows customer-driven trades, market-making activity, hedging and some investments in hedge funds and private equity funds. The proposal doesn’t include numerical thresholds to determine what is — and isn’t — proprietary trading. This may make it difficult to determine which trading is prohibited.

This briefing finds:

• The top 13 bank holding companies with trading assets and liabilities of $5 billion or more will have to comply with 17 reporting requirements4 for each of their subsidiaries and trading units. The metrics cover company-level and trading-unit-level risk, compensation and portfolio structures. It will take about 2,000 staff hours, or one staff year, per qualified subsidiary and trading unit to comply each year.

• A second tier of 12 bank holding companies with trading assets and liabilities of at least $1 billion and less than $5 billion will have to comply with eight new reporting metrics for each of their subsidiaries and trading units. That would take about 1,900 staff hours of work annually per qualified subsidiary and trading unit.

• The remaining 995 bank holding companies won’t have to comply with new reporting requirements in the Volcker rule because they don’t engage in sufficient trading activities, though they may have to adopt internal controls. These entities and their subsidiaries won’t be allowed to engage in proprietary trading.

Companies Subject To Most Stringent Reporting REquirements

There are 13 bank holding companies with trading assets and liabilities of $5 billion or more.10 These companies must report individual trade-level position information for each of their subsidiaries and market-making trading entities within each of the subsidiaries. The 17 required quantitative measurements, found in Appendix 1, must be calculated daily, and reported to regulators monthly for each market-making unit, and five of these metrics must also be reported for the company’s other trading units. Each company could have dozens of individual trading units that must comply.

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Table 1: Bank Holding Companies With Average Trading Assets and Liabilities of $5 Billion or More

In billions, average calculated using the last four quarters of Y-9 data reported to the Fed from Sept. 30, 2010, through June 30, 2011.

Source: Federal Reserve and BGOV analysis

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1 Federal Reserve press release and link to draft rules: (retrieved Oct. 11, 2011).

2 Detailed in Appendix 1.

3 As reported to regulators on a bank holding company’s consolidated financial statements. This is a quantification of the firm’s overall trading activity.

4 Ibid.

10 Assets and liabilities are defined in the proposal on page 11: “A banking entity must comply with proposed Appendix A’s reporting and recordkeeping requirements only if it has, together with its affiliates and subsidiaries, trading assets and liabilities, the average gross sum of which, (on a worldwide consolidated basis) is, as measured as of the last day of each of the four prior calendar quarters.”

11 Average trading assets plus average trading liabilities as reported on Line Items 5 and 15 of the Consolidated Balance Sheet in the bank holding company’s Y-9 during four quarters.

12 Data for RBC was reported for only the past three quarters; therefore BGOV averaged for three quarters instead of four.

Source:
Bloomberg Government Briefing
Volcker Rule Risk Concentrated in 25 Banks
L.P. »www.bgov.com