I was talking to a few friends today about the OWS protests, and I was surprised to hear a tone of ambivalence. When I asked them about why they felt negatively about the movement, they responded with a set of talking points that have been mentioned here before and that have some merit or sway with many people.
"There isn't a very clear message."
I responded by talking about the rampant abuses by the financial system, abuses the ended in billions in fines but very few criminal prosecutions. OWS is very clearly about the continuing failure of the financial system. At this point we started talking about who was responsible for the crash of 2008.
There is an idea centralized among the conservative population that poor and common people who defaulted on loans share a significant amount of blame for the crash. I found out last night that this idea has a firm foundation on ideas of personal responsibility that require all individuals to be vigilant and diligent in all economic transactions. After some thought, I responded by describing a typical loan transaction in the period leading up to the bust.
The faulty mortgages made during the long boom period between the 2001 crash prior to the hich home prices had been increasing rapidly for a number of years, leading many financial experts to conclude that this trend in housing would continue. Mortgage companies began selling so-called "Liar Loans" in which little or no documentation was kept about the nature of the buyer. In other words, the financial industry had a job to sell quality loans to generate debt with a known amount of risk. My friends thought that the people who bought these loans should have known they were going to fail.
I said, "If the poor people who talk out loans larger than they could handle knew that these loans would fail, then the banks who gave them money also knew that these mortgages would fail." The financial industry's job in the home mortgage market is to generate loans with a low and well-understood probability of failure. Basically, the probability of failure must be lower than the interest rate on the money loaned, and the overall amount of money earned is directly proportional to the difference between the interest rate and the failure rate. Instead, the industry knowingly started generating massive quantities of very risky loans with little documentation that would eventually accumulate and crash the world economic system. Even though there have been no large-scale investigations, there is documented evidence that major financial companies knew that the housing sector of the economy would crash and actively bet against it. Still, there are no prosecutions because the federal government has largely sided with Wall Street. This is such a major problem that it transcends parties, and this is in part why the OWS movement can be diffuse and difficult to understand: it does not fit int the prevalent frameworks in the population.
The problem goes much deeper than just a pile of faulty loans. It goes to problems with the very nature of basic economic transactions that make up the foundation of our economy. It is precisely what people like Elizabeth Warren are fighting against, and there are concrete ideas about what needs to be done. These ideas include (but are certainly not limited to) mandating simpler economic documentation that makes predatory lending more difficult, reinstating Glass-Steagall, raising government revenue via progressive taxation, and increasing public spending on basic infrastructure and quality of life issues that affect everybody. The OWS movement is engaged in both an informational propaganda war with a monied elite and a deeper cultural war that challenges deep-seated beliefs held across the population. It will be difficult because the enemies of the OWS movement are also diffuse and difficult to understand, but there is hope.