Bashing Wall Street has become a popular avocation. Anything happens anywhere in the world – blame the money grubbing greedy selfish Wallstreeters who are out to destroy Main Street. Subprime mortgage meltdown? – Blame greedy Wall Street! The market in a downward spiral? – Darned Wall Street is the only one profiting! Your 401(k) melting down? – Wall Street got your money! In fact, while you’re at it, why not blame Wall Street for the ballooning deficit, 10% unemployment, and the failing Obama economy?
But where has that blame got YOU? Has it turned the economy around, created a million new jobs or bolstered your 401(k)? Perhaps it’s time to reconsider who is responsible for the current problems and do something about it?
Wall Street is not perfect (who or what is?) but it performs a vital function: facilitating the flow of free capital into new growth opportunities. In a global economy, capital will seek the highest return with the least amount of risk anywhere it can find it. The country that creates the best conditions for capital will attract the most if it, and with capital will come jobs and prosperity.
Does the US have those conditions? For the most part the answer is still yes but the Obama administration seems to be doing all it can to “fundamentally change” that.
Companies not hiring? Perhaps, the higher healthcare costs caused by Obamacare and out of control unions and regulations make them reluctant?
According to Bloomberg, corporations have amassed almost $3 trillion in cash. But they are not spending it on capital improvements or expansion; instead, they are buying each other. Every day, there seems to be a new high profile deal announced. Bloomberg reports that in the third quarter of 2010 alone, companies made deals worth $562.6 billion. Why is that?
According to Renaissance Capital, Greenwich, CT (www.renaissancecapital.com), there were 86 IPOs in the third quarter of 2010, 13 of which were Chinese; Asia Pacific accounted for 69.7% of all global proceeds raised, with China raising the most. Why is US capital going to China? Since when does a Communist regime provide a better environment for capital than the most free economy in the world?
Perhaps, just perhaps, the US took an awfully wrong turn under Obama, Reid and Pelosi, and that’s what is keeping unemployment high and your 401(k) low, and Wall Street has nothing to do with it?