The war on Wall Street terror By Jerry Mazza

By Jerry Mazza
Featured Writer
Dandelion Salad
crossposted at Online Journal
Feb 28, 2009

It’s funny that during the run-up to the first War on Terror, Wall Street had such an active hand in exploiting the tragedy of 9/11. Thousands upon thousands of puts short-sold United and American Airlines stocks and WTC-based Morgan Stanley stock plunged; similarly calls (bets to rise) on defense and related stocks sent them soaring on that awful day, the War on Terror’s inciting incident.

Today, we can count on Wall Street again to supply us with what Warren Buffett calls Weapons of Mass Financial Destruction to strike terror not just in the hearts of investors, but workers, businessmen, retired people, the unemployed, the middle-and-working classes and the poor, leaving our financial system like another Ground Zero, with masses of open-mouthed crowds and teary-eyed families hovering about it, losing resources and jobs that took a lifetime to grow.

We’ve come so easily to live with terms like derivates, credit default swaps, subprime lending, toxic mortgages, collateralized debt obligations, all of which we’re told by the OTHER KATHERINE HARRIS add up to some “$1.4 Quadrillion, more money than there is in all the world (at least till Ben Bernanke turned on the printing press lately).” They are lethal in the extreme, created by a shadow market, a criminal market, designed to loot our financial system.

These are instruments of debt created for profit, by a handful of big banksters and credit companies, knowing how harmful they could be to banking, mortgage lending, and any credit institutions. Salesmen for the aforementioned made beaucoup cash on commissions, shoving them downstream to investment banks, securities and bond firms, and watching them collateralized into stocks and bonds, sold into corporate, union, institutional and private portfolios, retirement funds, IRAs, 401Ks, name it.

As with 9/11, these were not demonized Muslims with box-cutters who brought the financial system down like the World Trade Center. These were greedy salesmen, morally-bankrupt brokers, bankers, investment managers who spread the word, as Bernard Madoff did, to profit-anxious clients, friends, religious organizations, schools, foundations, and so on. These were and continue to be the true terrorists, homegrown, heartless, even your neighbor, working in their cells to topple our financial system. Was it a conspiracy? If you define that word as a group of people working towards common ends that would harm millions of people, yes, it was a conspiracy.

What is amazing is how the terrorists blended into the landscape, well-dressed, well-healed, racking up six, seven, eight figure incomes and more. It seems their only allegiance was and is to their greed, which as Gordon Gecko tells us in Oliver Stone’s film Wall Street, is good. Yes, greed is good, with that wild Michael Douglas stare, another Master of the Universe, as in Tom Wolfe’s market-maven novel.

What’s more amazing is how Congress unknowingly or not paved the way for the last 30 years at least for new improved, more devastating Weapons of Mass Financial Destruction by removing protective legislation, the last being the uptick rule, which Paul Craig Roberts speaks about in How the US Economy Was Lost.

Wiki tells us, “The uptick rule is a securities trading rule used to regulate short selling in financial markets. The rule mandates, subject to certain exceptions, that, when sold, a listed security must either be sold short at a price above the price at which the immediately preceding sale was effected or at the last sale price if it is higher than the last different price. In 1938, the SEC adopted the uptick rule, more formally known as rule 10a-1, after conducting an inquiry into the effects of concentrated short selling during the market break of 1937. The original rule was implemented by Joseph P. Kennedy, Sr., the first SEC commissioner.”

Despite the fact that the uptick rule was a marvelous defense against short selling, which can drive a market down as wildly as those we’ve recently seen, “The SEC eliminated the uptick rule on July 6, 2007. The elimination of the rule was preceded by a SEC order, placed on July 28, 2004, to create a one-year pilot temporarily suspending the uptick rule on select securities.

“The purpose of the suspension was so that the commission could study the effectiveness of the rule. The SEC’s Office of Economic Analysis and academic researchers provided the SEC with analysis of the data obtained during a six-month period starting May 2, 2005. The consensus was against the uptick rule, with the commission concluding that the uptick rule ‘modestly reduce[d] liquidity and do[es] not appear necessary to prevent manipulation . . . ’” So they studied it and killed it.

Yet “The rule was originally put in place to avoid the perpetration of a financial crime known as a bear raid. However, short sellers themselves viewed the rule as ‘largely symbolic’ and having little actual effect on short selling.” What else would short sellers say, “get rid of it, it’s killing us?” Not.

Calls for reinstatement

“On August 27, 2007, the New York Times published an article on Muriel Siebert, former state banking superintendent of New York, “Wall Street veteran and financial sage,” and, in 1967, the first woman to become a member of the New York Stock Exchange. In this article she expressed severe concerns about market volatility: ‘We’ve never seen volatility like this. We’re watching history being made.’ Siebert pointed to the uptick rule, saying, ‘The S.E.C. took away the short-sale rule and when the markets were falling, institutional investors just pounded stocks because they didn’t need an uptick . . . ’

“On the March 20, 2008 episode of Mad Money, Jim Cramer launched his campaign to reinstate the uptick rule. Citing the wild swings of the market since its elimination, Cramer said that the SEC eliminated the rule during a bull market, when liquidity was not a problem. Cramer believes that, without the uptick rule in place, short sellers are devaluing perfectly solid stocks. On the Friday 22, 2008 episode, Jim Cramer further underscored the true scale of the absence of the uptick rule, exclaiming that Obama must “reinstate [the uptick rule], a rule put in place to prevent a repeat of the great crash.

“On September 18, 2008, Republican presidential candidate and Senator John McCain said that the SEC allowed short-selling to turn ‘our markets into a casino.’ Sen. McCain criticized the SEC and its Chairman for eliminating the uptick rule.

“On October 6, 2008, Erik Sirri, director of the Securities and Exchange Commission’s Division of Trading and Markets, said that the SEC is considering bringing back the uptick rule, stating, ‘It’s something we have talked about and it may be something that we in fact do.’

“On October 17, 2008, the New York Stock Exchange reported a survey with 85% of its members being in favor of reinstating the uptick rule with the dominant reason to ‘help instill market confidence.’”

As of Thursday, February 26, Jim Cramer’s The Street.Com, quotes him as saying Fed chief Bernanke recently “talked of reinstating the uptick rule, which was put in place after the Great Depression, but recently repealed by former SEC Chairman Christopher Cox. The uptick rule,” Cramer said, “prevents short sellers from relentlessly beating down a stock by requiring an uptick, a moment of strength, before shares can be sold short.” So there’s a ray of hope.

Maybe now we can consider repealing the Commodity Futures Modernization Act, CFMA, which included “The Enron Loophole,” signed by Bill Clinton in 2000; or reinstating the Glass Steagall Act repealed in 1999 by the Gramm-Leach Bliley Act. The Glass Steagall Act created the kinds of protections we had before Clinton. Both were signed around Christmas when Congress must have been out shopping and two gifts from Santa came down the chimney for the banking and securities industries.

This non-enforcement of laws and protection, too, is also similar to the lead up to 9/11, during which worldwide warnings about a large attack involving hijacked airliners on the US and/or the WTC went unheeded by the FBI and CIA. Those warnings that were heeded and managed to seep through to the White House went unheeded there, as if the highest levels of the administration wanted the tragedy to occur. Could that possibly be? That would make 9/11 another kind of conspiracy, the box-cutter wielding Muslims mere patsies, strings pulled by larger politically elite hands.

The long-range goals of the two conspiracies, at the WTC and nearby Wall Street, had a common objective: to severely harm the United States. In fact, we seemed to glide from 9/11 ever so gracefully via a building and housing bubble into the Wall Street Terror. Could the same hands be at work, attempting to reduce us to a Third World Country, to bankrupt us, to enslave our working classes in poverty, and to make the top 10 percent earners the inheritors of their wealth? Yes they could be.

Who will fight back now?

The current administration seems somewhat bewildered if not in a fog about who gets what bailout or stimulus. Let’s make it simple for them. As much as possible, this money should go directly to benefit the people of the United States, the unemployed, those in danger of losing their homes, those whose savings and investments have been wrecked, those who are hanging by a thread, those who are ill, aging, young and healthy and ready to grow. It shouldn’t be handed out to banks to sit on or give themselves bonuses and jet planes.

So, President Obama, focus beyond your inspiring speech, on the above mentioned and let AIG and the banks crumble in their juices, with no one to blame but themselves for their tumbles, and make some examples by punishing the CitiGroups and Countrywides of the US for their Ignorance, Arrogance and Greed. Save the money for where it’s needed most, as you put it: job creation, energy, education, healthcare, and start reducing, not encouraging, further debt, personal or national.

It can be done. By busting these financial trusts that our sucking the blood money out of the body of the nation to feed themselves like vampires. If not, you will find as Chris Hedges points out in The Looming Collapse of the American Empire that as Admiral Dennis Blair testified before Washington’s new director of national intelligence that a “deepening economic crisis posed perhaps our gravest threat to stability and national security. It could trigger, he said, a return to the “violent extremism” of the 1920s and 1930s,” in simple terms, people in the streets ready to riot, “nationwide civil conflict or disturbance.”

Hungry, abused US citizens could be facing their own armies. It’s already happening in “roughly a quarter of the countries in the world,” this instability, for want of a better word “insurrection.” When people have nothing to lose, the government has a lot to worry about, especially with “an overvalued dollar (which will soon deflate) …” This is real, beyond speechifying. When the financial crisis becomes a currency crisis, you will have an utterly combustible situation.

One must rethink whether we wish to continue being an Imperial force rather than a democratic nation; whether to shore up our assets, the strength of our people and resources, or keep borrowing ourselves into oblivion to support an Empire. If we pursue the latter, we’ll go the way of all empires, from the Soviets back to Great Briton, to the Ottomans and the Romans. Tell that to those who would advise you. Remind them of history. Of the French Revolution, bloody as it was. The people can be driven back so far. Then like compressed gas, they suddenly explode. Roosevelt saw this and acted, swiftly and righteously, to avoid a civil catastrophe.

As Hedges says, “The principle failures of our elites is their inability to recognize an actively organized pool of disinterest called the public good . . . Our elites — the ones in Congress, the ones on Wall Street and the ones being produced at prestigious universities and business schools — do not have the capacity to fix our financial system . . . The democratic system, they think, is a secondary product of the free market. And they slavishly serve the market.”

You, President Obama, are the leader of all the people, top to bottom. Serve them well. As Hedges tells us, “If we do not become angry. If we do not muster within us the courage to confront the corporate state that is destroying our nation, to actively defy entrenched power, we will have squandered our credibility and integrity at the moment we need it most.” And we would give, I might add, the victory to the financial terrorists within.

Jerry Mazza is a freelance writer living in New York City. Reach him at read his new book, “State Of Shock: Poems from 9/11 on” at, Amazon or

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6 thoughts on “The war on Wall Street terror By Jerry Mazza

  1. Pingback: Bush’s karma, Obama’s change? By Jerry Mazza « Dandelion Salad

  2. Pingback: Ex-Countrywide honchos set up firm to buy bad loans By Jerry Mazza « Dandelion Salad

  3. Pingback: $30 billion more for AIG By Jerry Mazza « Dandelion Salad

  4. Repeal Corporate Individualism, heartless, soulless creatures, that feed off the poor, and offer little in return.

  5. Really? Leader of ‘all’ the people? One man is going to turn each of our lives into some kind of utopia because none of us are capable of running our own lives? Confront the corporate state? Confronting the corporate state seems to mean giving them billions of dollars. I would love to be confronted by the state in that way.

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