Extra Credit 8: Money, Power and Wall Street Episode 4

             I have now completed all four episodes of Money, Power and Wall Street on PBS. The first part of the episode was basically an interview with four workers who worked for various banks doing various parts of banking. When they were asked how much money they made, they all became nervous and said it would be inappropriate to answer. One male did say that starting salary could be between five and ten million dollars a year. All of the people interviewed admitted that the businesses make money for themselves. Traders are advised to sell to clients no matter if the client understands what is going on or not. Banks try to do most of their work that will require less regulation.

            People in our country as well as other countries had very little understanding of what they were buying from investment banks. In Jefferson County, Alabama JP Morgan took advantage of the fact that they were in desperate need. JP Morgan offered the county interest rate swap. They did this several times and were basically betting against the market. JP Morgan then bribed the financial advisors in Jefferson. In November 2011, Jefferson County filed for the highest municipal bankruptcy in all of American history. The head financial advisor of Jefferson went to jail for bribery and fraud and JP Morgan had to pay back fees to Jefferson County. Interest rate swaps cost American taxpayers about twenty billion dollars.

            Derivatives are the most risky and closed form of banking all over the world. Derivatives led to many of the economic problems in Europe. For example Italy and JP Morgan had a currency swap with a built in loan. This transaction was not required to be put on the financial statement. All of the European countries economies were connected with one another so when Greece’s debt doubled between 2001 and 2008, the institutions that fueled the European spending spree, then proceeded to back out and pull out of the plan. Banks are greedy and will do anything they can to get money. 

            I think the reason the directors of this documentary ended episode four talking about Greece and other countries economies was to show that even though our economy has been doing very poorly for many years now, all over the world economies are not thriving. The shady business performed on Wall Street affects economies all over the world. The people protesting to Occupy Wall Street may not know how the system works and everything about banking and trading, but they know that it is not helping them. Many of the protestors have degrees and cannot find a job. The government really needs to take action and regulate banking on Wall Street. Lobbyists made it so that only banks trading more then eight billion dollars require oversight; which leaves eighty-five percent of the derivative businesses out of that. I really hope that the government has a plan of action to help our economy.