Occupy Wall Street - An Anti-Capitalist Movement?

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In September 2008, the US suffered an economic collapse, which many considered to be the worst financial crisis since the Great Depression of 1929. Many economists and analysts were of the view that the root cause of the crisis was the collapse of the housing market, which later triggered the collapse of the banking system and financial institutions in the US. The US Senate Permanent Subcommittee on investigation into the origins of the 2008 financial crisis, pinpointed the cause as the high risk lending by US financial institutions, regulatory failures, and the high risk poor quality financial products designed and sold by investment banks...

The collapse of large financial institutions had its repercussions on the real economy, which in turn aggravated the problems of the financial institutions. This created a credit crunch in the markets. Confidence and trust in the financial system began to evaporate as the health of the financial institutions deteriorated. By early September 2008, credit flows froze, lender confidence dropped, the interbank lending system froze, the cost of interbank lending spread shot up to above 3.5 percent from 0.1 in January 2007. The increase in interbank lending spread threw up fears on financial institution credibility and there were apprehensions about their ability to deliver on their obligations. As a result, the interbank lending system froze and the entire credit system came under threat...

The TARP came under criticism when senior managers and CEOs of TARP recipient banks maintained their jobs and their high salaries, whereas shareholders' values were either wiped out or got diluted. According to an Institute for Policy Study report , nine major financial firms issued bonuses during the bailouts. A study undertaken by the Associated Press in 2008 found that US $1.6 billion of the total government bail-out money had gone into executives' pockets. AIG had paid US $ 165 million in bonuses to its employees that included US $ 33.6 million paid to 52 people who subsequently left the firm. Although President Barack Obama and Congress wanted the pay for executives at seven companies capped at US $ 500K, 49 executives still got paid US $ 5 million or more between 2009 and 2011...

The OWC protestors argued that the US government should tax the rich and spend money on healthcare and in people's interests and not on corporate welfare and corporate interests. Critics of the US bailout package commented that the OWC protest was due to public frustration over moral hazards among financial managers and the economic hardship caused by the crisis. The OWC protestors argued that the bailout packages were anti-capitalist. In a speech to OWC, Joseph Stiglitz, economist and Nobel laureate, commented that the financial institutions had misallocated capital and created risk and their misdeeds were being borne by the main street...

Exhibit I: Social Media March on Wall Street

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