Why America is a Bank-owned State
Discomforting because it made all of us who witnessed it feel crippled at the power of the status quo, ruing the unfairness of life when merit always comes last, relative to who you know and who you are.
Yet, if we look closer at the leading capitalist economies such as those of America and the UK, we will find that inequity raises its ugly head equally, and as starkly, when you look at the numbers.
Kept in the dark
Here too, a small percentage have the lion's share of national income in their hands, while the rest of the population experience stagnant incomes, all within a democratic, rather than an authoritarian, political regime.
Yet the real difference here is that, away from the numbers, the wider population and the electorate were mostly kept in the dark about this.
In 2006, the top one per cent of American households' share of all disposable income amounted to almost a quarter of all households' disposable income, according to Robert Hunter Wade, professor of political economy at the London School of Economics.In crude terms, one per cent of the population have a quarter of all the wealth.
Moreover, Wade found the average income of the bottom 90 per cent of the population remained almost stagnant after 1980, although consumption kept rising thanks to the build-up of private debt.
This means that 90 per cent of the American economy were financing their American dream on debt.
In the UK, Wade found the pay gap between the highest and average earners had widened alarmingly.
Back in 1989, chief executives pocketed 17 times more than average earners.
By 2007, those same "captains of industry" were earning 75 times more than the average worker.
That is one enormous leap and I wouldn't mind that happening to my salary!
What's good for Wall Street ...
Warning signs that the financial crisis would become the great recession were there for all to see for a long time.
But where were the alarms in the system itself to say that these countries and the individuals in them were pursuing an unsustainable way of life?
Where were the signs that things were going to end disastrously and, worse still, that the most vulnerable might end up paying the heftiest and most disproportionate price than anyone else?
I believe the status quo was allowed to go unquestioned because banks were benefiting obscenely from the interest on our debt, and governments were in cahoots with these banks.Let's not forget that governments conveniently moved away from the provision of affordable healthcare, free university education and affordable housing while the banks entered our lives, aggressively, to fill that void.
In addition, I think that this warped and unjust way of operating was not questioned because the electorate was kept in the dark in the most subtle way possible.
The whole issue was made invisible. It was kept off the radar screens of electoral politics.
The American electorate were made accomplice to this because they were convinced that what was good for Wall Street, was good for America as a whole.
It was a political sleight of hand of the highest order. And this explains the bipartisan agreement to the ill-designed deregulation of the finance sector that we have seen over the years.
America has become a bank-owned state.
Ann Pettifor, a fellow development economist who works for the New Economics Foundation, says the US administration has been hijacked, and democracy has been pushed aside in favour of what is good for the bankers, by what Abraham Lincoln called "the money power".
And how right she is. The way the banks are being bailed out is a clear example of this political edifice.
Sucking the life out of tax-payers
The fact some of these failing banks have been thrown a lifeline is a testament to the hold they have over Barack Obama's administration.
Some of the banks should be allowed to die because they are so insolvent and holding so much in toxic assets that they will forever need to be on taxpayer-funded life support.
The problem is, this life support is sucking the life out of the taxpayer in the process, as it weighs them down with ever-increasing debt.
On top of that, the money could be used to restructure the economy in a way that is less reliant on the financial sector.
Underlying this refusal to kill those banks in poor health is a faulty and, dare I say, convenient assumption, that is not backed up by reality or fact, that the banks are facing a liquidity crisis as opposed to them facing a solvency crisis.
A liquidity crisis means the banks are facing a credit shortage, and once that is sorted, all will be well.A solvency crisis means that the assets of many banks, firms and households are worth less than their debt.
And this means that these banks have to be completely nationalised.
Which leads us to Timothy Geithner, the US treasury secretary, and his "stress tests".
The tests were meant to give a clear and final assessment of these banks' balance sheets, telling us which were healthy and which would not be able to survive and would need more cash if the recession deepens.
As in any induced test, like the ones we undergo when we have our hearts tested, the "stress tests" were meant to simulate worse-case scenarios. Well, that was the promise at least.
The hope was that some would be declared so bad, they would have to go under once and for all.
Unfortunately, the tests turned out peculiarly lacking in stress.
Nouriel Roubini, professor at the Stern School of Business at New York University, says: "The government used assumptions for the macro variables in 2009 and 2010 that are so optimistic that the actual data for 2009 are already worse than the adverse scenario.
"As for some crucial variables, such as the unemployment rate – key to proper estimates of default and recovery rates for residential mortages ... and other bank loans – the current trend shows that by the end of 2009 the unemployment rate will be higher than the average unemployment rate assumed in the more adverse scenario for 2010, not for 2009."
The unemployment rate used in the worse-case scenario was assumed to average 8.9 per cent in 2009 and 10.3 per cent in 2010. But unemployment has already reached 9.4 per cent this year, and looks likely to overtake 10.3 per cent by next year.
So, there is nothing really challenging about these worse case scenarios at all.
Next week, I'll write about Timothy Geithner's plan to wipe toxic assets off the banks' balance sheets without getting rid of one single bank ... and how long before we say ENOUGH and really do something about it.
Samah El-Shahat also presents Al Jazeera's People & Power programme.
The views expressed in this column are the author's own and do not necessarily reflect Al Jazeera editorial policy.