Record profits for financial elite while the rest suffer through the Great Depression II...

Wall Street Celebrates Record Profits
by Tom Eley

JPMorgan Chase’s profit report for 2010, released Friday, has become the occasion for a celebration by the American plutocracy of the return of the good old days before the Wall Street crash of 2008. Jamie Dimon, JPMorgan’s CEO, summed up the general mood of the financial elite when he declared the bank’s record profits to be evidence of a “broad-based economic recovery,” adding, “I think the future is extremely bright.”

The very fact that Dimon can speak this way in the midst of the worst social crisis since the Great Depression without any repercussions from the government or the media is an expression of the immensity of the chasm separating the modern-day aristocrats from the people.

Such remarks—under conditions where the official unemployment rate is hovering around 10 percent, hunger and poverty are soaring, record numbers of homes are being seized by the banks, household wealth is being devastated by the collapse in home values, wages are declining, and school closures and cuts in social services are spreading across the country—could come only from someone secure in knowledge that the Obama administration, both political parties, Congress and all of the other official institutions are securely in his pocket.

JPMorgan’s announcement kicked off a week of earnings reports that is expected to show that 2010 was a record-setting year for America’s banks and corporations.

The banking giant reported a 48 percent increase in profits over 2009 and a 47 percent increase for the fourth quarter of 2010 over the same period the previous year. JPMorgan netted a profit for the year of $17.4 billion, a figure equivalent to the gross domestic product of Bolivia. Its fourth quarter performance lifted the stocks of the other major banks, including Bank of America, Citigroup and Wells Fargo, which are slated to release their 2010 results this week.

The New York Times reported, “Across the company, bankers expect to reap the benefits” of “the most profitable year in the history of JPMorgan.” Out of more than $102 billion in revenue, some $28.1 billion has been set aside to compensate employees, “much of which will be paid out as bonuses.” Employees in JPMorgan’s investment banking wing are taking home an average of nearly $370,000 for 2010, while top executives “can still expect to collect multi-million-dollar bonus checks.”

The profit windfall in the financial sector is part of a broader surge in US corporate profits, which analysts estimate rose 27.1 percent in the fourth quarter, nearly triple the median profit growth since 1988. This comes on the heels of record-setting year-over-year profit increases (37 percent, 51 percent and 92 percent) reported for the first three quarters of 2010.

For the broad mass of the population, there are records of a different sort. The official unemployment rate has been higher than 9 percent for 20 straight months, the longest such span since the Great Depression. Home prices have fallen by 26 percent since June of 2006, breaking the record 25.9 percent decline that took place in the Depression between 1928 and 1933. Household wealth has fallen precipitously and the official poverty rate is as high as it was in the mid-1960s.

From day one, the policy of the Obama administration has been to utilize the economic crisis to effect a vast restructuring of class relations in favor of the financial elite. While ruling out any serious measures to put the unemployed to work, Obama has overseen the funneling of trillions of dollars to the banks, intervened to block legislation limiting bonuses at banks bailed out with taxpayer funds, and given the signal for a campaign of wage cutting across the country by imposing a 50 percent wage reduction on newly hired auto workers as part of the government bailout of General Motors and Chrysler.

The administration has refused to provide significant aid to states and localities facing gaping budget deficits as a result of the recession, tacitly supporting cuts in jobs, wages and pensions for teachers and other public employees and crippling cuts in social services.

The Federal Reserve Board has kept interest rates at near-zero and electronically printed hundreds of billions of dollars in order to provide the corporations with virtually free credit and boost corporate profits and the stock market. Since March of 2009, US stock indexes have climbed by nearly 80 percent. Corporate America has amassed a multi-trillion-dollar cash hoard as a result of government subsidies and its own cost-cutting drive, while refusing—without encountering any opposition from the government—to use its mountain of cash to hire workers and expand basic production.

The policies of the government have enabled the major banks to tighten their stranglehold over the economy. According to data from the Federal Reserve, just five banks—Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Goldman Sachs—now control $8.6 trillion in assets, or 13.3 percent of all financial firms’ holdings. The three largest commercial banks by themselves control 33 percent of all US deposits and over half of all home mortgage originations.


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