The Wealth Gap and the Collapse of the U.S.
Obama and the corporate-controlled media are playing the “chump public” like a fiddle. Anybody with at least half a brain who has researched what is going on (that would include me) won’t buy the recent “for the Little People” spin by the administration. The democracy-masquerading corporatocracy that we are being smothered beneath is as pungent and rotten as a putrefying corpse in a George Romero horror flick. We live in a country run by a mafia government and its taxpayer backstopped Wallstreet casino.
Monday, December 14, 2009
Are we supposed to take this posturing seriously? The media is now peddling more and more banker-favoring narratives with a straight face.
The Columbia Journalism Review described one last week, how a little Goldman Kabuki theater to appease the peasants was incorrectly depicted as a serious move:
…the press way overplays what is essentially a PR move.
The Wall Street Journal and The New York Times both slap the news on A1, with the WSJ headlining that “Goldman Blinks on Bonuses,” implying it’s backing down on pay, when it’s doing no such thing. The Times’s hed is not much better: “Goldman’s Curbs on Bonuses Aim to Quell Uproar.” That implies that Goldman is curbing or cutting pay.
It’s doing no such thing. In fact, the move in all likelihood will increase the already-astronomical amount Goldman executives—and I do mean executives: these supposedly A1-worthy changes affect only the top thirty employees—will get this year. That’s because the big move, such that it is, is that Goldman is going to pay its top 30 people not in cash and stock, but in only stock—shares that they can’t cash in for five years.
This is a nice, positive move toward tying Goldman employees’ interests—like those of its partners of yore—to the long-term health of the firm. That theoretically means they wouldn’t be as tempted to blow up the world economy again in search of a quick buck (well, bucks. Many bucks. It’s always many bucks with Goldman) by, say, selling time-bomb securities they’re shorting at the same time.
Wellie, even this interpretation is a tad optimistic. Given that Goldman was a part of this last “blow up the global economy” exercise and now knows for certain it will be backstopped, there is no reason for it not to load up on risk again.
Today, the Wall Street Journal is promoting the curious fiction that a few harsh words from Obama to the banksters has any significance aside from its hopeful PR value.
Recall that Timothy Geithner once ventured early on to actually use “currency manipulator” and “China” in the same sentence. China threw its usual temper tantrum and the US backed down pronto. Here, Obama’s popularity ratings are falling, so the president has stepped up the rhetoric.
But who does he think he is fooling? The UK is imposing a 50% bonus supertax to encourage banks to retain earnings rather than pay them out. Financial services is a larger percentage of GDP in the UK than the US, so it is even more important for them not to mess up banking than it is for us, and they clearly believe that curbing banker pay is a positive and necessary move, and in lieu of having a worked out policy, a stopgap measure is a good place to start. Do we see anything approaching the same resolve here? Of course not, “resolve” is an empty word as far as Obama is concerned.
But look at how this tough talk drama is played up in the Wall Street Journal:
President Barack Obama lashed out at Wall Street, calling bankers “fat cats” who don’t get it, in an escalation of tensions with the industry.
Mr. Obama, speaking on the eve of Monday’s meeting with the heads of major banks at the White House, said he would try to persuade bankers to free up more credit to businesses, with the aim of boosting job growth. But the president also expressed frustration with banks that the government has assisted.
“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Mr. Obama said in an interview on CBS’s “60 Minutes” program on Sunday.
Yves here. That is a curious and revealing statement. No, you may not have run for office on a “cream to the bankers, crumbs to everyone else” platform, but it is certainly what you have done at every available opportunity. Start looking in the mirror and owning your policies, instead of pretending you are somehow not responsible for them. Back to the Journal:
Relations between the banking industry and the White House were frosty from the start and have deteriorated in recent weeks, with large banks lobbying against portions of legislation that would toughen financial-market regulations and administration officials angered by some banks’ continued payment of high bonuses and their reluctance to lend.
Yves here. Huh? Team Obama is acting surprised that the banksters are lobbying heavily against reform. They have been doing this all the way through, even ones who were still on the TARP drip feed. Were they not awake when the banking industry gutted the most meaningful part of the new consumer protection agency for banking products, that banks be required to offer plain vanilla products? Team Obama telegraphed a bank friendly posture from the get-go, from Geither’s very first statement in office, through the stress test charade, to letting the banks pay back the TARP so they could resume the critical-to-the-economy function of paying top executives big bonuses. We are supposed to take this “surprise” as genuine? They aided and abetted this behavior. No, what they are really surprised at is that the chump public noticed and is pissed.
And now we have this:
Mr. Obama is scheduled on Monday morning to meet with bankers to exchange ideas on ways to increase lending; to review the financial-industry regulatory bill moving through Congress; and to discuss bankers’ compensation
The industry signaled its complete disrespect for Obama when not a single Wall Street chief executive attended Obama’s anniversary of Lehman speech. They know they are in the driver’s seat because Obama already ceded too much and is now in no position to claw his way back. Had he acted boldly starting January 20, things could be very different, but he now lacks the strategic position to have any impact, and he never had the nerve to begin with.
i came back – lol – i love being shredded by you characters… if i am not getting shredded i feel neglected…
as previous stated i work for a major wall/fleet street institution. i see all kinds of stuff. as of late i have been watching the markets and what chris says is true. the dollar is trending down and commodities are trending up. it looks a lot like too much money searching for places to go. chris may well be right.
the democrats have taken the spending spree to new hights. i thought bush’s big government republican gig was out of hand. what has been going on since january 20th is simply outrageous. it is unsustainable and will lead to some type of catastrophe. it really will.
all the democrats in washington talk about is spending more and more money and the associated search for anything to tax to try to pay for at least some of it. if we tax the capital out of the economy we will have a business disaster. it is just that simple. the credit crunch is just setting the hair on fire of small business. it looks like some kind of crazy run up to another major down turn. that is what it looks like. and, it is being fueled by what can only be termed “massive spending”. how do you borrow and spend your way out of debt ? the answer – you can’t. the democrats are making a monumental series of mistakes. it is even worse than what the republicans have done over the last decade, and i thought that was over the top.
taxing energy is a major mistake. there is a direct relationship between energy utilization and economic growth. we need growth so we need cheap abundant energy now and into the future. right or wrong, we currently have a hyrdo-carbon based energy economy. we should be drilling and producing every btu we can get our hands on everywhere we can find it. we should embark on a nuc plant construction crusade. we should continue to explore alternative energy sources and try to develop cheap and effective alternative energy solutions. electric cars are not the answer. if everyone plugged in an electric car the power grid would fail. my wife drives a 6.1 liter srt8 challenger and i drive a 5.7 liter hemi pickup. we like our vehicles. we work very hard to have them.
we simply must get control of illegal immigration. immigration is completely out of control and it is hurting the country – especially our young people and adults with less education and training. labor is a market. true, it is twisted by all kinds of laws (minimum wage, etc.) but it is a market never-the-less. by allowing low wage earners in by the millions it drags the bottom end of the market down thus reducing the wages of the americas that most need to earn higher wages. the illegal people need to be arrested and deported. if they pursue illegal means to come back, then it is jail time.
we must reduce taxes on people and business. if people and business are allowed to retain more of the money they work and earn, they will have more money to spend, invest, and save. it is actually really simple.
we have to stop the mindless pursuit of equal outcome and get busy being america again. america was founded and prospered based on equal opportunity. that is where the focus needs to be. equal outcome is a disaster and drags us all down to the lowest common denominator. using the federal government to try to enforce equal outcome is actually unamerican and against the constitution, the bill of rights, and everything america has always stood for. if you have not read the constitution and bill of rights as of late, i would strongly encourge you to do so. to assist in that effort i will suppy the following link:
read it. try to understand it.
By the way, people get paid big bucks to shred me every day at work. you characters get to shred me for cheap. i am not going away – lol – i am here to try to get you to think. there are some pretty smart people who visit this site.
And, there is so much more to say about so many things…
Wow, you really have no clue do you?
That’s about all I can say without being moderated.
If it was up to me most of Wall Street would be charged with being an enemy of the State, and the COTUS for acts of sedition and acts against the national interest of the PEOPLE.
Read my Sig.
dsshields is missing the major points here. The masters of the universe are trying to revive the FIRE economy. I know recycling is a good thing, but recycling this piece of garbage won’t get us anything except toxic soup. The financial industry needs to be scaled back to what it was intended to be — a service to a real economy and NOT its present parasitic form sucking the life out of America.The same goes for government growth.
The just thing to do would have been to prosecute those responsible for fraud and bring the failed institutions into bankruptcy and resale. This would ultimately force the excess and unproductive people to find productive useful functions in a real economy.
the parallels between economic and biological systems:
“In our economy we have 2 classes of people, the PRODUCERS and the PARASITES. The producers are people or business entities that create things that can be sold or exported. These people create wealth. These people can be likened to the hosts in biology. They create wealth (life energy) and are capable of surviving on their own. Examples of the jobs or sectors that have these people include manufacturing, mining, software, movies, timber, agriculture and others. Again what these people have in common is that they produce goods or wealth for the economy.
Then we have the parasites in our economy. These are people that cannot survive without the producers. Not all parasites are bad, many do provide useful services such as the delivery of goods to markets, and as well as other services needed by the producers, however they still require producers for their sustenance. However there is one class of parasites that include bankers, financial analysts, stock brokers, pit traders and others. These financial people are parasitic because they survive by manipulating the hard earned money of producers and skimming a percentage for themselves. THESE PEOPLE PRODUCE NOTHING AND CREATE NO WEALTH. They cannot survive without the money or “life energy” of producers. If there are no producers, then there is no need for a financial sector since there is nothing to finance. Some of these financial parasites have siphoned billions of dollars in bonuses by creating fraudulent financial statements, packaging trillions of dollars of bad loans into securities, and selling these securities to other parasites. These fraudulent activities gave the nation the illusion of wealth, however we now know the truth and we need to end this illusion and take back our nation.”
We have lost track of the productive purpose of debt: to fund the establishment of means of production of things of utility. The purpose of debt has become focused on creating more “money” and nothing else. (I say that in quotes because debt has come to be viewed as money.) When we create debt for the primary purposes of collecting transaction fees and producing higher leverage, we end up with the question that James Kwak asks: “Financial Sector: What Good Is It Anyway” — John Loundsbury
…The way America lives is highly unsustainable, just by the numbers. The recent economic collapse demonstrated the horrible consequences of an entire society living on debt with a negative savings rate over a period of time. Will it require a similar environmental collapse before we decide to stop living beyond our environmental means? The Nephites, when traveling to deforested areas, saw the wisdom in allowing “whatsoever tree should spring up upon the face of the land that it should grow up, that in time they might have timber” (Helaman 3:9). The chilling reason for the deforestation given in the Book of Mormon is that the various lands had been “rendered desolate and without timber, because of the many inhabitants who had before inherited the land” (Helaman 3:6). Even the ancients recognized the dangers and witnessed the results of environmental collapse.
The Lord tells us that “It is wisdom in me; therefore, a commandment I give unto you, that ye shall organize yourselves and appoint every man his stewardship; that every man may give an account unto me of the stewardship which is appointed unto him. For it is expedient that I, the Lord, should make every man accountable, as a steward over earthly blessings, which I have made and prepared for my creatures.” What will we tell Him when we’re asked to give an accounting for our management of resources? How will we account for the fact that we refused to take care of the poor or share our rabid consumption of resources with others around us? What will He think when we admit we were careful of our financial accounting, but never saw the reason to take care of our environmental accounting? I have a feeling that some of us may hide our faces in shame when that time comes.
[quote=dshields] taxing energy is a major mistake. there is a direct relationship between energy utilization and economic growth. [/quote]
You really do NOT have a clue, do you……? The idea of taxing [fossil] energy is to make alternatives more competitive and discourage the likes of you from wasting it in your Ubervehicles….. The money raised from the taxes can then be used to build rebewables systems.
[quote=dshields] we need growth so we need cheap abundant energy now and into the future. right or wrong, we currently have a hyrdo-carbon based energy economy. we should be drilling and producing every btu we can get our hands on everywhere we can find it. [/quote]
Again, expecting you to understand Limits to Growth seems impossible……. but you’ll soon find out!
[quote=dshields]we should embark on a nuc plant construction crusade. [/quote]
With what fossil fuels in particular? It has been calculated that if the US did this just to replace oil, Uranium would last six years….
[quote=dshields] we should continue to explore alternative energy sources and try to develop cheap and effective alternative energy solutions. [/quote]
A Spanish engineer friend of mine who has worked many years in the renewable energy industry in Spain recently gave me this information:
Building up 3TW of wind power up to 2020 will cover 30% of the world electricity consumption in 2007 and will demand a 27% annual cumulative growth throughout the period.
The 1.5 million times 2 MW wind generators required will imply:
• 2 times the present world steel production of 2006
• Almost half of the world extraction of coal
• 30 times the world production of glass fiber
• The entire world concrete production
• Almost half of the copper world production
Is this demand and use of materials renewable?
Can we afford these start up energy expenses?
And while all this turbine erecting goes on, how will we build more cars, bridges, hospitals, schools, roads, houses…….. you see THIS is LIMITS TO GROWTH….. and there’s NOTHING we can do about it, too many people all wanting too many V8 SUV’s…!!
[quote=dshields] electric cars are not the answer. if everyone plugged in an electric car the power grid would fail.[/quote]
Finally…… something we can agree on…!
[quote=dshields] my wife drives a 6.1 liter srt8 challenger and i drive a 5.7 liter hemi pickup. we like our vehicles. we work very hard to have them.[/quote]
Wow…. we have this totally the other way ’round. My wife drives a 1.6 L car that consistently does 40MPG, and I don’t own a car at all. As a consequence, we work to do other more interesting things…… TWO DAYS A WEEK, between us!
Now (if you’re still with me) read this…:
A study by the New Economics Foundation in Britain has found that childcare workers and cleaners contribute more to society than bankers and advertising executives. The study called A Bit Rich tried to calculate the real value to society of a range of different professions; bankers and cleaners, childcare workers and advertising executives, tax accountants and people who recycle household waste.
On its analysis for every pound or dollar that they earned, hospital cleaners contributed 10 times that amount in benefits to society.
Childcare workers generated seven to 10 times their wages in social and economic benefits, but bankers on million dollar salaries and bonuses actually destroyed social value.
Helen Kersley from the New Economics Foundation is one of the study’s co-authors. “We look at the economic benefits, the things that we’re used to looking at and the things that we’re used to having prices attached to,” she said. “But we also look at the environmental impacts and the social impacts as well of all six of the professions that we looked at.”
One of the study’s key findings is pay in no way reflects the contribution to society. The study looked at high-flying bankers employed in the City of London on salaries between 500,000 and 10 million pounds. It found that they have destroyed more wealth than they have built.
Advertising executives rated poorly too.
The study took into account their role in encouraging people to go into debt and the environmental effects of the over-consumption they help to generate. It found that for every pound sterling in value they created, they cost society about 11 times that. But for every pound a childcare worker gets paid it says they produce seven to 10 times that in social and economic benefits. It is not just what they impart to the young; the carers also free up others to do paid work and contribute to society.
Contributing to society
The finding resonates for Sue Lines, assistant secretary of the LHMU which represents cleaners and child care workers in Australia. “Well childcare members certainly say to us that they are contributing to the aspirational values of the families that are using childcare, and in fact their low wages are keeping the cost of childcare down,”
Now that’s not right and it’s certainly not fair and it does need to be addressed.
But childcare workers are well aware of the value that they add to creating the economic prosperity of the families whose children are in care.”
The British study found that hospital cleaners contribute just as much or more – 10 times their wage – because of the vital role they play in combating diseases. Specifically the study looked at their role in combating a drug-resistant bug that thrives in hospitals.
Another co-author of the study, Eilis Lawlor, says hospital cleaners are responsible for keeping all sorts of infections at bay. “With the hospital cleaner we know for each additional cleaner on the ward that there is a reduced instance of MRSA,” she said. “The reduced MRSA (Methicillin-resistant Staphylococcus aureus) has economic benefits, but it also saves lives.”
The authors deny their report is a bank-bashing exercise.
“We’re absolutely not saying that finance as a whole has this damaging impact,” Helen Kersley said. “But the activities of a city banker were more damaging for society than they were beneficial.” That may not be true of Australia – we avoided the financial woes of London. And the methodology of the study is a bit rough and ready – ascribing social value to jobs is not easy, and some question whether this is a political tract dressed up as an economic inquiry.
But others wonder why our home-grown investment bankers, the men paid tens of millions at Macquarie and the financial engineers behind the failed Babcock and Brown get so much when others performing socially useful roles get paid so little.
Modification on CM’s 3 “E”‘s:
Economy is the management and use of resources to meet household and community needs.
Ecology is the pattern of relationships between living things and their environment. We all know our shoe size. How many of us know the size of our “ecological footprint,” the amount of air, land, and water it takes to support us?
Equity is fairness. Ideally everyone in a community shares in its well-being. Where there is equity, decisions are based on fairness and everyone (regardless of race, income, sex, age, language, sexual orientation, or disability) has opportunities and is treated with dignity.
Our current economic model of predatory capitalism/corporatism and exploitive globalization lacks equity.
The great and continuing crime of [predatory] capitalism is the physical and social degradation of the world. The physical degradation exhibits itself as pollution, environmental damage and global warming; the social degradation exhibits itself as the atomization of society, impoverishment, hunger, disease and war. [Predatory] capitalism does not create wealth; it robs the common good to increase the monetized accumulation of its select perpetrators.
—-Manuel Garcia Jr., retired physicist
The Wealth Gap and the Collapse of the U.S.
This one’s for you, Xray. You get it right, every time. Turn the volume down a bit. The mods will probably delete this, and that’s okay, but I think all who get a chance to view it, will appreciate the sentiments.
“This is a pre planned financial holocaust”
Jump You F***ers!
let’s see – what is coming next…
1) in 11 months the house will get turned over to the republicans
2) in 2012 obama will go back the chicago
3) in 2012 the senate will be turned over to the republicans
how will these changes effect america ?
in 11 months the current tax and spend frenzy will be over. i find it surprising the democrats have had so much trouble establishing new taxes and entitlements given they hold majorities in both houses of congress and the white house. cap and trade, if not passed by then, will be dead. taxing energy is a big mistake. we need cheap abundant energy to fuel economic growth. energy taxes hurt the poor and working class people the most. shame on the democrats – they are trying to stick it to one of their major constituencies. It seems like every week there is another zany tax proposal floated in washington. what I am not hearing are the voices of reason pushing for tax cuts. We need tax cuts to let people actually keep more of what they work so hard for – their income. if people have more money then they can pay their biils, save up for capital goods, save for retirement, etc.. I do not understand why the democrats think it is a bad thing to allow people to have what they work for.
in 2012 the republicans will really take over. I sure hope they do better this time than the last time they held power. at this point the republicans will have a big job ahead of them undoing all the damage the democrats will have caused by then. the tea party movement is gaining momentum and should propel numerous republican and independent candidates into office. these people will be what might be called constitutionalists. they will be people who believe in a civil society and a constitutional government. the tax and spend frenzy will certainly be over then.
the war. We appear to be in a crazy war with Muslim extremism around the world. It is not working out well for either side. It is very expensive and it is getting a lot of people killed. The democrats do not seem to have any answers for it. in my view, neither do the republicans. it is difficult to negotiate with someone(s) who believe that god wants you to die and they are doing his/her good work by killing you. bush’s answer was to put them on the paradise express. that did not work very well. obama’s answer is to try to talk them into being reasonable. they laugh at that and believe that obama is weak, because he is weak.
the economics. the economics look bad. chris is right. the current financial situation is unsustainable. the war is costing us a fortune and it is going to continue for the foreseeable future. the democrats want to tax and spend basically any way they can. when the republicans take over they will stop a lot of the crazy spending but the debt/credit bubble deflation will still be with us. there will be a lot less leverage in the financial system by then. the end result will still be the same – a lower standard of living for people in the united states. no matter which way I cut it I always come up with that. The united states is going to experience a permanent reduction in standard of living. on average, our kids will be the first generation of americans to have a lower standard of living than their parents.
it is a sad story.
There is much here to debate, but let me pick my battles with caution.
Some one mentioned the idea of us being in a war for our very culture with Islam. I always chuckle at that phrase (no offense intended) because our very culture is such a mystery to many of us and the rift within it is far more damaging than anything an outside threat could do. Recall 9/11 and the weeks immediately thereafter when our internal differences were put asunder to focus on a new enemy. We are like siblings it is ok for me to punch my brother, but if the kid down the street does it he has to answer to all of us.
And then there is this issue of tax and spend frenzies. Again, the numbers do not bear out. I think both parties are corrupt corporate puppets and hold no credence to either, but truly when you look at the past 100 years we get huge deficits when a republican is in office and things swing back to close the deficit when a democrat is in office. Hence my puzzlement as to why so many people seem to think the opposite is true. Since the REagan years there really hasn’t been that much difference between the parties that anyone can honestly claim one is better at running the government than the other. Both have made good choices, both have made disastrous ones. My ever present worry is that people keep getting side tracked by their own personal definition of freedom when often they are not talking about the same idea at all. There is freedom from and freedom to. They are not the same thing and they are not mutually exclusive.
As long as we insist on framing the discussion in terms which do not have a previously agreed upon meaning we will forever be at odds.