Guest Post: The Age of Mammon

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Submitted by Jim Quinn of The Burning Platform

The Age of Mammon

“Financiers – like bank robbers – do
not create wealth. They merely distribute it. While the mob may idolize
holdup men in good times, in the bad times it lynches them. What they
will do to the new money men when their blood is up, we wait eagerly to
find out.”  - 
Mobs, Messiahs and Markets


As our economy hurtles towards its meeting with destiny, the
political class seeks to assign blame on their enemies for this Greater
Depression. The Republicans would like you to believe that Bill Clinton,
Robert Rubin, Chris Dodd, and Barney Frank and their Community Reinvest
Act caused the collapse of our financial system. Democrats want you to
believe that George Bush and his band of unregulated free market
capitalists created a financial disaster of epic proportions. The
truth is that America has been captured by a financial class that makes
no distinction between parties. These barbarians have sucked the life
out of a once productive nation by raping and pillaging with
impunity while enriching only them. They live in 20,000 square foot $10
million mansions in Greenwich, CT and in $3 million dollar penthouses on
Central Park West.

These are the robber barons that represent the Age of Mammon.
The greed, avarice, gluttony and acute materialism of these American
traitors has not been seen in this country since the 1920′s. The hedge
fund managers and Wall Street bank executives that occupy the mansions
and penthouses evidently don’t find much time to read the bible in their
downtime from raping and pillaging the wealth of the middle class.
There are cocktail parties and $5,000 a plate political “fundraisers” to
attend. You can’t be cheap when buying off your protection in
Washington DC.

Lay not up for yourselves treasures
upon earth, where moth and rust doth corrupt, and where thieves break
through and steal: But lay up for yourselves treasures in heaven, where
neither moth nor rust doth corrupt, and where thieves do not break
through nor steal: For where your treasure is, there will your heart be
also. No one can serve two masters, for either he will hate the one and
love the other; or else he will be devoted to one and despise the other.
You cannot serve both God and Mammon.
Matthew 6:19-21,24

It seems that Lloyd Blankfein, the CEO of Goldman Sachs, may have
been overstating the case in saying his firm doing God’s work. With his
$67.9 million compensation in 2007 and payment of $20.2 billion to his
co-conspirators, Blankfein appears to be a proverbial camel trying to
pass through the eye of a needle. This compensation was paid in the year
before the financial collapse brought on by the criminal actions of
Lloyd and his fellow henchmen. After having his firm bailed out by the
American middle class taxpayer at the behest of his fellow Goldman
alumni Hank Paulson, Lloyd practiced his version of austerity by cutting
compensation for his flock to only $16.2 billion ($500,000 per
employee) in 2009. I’m all for people making as much money as they can
for doing a good job. But, I ask you – What benefits have Goldman Sachs,
the other Wall Street banks, and hedge funds provided for America?

Never have so few, done so little, and made so much, while screwing so many.

In 2005, the top 25 hedge fund managers “earned” $9 billion, or an
average of $360 million. One year after a financial collapse caused by
the financial innovations peddled by Wall Street, the top 25 hedge fund
managers paid themselves $25 billion, or an average of $1 billion a
piece. For some perspective, there were 7 million unemployed Americans
in 2006. Today there are 14.6 million unemployed Americans. While the
country plunges deeper into Depression, the barbarians pick up the pace
of their plundering and looting of the remaining wealth of the nation.
Bill Bonner and Lila Rajiva pointed out a basic truth in 2007, before
the financial collapse.

“On the Forbes list of rich people, you will find hedge fund
managers in droves, but no one who made his money as a hedge fund
client.” - 
Mobs, Messiahs and Markets

Ask the clients of Bernie Madoff how they are doing.

1920′s Redux

The parallels between the period leading up to the Great Depression
and our current situation leading to a Greater Depression are revealing.
When you examine the facts without looking through the prism of party
politics it becomes clear that when the wealth and power of the country
are overly concentrated in the clutches of the top 1% wealthiest
Americans, financial collapse and depression follow. This concentration
of income and wealth did not cause the Stock Market Crash of 1929 or the
financial system implosion in 2008, but they were a symptom of a sick
system of warped incentives. The top 1% of income earners were raking in
24% of all the income in America in 1928. After World War II until
1980, the top 1% of income earners consistently took home between 9% and
11% of all income in the country. During the 1950′s and 1960′s when
Americans made tremendous strides in their standard of living, the top
1% were earning 10% of all income. A hard working high school graduate
could rise into the middle class, owning a home and a car.

From 1980 onward, the top 1% wealthiest Americans have progressively
taken home a greater and greater percentage of all income. It peaked at
22% in 1999 at the height of the internet scam. Wall Street peddled IPOs
of worthless companies to delusional investors and siphoned off
billions in fees and profits. The rich cut back on their embezzling of
our national wealth for a year and then resumed despoiling our economic
system by taking advantage of the Federal Reserve created housing boom.
By 2007, the top 1% again was taking home 24% of the national income,
just as they did in 1928. When the wealth of the country is captured by a
small group of ruling elite through fraudulent means, collapse and
crisis becomes imminent. We have experienced the collapse, while the
crisis deepens.

It’s Good To Be the King

The Wall Street oligarchs  were able to accumulate an ever increasing
portion of corporate profits by inventing securitization, interest-rate
swaps, and credit-default swaps which swelled the volume of
transactions that bankers could make money on. These products were
originally introduced as a means for corporations to hedge their risks.
Wall Street shysters chose to use their “creative” financial products to
build the biggest gambling casino in the history of the world. They
functioned as the house, siphoning off billions in profits, but then got
caught up in the hysteria and placed billions of bets themselves. This
resulted in the financial industry generating 41% of all business
profits in 2007. From World War II through 1980, financial industry
profits ranged between 10% and 15%. Simon Johnson explains the despicable hijacking that has taken place since then.

From 1973 to 1985, the financial
sector never earned more than 16 percent of domestic corporate profits.
In 1986, that figure reached 19 percent. In the 1990s, it oscillated
between 21 percent and 30 percent, higher than it had ever been in the
postwar period. This decade, it reached 41 percent. Pay rose just as
dramatically. From 1948 to 1982, average compensation in the financial
sector ranged between 99 percent and 108 percent of the average for all
domestic private industries. From 1983, it shot upward, reaching 181
percent in 2007. 

The original robber barons amassed huge personal fortunes,
typically through the use of anti-competitive business practices. These
well known titans of industry included Henry Ford, Andrew Carnage, John
D. Rockefeller, and JP Morgan. They may have practiced questionable
business ethics, but they did create wealth while benefitting the
country as a whole. They introduced the automobile, provided the nation
with steel, produced the oil that powered our economy, and brought order
to industrial chaos of the day. It seems their fortunes were built by
creating rather than destroying.

The disgustingly rich Wall Street wheeler dealers who live in
Greenwich CT and NYC and summer in the Hamptons have created nothing.
Their immense wealth has been created through draining the economic
system of its lifeblood. Their financial innovations have created no
lasting benefit for our society. Wall Street knowingly created no
documentation (liar loans) mortgage loans, Option ARM loans, and
subprime loans. You do not create products that beg for fraud unless you
want fraud. The packaging of these fraudulent mortgages into CDOs and
CDSs by Wall Street’s crime machine benefitted Wall Street only. Those
who got the loans defaulted, lost the homes, and had their credit
ruined. Wall Street financiers have lured the American public into debt
with easy credit and a marketing machine geared to convince the average
Joe that he could live just like the rich. Simon Johnson explained the phenomena in a recent article.  

“Excessive consumer debt is an
outcome of prolonged inequality – in trying to remain middle class, too
many people borrowed too much, while unscrupulous lenders were only too
willing to take advantage of such people.” 

You Call This Capitalism?

Capitalism is supposed to be an economic system in which the means of
production and distribution are privately owned and operated for
profit; decisions regarding supply, demand, price, distribution, and
investments are not made by the government; Profit is distributed to
owners who invest in businesses, and wages are paid to workers employed
by businesses. The American economy is in no way a free market
capitalistic system. It has become a oligarchic consumer capitalist
society that is manipulated, in a deliberate and coordinated way, on a
very large scale, through mass-marketing techniques, to the advantage of
Wall Street and mega-corporations.

When you hear the Wall Street class on CNBC argue against tax
increases for the rich, they hark to the fact that small businesses
would be hurt most by the expiration of the Bush tax cuts. There are 6
million small businesses in the US, with 90% of them employing less than
20 employees. These are not the rich. The vast majority of these
businesses earn less than $1 million per year. There are only about
134,000 people in America who make on average $2.5 million per year.
There are another 600,000 people who make on average $760,000 per year.
Out of a workforce of 150 million, less than 1 million rake in over
$750,000 per year. These are not small businesses. They are the Wall
Street elite, corporate CEOs and the privileged classes that control the
power in NYC and Washington DC.

The following charts clearly show that  perverse incentives in the US
financial system have allowed corporate executives to reap ungodly pay
packages, while the middle class workers who do the day after day heavy
lifting in corporations have been treated like dogs. Considering the
S&P 500, which measures the stock returns of the 500 largest
companies in the U.S., has returned 0% for the last 12 years, the CEOs
of these companies would slightly embarrassed paying themselves 300
times as much as their average workers. Not in the age of mammon. Big
time CEOs are rock stars. Outrageous pay packages are a medal of honor
in a world where humility and honor don’t exist.

The Depression that currently is engulfing the nation was 30 years in
the making. The criminal Wall Street financiers are the modern day John
Dilingers. They have mastered the art of stealing from the masses while
convincing these same people that they should admire them because they
are rich. This is the oddity about Americans as pointed out by Bill
Bonner and Lila Rajiva.

“The poor genuinely believe the rich
are better than they are. They are smarter and better educated. The poor
even support low tax rates for the rich, as long as they have a lurking
chance of joining them.” -   
Mobs, Messiahs and Markets

The truth is that the poor have no chance of joining the the rich.
The game is rigged. The poor have admired the rich for decades. But,
hard times have arrived. And they are about to get harder. The rich have
armed guards to keep the poor at bay. They will need an army of guards
before this crisis subsides.

Leonard Cohen sums it up perfectly in his song Everybody Knows:

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died