This page has been archived and commenting is disabled.
Guest Post: Financial Profits Reduce Economic Prosperity
Submitted by Lance Roberts of Street Talk Advisors
Financial Profits Reduce Economic Prosperity
With
today's release of the corporate profit data I thought it was important
to remind you of the demise of America at the expense of Wall Street.
America was once a country built on the solid foundation of the hard
work, satisfaction and pride in the building of stuff. We aren't
talking about "namby pamby" stuff - we are talking about real stuff.
We used to produce everything from automobiles to steel to blue jeans;
right here in America. We ran telephone lines, built roadways and
bridges, drilled for oil and constructed buildings. It was the sweat
of the brow and the strain on the back that built America into its
former shining self. A country of opportunity and prosperity with a
solid moral foundation and a strong military to back it up.
That was then. Beginning in 1980 our world changed as we discovered
the world of financial engineering, easy money and the wealth creation
ability of successful use of leverage. However, what we didn't
realize, and are slowly coming to grips with today is that financial
engineering had a very negative side effect - it deteriorated our
economic prosperity. As the use of leverage crept through the system it
slowly chipped away at the savings and productive investment.
Without savings - consumers can't consume, producers can't produce and
the economy grinds to a halt as the cycle of economic growth is thrown
into a "balance sheet recession" strangle hold that is slowly pushing
the economy towards unconsciousness.
Yet, even with the economy hobbled and struggling, the average
American functioning as if we are still in a recession, the main focus
of the current Administration continues to be the bailout of the very
companies that not only got us into this mess to start with but are the
very leeches on economic prosperity that we need to be ridding ourselves
of.
As shown in the chart, as financial profits have risen over the past
thirty years as a percentage of total profits the year-over-year change
in our Gross Domestic Product has slowly deteriorated. This is due to
the "multiplier" effect of dollars spent. If I manufacture or build
something there is a large multiplication effect of each dollar spent as
it flows through the economy creating ripples of aggregate demand in
its path. However, as money is shifted from these low margin
businesses, which have a high multiplier effect, to high margin, low
multiplier, devices and schemes on Wall Street such as securitization,
products and "Ponzi schemes". This shift of focus from manufacturing
type "blue collar" jobs to high finance "white collar" masters of the
universe has successfully created the largest gap in the history of the
United States between the "Have's" and the "Have-Not's".
Not all financial services and businesses are bad, however, an excess
of anything is harmful to the system into which it is introduced.
There has been plenty written since the financial crisis about the
systemic risk that major Wall Street firms impose on the economy and the
data tells the rest of the story. We have done nothing to solve or
resolve that which brought this country to its knees in the first place.
We have bailed out the culprits, turned a blind eye to the facts and
leave the rest to hope and prayer that somehow things will turn out okay
as the average American is slowly bled to death.
This is why we need real reform in government that leads to a smaller
government, more clarity for businesses through pro-growth policies,
real regulation of Wall Street which separates banks and brokerages, as
well as programs and subsidies for bringing back to America those jobs
that require a little hard work, a little bit of sweat and create a
whole lot of pride and prosperity along the way.
»
- 8124 reads
- Printer-friendly version
- Send to friend
- advertisements -
Financialization is one problem.
Oilization is an older, deeper and ultimately more sordid problem.
American taxpayers still support corporate welfare for oil companies through direct tax subsidies (!). And these are the richest and most powerful corporations on earth. Corporate welfare dwarfs social welfare in the US. The political reach of the oil cartels in national and international affairs is infinite. Financial companies are only their satraps. Americans will continue to pay their taxes and die for oil overseas as they have for a long time.
I get the impression that you are anti-business and not especially pro-liberty. Let's test that.
If we had the power to repeal both corporate welfare (all of it) and social welfare (all of it), would you regard this as a good thing or a bad thing?
"pro business" really means nothing. I am pro free markets where losses are not socialized while profits privatized. One could argue today's system of socialism for banker losses is as pro business as it gets!
Start over, repeal everything except the constitution along with the Supreme court ruling that a corporation is a person. Repeal the 35th Amendment for the direct election of senators who are supposed to represent the states but now represent the USG.
FAIL!
wrong time, wrong place ;-(
If we could solve the governmentization, financialization and unionization problems, the oilization, foodization, roofization and energization of the country wouldn't be as much of an issue.
ManT, if you are really going to get down to solving issues, a good root cause analysis is needed.
At this point in time, the thing that needs to GO, is MSM.
All MSM. One fell swoop. Crap Radio, Crap TV, Crap Print. Make them illegal.
Lave the net free and honest and see what happens.
Put all radio waves into small community stations, likewise for TV.
Oh, and empty Hollywood of it's humans and blow it up.
Till then, every other step is pointless. The control mechanism needs to be broken first.
A CME shaman.....hmmmmmmm..... let me see....
ORI
http://aadivaahan.wordpress.com/2010/07/13/whither-india/
+++ - great point Oh wise Sage - it's a chicken or the egg argument - but I agree you would not have as many dumbed down masses if you cleaned up maistream media.
Media should be an advocate for humanity and have a hippocratic oath like Doctors USED too when it meant something. Oh well I guy can dream can't he...
It's time to break out the tar and feathers for media execs just like we need for politicians
True Josh.
My sister is a surgeon and I always tease her that she took the Hypocritic oath.
I think MSM would gladly take the hypocritic oath, eh?
Here is a classic quote on journalists... it's from 1880, on the "Free Press".
Imagine where we are today...
http://aadivaahan.wordpress.com/2010/09/21/meet-the-press/
ORI
the msm is what it is because it is fiat financed to be
what it is. it is the mouth piece of the beast.
it will take an oath but will never keep an oath except
the oath to speak for its master, the beast of ponzi
fiat money stealing out of compulsion and wrec/k/reation.
Indeed blindman.....thus the Hypocritic oath, see? ;-)
ORI
Your points are well taken......the internets are doing exactly this....much to the dismay of the elites.
Great stuff ORI.
Thanks spek, and we get to be a part of the front end of the battering ram.... interesting ehhhhhhhhh?
ORI
Okay, well the root cause issue is human nature and its tendency to intellectual dishonesty, greed, obsessions, insanity and a host more. After all, we were told by a fearless leader that character didn't matter. Now it seems otherwise.
Nothing compares to the money printing oligarchy and the banks who are part of it. Oil cartels are little league compared to that. To suggest otherwise is environmentalist propaganda.
If oil is 'top dog', why did the Rockefellers (who had an oil monopoly at one time) become bankers?
The foreign wars have many reasons and many benefactors. Oil is a minor one. The chief reason is a political one and the benefactors are the ruling class. They're used as a 'relief valve' for young people. Young people who have no job or future prospect tend to rebel. Foreign wars keep their young and naive minds away from the true evils back home. This is just the modern version of The Crusades.
The federal government certainly gives corporations, particularly large corporations, a better deal than it's residents, citizens, or taxpayers. Corporations pay a lower tax rate on regular income, particularly if you consider, that they can defer international profits indefintely. In fact, any corporation can establish, or buy a foreign subsidiary, that can be used to avoid paying american corporate earnings. It is done by having the subsidiary in what ever suitable nation/state sell goods, or labor to the corporation at high prices, while buying goods., or labor from it cheaply. I watched a Japanese company I worked for do it for years, and years. As a company engineer, I could make a pretty good estimate of what it cost to build machines, and I saw prices on sales contracts, and paperwork nearly every day. Funny thing is, it went the same way as the US companies send theirs, out of the US to cheaper tax nationstates. I'm not saying that GE doesn't have a lot of expenses, but absolutely no tax paid? Come on! Most people who are unemployed for a year pay federal income tax for every year they receive benefits. I never received any unemployment benefits, and didn't pay taxes that year, despite receiving benefits in both the '90s and '00s.
Then there is the matter of criminal, and civil liability. The civil legal system is tilted towards the average corporation, over the natural person, by the ability to buy lawyers, if nothing else. I don't believe there is now any limit on the magnitude of corporate campaign bribes, corporations can make, but if I give Ron Paul more than $2000, I can be indicted, and likely would be. An indictment is more probable, since the fiat would go the the Good Doctor.
Then there are the criminal cases. As a resident of metro Charlotte, the home of Wachovia ne Wells Fargo bank, I can assure you that a natural person who calls Charlotte home would get much harsher treatment, than the corporate citizen, not to mention the flesh and blood, free will endowed, employees that decided to launder hundreds of millions (at least) of dollars of drug, and gunrunning black market profits. There was even a jet plane bought with some of the money simonized by Wachovia, which went to buy a plane, that was found on a Mexican landing strip, loaded with Peruvian happy powder, bound to the good old USA, no doubt. The deal was so crooked, it turns out the plane was previously used to smuggle kidnapped humans (assholes call it Extraordinary Rendition) for the CIA. I tell y'all, you can't make this stuff up! Sort of makes me proud to be a Son of Confederate Veterans. You can bet that Jefferson Davis, or General Lee, would see this as vindication.
Of course the Europeans are no better than the US. Bush, and Cheney, dare not set foot on the Continent, but Haliburton employees, and innumerable other "contractor" corporate war criminal employees travel freely, and openly, on business, and pleasure.
Now that we have that settled, I question whether there is much favor shown to oil corporations, over others. Certainly large banks are preferred over them. If Exxon spends a lot of money drilling dry holes, in wet places, it comes out of their bottom lines. If AIG makes some much more obvious, and stupid bad business decisions. The Bernank falls all over himself forcing zero interest loans on it, and setting up deals for years, where it can borrow money at less than the CPI, much less real inflation, and make a guaranteed profit. Yeah I know, it's to save the banking system. BULLSHIT. This country can go a lot longer without financial derivatives, than it can without diesel fuel.
Yes there is an oil depletion allowance, but it's not too different than the depreciation schedules for industrial equipment. Then there is the widely reported average of 5% profit margin claimed by the majors. What was the average profit margin for Goldman Sachs, or JP Morgan this year? I think that will give you an idea of who gets the subsidies. As far as the war's fought to support their profits, I don't see how that really helps US companies. If the US blows up your house, your family members, and your friends, would you rather support contracts for the US, or the Italians, or the Chinese? The wars are for control, not to put the US companies on top.
Not to dispel the "god, guns, and guts" myth promoted here. But...
What made America great was liberty. The government was instituted to protect the individual rights of life, liberty, and property. Unfortunately, it had some contradictions such as slavery, fixing the value of gold to silver, and of course the "provide for the general welfare clause."
By the mid 19th century, the government was subsidizing railroads. But the late 19th century, the government was passing antitrust laws to attack the beneficiaries of their previous round of subsidies.
By WWII, the government had replaced sound money with paper that people were forced to use by law, instituted high marginal income tax rates, begun wholesale manipulation of the currency, rates of interest and discount, set minimum wages that outlawed the employment of millions, controlled rents, and basically replaced freedom with the system of Benito Mussolini: fascism.
After WWII, there was a small respite, and then the growth of the government takeover juggernaut continued under first Kennedy and then accelerated under Johnson and his "Great Society", designed to put in place a few more of Marx' 10 planks. Cradle to grave security was also a promise made by Hitler.
Carter added two new Departments (education and energy).
Reagan discovered the virtues of a falling interest rate structure that created one heckuva boom that gave us a false sense of prosperity and increasingly added malinvestment to the real investment that was also occurring.
We are now at the end game. We must plan for what comes next. Do we want a more "pure" marxist or fascist utopia with the government forcing everyone, and people are prohibiting from doing anything that isn't mandatory?
Or do we want to rediscover the concept of freedom, which does *not* mean:
- entitlements
- cradle to grave security
- goodies paid for by others
- or paid for by a central bank
- regulations on everything and everybody
- freedom from annoying or offensive people
- a "right" to make a slave out of someone else: doctors, employers, etc.
- safety nazis outlawing sugar, salt, trans-fat, cigarettes, alcohol, marijuana, etc.
I liked Reagan, he was an affable fellow. He also represents the genesis for national debt accumulation for 30 years that bankrupted our nation. In effect, he was one in a long line of spendthrift presidents. Deficits do matter and I do not think romanticing his presidency gives due respect to the ulitmate effects.
I'm surprised you didn't get junked for that. I agree with you. Carter, with all is foibles, said put on a sweater, drive 55 and a few other things for which the Peter Pan set despised him. Reagan basically said reality is for losers, bribed the Iranian hostage takers and supported a laundry list of killers in Latin America. I still can't figure out how Reagan gets such good press. Reaganomics became Bushanomics, Clintonomics and Obamanomics.
I still can't figure out how Reagan gets such good press.
He cut the highest marginal tax-rates a LOT. That's all anyone remembers.
Folks don't remember the huge expansion of government and the shift to constant warfare to subsidize big corporate interests.
I rather thought supply side economics works, and that debt side economics doesn't.
As for the Reagan deficits, my recollection is that is pure Keynesianism after inheriting stagflation from Carter, called Stimilus. We been stimilatin' ever since and here we are.
He cut taxes, expanded the Federal government, and increased military funding.
If you want to call that Keynesian stimulus, OK, but it just sounds like "spin" to me.
If by 'stimulus' you mean defense spending.
Reagan started this? Please.
This started with Wilson (although it really got rolling under Johnson's "Great Society").
Yeah, if you look at this chart, it's not like you'd see any trend-changes starting in 1980.
http://home.adelphi.edu/sbloch/deficits.html
We've historically always had lots of deficit spending during world wars, that's all.
Definitely Wilson's fault.
No I don't want that much "freedom". The freedoms I enjoy are a benefit of living in a country where we don't have a third world underclass. If some of the money I earn is contributed to the common good, with free health care and education for everybody, so the next generation will be capable of leading, that is what I expect.
We need more regulations on the multinationals that outsource jobs so that the small businesses can play with a little advantage instead of disadvantage. We need to continue government transfers for things like food stamps to help the unemployed who can't even score the McJob until we are able to produce more jobs in this country. Then we need to subsidize the homegrown American business that creates jobs in our economy. More regulation and taxes on multinationals, less on small businesses. And figure out a way to limit the number of lawyers in this country. Pretty worthless for the most part. Spend all their time writing up legislative tax loopholes for their corporate bosses, who pass it on the the lobbyists. Time to put the subsidies where the do the most good. Small is good.
How has that worked out for you in the last fifty years? Looks like the harder you squeezed business to pay for your socialism the faster they shipped your father's job to China.
Multinationals have not been squeezed at all. Quite the contrary. They have been allowed to repatriate profits at very low tax rates, compared to those paid by small businesses, because they buy themselves a loophole. They did it once, used the money to prop up their stock price. Now they are trying to do it again, getting the Rahminator to say its a good thing to fund the "Infrastructure fund" with the quicky upfront cash. If there is socialism, why am I paying so much for health care and my kids college? Why do real socialistic countries have it so much better? We aren't socialistic we are crony capitalistic. The increasingly powerful multinationals are setting the next generation up to be low paid serfs.
Yeah, those socialist countries over in Europe are doing great...
Most of them don't have our resources. And France's health care system costs less than half of what ours does per capita for better outcomes.
I agree the health care system is screwed up. But it is foolish to get a government (even more) involved that has demonstrated it doesn't give a fuck about it's people.
The trick is to redirect government away from subsidizing big corporations and start subsidizing the job creaters. Until then, we need to provide for basic human needs of those with no jobs, no homes, no food and no health care. There is certainly no private interest who is interested in picking up the slack brought upon us by globalization and a lax financial regulatory structure. Only in taking out an ever increasing piece of rent out of those that can pay. But with the current bought & paid for politicians, real reform is still a dream. They take orders from Insurance and Big Pharm. Oh, the AMA has a little influence as well. Doctors need to keep their monopoly. Don't want to give those nurse practitioners too much power or salaries may go down. Much more profitable to be a revolving door, charging inflated fees for spending 5 minutes per patient and writing prescriptions. Don't want to see any of that easy money go away.
What is this "we" stuff? Volunteer yourself, but DO NOT volunteer others to pay for your "fairness"
We all benefit when people aren't desperate. Taxes pay for the general welfare that benefits all. Its not like the most basic needs need to be addressed in extravagent ways. Just enough so people retain enough human dignity to want to lift themselves up.
Sorry, but a little bit of Socialism is like a little bit pregnant. Check your premises.
For some reason, as obvious as this may be, not everyone seems to agree we'd be better off without roads, phone networks, and management of the airwaves.
So who gets to decide where these, roads and phone networks are built? Who decides on the "management" of the propaganda airwaves? Experts from Academia? Think Tanks? The Wizard of Oz? Seems to be failing to me. Do you suggest "we" give them more "taxes", (that they can print for themselves anyway), to fix these failures? Might as well put the ball and chain on yourself while sitting on the deck of the Titanic. Centrally Planned Utopian Hopium.
Join me, brother. (You'll need to get yourself a red and black flag.)
Stop asking stupid questions and start answering them. Anarchism is the only solution.
As you obviously realize: roads and phone networks built with government subsidization are bad. End it all now.
Sorry, I misread your post before.
Here's some more stupid questions though:
How would you achieve anarchy? Isn't anarchy what usually happens after the fall of civilizations? Would you make laws to enforce anarchy? Or are you hoping for mass "enlightenment?"
Personally, I'm looking beyond the physical for my answers. God if you will. Not man. Humanity seems to be stuck in a loop. In the physical realm, "the loop" seems to be the norm, and the rule.
It's totally personal. You can only do your part. Don't recognize or help maintain illegitimate authority, and do your best to encourage others to realize that virtually all authority is illegitimate.
You only get up to about 100 years here. Chances are the entire species isn't going to achieve the same perspective before you're gone, so you may as well just relax along with it.
But true freedoms mean the right to trade freely using gold (or bit coins if you so choose), the freedom to own and bear guns, and the freedom to worship in a mosque, shul or church. So your argument still boils down to God guns and gold
Trade freely? Re-read Article 1 Section 8.
Bear guns? Do let us know the next time they attempt to quarter troops at your place or you feel a need to form a militia to defend the nation.
Freedom to worship? Not even in the original doc, and you misunderstand the amendment...it's about the state not telling me that I have to worship in any of those.
For people who claim to love liberty and the constitution you sure know fuck all about it.
Libertarian777 is talking about liberty, not some fucking government document, which is apparently where you find all of your liberty; some of us define freedom without it being defined for us.
So there.
- regulations on everything and everybody
I could go for complete deregulation of the TBTF financiers as long as bank robbery is deregulated too. That way I could walk into Goldman with my shot gun and get a million bucks or two. Same for all those international corporate fascists, as long as taking from them what I want isn't regulated then I'm fine with deregulating them.
+ good summary and true
The payoff for companies, countries, and HNW individuals in producing goods and services is probably a 5-10% return on the dollar each year. The payoff from lobbying in Washington DC is between 50 and 100 times. A million spent appropriately can return $100 million. Why would you ever do the former? Take taxation for hedge fund managers. A few million wisely spent in DC resulted in an earnings tax rate of 15%. That's probably a 1000 to 1 return on your money.
Financial profits are for the most part a private sector tax on the value creating parts of the economy.
Whether through interest rate policy, through charges or simply fleecing investors every time they come to the market place, the amount of wealth that needs to be transfered to save the financial system in its current for is too great a burden for the underlying economy.
The other great mistake in our rigged financial system is that the markets are no longer a weighing machine - the investor no longer wins by placing money with those who can generate the best return on capital, and industrial innovation takes second place to financial innovation, which is merely playing around with moving money in a way that gives the appearance of success.
"money is debt albert.
stuff is just assets to seize in
time and space. the trick is to
steal time and put it in a safe
(somewhere) place.
only take it out to polish
infrequently
and keep it away from
the light.
the photons will eat
it and you will be left
polishing
nothing
again."
ps. end the fed and their mojo !
it is killing us and the u.s..
(this is actually a quote from an
anonymous, never read, philosopher
from the years 350 or so b.c. )
..passed down to me as a family word of mouth
thing. here, i offer it to you freely?
Banking is basically a parasitic function. Once it takes to much from the host it begins to kill it.
hopefully it will then eat itself.
@"..at the expense of Wall Street."
should read "..for the benefit of wall st."
just sayin', then again that isn't correct either.
Financial Profits Reduce Economic Prosperity...
I hypothesize ZIRP is the main source to place the blame.
It is impossible to compete when money is cheap and the big boyz get to spend it first
My name is mudduckk. I am the mud man from Toledo. By the sweat of my brow, I create jobs. http://bit.ly/eyV1iE
http://midwest-mosaic.blogspot.com
Agreed.
Combine with your fine points - the increasingly juvenile and narcisisstic presonalities and society created by consumerism and media saturation or "people watching other people's lives on the walls of their homes" a la Orwell.
We have lost our minds, and are rushing pell-mell into collapse and anarchy.
lance roberts seems like a cogent fella (Paste):
the main focus of the current Administration continues to be the bailout of the very companies that not only got us into this mess to start with but are the very leeches on economic prosperity that we need to be ridding ourselves of.
and: We have done nothing to solve or resolve that which brought this country to its knees in the first place. We have bailed out the culprits... (End Paste)
zombies. insolvent corporate structures used to funnel money b/c they are "counterparties" and TBTF. we should probably re-establish cogent accounting rules and get to work straightening out this
BULL
fuking
SHIT
before it straightens us out!
Ahoy slewie!
I raise me glass of grog in toast and song with ye!
"Dead men tell no tales!"
Awful post, just awful.
Manufacturing, "real stuff", blah, blah, blah... nobody wants it. The consumer is dead, unless you count owning an ipad2. Or does "street talk advisors" pine for other people to go back to the good old days of ditch-digging?
Face it: the rich are getting richer, the poor getting poorer. Those few with savings want nothing more than returns, driving bank and financial growth.
Stop denying reality.
That was kind of the point of his article me hearty.
And, you're hogging deck space at the end of yer posts.
Which is why we need to use the tax system to fix things. Reward job creators with low taxes and less regulation, punish the outsourcing multinationals with higher taxes and more regulation. Encourage new business on our own soil.
Raising taxes is just going to improve Singapore Airline's top line.
Everybody is going to get a lot poorer, until the next successful mutation comes along. You know the Rennaissance was nothing but lavish spending by a few superrich people. Without them that tranny Leonardo would never have made those notebooks.
But maybe tax subsidies would help Southwest Airlines create more jobs. The point is to reward businesses who create jobs with the lowest tax rates and who cares what the multinationals do with their extra cash.
You're missing my point. You raise taxes on high net-worth people, they will move to Singapore.
Oh, right. Let them go. They won't be missed.
Where did the number for the "Financial Profits" come from?
Dear Lance Roberts,
Just try to setup a real factory here in the United States. Report back after you are done with the EPA, neighbors complaining about noise, and every other permit bureau involved.
Good luck.
PS - The jobs you are talking about died for a reason.
Erm... Tom Delay... what good is a job if it is sure to kill me? You guys drive me insane. You really think there are very very bored assholes like me that sit around thinking of ways to piss you off / frustrate you, so all we do is beseach our growing government to beat you entrepreneurs down? You really believe that regulations which restricted pollution of the waterways, land, food, air, etc were simply enacted to injure you or limit your freedom? You really believe that without these regulations, those affected by these loathsome restrictions were well on their way to addressing these concerns on their own, except that some government beauracrat intervened prematurely, creating just another obstacle? Give me a fucking break. The laws exist to protect people like me from people like you because you did not exhibit any signs that you gave a crap about me. The laws exist because companies have shown that they will not do so voluntarily.
What you should be focusing your energy on is not on dismantling the legistlation which protects life, but on understanding what in our system places human life at such a low level, and why companies or you, loathe other people to the extent that you would rather harm them than take on additional safeguards voluntarily.
I will tell you so you don't have to think about it too long... the profit imperative. The mistaken belief that surplus value is more important than all else. The capitalist system, being one of exploitation, also engenders an apathy or loathing towards others within society, as it ensures high levels of competition... how can you compete with me ruthlessly if you care a great deal for my welfare? Which is precisely why our civilization is so fucking dysfunctional. I really really hate when I hear the false expressions of community or concern, when in the next breath, the only fucking thing that is important is did you take advantage of me before I had the chance to take advantage of you. So in fact, there is only a community of back stabbers. And those who would not wish to take advantage of others end up failing in the system, so they're "enticed" to also take on those qualities.
Now, before you go all out raving mad on me... I actually agree that we should try to limit government to protect freedoms... I just disagree with you about why or how we should achieve that. I think the only viable way to limit the scale / scope of government is after we have exhibited to each other that we have created a new means of exchange which places human life above all else. Once we know that everyones actions will aim to ensure the safety / preservation of everyone else's lives, then we will no longer need outside regulation. Is it possible? Yes. How? Equitable, not exploitative, exchange.
Think about that and have a nice day. Don't take my comments personally... I am trying to trigger something inside that makes you feel.
Enjoy the foodstamps and the chronically high unemployment. You aren't going to understand this until you are picking through garbage cans for dinner like they did in Argentina.
The Chinese guy that is doing your job deserves it. You absolutely refuse to allow this country to compete on the world's stage.
Not if the world stage means leaving a large part of our population impoverished. I would much rather explore nationalism. We have the biggest consumer market in the world. If we leveled the playing field so that small businesses, the job producers in this country, have an advantage over the multinationals we might be able to start to turn things around. Of course there are no politicians left that aren't owned by corporate lobbyists, but I can keep dreaming.
I have no problem with that. But you need to understand that regulations do not harm large corporations. In fact, they welcome regulations because it raises the bar to entry and prevents competition. I want to be regulated if I am a CEO. I can deploy armies of lawyers and accountants (that my smaller competitors can't afford) and not comply with the regulations anyway. Also, I can now create a "revolving door" between my company and the government agency regulating me (like the Treasury and Goldman Sachs).
Of course we need good regulation, like the very simple Glass-Steagall, that will help eliminate a lot of problems. Also, regulations should be tougher for big corporations than they are for small businesses to level the playing field for the favored class of job creators. Any hardships that small businesses face from regulation should be subsidized, since they are our best chance for a future that isn't serfdom. I say what if.
And, as I have said before, we need less bloodsucking lawyers. There should be a limit on the number who are allowed to practice.
It is unfortunate that smaller businesses have to play by rules that multinationals can ignore by outsourcing. We need to figure out a way to subsidize our homegrown businesses for the neccesary safeguards to even the playing field for the job producers.
I watched with amazement as the financial elite in the US captured both the US Treasury and the Fed, so that by the 90's, monetary policy was crafted purely for their benefit. The banner was "free trade." Except that there can be no free trade if currencies can be manipulated to avoid current account rebalancing. So while the US import-export deficit continued to widen, the "strong dollar policy" initiated under Robert Rubin was in essence a tariff on American producers. This assured outsized profits for the foreign investments. And when the dollar became "too strong" and countries began to default on their dollar-denominated debt, the same money center banks were bailed by various means, Brady bonds, etc. Meanwhile, America quietly deindustrialized, which was rationalized as "The New Economy."
In an ideal world, where currencies are measured against some stable metric like gold, free trade would work since current account rebalancing would naturally follow as countries with current account deficits would see their currency value fall, and vice versa. In the current international trade structure, this is not possible.
GATA-WTO allows a general tariff to be placed on a country that continues to have import-export surpluses if the issue cannot be settled by other means. I'm not a big fan of tariffs, but right now, I see no other way to revive American production.
Of course, this is not going to happen because money center banks would see an immediate drop in the value of their foreign investment. Ideologically, too many people have bought into the notion of "free trade" with managed currencies, an economic oxymoron. The fact that it has not worked out for the US and Europe does not seem to matter.
This book was prescient. KP illustrates the historical parallels of financialization of economies and their subsequent failure, looking at various examples around the world - Dutch, Spanish, English, etc. Unfortunately, his writing style makes for a difficult read.
Wealth and Democracy: A Political History of the American Rich by Kevin Phillips
http://amzn.com/0767905342A lot of focus seems to be directed towards securing as many resources as possible for the self, to such an extent that all thought and energy is directed towards only that aim. The problem is such singular focus prevents consideration of broader issues... like how to produce more, how to limit population growth, how to cooperate, how to advance society instead of desrtoying it in the name of self preservation.
A lot, a lot of people view the term equitable in disgust... and the reasons are many, but two stand out... one reason is an egoistical conditioning provided by the system which educates everyone that to succeed, you need to be singular in your self-interest, to segregate, to differentiate oneself as a winner and others as losers...essentially a misanthropy... and another reason is the result of the singular focus on securing of resources, on the presumption that there are limited resources and me before / more than them.
The saddest irony is that we actually created communities to cooperate, to ensure adequate procurement of resources for all in the group. Now, we work exhaustively to prevent others from acquiring an equal amount of resources. There is a lot of Cain and Abel in this narrative. Maybe humanity should be destroyed, just as humanity itself has been.
DEAD HAND OF GOVERNMENT IMPOVERISHES THE MIDDLE CLASS
Michael Spence, Nobel Laureate and former Dean of the Stanford Business School, has just published a rigorous economic analysis called: “The Evolving Structure of the American Economy and the Employment Challenge.” The report illuminates how the unbridled growth of government consumption spending has destroyed America’s productivity leadership, driven entrepreneurs to off-shore production, and destroyed middle class wage rates.
Adam Smith, 18th Century English economist, pioneered the concept of the “invisible hand” to describe how capitalism through self-interest, competition, and supply and demand, more effectively allocated resources than the “dead hand” of the state; that levied punitive taxes, adopted restrictive regulations, and enforced monopolies to favor their crony allies. Smith described how English entrepreneurs flourished after their King’s feudal dominance of the economy was liberated by adopting the laissez-faire economics that allowed transactions between private parties to be free from the state’s coercion. Smith described how new wealth was rapidly created and compounded over time form the productivity gains of the Industrial Revolution that leveraged the value of workers and led to higher wages.
The Spence report illuminates that from 1988 to 2008, America’s productivity dominance collapsed by 70%; shrinking from 2.5% gain per year to only .7% per year. This crash in American leadership was the result of 98% of the 27.3 million new jobs created during the period coming from the lower productivity, and thus lower wage, “consumption” sector of the economy. Higher productivity, and thus higher wage, “goods-producing” sector grew by only 620,000 jobs. The root cause of this substitution for lower productivity jobs was a 23% growth in government, to 22.5 million workers, and a 63% growth in government dominated healthcare, to 16.3 million workers. Productivity for the American goods-producing sector continued to grow by a healthy 2.3% per year, but productivity of government workers sunk by 4% and productivity of healthcare workers plummeted by 9%.
In 1988 the average value added for American workers was $75,000. Over the last twenty years, America’s revolution in information-technologies helped drive up the valued added of a goods-producing American worker to $115,200 per year. But the productivity value of government and healthcare worker tumbled to $72,000 per worker; dragging down the average value added of American workers to only $90,750. That $24,450 loss of productivity explains allot about why the American middle class wages have been shrinking in the United States.
Adam Smith identifies the "entrepreneur" as the invisible hand that shifted economic resources out of lower and into higher productivity activities for and greater reward. If the invisible hand is expected to be busy shifting resources from lower to higher productivity; why has America shifted resources from higher to lower productivity jobs?
Welcome to the wonderful world of the “dead hand” of government. Over the last two decades the U.S. government has vastly increased punitive taxes, restrictive regulations, and enforced monopolies in favor of their crony allies. This result has been a loss of 7.5 million goods-producing jobs in the last twenty years. That trend accelerated over the last ten years with the closure of 57,000 factories and the loss of 5.5 million higher paid goods-producing jobs.
Entrepreneurs are not stupid! They did their arithmetic and figured out that the outrageous costs of paying twice China’s corporate tax rate, complying with punishing regulations, and competing against cronies like General Electric over-whelmed the productivity advantage of hiring an American workers. Entrepreneurs also recognized that even though they did not benefit from the 13.7% compound growth of government spending; the Congressional drumbeat to raise taxes on millionaires to pay for trillions of dollars of deficits, are “code words” for taxing entrepreneurs.
The bottom line is the “dead hand” of government has diminished the productivity of American workers by changing the structure of our economy to favor of the lower wage consumption sector, at the expense of the higher wage goods-producing sector. This government coercion has resulted in the invisible hand of entrepreneurs closing U.S. factories, moving goods-production off-shore, and impoverishing middle class wages. Entrepreneurs will not build new American factories and bring back higher paying middle class jobs until our government cuts taxes, deregulates industry, and stops favoring crony allies.
The relative barriers to flow of capital vs. labor have been inverted since Smith's Wealth of Nations. Capital is now far more mobile than labor, rather than the reverse he wrote about. That changes a lot of the predictions his theories would make.
all of it fits into the gaming of evolving global
markets theory of leverage, rape and pillage for
begginers philosophy where there is nothing kind
about mankind, only fiat bonus points to be grabbed
when the lights turn out and the flashes of lightning
blind anyone who dares to look into it.
the money system is dooming us. no exit, in this
money system you are guaranteed massive failure.
period. talk , politics, philosophy, religion,
spirituality, you name it, will not correct the
problems this money system dictates. you cannot
right the ship of ponzi in this universe !!
end of story.
but it is a choice to be slaves to
our virtual dictated doom or grow up / smarten up.
we may not have what it takes to do that, after all,
the distracting tangential bullshit is so entertaining.
.
There's a further problem which the article does not mention.
The financialization of Usa has certainly eliminated the manufacturing base.
But worse: an entire generation, two generations really, has grown up as ... idiots. No need to mince words. Almost everyone is now: an idiot.
Normally in life you have to think hard and work hard - if you want to eat.
It's that simple.
But for 30, 40 years, the USA (the West generally) has adopted the "something for nothing" policy.
Financialization has killed the idea that you have to "make something to eat," and the nanny state has killed the idea that a man has to think & work to live.
The end result is the current situation. Everyone is - an idiot.
If Ayn Rand became president at lunch time and we returned to a pure gold currency this afternoon and every banker and central banker was shot at sunrise tomorrow --
Unfortunately, almost everyone would still be ... an idiot.
Culture, the very nature of human beings, has been so radically altered - it's not clear how the situation can ever revert to normality.
If the libertarians completely take over all Western government tomorrow afternoon, and every banker and central banker is shot - it could easily take fifty years for the manufacturing system to return. But that's just the technical aspect of rebuilding.
It could take centuries for people to stop being idiots.
The current mega-system of utterly dumbing-down humanity, has worked all too well. Almost everyone is an idiot, and there is just no way back, other than centuries of darkish ages - to a situation where humans think & work to eat.
lol...agreed...good one.
Have you seen the movie "Idiocracy"?
you may be confusing idiots with fuking morons
Wisdom of the Idiots - Wikipedia, the free encyclopedia
"This is why we need real reform in government that leads to a smaller government, more clarity for businesses through pro-growth policies, real regulation of Wall Street which separates banks and brokerages, as well as programs and subsidies for bringing back to America those jobs that require a little hard work, a little bit of sweat and create a whole lot of pride and prosperity along the way. "
I completely agree. Problem is is this will never happen. This system HAS to self destruct. It will involve much pain. Think massive societal revolt. It is going to get very, very bad.
Prepare accordingly IF you want to live.
One of the few things Jim Cramer ever said that wasn't sensationalist, cheerleading for Wall St nonsense was around the time of the dot.com bubble bursting in 2000. He pointed out the the total market cap of tech stocks compared to the rest of the stock market had grown to a disproportionately large number (I don't recall the exact figures--maybe it had been 20% historically and it had increased to 40%). Recently I read something akin to the same thing re: financial services industries--currently they have collectively a much higher percentage of the entire publicly traded economy (by market cap) than ever.
Just another measure which shows what the above and most already recognize, that financial services have become far too powerful for a healthy economy.
It's time for a paradigm shift. What's worked in the past may not be the answer for the future. I tremble at the consequences of this statement.
We live in a world of limited resources and compounding resource consumption. I'm not sure where on the hockey stick curve we're at, but my hunch is we're farther along than we think.
If we're going to live on this planet long term without making it one giant cesspool, we either do things differently or unvoluntarily give the world back to the cock roaches.
The white trash morons who shop at Wal-mart buying crap from their Chinese masters deserve everything they get. Their criminal Muslim leader Obama bin laden can lead them into slavery and the world will laugh. Fuck off suckers!
"Beginning in 1980 our world changed" -- THANKS REAGAN!!!!
Get rid of computers and the internet and problem solved! Of course we won't do that but it certainly would solve the problem. The development of computers with their software and then the internet has brought about the destructive feature of centralized control. It would be impossible to have the size government we have and the large global corporations we have without computers and the internet. This condition has created so many rich people and overbearing overreaching governments. Computers and the internet is the main contributor to the concentration of wealth to the few. Government and global corporations could not grow this large without computers and the internet. Decentralization would create more jobs because of redundancy. Until we voluntarity decentralize and relieve the richest from their stolen wealth by using this new technology, conditions will get worse until a total collapse and revolution. Computers and the internet have been a blessing and a curse. We need to find a way to get past the curse of them.
A way to solution would be to get rid of the criminal gangs that run government.
I take it you are not familiar with the Gilded Age.
Computers are not a prerequiste for domination of the people.
For reference see nearly all of recorded history.
The second line's " America was once a country--------" is all that needed to be said and without the dashes. 'Once a country' is now a feudal fascist state. I just had to express this before I could read any more-----now----back to the article.
I read the rest and my first comment is the one I want to stand by. The rest was just more of the constant whining that everyone seems to believe is all that is required to change these shitty diapers we are left sitting in------------this is why I prefer cats.
The "strong moral foundation" part might be stretching it a little bit...
It's the "Greed is Good" generation.
MBAs fucking everywhere. Dime a dozen.
But, Welders are no where to found.
Make up your mind!
Until you wrap your head around the fact that "smaller government" means "more laissez-faire"...you'll keep chasing your tail (risk).
Financial engineering isn't the problem. The problem is the unabated appetite for debt / lack of discipline.
And this administration is NOT bailing out companies. I can't believe people buy that line. The administration is protecting its own livelihood and attempting to expand the centralized power structure. The "bailouts" are intended for controlling purposes, not to ensure those companies return to a free market.
This would be much clearer if XOM was failing and Hussein's army stepped in to "bail them out." Everyone would see that for what it would be - a major chip in taking over the energy industry.
Selah...
I think it goes deeper than that. There are two ways to control a population (and every population needs a means to control itself). The two ways are "hope" and "fear".
When people have hope, they are energtic, empathic, ambitious, forward looking. They are willing to sacrifice themselves for their family, their children, their neighbors and their country ... everyone who they identify with.
When people are being controlled through fear, there is nothing worth sacrificing for. There is no purpose. There is no goal, no vision. There is nothing worthwhile enough. People become passive, lazy, depressed, observers instead of participant.
IMO, everything and I mean everything plays off of this. Greed, is a fear based reaction. It is a belief that one must draw in, protect, take from others so that there will always be enough for you. One sacrifices others for onesself.
The mechanisms of how you get there (debt, military conquest, a propagandized war on terror, financial oppression, police state, creating dependencies instead of freedoms) are just the symptoms ... But just as with modern medicine and its inclination to treat symptoms instead of causes, treating the symptoms of a fear based environment does not solve the problem. The fear must be eliminated and replaced with hope.
To put it in a religeous context: IMO, hope is the christ and fear is the anti-christ.
Wall Street would rather print welfare checks and gamble than work. Sadly, we have all become their abused spouses.
Fortunately Microsoft Office 2010, the keyboard shortcuts Microsoft Office 2007 are the same, just press Office 2010 the ALT key at Office 2007 any time to see tiny Microsoft outlook 2010 "badges" that label the functional MS office 2007 areas of command shortcuts Outlook 2010. And a subtle new Word 2007 format, the toolbar Office 2007 key to quickly dissipated download Office 2010 near the cursor. Overall, our Microsoft outlook favorite interface adjustments Office 2007 download are made in Microsoft Office the lower right corner that allows Microsoft Office 2010 download you to easily zoom in and out slider download Office 2007. By that we mean Office 2010 key that there is a decision-making documents Office 2010 download, spreadsheets attached microsoft office 2010 trial great importance to and office 2010 pro introduced the eyes easily office 2010 professional.