C-Suite Gamblers - The Real "Dumb Money" Inflating The Bubble

Tyler Durden's picture

Submitted by David Stockman via Contra Corner blog,

U.S. companies announced $141 billion of new stock buyback programs last month and $243 billion of new M&A deals. Both figures are all-time records, and according to bubblevision are further evidence that CEOs are bullish on their companies and the economic outlook.

You might say that. Then, again, it might put you in mind of swarming moths heading for a light bulb. In his excellent post yesterday, Wolf Richter didn’t bother with the long-form chart on M&A deals since, say, the turn of the century. He just cut to the chase with this self-explanatory comparison of pre-crash peak monthly deal rates:

In a similar vein, the run rate of 2015 stock buyback announcements is on pace to reach $1.2 trillion for the full year, shattering the 2007 record of $863 billion. Yes, indeed, there is much bullish enthusiasm in the C-suite, with the weekly announcement line literally going parabolic.

The above might be taken as evidence that stock option obsessed CEOs are no better market timers than the proverbial retail mullets. As even Goldman recently noted,

Exhibiting poor market timing, buybacks peaked in 2007 (34% of cash spent) and troughed in 2009 (13%).

Right. It certainly didn’t take long to forget the lessons of 2009. Companies are on pace to put fully 28% of their operating cash flow into the buyback mill; and recall that this Goldman chart is based on gross operating cash flow before CapEx or any other investment in future growth.

 

 

Yet there is much more to this than just bad timing. The fact is, due to drastic central bank falsification of financial market prices, the C-suite temptation to bang the buyback lever—especially with borrowed cash— is overwhelming; debt is ungodly cheap and the Greenspan/Bernanke/Yellen “put” has made the equity markets a dip-buyers dream.

Consequently, corporate stock repurchases in an ever rising market mean there is never a “pause button” moment. That is, boards and executives are never forced to ask why cash flow was squandered and balance sheets were impaired to fund stock purchases at, say, 125% of today’s price.

This is the real evil of the Fed’s stock market “put”. It enables the Wall Street gamblers and robo-traders to keep the market on a seamless ascent, thereby anesthetizing the C-suite against any residual fears that pumping stock prices in order to line their pockets with stock-option winnings could unexpectedly backfire.

That hasn’t happened for 75 months now—-a time span that in today’s “snapchat” world far exceeds the institutional memory of top executives and boards.

The potency of this perverse incentive can’t be exaggerated. As Jeff Snider recently documented, the companies in the S&P 500 with the most aggressive buyback programs have experienced a 70% share price gain during the last 30-month stock surge. That compares to just 50% for the index as a whole and only 30% for the entire basket of NYSE stocks.

ABOOK May 2015 Bubblewatch NYSE SP500 Buyback

Therein lies the essence of our current economic malaise. In its misguided effort to make debt cheap and thereby stimulate investment, jobs and growth, the Fed is actually disabling one of the most important ingredients of capitalist prosperity. Namely, the top executive leadership of business enterprises.

In effect, the mad money printers in the Eccles Building have infected the C-Suite with a lethal addiction to stock market gambling. In all of its manifold aspects—–M&A, stock buybacks,  spin-offs, asset securitizations, debt refinancings—–today’s corporate financial engineering is just a form of stock market gambling. And that’s primarily and overwhelmingly what the C-suite is preoccupied with.

It is no wonder, then, that real net investment has collapsed and remains in the sub-basement of historical trends. And here we are not talking about the monthly gross business investment numbers that the bubblevision commentariat jaws about when the number is good and excuses when it disappoints. Even on that basis, real gross business investment during the last 7 years has averaged only 0.9% annually——a far cry from historic 3-4% growth rates.

But what even this tepid growth trend omits is that as the US economy stumbles slowly forward it is wearing out its capital stock. So what counts is how much investment is being made over and above replacement of the productive assets consumed in current production, as measured by depreciation and amortization. That net investment number was $525 billion (2009$) in the year 2000—–just before business spending plunged during the tech wreck of 2001-2002.

Notwithstanding Greenspan’s manic interest rate cutting during the 30-month period after December 2000 (from 6.5% to 1.0% on federal funds) net investment in productive business assets recovered only modestly, reaching a peak of just $475 billion in 2007. What the Greenspan money printing spree accomplished, of course, was not enhanced business investment at all; it actually triggered a monumentally destructive mortgage borrowing and housing boom and bust that brought the US economy to its knees in late 2008.

During the resulting swoon, as shown below, real net business investment plunged to just $91 billion at the bottom of the Great Recession. And that was some kind of bottom. Only once (1975) during the previous 42 years had real net investment been that low.

So the subsequent gumming by Wall Street economists and their financial media lip syncers about the purportedly strong “rebound” in capital spending is just another example of the kind of context-free, ahistorical numbers scam which comprises the bubble finance narrative. Even then, the rebound in gross investment was decidedly subpar, meaning that by 2013 real net business investment had only reached $337 billion—-a level 36% below its turn of the century peak.

Moreover, 2013 was apparently close to the peak for this cycle. Since then both organic cash flow and incremental borrowings have overwhelmingly been cycled into financial engineering maneuvers. Accordingly, I estimate that net business investment peaked at about $350 billion in 2014 (not shown) owing to the fact that last year’s 6% gross CapEx increase only slightly exceeded the capital stock consumed in current production.

Stated differently, real net business investment in the year 2000 amounted to 4.2% of GDP. It then dropped to 3.2% of GDP during the next peak in 2007; and now (2014) stands at just 2.0% of GDP—-the lowest level for any non-recession year during the last half century.

Needless to say, the 15-year slump in real net investment shown above was not for lack of access to capital. In fact, US business has been on a veritable spree of bond issuance since the mid-1990s, and one that has been accelerating with each new bubble cycle.

Thus, it took 7-years to generate $4 trillion of corporate bond issuance after 1995; 5-years after 2002; and only 3-years since 2011. ABOOK May 2015 Corp Gross Total

In short, the Fed’s drastic financial repression has generated such a desperate scramble for yield among investors that the traditional function of the bond market has been eviscerated.

To wit, yield starved bond mangers, institutional investors and mutual fund chasing home gamers alike no longer give a wit as to use of proceeds from bond issues. By contrast, in the time of relatively honest financial markets under William McChesney Martin (1953-1970) and Paul Volcker (1979-1987), no respectable Wall Street underwriter or blue chip corporate board would have even considered bond issuance for the purpose of stock buybacks or serial M&A deals. The exuberant dealmakers and corporate empire builders of those halcyon times, in fact, had to use inflated stock to fund their dubious acquisitions——a form of capital raising that put their shareholders rather than their balance sheets at risk.

No longer. Companies are not only raising massive amounts of debt to fund financial engineering rather than real productive investment, they are also largely abandoning the use of stock as a currency. And that, too, is a function of the C-suite gambling culture nurtured by the Fed.

Why dilute your share base and near-term stock option payoffs when there is unlimited debt availability at after-tax costs of less than 2% for investment grade companies and 3-4% for even junk credits?

As documented in the chart below, you don’t. Even as M&A activity has soared to a $1.4 trillion annual rate, the share of deals financed with stock has dropped to just 20% compared to upwards of 50% before the turn of the century.

 

Yet even this does not capture the full extent of the Fed’s pernicious impact on the C-suite. Once upon a time, the fear of losing an investment grade bond rating constituted a form of financial chastity belt for CEOs and boards that became too fond of debt issuance to fund their dreams and schemes.

 

But no longer. The utterly desperate scramble for yield induced by ZIRP and what amounts to a permanent regime of central bank financial repression has fostered an eruption of issuance in the so-called high yield bond market. Whereas it took 7 years to raise $550 billion in high yield debt between 1996 and 2002, nearly double that amount—–$975 billion—-has been issued in the last three year alone.

 

ABOOK May 2015 Corp Gross HY

But wait, as they say on late night TV, there is more and its worse. The above data does not include the kissing cousin of junk bonds—-that is, leveraged senior loans. An overwhelming share of these debt tranches go into the funding of financial engineering projects, as well.

Once again, this is still another venue for misdirection by the talking heads. Their current hobby horse is that escape velocity is surely around the corner because the level of bank C&I loans has fully recovered and now stands at nearly $1.7 trillion or more than 20% above its pre-crisis peak.

Unfortunately, they are reading from their grandfathers’ Keynesian textbook. Back in the day, business recovery was indeed accompanied by rising bank loan advances to fund working capital and fixed assets. But the cyclical pattern since the turn of the century shown below is about expansion of the central bank driven financial bubble, and the financial engineering schemes which accompany it, not the expansion of business capacity to produce goods and services.

In fact, more than 100% of the $700 billion gain in C&I loan outstandings since the year 2000 represents the growth of the leveraged loan market, not the provision of traditional commercial credit.

Needless to say, the paint-by-the-numbers Keynesian commentariat cannot see the forest for the trees. What they construe as evidence of bullish confidence in the C-suite is actually proof of a profound deformation that is grinding the engines of capitalist growth and prosperity to a halt.

To wit, the equity capital base of American business is being systematically strip-minded by financial engineering from the C-suite. While the fundamental purpose of equity markets is to raise capital to fund growth, productivity and innovation, what has actually happened since the Greenspan era commenced in 1987 is just the opposite.

Over the last 27 years more than $5 trillion of net equity has been liquidated. That is, financial engineering—-especially stock buybacks and cash M&A deals—-has extinguished more equity than all the IPOs and secondary stock offerings during that period have raised. In effect, the equity markets have been transformed into gambling casinos which function to continuously ratchet-up the price of existing shares on the secondary market.

Corporate America's 27-Year Equity Liquidation Spree - Click to enlarge

Corporate America’s 27-Year Equity Liquidation Spree – Click to enlarge

At the same time, these same central bank financial repression policies have triggered an equal and opposite spree of debt securities issuance—–more than $9 trillion. So the business sector has raised a huge dollop of net capital, but it has all been pumped into the fixed coupon section of the aggregate business balance sheet.

Corporate Debt Spree - Click to enlarge

Corporate Debt Spree – Click to enlarge

The chances that this 27-year long conversion of US businesses into fixed debt mules would have occurred on the free market under a neutral tax regime are somewhere between slim and none. Instead, this is state policy at work, and not in a good way.

It is no wonder, therefore, that we have experienced three stock market bubbles in the last 20 years. The Fed’s heavy handed intervention and destruction of honest price discovery in financial markets has essentially turned the C-suite of American business into a giant enterprise in financial engineering and stock market gambling.

So doing, it has diverted massive capital resources and corporate cash flows away from productive investment and into the secondary markets. There the most adept speculators and hedge funds have captured monumental windfalls owing to their ability to surf on the endless bid of the C-suite for existing shares.

But these are unearned rents pure and simple. It is no wonder that real economic growth on main street is dying and that the 1% on Wall Street are luxuriating in their billions.

The baleful truth is this. In its arrogant and misbegotten seizure of all financial power, the nation’s central bank has turned the C-suite of corporate America into a destructive agent of bubble finance. That’s ‘dumb money’ with a vengeance.

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Oh regional Indian's picture

Many of these CEOs take token low salaries and huge stock grants exercised upon hitting stock price targets.

I had UTC options at $25 in 1997 and though I went to the Valley and was a part of a $3.5 billion buyout, I would have made more money if I had stayed at UTC.

UTC kept frigging splitting and doubling.....up up and away, while sillyCON vALLEY came crashing down in 2000...

So, for these C-Suite guys and their complex perks, the stock price is EVERYTHING, which makes it such a warped, twisted basis for LEADership.

I think DEALERSHIP and LEADERSHIP are anagrams for a reason...

Flooot...

https://www.youtube.com/watch?v=aaZcFjEOr2s

KnuckleDragger-X's picture

I was working for HP and saw the same thing happening as now, but we've got ZIRP this time. Of course this time they are sooo much smarter and nothing will go wrong.....

falak pema's picture

You worked for the war machine that hired Alexander Haig as CEO. 

haha, from war machine executive to Ori...some trajectory.

A life is well lived when its seen all sides of the prism/

Oldwood's picture

Just because this will ultimately fuck the corporations that are doing it, does not mean that those running the corporations are stupid. They will have cashed the check long before this shit comes tumbling down. They are no different that our politicians spending money that isn't theirs. Its always the next guy's problem while THEY retire to write their memoirs and history books.

cherry picker's picture

Why should anyone have confidence in anything anymore?

You can't believe in anything anyone writes or says.

Those CEO who buy back have two arms, two legs like the rest of us, put on their pants the same way.  They are just as stupid too.

When this big lie falls apart for what it is we won't even see wheelbarrows of cash walking around for a loaf of bread anymore as there is not enough cash and the digits will turn up zero when people access their accounts online.

Meanwhile a band of rag tag misfits is taking over the midddle east and they started with a couple of swords and AK 47s.

Lot of good the CIA, NSA and high tech military is eh?  Except for bombing the shit out of the people who happen to live and work there in the name of liberation.

 

Soul Glow's picture

I'm going into town and buying silver today.  Holy thank you JPM!

:)

duo's picture

How about some simple legislation.  No buybacks if you haven't given your employees a raise.  No buy backs if you have laid off a large number of people.  If you want to borrow money to buyback stock, then your CEO/wage slave maximum ration can not exceed 100.

exi1ed0ne's picture

I'd settle for risk having consequences myself.  Let companies buy back all the stock they want, borow all the money they want.  When the shit hits the fan the company gets no bail outs, special treatment, etc and the loan counterparties take it in ass for placing funds at risk for blatently idiotoc reasons.

rejected's picture

LOL..... in your dreams, suckers.

Dr. Engali's picture

Buy backs serve on purpose, to inflate the stock price in order to reward the insiders and nothing more.

NoDebt's picture

I can't believe they let shareholders ride their coattails on that.  It seems too generous.  There must be some way they could devise that they are the only ones who realize the gain while mere "shareholders" get nothing.

Dr. Engali's picture

2008 and 2009 rings a bell.

remain calm's picture

I am not sure companies using their cas to buy their shares is a bad idea. If you're Apple do you want to own apple shares or cash? bonds? I tink they are being smart. Probabably their boards would never authorize the purchase of gold. So this is their best option.

Dr. Engali's picture

Using cash to buy shares at lower prices may make sense, but that isn't what they are doing now is it? If you're an insider you're happy, but if you're a share holder more often then not in the long run you're left as a bag holder.

remain calm's picture

I think your wrong. If currency goes to Zero someday. Sure Applee shares might loose 75% in a stock market meltdown but they will apppreciate after they bottom. Currency will Not! Don't be so simple doctor. Must be an internist :)

LawsofPhysics's picture

So, you think that you will be a big "winner" after selling that stock when the currency it is priced in becomes worthless? 

good luck with that.

remain calm's picture

No Einstein. All assets will get repriced in the new money: SDR's or Gold backed currency or ???. Doesn't matter assets will get repriced in what ever the  money of trade at that time may be. So do you think that the Euro, the Yen or the dollars is more valuable then Apple, Exxon, Tyson, or farmland, gold mine? Good luck with that.

NoDebt's picture

"The above might be taken as evidence that stock option obsessed CEOs are no better market timers than the proverbial retail mullets."

When it comes time to buy, they're as stupid as everyone else.  When it comes time to sell, however, they know before everyone else it's time to get the hell out.  Like right before their accounting "irregularities" hit the news.

Monetas's picture
Monetas (not verified) Condor96 Jun 4, 2015 11:58 AM

We do not need Russian products .... they don't really make anything, anyway .... we will buy their resources if they are substantially cheaper .... and help them integrate into the civilized world .... but, if they are going back to their heavy handed ways .... we can and will punish them economically .... until they get back into line !

Kilgore Trout's picture

mullet: a sucker, especially of the genus Moxostoma.

boattrash's picture

#sukadikyellen

If the Fed was giving me free $$, I might buy back some of the things I've sold.

Hannibal's picture

Live 9/11 video that was aired once and never aired again

Pentagon hit by plane,..but no plane>?

https://www.youtube.com/watch?v=07Bn_CC_mrg

and,...what realyy happened to John Kerry.?

http://www.whatdoesitmean.com/index1875.htm

Mike Honcho's picture

No need to watch footage.  The building damage is blatant.  Same as the PA, no debris.  Those scenarios are self explainatory.

Monetas's picture
Monetas (not verified) Jun 4, 2015 11:44 AM

The Capitalist Conestoga Caravan is circling the wagons .... under the onslaught of Socialism .... "Buy Back Mountain" and M & A and off-shore production are defensive manouvers .... taxes and regulations and the cost of doing business .... are escalating relentlessly .... the productive sector is being squeezed like never before .... this is not rocket science !

MEFOBILLS's picture

Scenario from this article proves economic textbooks wrong. 

Company owners seldom borrow credit money to improve productivity; usually they use internal savings.   Owners are taking out loans to do stock buy backs, to then make rental gains on stock options.  It is yet another rent scheme.   Corporate raiders also borrow “credit” to greenmail companies.  Usually they strip pension funds as the basis for the new loan.

With stock buy-backs, American citizens become disenfranchised from an ownership society.   An ownership society allows labor to at least enjoy some of their productivity.   Financial capitalism “credit system” enables those who own the production means (which includes creators of capital – the banks), to benefit from productivity.  The machines and productivity is mostly a function of capital improving outputs – hence “unearned increment of production.”

Credit money is a loan, which means credit is first spent into money supply and then must be recalled at some point in future.   Recall rate is specified in debt instrument contract. The future is always unknown, and bankers may accelerate recall rate.

  In a downturn, Corporate Oligarchs will increase prices in order to pay off their loans.  Payoff is on an inexorable schedule, forcing corporate titans into raising prices and/or laying off workers.

  In an ownership society where stocks are owned by small laboring investors, company owners can just tell their stock holders…sorry not so much in the way of profits.  Let’s get through this downturn, and I won’t lay everybody off.

In an ownership society risk is spread across the many, and hence futurity is not asked to make loan good.

Of course, the better solution is to dump Western credit money system into the crapper, and thus you don’t get these kinds usurious games.  These games have predictable outcomes.   Private credit mechanism is creating corporate oligarchy, or perhaps a more descriptive term “financial feudalism.”  An opening chasm will continue to widen between labor and “capital.”

From a social perspective, when wealth is mal-distributed, meaning oligarchy is taking out-sized rental (theft) gains, there will be revolution.

 

www.sovereignmoney.eu

JR's picture

Thanks for exposing and countering the inflated balderdash fed by the Fed and Wall Street to the public and investors.

As the stock market is running at all-time records, the Fed is moving money constantly into the banks to “to help the economy.” It is a tsunami of stealing money from American citizen-investors and transferring it to the bankers and financial intermediaries – the managerial capitalists.

“Today’s capitalism…has departed, not just in degree but in kind, from its proud traditional roots. Over the past century, a gradual move from owners’ capitalism—providing the lion’s share of the rewards of investment to those who put up the money and risk their own capital—has culminated in an extreme version of managers’ capitalism—providing vastly disproportionate rewards to those whom we have trusted to manage our enterprises in the interest of their owners. Managers’ capitalism is a betrayal of owners’ capitalism, a system that worked, albeit imperfectly, with remarkable effectiveness for the better part of the past two centuries, beginning with the Industrial Revolution as the eighteenth century turned to the nineteenth.”

– John C. Bogle (2005), The Battle for the Soul of Capitalism: How the financial system undermined social ideals, damaged trust in the markets, robbed investors of trillions—and what to do about it”

kw2012's picture

I got to hear a senior finance executive at a mega telecomm speak. He was so GIDDY that they could go borrow money for almost nothing and implement huge stock buybacks. When interest rates go up, it will be a HUGE problem. 

adr's picture

You don't become a CEO to run a business. You don't care about what your company actually makes.

You become a CEO to sell the shares of the company you were given and buy a new larger mansion and a bigger yact.

If you bankrupted 100 companies, but caused each of their stocks to rise 100 fold before they failed, you are called an extremely successful businessman. In fact you'd be on the short list of every exchange traded company for their next CEO.

Stock based compensation has perverted every facet of business and destroyed the economy.

slightlyskeptical's picture

It's become pretty obvious. Long term I will look to be putting my money into those companies that bought back in the 2008-2009 timeframe. You are either a steward to the shareholders or you are not. If you are buying back stock at already high valuations then you are not being much of a steward to anyone but yourself.

Atomizer's picture

Latest rumor, T-Mobile and Dish Network merge. Another monopoly to compete with Netflix in rolling video stream via satellite. Sorry, my GPS is turned off, location traffic services are off. Past history of pinged locations get cleaned. 

We just received a new BlackBerry 10 software update yesterday. Cannot delete the Amazon/AmazonAPP OS installed application. Presently, it's not drawing any activity. Just a eye sore on my screen. Always lock out 3rd party APP from downloading. Will create a new folder called, Flushed down the toilet OS APP. Drop into file, be gone. 

JR's picture

For years it has been taboo to specifically discuss the influence of Jews in America’s financial markets. A recent report suggests these discussions are entering mainstream media. And that includes the Jewish leverage in mergers and acquistions.

Philip Weiss writes: “Maybe it’s a sign of the end of the Jewish establishment: here are two recent mainstream pieces that frankly address the role of Jews in transforming the culture of Wall Street. The pieces are most remarkable because they express a frank recognition of the rise of Jews into the establishment beginning in the 70s, something the second author, Rob Eshman of the Jewish Journal, says we haven’t been allowed to talk about.

“First at the PBS News Hour of all places, economics correspondent Paul Solman highlights a portion of a book by John Weir Close on the mergers and acquisitions (M&A) trend on Wall Street in the ‘70s. The PBS piece is titled, ‘The Luck Sperm Club: Jews, M&A and the Unlocking of Corporate America.’ Close writes that Joseph Flom called his associates ‘the Lucky Sperm Club’:

In the late 20th century, M&A was driven by two Jews, Marty Lipton and Joe Flom, who had simultaneous epiphanies about how to take advantage of new government regulation –in other words, how to turn the rules into an instruction manual for transforming the buying and selling of companies into a profession itself. But rather than seek to buy, sell or keep companies themselves, they became the Sherpas, interpreting regulatory maps and making up new law as they went along…

…it was primarily Jews who first became expert in taking over companies against the will of their existing executives.

“Then there’s this excellent piece by Rob Eshman at the Jewish Journal on the Film, ‘The Wolf of Wall Street”…

http://mondoweiss.net/2014/01/reflects-though-scorsese

This supports Counterpunch’s Jeffrey Blankfort’s position in “The Israel Lobby and the Left”:  “Jews played a central role in American finance during the 1980s, and they were the chief beneficiaries of that decade’s corporate mergers and reorganizations.”

topshelfstuff's picture
"To learn who rules over you, simply find out who you are not allowed to criticize." - Voltaire

 

[ IMPORTANT 101 Minutes, Save and find the time to listen, explains all ] Pawns In The Game by William Guy Carr - YouTube https://www.youtube.com/watch?v=-EOpmew5rh0
falak pema's picture

So what will give back to US capitalism its pristine virginity; its irrepressible lightness of being; before the JEW, the black man and the Keynesian state, along with that instrument of statism the FED, corrupted that pristine mindset--that loved to use free labour cotton pickin blackies on their plantations and considered that "only a dead injun was a good injun" to win the West to Colt's and Winchester's law and order mantra-- went down the drain based on Keynes's obsession with bad money and bad ass homosexuality.

When the Wasps go nostalgic you know that the USA's scions are carbon copies of their original genitors : those that wore red coats and sang rule Britannia in Andrew Jackson's war in New Orleans. 

George III's ghost, if he came back to haunt Washington DC today, would feel very much at home : All the Yanks need to look like us TRULY  is for them to bow to the Queen! 

Haha, Oligarchy America goes back to being decidedly aristocratic to its deep down funny bone. 

The Jewish state was a concoction of Pax Britannica to solve the Problem in Europe and to create subsequently a new Templar state in the Oil patch of Ghawar; once it became clear that that was the region that had all the free black gold! 

So they are a creation of Pax Americana as successor of Pax Britannica; not the other way round.

And for that matter Pax Americana has gone further : it created Al Qaeda to oust Soviets from Afghan and now ISIS to oust Assad from Syrac! 

The Bush legacy makes America a fabricator of its own Frankensteins. 

Ain't that awesome? 

So what has the Jew got to do with the Waspish creation of the NWO, except be its executioner; like Dear Henry was, as were Zbig, Rubin, Greenspan, Wolfowitz, Perle, Bernanke, Albright, Nuland and all those other spear carriers of Pax Americana ? 

Don't confuse real power and its spear carriers...The Jews are like the Rothschild : facilitators of Empires; nothing more. The Emperor is not a Jew.

Today he is a Wasp compatible mulatto. What progress. Septimius Severus in new Rome ! That's how powerful Empires are; blood lines don't count, as long as you serve The Great Game.

JR's picture

The Fed is the creation of the Rothschilds and Kuhn Loeb and its unique model of corrupting government and funneling public money into the pockets of the owners of the Fed may have begun in parasitic form but who can doubt that the controllers of the Federal Reserve now are controllers of America. And a quick look at the key financial figures reveals that they are predominantly Jewish, not white WASPs.

A society that emphasizes the independence of individuals and openess such as America, is fertile ground for the establishment of Jewish collective power that uses its group strategy and cohesiveness for the ultimate displacement of the culture it targets.

The Jewish advocacy of cultural pluralism as a model for Western societies, using  open immigration, integration and miscegenation, has been used to criticize everything about Western society while glorifying everything primitive. Multiculturalism is used by the Jews to displace whites in their traditional lands and to weaken the power of their perceived competitors – white Christian Western society.

It is a group evolutionary strategy that the Jews have used throughout history to advance their ethnic group interests over non-Jews.

Earl Raab, former president of heavily Jewish Brandeis University, predicted last century that the Jewish diversity movement in the US would displace the people and culture of America’s founding gentile white stock by the middle of this century both in numbers and influence. He wrote:

“We have tipped beyond the point where a Nazi-Aryan party will be able to prevail in this country.”

He continues: “”[W]e [Jews] have been nourishing the American climate of opposition to bigotry for about half a century. That climate has not yet been perfected, but the heterogeneous nature of our population tends to make it irreversible…”

As yet it appears the white European culture does not have the organization or the will to take on the battle, instead accepting the charge that they are the haters instead of the other way around.

Thus, one of the most open societies in the world is being replaced by one of the most closed societies in the world as the Jews achieve social, political and cultural dominance over the peoples of the United States and Europe. In short, the rulers of the ruling class have become primarily Jewish.

Queen Elizabeth may be extremely rich but she doesn’t print money.

JR's picture

And, oh yes. "So what has the Jew got to do with the Waspish creation of the NWO"?

Let me pose this question asked long ago by Dr. Dennis Laurence Cuddy: "Will the New World Order be invoked to free Palestinians from Israeli domination?"