Yesterday when the markets closed the price of oil was only 66 cents shy of $100. What a come back. We expected oil, stocks and gold to sink down deep…and not come back for a long time. So far, we’re wrong a about that. People are still sending money to Wall Street to buy stocks and gold.
Where is all this money mail coming from? We don’t know exactly, but there are foreign stamps on many of the envelopes. Foreign stock markets are down. Many of the leading foreign bonds are down too. Investors look at Italy; they see Vesuvius. They look at France; they see Dunkirk. They look at India; they see a Black Hole.
Investors are afraid. They look to the USA for safety.
But oil? Hmmm… We don’t know the cause, but we have a pretty clear idea of the consequence. High oil prices make it harder for oil-dependent US households to make ends meet…thereby reinforcing the slump in consumer spending.
Yes, the Great Correction proceeds. Low levels of consumer spending, high unemployment, with periodic bankruptcies, blow-ups and financial crises.
And what else do we see ahead?
…falling real estate prices…they could go down another 30%, or so
…the sell-off in the stock market (hasn’t happened yet)
…more zombification of the economy, with greater “investment” in unproductive industries — health care, education, and war
…more resentment towards the rich…tax increases…revolution…and repression…
…growing corruption as people become more cynical… “Get it while you can,” they will say
Since the beginning of time, the insiders have always had an advantage. That’s why people want to be insiders; they know that’s where the money is.
In business and investment, it is perfectly normal, healthy and unavoidable. The people on the inside always know more than the people on the outside. So, you tend to listen to the insiders. You hope you can trust them. And when an insider wants to sell you something…beware. Caveat emptor.
But along came the feds. They tried to pretend that insiders and outsiders were on a level playing field. They wanted the outsiders to feel that they could give the insiders their money without worrying. There was nothing to worry about.
The feds and the insiders work together. The insiders give the feds jobs and money. The feds look out for the insiders too. Putting in place a heavy and expensive regulatory system, the SEC helped them from competition. It also shifted income from productive, profit-making activities to the zombies — the lawyers, administrators, and regulators who, not entirely by coincidence, are the feds themselves.
Since then, the parasites have multiplied…and the insiders have done better than ever. People on Wall Street used to earn about as much as similar people in other industries. Now, they earn far more. As a percentage of the nation’s total for public companies, Wall Street profits rose 3 times — from 10% to 40% since the ’70s. Tyler Cowen reports that in the mid-2000s “the top 25 hedge fund managers combined earned more than all of the CEOs from the entire S&P 500. The number of Wall Street investors earning over $100 million a year was nine times higher than the public-company executives earning that amount.”
And corporate CEOs, who used to earn 40 times as much as their lowest paid employees in the ’70s, now earn 400 times as much.
This field is tilted so far in the insiders’ favor the outsiders can barely stand up.
The Pittsburgh Post Gazette reports:
For the three decades between 1949 and 1979, family incomes in America rose evenly for every fifth of earners, from the bottom 20 percent through the top 20 percent. In other words, a strong economy lifted all boats at about the same rate.
Since then, the rich have pulled away from everyone else. A new study by the nonpartisan Congressional Budget Office showed that between 1979 and 2007, after-tax income for the top fifth of earners went up by 103 percent, compared with 40 percent for the middle three-fifths of earners and just 18 percent for the bottom fifth.
The greatest benefits went to those at the very top. Research by economists Emmanuel Saez and Thomas Piketty shows that the top 1 percent of earners increased their share of pre-tax income in America from 8 percent in 1979 to 18 percent in 2008, the highest level that group had garnered since 1928, the year before the Great Depression began.
There is a hotly contested, unresolved debate over what caused the rich to get so much richer over the past three decades, and whether that is a bad thing.
Intellectuals may be debating what caused the rich to get so rich. No one else cares. They just know they don’t like it. And they want to do something about it. Probably, just the worst thing.
The average person may not sit still for an explanation, but how about you, Dear Reader? Want to know why the rich got so rich?
Well never mind. But if only the feds had allowed capitalism to do its work 3 years ago! It chewed up Lehman Bros and was about to go after Goldman, Bank of America…GM…and then it would have bankrupted businesses, banks, and households all over the world…leaving a lot of CEOs out of a job. Talk about contagion! The whole capital structure was about to get sick.
If the feds had allowed creative destruction to continue…there would be a lot fewer rich people around today. And we wouldn’t be having this discussion.
Survivors of concentration camps report that the secret to staying alive was often simple: those who were near the kitchen made it; those who were not didn’t.
In our modern, degenerate form of capitalism the secret is the same: you want to be near the kitchen…the place where the food is handed out. You want to be near the government. That’s why there are so many lobbyists in Washington. And why the only city in America where property prices are going up is Washington, DC.
The politicians collect money from all over the country. They give much of it away in the Washington, DC metropolitan area. Montgomery County, Maryland and Fairfax County, Virginia are two of the richest counties in the country. Why? They’re right next to the kitchen... Read more>>:
Yes, the Great Correction proceeds. Low levels of consumer spending, high unemployment, with periodic bankruptcies, blow-ups and financial crises.
And what else do we see ahead?
…falling real estate prices…they could go down another 30%, or so
…the sell-off in the stock market (hasn’t happened yet)
…more zombification of the economy, with greater “investment” in unproductive industries — health care, education, and war
…more resentment towards the rich…tax increases…revolution…and repression…
…growing corruption as people become more cynical… “Get it while you can,” they will say
Since the beginning of time, the insiders have always had an advantage. That’s why people want to be insiders; they know that’s where the money is.
In business and investment, it is perfectly normal, healthy and unavoidable. The people on the inside always know more than the people on the outside. So, you tend to listen to the insiders. You hope you can trust them. And when an insider wants to sell you something…beware. Caveat emptor.
But along came the feds. They tried to pretend that insiders and outsiders were on a level playing field. They wanted the outsiders to feel that they could give the insiders their money without worrying. There was nothing to worry about.
The feds and the insiders work together. The insiders give the feds jobs and money. The feds look out for the insiders too. Putting in place a heavy and expensive regulatory system, the SEC helped them from competition. It also shifted income from productive, profit-making activities to the zombies — the lawyers, administrators, and regulators who, not entirely by coincidence, are the feds themselves.
Since then, the parasites have multiplied…and the insiders have done better than ever. People on Wall Street used to earn about as much as similar people in other industries. Now, they earn far more. As a percentage of the nation’s total for public companies, Wall Street profits rose 3 times — from 10% to 40% since the ’70s. Tyler Cowen reports that in the mid-2000s “the top 25 hedge fund managers combined earned more than all of the CEOs from the entire S&P 500. The number of Wall Street investors earning over $100 million a year was nine times higher than the public-company executives earning that amount.”
And corporate CEOs, who used to earn 40 times as much as their lowest paid employees in the ’70s, now earn 400 times as much.
This field is tilted so far in the insiders’ favor the outsiders can barely stand up.
The Pittsburgh Post Gazette reports:
For the three decades between 1949 and 1979, family incomes in America rose evenly for every fifth of earners, from the bottom 20 percent through the top 20 percent. In other words, a strong economy lifted all boats at about the same rate.
Since then, the rich have pulled away from everyone else. A new study by the nonpartisan Congressional Budget Office showed that between 1979 and 2007, after-tax income for the top fifth of earners went up by 103 percent, compared with 40 percent for the middle three-fifths of earners and just 18 percent for the bottom fifth.
The greatest benefits went to those at the very top. Research by economists Emmanuel Saez and Thomas Piketty shows that the top 1 percent of earners increased their share of pre-tax income in America from 8 percent in 1979 to 18 percent in 2008, the highest level that group had garnered since 1928, the year before the Great Depression began.
There is a hotly contested, unresolved debate over what caused the rich to get so much richer over the past three decades, and whether that is a bad thing.
Intellectuals may be debating what caused the rich to get so rich. No one else cares. They just know they don’t like it. And they want to do something about it. Probably, just the worst thing.
The average person may not sit still for an explanation, but how about you, Dear Reader? Want to know why the rich got so rich?
Well never mind. But if only the feds had allowed capitalism to do its work 3 years ago! It chewed up Lehman Bros and was about to go after Goldman, Bank of America…GM…and then it would have bankrupted businesses, banks, and households all over the world…leaving a lot of CEOs out of a job. Talk about contagion! The whole capital structure was about to get sick.
If the feds had allowed creative destruction to continue…there would be a lot fewer rich people around today. And we wouldn’t be having this discussion.
Survivors of concentration camps report that the secret to staying alive was often simple: those who were near the kitchen made it; those who were not didn’t.
In our modern, degenerate form of capitalism the secret is the same: you want to be near the kitchen…the place where the food is handed out. You want to be near the government. That’s why there are so many lobbyists in Washington. And why the only city in America where property prices are going up is Washington, DC.
The politicians collect money from all over the country. They give much of it away in the Washington, DC metropolitan area. Montgomery County, Maryland and Fairfax County, Virginia are two of the richest counties in the country. Why? They’re right next to the kitchen... Read more>>:
