Friday, March 14, 2014

The Economic Abomination Continues

This is a story from yesterday that should easily have been the most important news of the day, but which is already being swallowed in the black hole that exists for any facts which threaten the beltway narrative paid for by the rich:

"New figures show that the bonus bonanza of 2013 didn’t disappoint. According to the New York State Comptroller’s office, Wall Street firms handed out $26.7 billion in bonuses to their 165,200 employees last year, up 15 percent over the previous year.
The $26.7 billion Wall Streeters pocketed in bonuses would cover the cost of more than doubling the paychecks for all of the 1,085,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour."

Yes, you read that correctly.  The bonuses given to a pack of Wall Street vampires who contribute exactly nothing to our well-being except sucking it dry, added up last year to more than the entire amount paid to all full time minimum wage workers in the country.

And yet, everyone goes along with this division of wealth as though it is perfectly normal, even though it is more unbalanced than at any time in the history of the United States, exceeding at this point even the grotesque pampering of the rich (as a result, of course, of Republican policies, which have not changed a bit since then) which caused the Great Depression, and led directly to World War II.

Are any of you old enough to remember when a stock broker was a guy who helped you invest your money wisely, and probably made a pretty good living doing so?  Now they are nothing but parasites, without even a pretense of serving anyone but themselves.  At this point even the rich suckers lured into most hedge funds end up getting shaved of their possessions:  Bloomberg reports that, for the fifth year in a row, hedge fund returns have trailed the Standard and Poor averages.  This means that hedge fund managers could have simply taken the rich people's money, put it in a mutual fund, and made billions off of their very rich investors; and for this they are given a fortune in bonuses.  So much, by the way, for the idea that these Wall Street guys are the "best and brightest" and that they work so hard for their money.  A chimpanzee with a dartboard could have done better.

Let me make my position clear:  Hyper-rich people and their tools in the financial "industry" need to be stripped of virtually all of their wealth, by force if necessary.  This is not an argument for fairness, although the current situation is obviously grossly unfair.  It is an argument from economic necessity.  Presently, as happened during the 1920's, so much money has shifted to the rich that they have no productive way to invest their ill-gotten gains.  The result of this situation is to inflate the value of all investment vehicles far beyond what could ever have been justified by expected earnings.  This is exactly what causes bubbles, and what is responsible for the "boom and bust" cycles that dominated world trade from the Renaissance to the 1930's, when Democrats enacted legislation to prevent this from happening.

Of course, Republicans and their bought and paid for supply-side economists knew better, and consequently, under the Republican rule of Reagan and the Bushes, those Democratic laws were done away with.  The consequences were almost immediate- another collapse into depression- a depression that was narrowly averted due to one single fact: in 1929, when the stock market collapsed, Democrats were unable to take over the White House until 1933, giving the Republicans over three years to continue running the country according to their self-serving ideological nonsense.  It was during this period that an investor-class crash was turned into a world wide economic catastrophe.  This time, we only needed to wait a few months to stop a Republican administration from continuing the bankrupt policies that caused the 2008 crash, so we only got a near-depression, prolonged as long as possible by Republican intransigence.

Well, we cannot allow this much money to accumulate in the hands of the very rich, unless we are content to have a depression every four decades or so.  This is a simple truth easily understandable by anyone who has ever heard about the most basic economic principle in the world- the law of supply and demand.

3 comments:

Green Eagle said...

Off topic: Magpie, a little while ago you asked me to say something about the intelligence of parrots. Try watching the following short video:

https://www.youtube.com/watch?v=7yGOgs_UlEc

You can see behavior here which reveals an understanding of the meaning of speech that is far beyond anything displayed by other animals.

Magpie said...

Thanks GE, I went and read about 'Alex'... amazing stuff.

Grung_e_Gene said...

Bruce Rauner, self-described .01%, is probably going to be the next Governor of Illinois. Rauner made his money, just like Mitt Romney, by Hedge Fund theft.

By Rauner's own estimate 2/3rds of GTCR funds were supplied by Public Pensions. Here in Illinois
GTCR has "managed" money for the Illinois Teachers' Retirement System (TRS) and the Illinois State Board of Investment, the state's largest and third-largest, respectively. Additionally, GTCR had access to state and municipal pension plans from the San Francisco City and County Employees' Retirement System to the Massachusetts Pension Reserves Investment Management Board.

For this "work" GTCR, takes a 20% or more slice plus consultation and management fees. Rauner got paid no matter what the funds he "managed" did.

So, it's not surprising that Illinois and other Public Pensions began to go into insolvency once Vandal Capitalists got their hands on the funds. In fiscal year 2009, TRS lost $4.4 Billion (22% of its' value) in 2008 TRS lost 5% of it's value because of the Management of their Portfolios by Rauner-types.

Additionally, Rauner got rich in the 90's by buying up Retirement and nursing homes and then slashing service, eliminating nurses, downgrading care and leaving the elderly to rot and die.