The Ruling Elites Bought Themselves A Cycle And Now They Want To Squeeze All They Can Out Of Their Investment

Mark Kirk isn't a teabagger. They don't even like him. He's a relatively refined and mainstream kind of guy... in a conservative kind of way. And he's gay, although afraid to admit it publicly and tightly locked in the closet. And, unlike the neanderthals, who Michael Bloomberg was wailing about in yesterday's Wall Street Journal, Mark Kirk certainly does know how to read and does know where China is. He even crossed the aisle to vote with the Democrats late in September when they passed a bill opposing Chinese currency manipulation-- and against Boehner, Cantor, Dreier, Ryan and the rest of the Republican House leadership. Bloomberg, who fancies himself the anti-Teabag independent and reasonable moderate who should be president, endorsed Kirk last month and has a history of contributing to his campaigns going back to Kirk's first (unsuccessful) try for the Senate.

Visiting China this week, Bloomberg, NYC's globalist, multinational mayor, growled about congressional attempts to prevent China from illegally dumping solar panels into the American market with the express purpose of driving U.S. firms out of business. “If you look at the U.S., you look at who we’re electing to Congress, to the Senate-- they can’t read,” he said. “I’ll bet you a bunch of these people don’t have passports. We’re about to start a trade war with China if we’re not careful here,” he warned, “only because nobody knows where China is. Nobody knows what China is.” Former Rep. Robert Wexler, then a member of the House Foreign Relations Committee, made the same observation in his book, Fire Breathing Liberal, about Know Nothing members of Congress, including members of his committee, for whom not having a passport-- or even eating "foreign" food-- was a badge of honor. Wexler endorsed Charlie Crist for the open Florida Senate seat and Crist lost to one of the bunch of Know Nothings Bloomberg was whining about, Marco Rubio, who's waltzing into the Senate-- and, many fear, the national stage-- after a 49% win, Crist and Kendrick Meek splitting the non-teabaggy vote.

Bloomberg's push to make the GOP more mainstream saw him endorsing Michael Castle in Delaware, who famously lost the Republican nomination to a former witch and anti-masturbation candidate, and Mark Kirk in Illinois. His Illinois candidate, Mr. Kirk, won, thereby helping to empower the provincial Know Nothings like Rubio, Ron Johnson (WI), Mike Lee (UT), Richard Burr (NC), Pat Toomey (PA) and Jim DeMint (SC). Bloomberg is no teabagger; he really is an enlightened mainstreamish kind of conservative. He's pro-choice, pro-gay... But, when push comes to shove, he a billionaire corporatist, one of them, not one of us. Robert Reich's blog yesterday dealt with America's two economies and why one is recovering and the other isn't. Bloomberg's-- the Big Money economy "comprised of Wall Street traders, big investors, and top professionals and corporate executives"-- is just fine, thanks to Bernanke's zero interest rate policies and money-printing mania: free money, as Patti Smith sang, but not for us; for them.

Free money can almost always be put to uses that create more of it. Big corporations are buying back their shares of stock, thereby boosting corporate earnings. They’re merging and acquiring other companies.

And they’re going abroad in search of customers.

Thanks to fast-growing China, India, and Brazil, giant American corporations are racking up sales. They’re selling Asian and Latin American consumers everything from cars and cell phones to fancy Internet software and iPads. Forty percent of the S&P 500 biggest corporations are now doing more than 60 percent of their business abroad. And America’s biggest investors are also going abroad to get a nice return on their money.

So don’t worry about America’s Big Money economy. According to a Wall Street Journal survey released Thursday, overall compensation in financial services will rise 5 percent this year, and employees in some businesses like asset management will get increases of 15 percent.

The Dow Jones Industrial Average is back to where it was before the Lehman bankruptcy filing triggered the financial collapse. And profits at America’s largest corporations are heading upward.

But there’s another American economy, and it’s not on the mend. Call it the Average Worker economy.

Last Friday’s jobs report showed 159,000 new private-sector jobs in October. That’s better than previous months. But 125,000 net new jobs are needed just to keep up with the growth of the American labor force. So another way of expressing what happened to jobs in October is to say 24,000 were added over what we need just to stay even.

Yet the American economy has lost 15 million jobs since the start of the Great Recession. And if you add in the growth of the labor force-- including everyone too discouraged to look for a job-- we’re down about 22 million.

Or to put it another way, we’re still getting nowhere on jobs.

One out of eight breadwinners is still out of work. Most families in the Average Worker economy rely on two breadwinners. So if one out of eight isn’t working, chances are high that family incomes are down compared to what they were three years ago.

And that means the bills aren’t getting paid.

According to a recent Washington Post poll, more than half of all Americans-- 53 percent-- are worried about making their mortgage payments. This is many more than were worried two years ago, when the Great Recession hit bottom. Then, 37 percent expressed worry.

Delinquency rates on home loans are rising. Distressed sales are up as a percent of total sales.
Most people in the Average Worker economy own few shares of stock, if any. Their equity is in their homes. But with all the delinquencies and distressed sales, the housing market has a glut of homes for sale. As a result, home prices are still dropping. So the net worth of most Americans is still dropping.

And even though interest rates are falling, most people in the Average Worker economy can’t refinance their homes. They can’t get home equity loans. Banks don’t want to lend to the Average Worker economy because people in it are considered bad credit risks. They still owe lots of money, their family incomes are down, and their net worth has fallen.

And according to the Reuters/University of Michigan survey of American consumers, expectations about personal finances are at an all time low.

Inhabitants of the Big Money economy are celebrating Republican wins last week. They figure financial regulations will be rolled back, environmental regulations will be canned, the Bush tax cut will be extended to the top 1 percent, and it will be harder for workers to form unions.

Inhabitants of the Average Worker economy aren’t so sure. The economy has been so bad they’re angry at politicians. They showed their anger at the ballot box. They took it out on incumbents.
But if nothing changes in the Average Worker economy, there will be hell to pay.

If a modern day Madame DeFarge happens to come across this blog, allow me to point cher Thérèse in the direction of Alabama Republican Spencer Bachus, who will replace Barney Frank as the chairman of the House Financial Services Committee in Janvier. Bachus plans to use his committee to attempt to roll back-- or at least cripple-- the Wall Street reforms that passed last year. He owes them that... at least. The next chairman has raised $6.1 million from the finance, insurance, and real estate sector, with more than $1.1 coming in this election cycle alone. Over his career, Bachus has pulled in $1.2 million from commercial banking donors, and another $1.1 million from those representing the securities and investment industry. And you know what... he's not waiting 'til January to get busy paying back the Big Money economy Reich was talking about above.

The corrupt Alabama Wall Street shill, who claims the Volcker Rule, meant to curtail dangerous gambling and expansionist proclivities of barely regulated banks, insists, rather speciously, that it actually curtails job creation. He sent a letter to Geithner, who agrees with him anyway, about not enforcing it. But on Friday the two senators who wrote the provisions, Jeff Merkley (D-OR) and Carl Levin (D-MI), sent a letter of their own. And theirs', unlike Bachus', instructed regulators to follow the law. Merkeley's office pointed out in a press release to Oregon media that "despite recent comments from some who opposed reform of the high-risk trading that contributed to the collapse of the American financial system, strong regulations are essential to preventing future boom and bust cycles that jeopardize the financial stability of American families."

“Now that Congress has passed and the President has signed into law the strongest protections for our financial system in 75 years, we look to you to follow the statutory intent to eliminate high risk and conflict-ridden activities at banks, and limit them at systemically significant non-bank financial firms,” the senators wrote.

“The Merkley-Levin provisions on proprietary trading and conflicts of interest, often called the Volcker Rule, offer key measures to address these issues. The Financial Stability Oversight Council (FSOC) study will hopefully recommend vigorous enforcement of them and provide guidance to agencies on how to ensure their effective implementation. Financial firms must not be allowed to rely on implicit or explicit government support, through access to the Federal Reserve discount window, FDIC deposit insurance, or other taxpayer- financed mechanisms, to place bets where heads they win, tails taxpayers lose.”

In closing, I'd like to recommend an interview by Jan Frel with historian Lawrence Goodwyn, author of The Populist Movement, a condensed version of his harder to find Democratic Promise. Right at the outset, he tells Frel that he "underestimated the capacity for sheer greed that drives American banking. The evidence is compelling that a great many people within the financial community acknowledge no limits because they have a seriously atrophied loyalty to American society as a whole. I speak here of the cornerstone of the American democratic experiment itself: the sense that a majority of us have had-- have always had-- that we are in this thing together. Bankers are not with the rest of us on this. Perhaps they never have been. All exceptions freely conceded, but the general reality still holds: they are killing the promise of this republic." That certainly validates my own experience with that... sector.

The sequence of events is not debatable: 1) In 2001 Republicans inherited Clinton's hard-earned "balanced budget." 2) They immediately moved to dismantle it by generating a trillion-dollar tax cut for the rich. No more balance in the budget. 3) The GOP then added in a war against the threat of Saddam Hussein's "weapons of mass destruction" that did not exist because the "evidence" concocted by Dick Cheney was fraudulent. Another trillion more or less. 4) En route, they tossed in a prescription drug benefit that added more trillions, conceivably forever-- or until we get the public option, whichever comes first. 5) An additional inheritance from Clinton was the culmination of the relentless conservative-championed campaign for "financial deregulation" sanctioned by Alan Greenspan, the old Fed chairman, and buttressed by the Milton Friedman-inspired balderdash trumpeting the emergence of a "rational market." (For reasons that have always escaped me, the latter piece of puffery found a home in the American economics profession.) 6) As a sendoff for his final days, Bush's Secretary of Treasury and his Federal Reserve Chairman found themselves saddled with the inevitable post-regulation financial crisis that (inconveniently enough) could no longer be postponed until after the 2008 election. The $800 billion or so embedded in the Toxic Assets Relief Program was the result.

...Over the past 30 years, the percentage of the national wealth held by the top 1 percent of the population has gone from 9 percent in 1976 to 28.9 percent in 2007. Quite soon this pampered one percent, heavily concentrated in the financial sector, will own one-third of all the wealth in the country. They do especially well in times of severe popular stress, whether these depleting moments are called depressions, recessions or downturns. "Bubbles" can also be counted on to afford opportunities for rapacious plunder, though in advanced capitalist countries, housing bubbles have provided especially lucrative terrain. Democracy as we know it cannot survive this maldistribution of the fruits of the labor of the toiling millions whose belief in the country make America what it is.

It gets better and better and I really recommend you read the whole thing, especially if you'd like to know why there's been so little deviation since Obama won in 2008 from the disastrous Bush years "on the key issues of war, empire and the distribution of wealth in the country."