Thursday, October 18, 2012

Focus on the 1% Takes Heat Off Wall St

The devious minds that slowly took over direction of the US economy and captured the watchmen (regulators + politicians) are pretty smart. Previously, I have written about the bust out, which was the financial coup performed on America and the way the banks have captured our press. The Wall St banking interests are full of well connected and intelligent people. As I wrote before, they can exert influence on the media due to their financial funding and power over the biggest media outlets. Allowing the OWS movement to receive media attention, voice their insane demands, make a mockery of pinpoint TBTF Wall St bank reform, shifted the talk from Wall St reform to an attack on an idea: the 1%. This shifted heat from Wall St to the entire 1% overclass.

What the US went through in 2007-2009 was a financial shock to the core dollar zone. Previous problems had been on the periphery like the Asian banking crisis, Mexico or random post-Communism countries. The US crisis was different and should have sparked reform. We know it did not, and assets are even more concentrated no in fewer banks while TBTF banks have increased their use of derivatives. The mood in the nation in late 2008 to 2009 was definitely one of 'get the bankers'. In a rare move of sheep wakign up, Paulson's original three page plan for TARP created enough citizen blowback to cause Congress to slow him down. The mood in early 2009 was strong enough to get the Tea Party moving and cause President Obama to tell bankers 'the only thing standing between you and the pitchforks is me' (paraphrasing). President Obama doubled down on bailouts, and signed the messed up Dood-Frank reform bill into law. People were still unhappy with the TBTF banks and were wondering why the guy they thought was a populist offering hope + change had not jailed any bankers? The banks were even suffering some PR problems that they felt they should address.

How does the focus on the 1% help them? The focus on the 1% spreads the attack to a wider base. The concept moves from US vs. the Wall St banks to Little Guy vs. 1% overclass. I was not surprised to find out that a documentary from 2006 even uses this 1% title and concept. I do think we could use a wealth tax aimed at the 1% which would spur investment by the top 1% while not taking money out of the income-consumption cycle. Don't raise taxes on income in a depression, but target wealth sitting in accounts that is earning paltry interest in our ZIRP investing world. If you start looking at numbers, to be a top 1% income earner takes $350,000 in annual income. That is the salary of many lawyers, doctors, great salesmen, and countless other well paid management employees in the US. I work in a job that sees many American salaries, you'd be surprised who can reach that even at small companies of 150-200 people. Are they the problem in our economy? No. The hatred even gets heaped on CEOs and executive management at goods and service producing firms. Steve Jobs was part of the 1%, but the man brought you those wonderful gadgets. There are countless chemical + basic necessities executives who are in the top 1%. Shifting the anger at the banks to the anger at an entire class, that does act like selfish bastards at times but who doesn't, potentially throws the baby of (goods producing sector )out with the disgusting bathwater (corrupt Wall St-Wash DC system).

There lies the major scare tactic that defeated the call to reform. Once OWS revealed its ugly side and its laundry list of Port Huron sounding demands, people not only turned from watching, but turned their frustration on the entire 1% and away from Wall St reform. Wall St reform has not been addressed at all in debates. The breaking up of the TBTF banks should be priority number one in getting the economy moving, but it isn't on either candidates' agenda. OWS was a chance for reform. It suffered self inflicted wounds. It also received plenty of press, which made the issue of banking reform turn into an issue of reforming capitalism. After Clinton's turn to big biz fundraising, the consensus of free market capitalism is too widespread for overthrow of the entire system to be sold to the public. America is not going to back the overthrow of their entire system. Pinpoint banking reform, which leaves many smaller banks and the goods producing economy untouched, would hurt only the Wall St banks. This parasitic group must be dealt with before the entire economy can get moving again. The TBTF banks will fight this as it is their survival at stake. Wall St can now breathe easier as the entire anger that should be directed at them is now aimed at an entire group that they can hide amongst or behind at their choosing. Wall St banks are sharp bastards, and they deflected a threat at a peak time of frustration as well as redirected that anger towards an entire class rather than six big banks.


peterike said...

The attack on "The 1 Percent" was a brilliant move, aided and abetted by the real source of our problems: the 0.001%. Or whatever the number is that designates the ultra-wealthy.

The concentration of wealth and power and the very tip of the pyramid is grotesque. By "spreading the hate" to even moderately successful small business owners and others you mention, they blur the focus. Yes, a tech salesman, for instance, can easily clear $500,000 a year -- for that matter, so do countless local, state and Federal government officials. But while many of them do the bidding of the Uber-Class (sometimes unintentionally), they are not the source of the problem.

I don't think we solve the steady demise of America until we reach the point of enraged citizens with ropes and lamp-posts. And I don't think we'll ever reach that point.

But even if we did, the mob wouldn't know who to string up, because the real movers don't get their pictures in the papers or appear on The View.

Son of Brock Landers said...

Laser focused reform of Wall St would have such a huge ripple effect financially that we'd see massive debt relief and cash flow improvement, boosting the economy instantaneously.

It was masterful to have the hate be spread towards our entire overclass.

I too fear we'll reach pitchforks and torches, but the "elite" they destroy will be the wrong elite.