“Every man a king, but no one wears a crown.”
— Huey P. long, Governor of Louisiana
Americans are committed to capitalism and prefer free market solutions whenever possible.
Wrong. The truth is that support for capitalism has been steadily eroding since the Great Crash of ’08 when markets tumbled and housing prices plunged wiping out $8 trillion in home equity and leaving 5 million homeowners facing foreclosure. After that dose of cold water in the face, support for the free market system dropped precipitously from 80% (in 2002) to a titch above 54% by 2010. Interestingly, in France (according to the Economist) only 6% of the people now “strongly” support the free market. Here’s more from the article in the Economist:
“Capitalism’s waning fortunes are starkly visible among Americans earning below $20,000. Their support for the free market has dropped from 76% to 44% in just one year. The research was conducted by GlobeScan, a polling firm. Its chairman Doug Miller says American business is “close to losing its social contract” with average families.” (“Market of Ideas: Capitalism’s waning popularity”, The Economist)
“Social contract”? What social contract? You mean the social contract that allows the banks to fleece your ass at every opportunity with no chance of being held accountable?
While the report is 2 years old, it indicates something that’s fairly obvious to many, that Americans are generally pragmatic people who judge a system by its results not by the public relations blabber issuing from the business channel. “Show me the beef”, that’s what the average working slob cares about, not some horseshit about “the wondrous symmetry of the self-correcting market”. What a load of malarkey. If we’d applied the theories of the market fundamentalists after Lehman Brothers collapsed, the 10 biggest banks in the country would have been euthanized (as they should have been) and we’d be well on our way to a true recovery. Instead, the economy is still hopelessly mired in a long-term slump that shows no sign of ending. The only thing that’s “corrected” is the profit margins on Wall Street which are at record highs. Get a load of this from the WSWS:
“As the US government prepares to furlough 1 million federal workers and slash hundreds of billions in social spending, corporate executives in the United States are receiving among the highest payouts in history. USA Today reported Thursday that at least ten CEOs took in $50 million apiece in 2012, largely as a result of cashing in stocks that have soared in value with the rising market. According to the newspaper, “Early 2013 proxy filings detailing 2012 compensation show a growing number of CEOs reaping $50 million or more, gains that could prove unmatched in breadth and size since the Internet IPO craze enriched tech company executives more than a decade ago…..
Among the top pay packages according to preliminary calculation is that of Starbucks CEO Howard Schultz, which included stock options valued at $103.3 million this year, on top of $30 million in other compensation and stock, as well as $10.2 million in vested shares, according to USA Today.” (“US corporate executives cash in”, World Socialist Web Site)
Geez, I sure hope Mr. Starbucks can make ends meet on a measly $130 mil a year. He might have to cutback on his trips to Walmart, don’t you think?
The whole thing is laughable. This is a free market? Give me a break! The Fed is pumping $85 billion per month into financial assets pushing up stock prices, while everyone else faces the grinding deprivation of austerity. Who can support a system like that? Everything about it is a lie. Now take a look at this from Trimtabs:
“…there has been a record number of buybacks announced since the start of February. There have also been a bumper crop of new cash takeovers. The number of shares grows when companies and or insiders sell new shares. …
Here’s why this is such a big deal. In essence over the last seven weeks companies have given shareholders $120 billion in cash in exchange for shares. Compare that $120 billion with just $50 billion of new money going into all equity mutual and exchange traded funds so far for all of 2013.
Remember, 80% of US stocks are held by institutions. Institutions typically have a constant rate of cash holdings, whether 1% or 5%. When the number of share held by institutions shrinks by $100 billion, or around 80% of $120 billion, that means those institutions have more money with which to buy the fewer shares available in the equity markets. Therefore, the price of the remaining shares should go up.” (“Record Buybacks Creating Massive Float Shrink”, Trimtabs)
There’s your great stock market rally in a nutshell. 100% fake. The Fed is juicing the system, so the guys with money are following Bernanke’s lead and buying back their own stinking shares, thus, pushing prices even higher. They make boatloads of cash while you and I get bupkis. That’s fair, isn’t it?
The whole thing is a joke. There’s no free market; it’s just PR-hype geared to dupe people out of their hard-earned money. Did you know that the nation’s biggest corporations are giving record amounts of cash back to investors via dividends because they don’t have anything to invest in? Here’s the story:
“The New York Times reported earlier this month that S&P 500 companies are expected to hand investors $300 billion in dividends this year, an increase over last year’s payout of $282 billion. American corporations bought back $117.8 billion in their own stock last month, the highest total on records going back to 1985.”
Of course, the reason they have nothing to invest in because everyone is broke. Unemployment is still high, wages are falling, and the average working family is up-to-their-eyeballs in debt. So, where’s the demand for more widgets? There isn’t any. The behemoth financial institutions have cannibalized the system to the point where nothing is left but a stripped carcass. There’s no sense in investing in plants and machinery when everyone is flat busted. You’re better off just giving money back to your rich friends so they can buy another bauble at Tiffany’s. And, that’s what they’re doing.
But, at least housing rebounding, right? I mean, it’s not all bad. Here’s the scoop from the country’s Number 1 housing cheerleader, Calculated Risk, from a post titled “Existing Home Sales in February: 4.98 million SAAR, 4.7 months of supply”:
“Sales in February 2013 (4.98 million SAAR) were 0.8% higher than last month, and were 10.2% above the February 2012 rate. “
Sounds pretty good, eh? Prices are up, sales are up, and all is well with the world. There’s only one little glitch; it’s all bullshit. In fact, disproving the “Housing is Back” theory is so easy, it’s ridiculous. If you can read a chart, you can grasp why housing is NOT rebounding. Look carefully at the chart above. See where we are now as far as existing housing sales. Sales are back to what they were in 2002, right? Now–ask yourself this– what happened in 2002 that might have impacted housing sales?
Does “housing bubble” ring a bell?
There was a sharp uptick in sales due to the fact that the banks started selling homes to anyone who could fog a mirror, right? Remember the subprimes, ARMs, no-down, interest only, liar’s loans, piggybacks, ALT As, and the whole panoply of freakish mortgages that boosted sales and sent housing prices into the stratosphere? That all started right around 2002. In other words, the bubble was caused by extending credit to people who were not creditworthy to begin with, people who the banks knew, would never be able to repay the loan. THEY KNEW THAT. That WAS the scam. Sure, low interest rates did play a role, but not nearly as big a role as criminally lax lending standards that put people in homes that they would eventually lose to foreclosure.
So, now sales are back to their historic trend, which is good. But it’s silly to expect prices and sales to return to bubble-era highs unless regulations are jettisoned (again) and the banks start issuing loans to anyone who stumbles into their office. That’s not to imply, that the banks and industry leaders are not working as hard as they can to weaken lending rules and to gut the new “Ability to Repay” provision of the Consumer Financial Protection Bureau’s (CFPB) “Qualified Mortgage” regulation. They are! In fact, they appear to be making great strides in that regard. (See: MBA Applauds Bill to Clarify Points and Fees Calculation for Qualified Mortgage Rule, RISMedia.)
But the point is, unless the banks are able to sabotage the new guidelines for lending, (for gov-insured mortgages) there is not going to be another housing bubble. At best, prices will rise at their traditional 1 to 2% appreciation per year. And at worst, they will resume their downward slide when the speculators (who now make up roughly 25% of all sales) flee the market for greener pastures. Bottom line: There’s nothing in the recent data that suggests that housing prices will continue to rise. It’s all interest rate stimulus, inventory suppression and aggressive mortgage mods. (keeping underwater borrowers in their homes)
When the average guy reflects on the way he got raped in the housing swindle, or the twisted way the banks were bailed out, or the way the Fed forks over $85 billion per month to his crooked friends on Wall Street (while teachers, firefighters and other public workers get their pink slips month after month); he doesn’t get a real warm and fuzzy feeling about the system. He knows the system is rigged against him, that Bernanke’s thumb is planted on the scale, and that he’s getting bent-over by lowlife vipers and miscreants. He knows all that, which is why his support for free market capitalism is tenuous at best. Just take a look at this recent survey by Gallup and you’ll see that majorities on both sides of the aisle support big government programs that put people back to work.
Majority of Party Groups Favor Each Jobs Proposal
A majority of Democrats, Republicans, and independents support each of the three job creation proposals tested in a new Gallup poll. Republicans are much more supportive of business tax breaks than the new job programs, and Democrats are more likely to favor the job creation programs, while independents show roughly equal support for all three.
Implications: “Job creation proposals enjoy widespread public support, including majority backing among all party groups, even when the issue of government spending is raised in an era when deficit reduction is one of the major priorities for the federal government.” (Gallup)
Can you believe it? Even the Republicans support government jobs programs. So all that gibberish about “hating big government and loving the free market” is just a load of crap. Americans don’t hate socialism; What they hate is the word which conjures up images of the Berlin Wall, Joe Stalin and Soviet troops marching through Red Square. One of the country’s greatest political visionary’s was died-in-the-wool socialist; a man who worked his entire life to put the rich in their place and spread the wealth to ordinary working stiffs. He was America’s Hugo Chavez and his name was Huey P. Long, Governor of Louisiana, aka the “Kingfish”. Here’s a short video of Long giving speech to Congress.
Huey P. Long:
“How many men ever went to a barbecue and would let one man take off the table what’s intended for 9/10th of the people to eat? The only way to be able to feed the balance of the people is to make that man come back and bring back some of that grub that he ain’t got no business with!
Now we got a barbecue. We have been praying to the Almighty to send us to a feast. We have knelt on our knees morning and nighttime. The Lord has answered the prayer. He has called the barbecue. “Come to my feast,” He said to 125 million American people. But Morgan and Rockefeller and Mellon and Baruch have walked up and took 85 percent of the victuals off the table!
Now, how are you going to feed the balance of the people? What’s Morgan and Baruch and Rockefeller and Mellon going to do with all that grub? They can’t eat it, they can’t wear the clothes, they can’t live in the houses.
Giv’em a yacht! Giv’em a Palace! Send ’em to Reno and give them a new wife when they want it, if that’s what they want. [Laughter] But when they’ve got everything on God’s loving earth that they can eat and they can wear and they can live in, and all that their children can live in and wear and eat, and all of their children’s children can use, then we’ve got to call Mr. Morgan and Mr. Mellon an Mr. Rockefeller back and say, come back here, put that stuff back on this table here that you took away from here that you don’t need. Leave something else for the American people to consume. And that’s the program.”
Where’s Kingfish now that we need him?
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at email@example.com.