The Occupy Wall Street movement is getting a fair amount of press. The movement, as you know, dear reader, is a loose assembly of the jobless, the homeless and the shiftless. Troublemakers, every one of them, with no coherent or sensible view of what is wrong or how to fix it. But what’s wrong with that?
The Occupy Wall Street protests started on Sept. 17 with a few dozen demonstrators who tried to pitch tents in front of the New York Stock Exchange. Since then, hundreds have set up camp in a park nearby and have become increasingly organized, lining up medical aid and legal help and printing their own newspaper, the Occupied Wall Street Journal.
About 100 demonstrators were arrested on Sept. 24 and some were pepper-sprayed. On Saturday police arrested 700 on charges of disorderly conduct and blocking a public street as they tried to march over the Brooklyn Bridge. Police said they took five more protesters into custody on Monday, though it was unclear whether they had been charged with any crime.
On Monday, the zombies stayed on the sidewalks as they wound through Manhattan’s financial district chanting, “How to fix the deficit: End the war, tax the rich!” They lurched along with their arms in front of them. Some yelled, “I smell money!”
The US is probably getting ready for a revolution. Back in the Cold War days, the CIA was asked to do a portrait of a country that might have a revolution. It decided that such a country would have three characteristics:
A big gap between rich and poor.
A middle class that was disappearing…or one that never existed in the first place.
A lot of people with a grudge.
The US fits each of these criteria. And then some others the spooks hadn’t thought about. The U6 broad measure of unemployment is going up…with 16.5% of the population without work. There are 6.2 million people who have been looking for a job for more than 6 months.
Americans are $7 trillion poorer, according to David Rosenberg, than they were 4 years ago — and property prices are still going down.
Yes, there’s also a Great Correction in progress. It, along with the policies of the US government, grind the faces of the poor.
Millions of marginally successful people think the system has failed them. Youth joblessness is at Great Depression levels. More than 45 million are on food stamps.
People come to think what they must think when they must think it. So, a person who feels he has failed must come to terms with it. He must find a reason that gets himself off the hook. It must be someone else’s fault.
It was not his fault he failed his chemistry exam. The ‘system’ should provide him with a good job anyway. It was not his fault his house got taken away; the system caused prices to fall…and his job got exported to Mumbai. It was not his fault he didn’t save any money; the banks took advantage of him mercilessly. He may even get a “deficiency notice” — telling him he has to pay the bank for its loss on his foreclosed house.
Add insult to injury, why don’t you!
The guy has a legitimate beef!
It wasn’t his fault that the Nixon administration cut the link to gold in 1971. It wasn’t his fault the Chinese produced things better and cheaper. It wasn’t his fault that the feds kept stimulating the economy…and encouraging him to go deeper and deeper into debt at artificially low interest rates. And it certainly wasn’t he who caused the housing bubble to blow up…or who caused it in the first place.
But one thing you can depend on. Not many people will do the hard work of connecting the kneebone of this disaster to the legbone that caused it. And he won’t want to make the sacrifices necessary to protect himself from it either. (Our advice: cut expenses to almost zero…save money…buy gold…become a bankruptcy lawyer.) Instead, he’ll join the revolution.
Of course, people do not join revolutions for good reasons. They join them for bad ones. They expect miracles. One wants free money. The other wants power. One wants to see his brother-in-law, who earns big money as a currency trader at JPMorgan, brought low. Another just wants to get high. One expects his mortgage to disappear. Another wants the whole neighborhood to disappear. One hopes to see his dead wife rise from the grave…the other hopes his live wife will fall into it.
One believes the bankers are rich and evil. Another believes the oil companies are rich and evil. A third thinks all rich people are evil. And a fourth believes that all people are evil, even those in the Occupy Wall Street movement.
Some want to save porpoises. Some want people to use only natural deodorant. And a third thinks the world uses too much oil…and that only people who drive Priuses should be allowed on the road on Sunday. He owns a Prius dealership.
It is fun to mock the protestors. That’s why we do it. They are such easy targets.
But here at The Daily Reckoning we always stand with the powerless, the aimless and the witless. We are champions of the underdog…the lost cause and the diehard. So, we lock arms with the protestors and pledge our solidarity.
Vive la revolution!
But the poor protestors are just victims of history. When the US embraced its empire it condemned its middle classes. Why? Because that’s how empires work. They bring in cheap goods — and sometimes money itself — from outside. Whether they are taken as booty or traded for the imperial currency, the effect is about the same; they undermine local industries and local wages.
Ancient Rome imported wheat from Egypt, by the boatload, and gave it to citizens (an early form of food stamps). Result: the price of wheat collapsed. Small farmers couldn’t compete with free wheat. They couldn’t earn a living.
The Romans also brought in slaves. Rich, politically-connected Romans took over the small farms, consolidated them into big plantations, and ran them with slave labor. Again, the local labor was out of luck.
Things got so bad for the small farmers that they sold their children into slavery…and then, themselves. Then, in alarm, an edict prohibited Roman farmers from selling themselves into slavery. They were required to remain on their farms…and at work.
Spain ran a very different, short-lived empire in the 16th century. It conquered New World civilizations and imported gold and silver on a colossal scale. It was as if they were printing money! This easy money made the Spaniards rich. They used it like America uses her dollars — to buy things from overseas. Pretty soon, the Spanish neglected their own manufactures and their own farming. Prices rose. Spain’s nascent middle class was smothered in the crib.
Are things so different now? The rich get rich. The middle classes get poorer; they have to compete with imperial plunder…riches coming from Asia, bought with dollars that were never earned…and never will be redeemed.
America’s middle classes were happy to sell their own children into perpetual debt servitude. The kids face obligations 5 to 15 times as great as annual output. Unless they revolt, they will have to work their entire lives to pay for their parents’ excesses.
But what will they do when future generations can take no more? They cannot sell themselves into slavery. They’ve already done so. Most face a lifetime of student debt, mortgage debt, and medical debt (aka Medicaid and Medicare), already.
What can they do? Join the revolution!
Bill Bonner,for The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010.
I came, I saw, I conquered…. we protest, we shout, we demand, we condemn…
I posted another one of my brilliant comments here earlier, but the system has delayed it for processing. Sorry, fans, you will have to wait.
Basically, I just pointed out that Poor People in the United states also have guns.Lots of them.
Don’t feed the troll.
We need contributors such as TIF to lead us through these difficult times.
Yesterday,all this Countrys troubles seemed so far away! Help me if u can i’m feelin down! BB how do u handle all the wisdom,Knowledge and all the things uc in the world with out “Feelin Down?” Aah,its the pages of the D@R. Ain’t it??? *S* P.S. Happy Trails,2 all who c the world 4 watt it really is!!!
Lead us by the… what?
Somehow, the part about China and quality goods pretty much ruined the credibility of the rest of the article for me.
Yeah, on this one BBB got it wrong. There are no quality goods coming from China, Japan, Hell Yeah!, but not China. That stuff is crap, especially the baseball equipment.
Agree with Bruce, it’s well known that if an outsourcing company turns it’s back for a moment the Chinese will sub out components and make a shoddy product.
Bill, stop blocking the comments. I like ‘em all…even the one’s from TIF…there all entertaining in their own way.
All fiat currencies go to zero value. Federal debt will be cancelled and we will start over. Bernanke has already printed the money. Boomers with a couple of million in their portfolio will come up short when severe inflation hits.
That is entirely amusing; crap, shoddy products are remarkably hot-selling stuff internationally? Garbage may be substantial, but, real stuffs silent. Are you OK? Nervous system mis-aligned due to physiology imbalance?
Let’s say something nice about China: foxy ladies.
Japanese goods are generally excellent while Chinese products are often slipshod, check out your local Walmart, it’s all gone Chinese now.
Which Chicom company sells at Wally? I see many Japanese companies selling at Wally, but not the Chicoms.
Why not load up on debt and let inflation carry it away?
Phelps, with all due respect, where have you been?
I have been to Bentonville, AR and toured Uncle Sam’s warehouse that he calls a corporate HQ. No WINDOWS. I couldn’t believe it. Thought the man was a crazy, slave-driving hick. That report is leading one to believe that Wally manufactures products, other than their own brand of food “Great Value”. They don’t make their own products other than food. I’ve never met the Walmart Avengers, but they have a reputation for being ruthless negoitiators. I’ve tried to explain the manufacturing business further, but bill is blocking this.
I’m going to try to again explain the “Made in ….” label in another comment. I hope this gets through. That Dateline report is misleading and Wally chose not to fight b/c they were already losing the PR campaign.
No one is still able to answer my question as to which Chinese companies sell at Wally. That report is a bunch of noise from people who hated Wally.
In his book “American Theocracy”, Kevin Phillips (whom Baby Boomers and older folks may remember as the author of “The Emerging Republican Majority”) pointed out a fact that shocked me. He wrote that, in 2005, profits of financial companies represented 40% of all corporate profits in America. (According to the Bureau of Economic Analysis, this turns out to have been a slight overstatement, as financial sector profits actually represented about 35% of all corporate profits in America in 2005.) During the depths of the financial crisis, the huge share of financial sector profits disappeared, but they recovered in 2010 to represent about 1/3 of all corporate profits. In other words, the profits made by companies that exist just to move money around (mostly not even their own money) equals half of all of the profits earned by every other industry that produces goods and services for the American people. This strikes me as excessive. As Gary Butress has pointed out, “The percentage is dramatically higher than was the case back when the U.S. economy was delivering much better income growth for Americans in the middle and at the bottom of the income distribution. The years 1950 to 1973 were pretty good years for middle-income families, and back in that era, financial companies earned an average of 13 percent of all corporate profits.” Pat Garofalo has noted that according to results released by the Bureau of Economic Analysis, “‘corporate profits grew 36.8 percent in 2010, the biggest gain since 1950.’ But these numbers hide the fact that not all industries are doing well. In fact, the recent growth in corporate profits was driven almost entirely by the financial industry.” Referring to the financial sector’s share of corporate profits, the Wall Street Journal’s Kathleen Madigan wrote, “that’s an amazing share given that the sector accounts for less than 10% of the value added in the economy.”
I suspect that much of the Occupy Wall Street crowd’s discontent is fueled by a sense that something is a-kilter and much of what is a-kilter is reflected in the financial sector profits. (I base this suspicion in part on the protesters’ public withdrawals of deposits from large banks.) Because I have trouble parsing out cause and effect, let alone remedy, I invite responses as to the causes of the sector’s relative profitability, whether something should be done about it, and, if so, what.
You might consider two potential downsides to the relatively easy profits being made in finance. Those profits draw bright, financially ambitious people to that sector where they use their brains to make money by manipulating money rather than doing it the old-fashioned way–making money by producing or improving goods and services for society. Similarly, what capital exists will be drawn to the sector with the most attractive profits, thus exacerbating the divide between haves and have-nots.
Do you recall our rather public discussion about the “basket case” economies of Haiti and the United States of America at last years London Money Show? We exchanged business cards and I emailed the address printed on yours, but I’ve yet to receive a reply. Maybe our conversation got lost in someone’s spam filter?
Since we both seem to be blogging about the merits or otherwise of Occupying Wall Street at the moment, I thought I’d take this opportunity to reopen our conversation by providing you with a link to my latest meanderings on the topic of the merits or otherwise of Anglo-Saxon Capitalism:
Would you vote for Bill or Bucky or Jacque or the FT or The Economist? Do you by any chance have a better suggestion than any of them?
What do you reckon will happen, at the end of the day?
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