Wall Street Is Dissing You

Patriotism is the last refuge of a scoundrel. – Samuel Johnson

Saving America is decidedly not a priority of Wall Street. That sentence has an intentional ambiguity.

America is widely famous for having the lowest savings rate in the developed world. Why? The reason is shoved in our face with some regularity. The problem is that we fail to recognize it as such. We periodically hear in the news that the Fed is going to manipulate the interest rate. So? The Fed doesn’t deserve all of the blame. The entire financial system works in tandem to screw the country.

As you may have gathered from many of my earlier posts, putting money into the stock market is not investing. Neither is it saving. It is, purely and simply, gambling. Some try to dress it up by calling it speculation but that is just another word for gambling.

Money put into the stock market almost always goes to another gambler, with the brokers getting their pound of flesh. Rarely does any of the money go to the companies for investment in increasing production, increasing productivity, creating jobs or any of that other unimportant trumpery.

Money put into savings may go to such things as home mortgages, businesses buying inventory, covering payrolls, starting new businesses, growing existing businesses and such. When the market goes down the Fed reduces interest to get people to put money into the market instead of saving.

Is saving important? Our savings rate is 1% or less. China’s hovers around 30%. Japan’s major growth was built on a savings rate of something over 20%. The U.S. became the pre-eminent economic power of the world when our savings rate was far higher than 1%. Savings are the primary foundation and engine of economic growth.

As I stated in an earlier post, the financial industry sucks $650 billion out of our economy every year and gives us paper. Do you know what a credit default swap is? It is classified as one type of derivative. That last word was peppered throughout the news when we started hearing of the present economic meltdown. CDSs played a major role in our present predicament.

Credit default swaps are often referred to as a form of insurance. You pay a premium to bet on the failure of a company. So, you think, if the company succeeds you are a winner. If the company fails, the CDS covers your loss. That seems like a win-win position. There are a couple of problems with this.

When you buy insurance you are basing it on a company, a home, perhaps a car that you own. You can buy a CDS on anything of value, whether you own it or not. That’s not quite the same as insurance. You and I, without owning a share of stock, can purchase a CDS betting on the failure of General Motors. Thousands of others can do the same.

Even people in a company with the ability to harm it can bet against the company. Their financial situation might improve considerably if the company fails. Want to buy some stock in General Motors?

If anybody and everybody can place such bets on any company, the value of these CDSs can easily exceed the value of the company. These CDSs were also used to bet against bundles of sub-prime mortgages. Get ready to be worried. The value of CDSs exceeds the value of the production of the entire world. Could that possibly lead to a bit of financial instability?

The commodity markets are supposed to be the closest we get to the mythical ‘free market.’ They were designed to establish a market price. So, here comes Wall Street, the brokers, the hedge funds and all of the other vermin. They start telling their ‘investors’ to get into the commodities market.

They were successful in pointing lots of major players into commodities. They were very honest about it. They told these players that it was a good place for speculation.

Into the pot went tons of money from Harvard , the California state empolyees retirement funds and others of that ilk.

Last Summer there were Wall Street traitors telling Congress that the reason for $147 a barrel oil was due to supply and demand. More BS. Actually, supply was up and demand was down. Oops, the ‘law of supply and demand’ wasn’t working. The invisible hand was probably jerking off Alan Greenspan.

Can you guess what was happening, other than you paying over $4 a gallon to get to work? All of the money from Harvard, various retirement funds and other large investors was being put into buying oil. These gamblers were pushing each other to pay ever higher prices.

It also meant that the airlines, oil companies and others who actually used the oil were having to pay $147 a barrel. It meant $4-plus at the pump for you. All that so the rich could gamble. In an aside, at the end of the last fiscal year last Summer Harvard’s endowment was $36.9 billion. As of December, they were down 22%. now that’s gambling. Hey, Harvard alums, could you give a little more gambling money?

The Fed, Wall Street and their lackeys in Washington have the system gamed to get what they want. It is, almost without exception, to your detriment. The significant players in the system have no qualms about destoying our productive capacity, diverting essential savings to their own pockets and giving us paper.

Do you know when, adjusted for inflation, the average American’s income was at its highest? Try 1973. Although there was a slight uptick in the 1990s, 1973 was the peak. We used to be the largest exporter of manufactures. We are now the largest importer. We used to be the largest importer of raw materials. We are now the largest exporter. We used to be the largest lender. We are now the largest borrower. Our financial system and its controllers have reduced America to qualifying as a 3rd-world country.

They hang a humongous American flag on the facade of the New York Stock Exchange and a few smaller ones below it. You are supposed to think that means they are patriotic. I cannot believe that those who do such damage to the country should be acclaimed as patriots. They are, in truth, traitors. They need to hide behind the largest flag they can display. Samuel Johnson was right.