I had some money, once, and it wasn’t just my two divorces that cleaned me out. Being in a service industry can be just as volatile in a downturn as being in a manufacturing space. For several years I was in business development for a corporate travel management concern, and as the recession bloomed people found less expensive and less frequent means of getting to point b, including webinars and teleconferencing. Not to say that a little belt tightening and ending extravagant spending isn’t a good thing, but it didn’t seem to reach across the board.
While the average silicon valley executive had his boarding passes start to read “coach” instead of first class even on international flights, the board members of the auto industries had to be reminded that it would be slightly poor form for them to take their private jets to Washington while begging for bail-out money.
The list of golden parachutes and excesses is truly amazing, and I have attached a story by Henry Blodget of The Business Insider that documents the disparity of our distribution of wealth far better than I could have ever had the time to research.
The bail-outs and lack of accountability were actually the tip of the iceberg. Who in their
right mind would give a child a blank check because they had spent their money on drugs and couldn’t afford their rent? Well that is essentially what we did to the banks. We took those functioning least responsibly and rewarded them for their incompetence without any direction as to where they had to spend this windfall.
Then came the Obama appointments. If my memory serves me wasn’t it Geithner and Bernanke who were at the helm when the ship ran on the rocks in the first place? Another reward for failure. They were appointed because of their “experience.” Hell, Jeffrey Dahmer was experienced at what he did.
My wife and I went up to the City (and yes, there is only one) for the fleet week celebration last weekend. There is another great example of the taxpayers money being oh so wisely spent. It was a grand time though, hanging around the south beach marina with our boating buddies, having drinks at the Yacht club, and retiring to the Hyatt Regency Embarcadero Center. It might sound opulent, but the Hyatt has seen its hay-day and we had deeply discounted rooms, the drinks at the Yacht club were $3, and we had dinner at Delancy Street (highly recommended) where the entries were around $12 and delicious.
My point? We, like most Americans have had to learn to make do with less. After I was laid off from the travel industry I started an internet marketing company specializing in social media and website optimization. I’m getting by just fine, but like the rest of humanity (except for the 1%) my stocks have taken a beating, my property maxed out 5 years ago and I’m not holding my breath for Social Security.
Outside our window at the Hyatt, lies the Federal Reserve building. It was swarmed with young and old people like with fire in their eyes, and blowhorns in their mouths till all hours of the night. The pace was fever pitched at 2:00 in the morning, and when we walked by on Sunday the tired but determined group was still there. This morning they stormed downtown and demonstrated in front of the Wells Fargo building. My wife and I were discussing this on Sunday: God bless these young wild eyed freaks that have the energy and principles to stand up and say “I’m mad as hell and I’m not going to take it anymore.”
We lost lots when Steve Jobs passed away. We stand to lose lots more than that if we ever lose the spirit this country was founded on. Remember what we said to the British Monarchy? Taxation without representation is tyranny.” Well, isn’t that really what is happening again now? Do we really have any say where our hard earned dollars go? Let’s start another war over weapons of mass destruction.
Below are some facts that should make you ill. Good luck protestors, I’m with you!
CHARTS: Here’s What The Wall Street Protesters Are So Angry About…
BY Henry Blodget | The Business Insider
The “Occupy Wall Street” protests are gaining momentum, having spread from a small park in New York to marches to other cities across the country.
So far, the protests seem fueled by a collective sense that things in our economy are not fair or right. But the protesters have not done a good job of focusing their complaints—and thus have been skewered as malcontents who don’t know what they stand for or want.
(An early list of “grievances” included some legitimate beefs, but was otherwise just a vague attack on “corporations.” Given that these are the same corporations that employ more than 100 million Americans and make the products we all use every day, this broadside did not resonate with most Americans).
So, what are the protesters so upset about, really?
Do they have legitimate gripes?
To answer the latter question first, yes, they have very legitimate gripes.
And if America cannot figure out a way to address these gripes, the country will likely become increasingly “de-stabilized,” as sociologists might say. And in that scenario, the current protests will likely be only the beginning.
The problem in a nutshell is this: Inequality in this country has hit a level that has been seen only once in the nation’s history, and unemployment has reached a level that has been seen only once since the Great Depression. And, at the same time, corporate profits are at a record high.
In other words, in the never-ending tug-of-war between “labor” and “capital,” there has rarely—if ever—been a time when “capital” was so clearly winning.
Let’s start with the obvious: Unemployment. Three years after the financial crisis, the unemployment rate is still at the highest level since the Great Depression (except for a brief blip in the early 1980s)
Jobs are scarce, so many adults have given up looking for them. Thus, a sharp decline in the “participation ratio.”
Image: St. Louis Fed
And it’s not like unemployment these days is a quick, painful jolt: A record percentage of unemployed people have been unemployed for longer than 6 months.
Image: St. Louis Fed
And it’s not just construction workers who can’t find jobs. The median duration of all unemployment is also near an all-time high.
Image: St. Louis Fed
That 9% rate, by the way, equates to 14 million Americans—people who want to work but can’t find a job.
Image: St. Louis Fed
And that’s just people who meet the strict criteria for “unemployed.” Include people working part-time who want to work full-time, plus some people who haven’t looked for a job in a while, and unemployment’s at 17%
Put differently, this is the lowest percentage of Americans with jobs since the early 1980s (And the boom prior to that, by the way, was from women entering the workforce).
Image: St. Louis Fed
So that’s the jobs picture. Not pretty.
And now we turn to the other side of this issue… the Americans for whom life has never been better. The OWNERS.
Corporate profits just hit another all-time high.
Image: St. Louis Fed
Corporate profits as a percent of the economy are near a record all-time high. With the exception of a brief happy period in 2007 (just before the crash), profits are higher than they’ve been since the 1950s. And they are VASTLY higher than they’ve been for most of the intervening half-century.
Image: St. Louis Fed
CEO pay is now 350X the average worker’s, up from 50X from 1960-1985.
Image: G. William Domhoff, UC Santa Cruz
CEO pay has skyrocketed 300% since 1990. Corporate profits have doubled. Average “production worker” pay has increased 4%. The minimum wage has dropped. (All numbers adjusted for inflation).
Image: G. William Domhoff, UC Santa Cruz
After adjusting for inflation, average hourly earnings haven’t increased in 50 years.
In short… while CEOs and shareholders have been cashing in, wages as a percent of the economy have dropped to an all-time low.
Image: St. Louis Fed
In other words, in the struggle between “labor” and “capital,” capital has basically won. (This man lives in a tent city in Lakewood, New Jersey, about a hundred miles from Wall Street. He would presumably be “labor,” except that he lost his job and can’t find another one.)
Image: Robert Johnson
Of course, life is great if you’re in the top 1% of American wage earners. You’re hauling in a bigger percentage of the country’s total pre-tax income than you have at any time since the late 1920s. Your share of the national income, in fact, is almost 2X the long-term average!
Image: David Ruccio
And the top 0.1% in America are doing way better than the top 0.1% in other first-world countries.
Image: David Ruccio
In fact, income inequality has gotten so extreme here that the US now ranks 93rd in the world in “income equality.” China’s ahead of us. So is India. So is Iran.
Image: G. William Domhoff, UC Santa Cruz
And, by the way, few people would have a problem with inequality if the American Dream were still fully intact—if it were easy to work your way into that top 1%. But, unfortunately, social mobility in this country is also near an all-time low.
So what does all this mean in terms of net worth? Well, for starters, it means that the top 1% of Americans own 42% of the financial wealth in this country. The top 5%, meanwhile, own nearly 70%.
Image: G. William Domhoff, UC Santa Cruz
That’s about 60% of the net worth of the country held by the top 5% (left chart).
Image: G. William Domhoff, UC Santa Cruz
And remember that huge debt problem we have—with hundreds of millions of Americans indebted up to their eyeballs? Well, the top 1% doesn’t have that problem. They only own 5% of the country’s debt.
Image: G. William Domhoff, UC Santa Cruz
And then there are taxes… It’s a great time to make a boatload of money in America, because taxes on the nation’s highest-earners are close to the lowest they’ve ever been.
Image: National Taxpayers Union
The aggregate tax rate for the top 1% is lower than for the next 9%—and not much higher than it is for pretty much everyone else.
Image: G. William Domhoff, UC Santa Cruz
As the nation’s richest people often point out, they do pay the lion’s share of taxes in the country: The richest 20% pay 64% of the total taxes. (Lower bar). Of course, that’s because they also make most of the money. (Top bar).
Image: G. William Domhoff, UC Santa Cruz
And now we come to the type of American corporation that gets—and deserves—a big share of the blame: The banks. Willie Sutton once explained that the reason he robbed banks was because “that’s where the money is.” The man knew what he was talking about.
Image: AP
Remember when we bailed out the banks? Yes, and remember the REASON we were told we had to bail out the banks? We had to bail out the banks, we were told, so that the banks could keep lending to American businesses. Without that lending, we were told, society would collapse…
So, did the banks keep lending? Um, no. Bank lending dropped sharply, and it has yet to recover.
Image: St. Louis Fed
So, what have banks been doing since 2007 if not lending money to American companies? Lending money to America’s government! By buying risk-free Treasury bonds and other government-guaranteed securities.
Image: St. Louis Fed
And, remarkably, they’ve also been collecting interest on money they are NOT lending—the “excess reserves” they have at the Fed. Back in the financial crisis, the Fed decided to help bail out the banks by paying them interest on this money that they’re not lending. And they’re happily still collecting it. (It’s AWESOME to be a bank.)
Image: St. Louis Fed
Meanwhile, of course, the banks are able to borrow money FOR FREE. Because the Fed has slashed rates to basically zero. And the banks have slashed the rates they pay on deposits to basically zero. So they can have all the money they want—for nearly free!
Image: St. Louis Fed
When you can borrow money for nothing, and lend it back to the government risk-free for a few percentage points, you can COIN MONEY. And the banks are doing that. According to IRA, the “net interest margin” made by US banks in the first six months of this year is $211 Billion. Nice!
Image: Institutional Risk Analytics
And that has helped produce $58 billion of profit in the first six months of the year.
Image: Institutional Risk Analytics
And it has helped generate near-record financial sector profits—while the rest of the country struggles with its 9% unemployment rate.
Image: Reuters (Felix Salmon)
And these profits are getting back toward a record as a percentage of all corporate profits.
Image: The Big Picture
And those profits, of course, are AFTER the banks have paid their bankers. And it’s still great to be a banker. The average banker in New York City made $361,330 in 2010. Not bad!
Image: New York Times, New York State Comptroller
This average Wall Street salary was 6X the average private-sector salary (which, in turn, is actually lower than the average government salary, but that’s a different issue).
Image: New York Times, New York State Comptroller
So it REALLY doesn’t suck to be a banker.
And so, in conclusion, we’ll end with another look at the “money shot”—the one overarching reason the Wall Street protesters are so upset: Wages as a percent of the economy. Again, it’s basically the lowest it has ever been.
Image: St. Louis Fed
So now you know!
Image: Julia La Roche for Business Insider
Now check out…
15 Mind-Blowing Facts About Inequality In America
Tags: Economy, Occupy Wall Street, Inequality, Taxes, Politics, Features | Get Alerts for these topics »
Read more: http://www.businessinsider.com/what-wall-street-protesters-are-so-angry-about-2011-10?op=1#ixzz1abgi2Jwr
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