10 Things You Can Do to Starve the Wall St. Beast and Grab Yourself a Piece of the Pie
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Dialogue on the economic crisis has focused on symptoms: bailouts, corruption on Wall Street, collapse in housing prices, intractable unemployment, Federal Reserve monetary policy. Most people have been socialized to silence on the topic of the disease itself: debilitating wealth concentration. We hear little on the overwhelming argument that wealth concentration is the root cause of the lingering crisis because within milliseconds of the words escaping into the public arena, screams of “Socialist! Socialist!” proliferate; an army of right wing talk radio buffoons fill the airwaves with dire warnings of the growing communist threat of wealth redistribution; Rick Santelli spazzes out on CNBC; and the Tea Partiers figuratively (or literally) stomp on us.
The people who scream the loudest aren’t the super rich who control the wealth; they’re part of a labyrinthine network of hired hands who function as high pitch bodyguards for the wealth hoarders. The actual super rich are the folks who appear on the Forbes list of the wealthiest Americans; people like Charles and David Koch, each worth $21.5 billion, who create multi layers of front groups, like Americans for Prosperity, to make it not only socially acceptable to hoard wealth but social nirvana. The Kochs hold secret confabs with their wealthy friends once a year, fingering their worry beads and plotting to keep the Bush tax cuts for the wealthiest, lest they become number 6 on the Forbes list of billionaires instead of number 5. This, while 43 million of their fellow Americans live beneath the poverty level; including one in every 5 children.
David Barber, Associate Professor of American History at the University of Tennessee, is not afraid of the cacophony from the wealth hoarders’ cabal, writing bluntly about the dangers of wealth concentration. In response to an email query last week, Dr. Barber said:
American society’s fantastically skewed distribution of wealth stands as one of the main structural fault lines underpinning the Crash. America’s richest one percent of the population own over forty percent of America’s wealth — exclusive of home ownership — in this, the most opulent society history has ever known. On the other hand, the bottom sixty percent of Americans own approximately one percent of all of America’s wealth. Maintaining the Bush tax cuts for the rich only perpetuates a part of the contradiction which brought on the present phase of the world economic crisis.
Dr. Barber’s statistics come from a study conducted by Edward N. Wolff for the Levy Economics Institute of Bard College in March 2010. Other findings from that study include the following:
The richest 1 percent received over one-third of the total gain in marketable wealth over the period from 1983 to 2007. The next 4 percent also received about a third of the total gain and the next 15 percent about a fifth, so that the top quintile collectively accounted for 89 percent of the total growth in wealth, while the bottom 80 percent accounted for 11 percent.
In 2007, the top 1 percent of households owned 38 percent of all stocks; the top 5 percent owned 69 percent; the top 10 percent held 81 percent.
Debt was the most evenly distributed component of household wealth, with the bottom 90 percent of households responsible for 73 percent of total indebtedness.
Wealth concentration in too few hands while the general populace is saddled with too much debt to buy the goods and services produced by the corporations, in whom the wealthiest hold 81 percent of the stock, is a replay of the conditions leading to the crash of 1929 and the ensuing Great Depression. (The Social Security system was borne out of that debacle. This time around, the wealthiest hope to use the funds from the bottom 90 percent flowing into the Social Security trust to prop up stock prices for the benefit of the top 10 percent. Any action today which postpones the inevitable process of more equitable wealth distribution, such as privatizing Social Security or retaining the Bush tax cuts for the wealthiest, will simply hasten the onset of more economic pain which will broaden out to devour the wealth of the upper quintiles through deflation.)
Writing in his book, “The Worldly Philosophers,” Robert Heilbroner explained the situation leading up to the depression of the 1930s:
The national flood of income was indubitably imposing in its bulk, but when one followed its course into its millions of terminal rivulets, it was apparent that the nation as a whole benefited very unevenly from its flow. Some 24,000 families at the apex of the social pyramid received a stream of income three times as large as 6 million families squashed at the bottom -- the average income of the fortunate families was 630 times the average income of the families at the base…And then there was the fact that the average American had used his prosperity in a suicidal way; he had mortgaged himself up to his neck, had extended his resources dangerously under the temptation of installment buying, and then had ensured his fate by eagerly buying fantastic quantities of stock – some 300 million shares, it is estimated – not outright, but on margin, that is, on borrowed money.
In both eras, Wall Street ceased being an allocator of capital to worthy enterprises and became an institutionalized system of rigged wealth transfer. The primary artifices this time around included issuing knowingly false stock research; lining up large institutional clients to buy at predetermined prices (laddering) on the first day of a new issue of stock – this made the price appear to soar and thus sucked in the small investor; threatening to take the stock broker’s commission away (penalty bid) if the broker let the small investor take profits in the newly issued stock – the practice was known as flipping and was reserved for the big boys. When the tech mania went bust and the rigged game was revealed, the small investor left in droves. Wall Street, with the Fed’s able assistance, fueled the next bubble – housing – and crafted complex derivatives to turn this market into a cash cow for Wall Street and foreclosures for Main Street.
The January 21, 2010 Supreme Court decision to allow corporations to have staggering financial influence in our elections (Citizens United v. Federal Election Commission) and the November 2, 2010 results of the midterm election should send a bone chilling message. Help is not on the way. The end game of this massive wealth concentration is long-term deflation, economic misery and multiple generations who will look back on us as the hapless society who couldn’t tame the Wall Street greed machine for want of a plan.
Thinking Americans can no longer wait for politicians to save us. When a dedicated public servant like Senator Russ Feingold from Wisconsin is unceremoniously tossed out and a billionaire-financed Senator like Rand Paul from Kentucky is sworn in on a so-called populist mandate, the baton for economic salvation falls to the individual. I offer below ten ideas to get started on the first course of starving the Wall Street beast. And, just to be clear to those perched on the edge of their seats preparing to scream “Socialist!,” I’m not suggesting “redistributing” wealth; I’m suggesting putting the wealth back into the hands from which it was taken in a rigged wealth transfer scheme.
(1) Shorten Your Home Mortgage: Former Supreme Court Justice Louis Brandeis summed it up: "We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." The Wall Street beast is thriving on interest on our debt and using it to hire lobbyists and fund politicians who will work for their interests, not ours.
According to March 31, 2009 data from the Federal Deposit Insurance Corporation, four Wall Street behemoths control 35 percent of all the insured bank deposits in the U.S. and 46 percent of the assets (although the quality of those “assets” is very much a subject of debate). Those firms are: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup, Inc. That leaves the other 8,242 FDIC insured banking institutions to share the balance. The total domestic deposits were $7.5 trillion with total assets of $13.5 trillion as of March 2009. That is far too much wealth concentration in too few hands as we’ve sadly learned from having to bail out those four institutions.
Seek your accountant and/or financial advisor’s advice about converting your 30 year mortgage to a 15 year to move wealth from the bank’s shareholders pockets to yours. Rates have never been more favorable for such a move. Typically, over the life of the loan, you will save tens of thousands of dollars of interest. You can look at the savings for your specific situation by clicking on the mortgage calculator at www.bankrate.com. (I’m not endorsing any of the bank loans offered at this site since I haven’t done any research in that area; I’m just suggesting the use of the mortgage calculator.)
Talk to your children before they buy a home about the interest differential between a 30-year and 15-year mortgage over the life of the loan. Show them how to use the mortgage calculator.
(2) Think Local: Consider moving money as it becomes liquid out of the big Wall Street banks that have an iron grip on your Congress and moving it into FDIC insured certificates of deposit at your community bank (being careful not to exceed the insurance limits). A good rule of thumb is to ladder maturities to coincide with when you will need the money. Again, you should consult with your accountant and/or financial advisor. This will also help provide loan funds to local businesses and residential housing in your area.
(3) Start a Business: Don’t worry about the possible arrival of the pink slip; be proactive. Start a business on the side. Do well by doing good: what product or service can you provide that a struggling consumer wants and can afford. (Ideas might include: debt counseling, low cost child care, foreclosure counseling, a pick-your-own fruit and vegetable business if you own farm land, consignment shop, home staging services to help with quicker resales.)
(4) Invest Wisely: Get smart with your 401(k). Investing in the S&P 500 is simply feeding the beast; the beast that’s using your cheap capital to hire lobbyists, create PACs and separate you from representative government. Some 401(k) plans allow you to roll over 50 percent or more to your own IRA after reaching a certain age. Call your benefits office and find out what your options are. Speak to your accountant and/or financial advisor before making any move. You may also want to consider opening an IRA at a community bank and buying insured CDs as an alternative to putting more funds in the 401(k).
(5) Check Out Credit Union Membership: Do you have a family member that belongs to a Credit Union? Chances are they can get you an account there. If you need to use a credit card, try to get one through the credit union at a reasonable rate and then cut up any high-rate card. It’s an outrage that some of the banks that required a citizen bailout are getting their money from the Federal Reserve at almost no cost while charging struggling citizens 20 percent interest.
(6) Don’t Use Credit Cards from Corporations That Abuse You: All of the following have one thing in common: Home Depot, Exxon Mobil, Shell, Macy’s, Sears, Zales. They all extend credit to their customers on a Citigroup credit card. Forty million customers are helping to prop up Citigroup and its anti-consumer, anti-citizen practices by using these cards. Citigroup makes its workers sign away their rights to go to court (see number 8 below) and has serially abused investors through corrupt practices.
(7) Brand Attacks: Chances are high that your local storeowners don’t have a PAC and lobbyists on K Street working against your interests? Reward them with your business and starve the S&P 500 firms until they get the message: if you want me to honor your brand, honor my right to representative government.
(8) Return the Courts to Workers: Many of the largest corporations force workers to sign away their rights to the Nation’s courts as a condition of employment. It’s called mandatory arbitration and it’s an unfair process that is rigged to favor the corporation. If you interview for a new job, ask if the company has such a policy and walk away if they do.
(9) Complain: Don’t let shady practices go undetected. Write a detailed report and file it with the appropriate body: local district attorney, state attorney general’s office, consumer protection groups; and write a letter to the editor to the local paper. This helps good businesses prosper and starves dirty businesses of customers.
(10) Just Say No: To frontal nudity photographs/skin radiation/genitalia groping; all just to board a plane. Don’t fly. You will be standing up for civil rights and starving Wall Street. Body scanner companies trade on Wall Street and the banksters are hoping domestic surveillance is their new cash cow.