Stock Market Fetish

I’m of the opinion that we pay way too much attention to the stock market.  While news hosts and twitterers obsess over its fluctuation, it isn’t the end all, be all sign of our economic health,  although there’s an upside to having us think so.

If a person were to take 45’s series of tweets about the ballooning of stock market stock marketincreases several months ago, they’d think that our economy was just booming!  From his POV, the stock market could be seen as the key indicator of the health of our economy.  Twitter is  alive the past couple of days with all kinds of people wondering why 45 isn’t claiming the credit for the current downswing due to his wag-the-dog trade war.

There are some issues with this growing stock market fetish. First and foremost, the stock market is a whimsical, flirtatious, flippant animal that I personally hypothesize would literally react to the fluttering of a butterfly’s wings.  It’s not to be trusted as a key or sole testament of health of the economy.  That’s probably why the holy grail of  “leading economic indicators” consists of ten elements, the stock price of the 500 most common stock being only one.  In other words, those stock prices (not overall shares of market trading, mind you) make up merely ten percent of our economic picture. It is NOT the entire picture, but….

In our financialized economy, fawning over the stock market as if it were a pet is exactly what we should expect.  One of the three principal impacts of financialization is to “elevate the significance of the financial sector relative to the real sector” (Thomas I. Palley).  Take a look at retirement options.  Where pension plans were the golden egg for our grandparents, our retirement is bound to the stock market via 401ks.  When news of a plummet in shares directly affects our future livelihood, of course we’ll pay more attention to how well (or not) the market is doing, thus giving the ‘pet’ more attention than it deserves.  Having our retirement tied to market performance subtly allows us to become more willing to listen to boardroom executives talk about loosening Wall Street regulations (Hint: Wall Street needs regulations.) We’ve converted entirely from being interested in the next widget coming out to being obsessed with how well the stock is performing for the company making the widget, a definitive impact.

Taking the idea of elevating the significance of the financial sector to a deeper level, examine the cause of the balloon for which 45 so bravely took credit. Most of the increase was due to corporate buybacks of their own stock, sitting in an imaginary account somewhere in Manhattan. The process means that shareholders rejoice in the growth of their portfolio while the wage earner is paid the same so there’s a zero increase in the amount of actual circulating dollars.

We’ve slowly warmed to the idea that the stock market should be some golden calf whose health reflects the entire economy.  While the supposition accurately depicts an  financialized economy, it’s imperative to remind ourselves that there are other factors that paint our overall fiduciary picture and they deserve equal consideration. We can’t afford to be short-sighted.

Yours, Frankie

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Cannibals

“It worked so well in the third world that we brought it home.  The Corporatacracy colonized its own People.” John Perkins, “Hoodwinked.”

There’s a scent of a fresh kill in the air, and the hunter is crouched and ready to spring, it is so certain of it’s prize it’s brazen about showing itself.   We’ve seen it play out before on whatever nature program:  Some one is going to eat today, some one else is going to die.  Except this isn’t a normal kind of nature program to which I refer, in this case the

lionprey

Photo courtesy National Geographic

hunter is corporate America and the prey is US citizens.

There’s been evidence of its coming for some time now.  As Naomi Klein describes in her important work “Shock Doctrine” Americans ravaged several South American nations during the eighties and nineties.  Graduates of Chicago’s School of Economics, impressed with Milton Friedman’s perception of free market capitalism tore apart democratic governments and national resources, all for the love of mammon.  It was ugly.   People went to jail or were killed for protesting against American influences.   In the aftermath of ravaged economies that were driven to third world nation status, only socialist kinds of interventions ameliorated the damage.

The time is ripe for the Corporate Hunter to finally move in for the kill on its Citizen Prey.  With a Congress full of Corporate lackeys (Pass this bill or say goodbye to your donations) and a CEO for President whose greed is ostentatious,  the chase is nearly over.

Cutting Corporate taxes as well as individual taxes for the wealthy (not to mention a permanent ban on estate tax) means that the monies to run the nation must come from somewhere.  They come from 98% of the rest of us.  Many itemized deductions that are currently available to Mr and Mrs Average are nixed under the plan which combined with changes in tax rates, spell disaster for most of us.  It severely curtails the ability for communities to pursue bonds for building and education.  Higher education, our biggest contributor to progress, innovation, and enlightenment, is threatened.

While we reel from the blow of the “Tax Cut and Jobs Act”, another fatal wound will be incurred with the elimination of  longstanding safety nets of Social Security and Medicare. We will take our last breath with the ending of Net Neutrality where equal access to information allows our democracy a freedom other nations covet.

We are in trouble.  There’s not much to do now, no matter how fast or how hard we run, the Corporate Hunter has gained considerable strength these past twenty years, it has waited patiently for right time, the right hour, to move in for the kill, and it seems to be upon us.  The Oligarchy is unashamedly cannibalizing its own.

RIP Middle Class.   RIP American Dream.  RIP American Democracy.

 

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The London Lesson

There’s a lot going on right now:  The GOP tax bill would devastate our nation in ways that will take decades to amend.   Net Neutrality,  which keeps our democracy healthy by providing the ability for all of us to freely access any information, without regard to economic status, it is currently being threatened. We have a President who openly attacks the 4th estate, the entity which keeps the government accountable and operates on one of the foundations of American values.

It’s exhausting.

There is, however, a beacon of inspiration to which we can turn. Hitler’s decision to Blitz

stpauls

St. Paul’s Cathedral miraculously survived the German bombing.  Courtesy BBC News

the city London was founded on the idea that Britain would eventually get tired and capitulate to the dictator.  From September 1940 to May 1941, whether it was day or night, German airplanes dropped bomb after bomb after bomb on the city in an attempt to tire its people and government.  Children were sent out of the area to relatives further north.  The Tube was opened up as a makeshift bomb shelter where thousands gathered for protection.  Docks were targeted during low tide so that water to fight the fires was scarce and maximum damage inflicted.  Yet, Londoners never yielded.

It is certain they too were exhausted.  Weary from fighting fires.  Weary from rationed food. Weary from losing friends or loved ones to the bombings.  Weary from lack of sleep due to air raid sirens at all hours of the day.  Weary from taking care of the wounded or elderly.  Weary from worry.  Yet, they never yielded.

While we do not face the physical destruction wrought upon those staunch, stubborn, glorious Londoners, we do currently face attacks on our freedoms and democracy on a daily basis. (I’ll note that part of the danger is that since the attacks are not physical, a large portion of our citizenship has simply turned away, turned the t.v. off, and choosen not to pay attention at all.)   But for those of us who are attentive, who are writing and calling and donating, and fighting for all we’re worth, we must continue until we’ve turned the tide to a more equal, more kind government.

We cannot afford to let up once.  We cannot allow our children’s future to be rent with destructive economic policies.  We cannot give up fighting for the health of our planet and the value of our natural resources.  We cannot concede our democracy to the oligarchy any more than those Londoners could not concede to Hitler’s Germany.

Be encouraged, fellow American.  There are others who’ve faced grievous circumstances only to have their resolve strengthened, their mettle tested and refined to an even stronger element.  When you are tired, when you feel lambasted at every level by attempts to undo all that our nation has stood for, think of those Londoners who stayed the course and demonstrated to their adversary that no amount of bombs would propel them to surrender.

#Resist.

Frankie Wallace

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Protest Sympathy

Boy, has Facebook and Twitter and most of America blown up over this whole protesting thing.    I have a theory.

I’m willing to bet that the bulk of those who are mad as hell at the anthem being disrespected haven’t protested much in their life, if at all.

The entire premise behind protesting (let’s all assume from here on out that I always refer to protesting as peaceful, because I do) is to be able to speak our mind about a perceived injustice, and to do so without legal repercussions.   I can stand on a street corner all day long claiming that being forced to wear a seat belt takes away my freedom to choose otherwise, and I won’t get arrested.  Free speech, baby.

It’s empowering to protest. But here’s the thing:  In order to be motivated enough for us to get out of our comfy house and protest, the injustice must be felt acutely by an individual.

There’s no reason to protest if I don’t feel my rights are threatened.  If I am white and have a cross bumper sticker on my car, I pretty much don’t feel like any of my rights are being threatened.  I can walk into any store and get what I need without being watched for fear I would steal something.  If my tail light is out and I am stopped, I know fairly certainly that I will have a friendly exchange with a police officer, probably get a fix-it ticket and be on my merry way.  I can go to the church of my choice.  I can submit an application to a job and be judged solely upon my qualifications, not my skin color.  Life is good!   I experience no threat to my freedom, what is there to protest?

Here’s the chink in the armor:  If I haven’t had to protest, I don’t have the capacity to understand someone who has.   I can’t fathom what could be so unjust in the world that I would need to publicly state my frustration in order to bring about change.   I can’t imagine why I would need to waste my energy marching when I don’t have any challenges in life.

This whole ‘take a knee’ gig has a lot of people fuming, I think, because they can’t understand that someone feels an injustice deep enough to speak out against it by protesting since they’ve not done so themselves. They have no point of reference for public dissent because they’ve never experienced a curtailment of their freedom. It’s entirely lost on them why such a seemingly drastic action needs to take place since they’ve not been challenged themselves in a manner that requires a similar action.

Protesting a social injustice is as American as the flag and the Fourth of July.   But engaging in the activity requires reaching a level of discomfort that, fortunately, many haven’t reached in our society.  Therefore, there’s little understanding or sympathy of the motivation behind the behavior, and lots of judgement instead.

Peace today to each of you….we need it.

Frankie

 

 

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Free Market Reality

A “Free market equals a Free human” is a nice catchy phrase.  It implies that there’s no burden of regulation, no government interference, no one sitting in a far away office telling you what you can and can’t do with your life. While it might seem like something recently coined, the phrase was actually invented in the aftermath of the Great Depression as a means to push against newly minted government regulations on businesses (see Kevin Kruse’ “One Nation Under God“).

The sentiment is alive and well today, even if it is decades old.  Politicians and pundits alike are adamant about a strict free market: anything short of an unbridled economy is socialist and should be avoided at all costs, goes the talking point.   We aren’t free if the government is imposing its will upon the people and their businesses.

Truth is, this notion really gets twisted.

I am all for capitalism.  The idea that demand drives supply and prices and wages while at the same time the competition enables innovation, creativity and iPhones seems fairly logical.  As a fiction writer, I absolutely appreciate the competition aspect in keeping me a sharp writer with new twists.  I find the marketing arena exciting and even fun.  I greatly enjoy the ability to set my own prices as a self-published author.  I am happy to be able to choose Dutch Bros. over Starbucks, Jeeps over Explorers, and Sling TV over Charter as a consumer.

Yet.   The reality of the free market gospel is that it gives corporations freedom to manipulate interest rates, freedom to drive up foreign exchange rates, freedom to create economic bubbles.  Consider the market crash of 2007.   With the invention of wiley animals such as CDO’s and derivative markets, investors were able to create a bubble that not only busted, it hobbled the housing industry for years (consumers still feel the effects of inflated home prices), and very neatly enabled a large shift in wealth distribution upwards, sounding an air-raid-worthy alarm for the US middle class.

The consequence of such ‘freedom’ was a monumental chasm of wealth disparity such that the majority who once thought themselves ‘free humans’ because they exist within a ‘free market’ system were no longer free, but shackled with debt and very few resources.

Perhaps a free market doesn’t equate to a free human after all.

There’s an agreement we all have that certain things just aren’t advantageous to a viable society; theft, murder, and money scams are regulated and deemed illegal precisely because of the damaging affect they pose to a peaceful way of life that’s necessary if we want to progress as a species.  We all accept this premise to be true and in that we understand that we aren’t free to do whatever we want.   It is time we extrapolate that idea into the intangible realm of economics.  If SCOTUS can rule that a corporation is a person, then that person should be subject to rules and regulations that prevent them from harming society, just like the rest of us.  That is the reality of a free market.

Yours,

Frankie

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To Hell With General Welfare

They’re some of my favorite words of the preamble, and as all words of our our founding document, they were carefully, purposefully, weighed before they were chosen by our forefathers.

                                                                “General Welfare”

It is included among other phrases in the preamble of the Constitution. Phrases not meant to be suggestions, not merely “guidelines”, but rather a command:

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

These words mean to take care of the general public.  Take care of your people.  Take care of your nation.  They are specific in their intent:  the good of the most is an imperative goal, and burden for our sworn leaders. They’re part of the social contract, we elect and pay our representatives to speak for us and ‘promote the general welfare.’

They’re there for a specific reason:  a healthy ‘most’ or middle class is directly reflective of a healthy economy, nation, and democracy.   A sizable, vibrant middle class defines a nation’s culture, its trends, its innovations, its norms and standards.  It keeps an economy robust and forces companies to be creative.

There’s a lot of negative rhetoric in the media right now surrounding the idea of the government “taking care of us,” or the “general welfare.”  But it’s right there in the preamble of our Constitution, the very thing that every single congressperson and the President himself swear to uphold upon entering office – promote the general welfare.

Legislatures are matching their actions with the idea “the government shouldn’t take care of us” as the AHCA is being “rammed through” without debate or the thought of the general welfare of the nation.  They know better and they’ve sworn better, but they’ve buried their conscious long ago and realize they can take advantage of this moment of shock where the public can barely get its bearings from one day to the next, when national security is no longer a consensus and the public lives in fear – thanks to a President, thanks to certain media – and manipulate it and swerve the tide of fortune to their greedy little hands.  To hell with the general welfare.

Furthermore, there’s another bill that’s passed the House with even more terrifying consequences: The Financial Choice Act.  It repeals Dodd Frank, AND, ties the feds hands to bail out a sunken economy.   Should the FCA pass, the scenario would be something like:  new cool economic bubble, crash that we all knew was coming, and then, well, nothing. There’s no help because the FCA actually makes it illegal to bailout the economy with any kind of stimulus such we had with TARP.  We currently have a President who has been cavalier about declaring bankruptcy and would probably not be bothered one bit by doing so with the nation’s economy.  There were Republicans calling for ‘austerity’ after the 2007/2008 crash (Have you kept up with how well that worked out for Greece?) so if the FCA becomes a signed gig then that’s a likely road we’ll be forced to take and we’re pretty much screwed. To hell with general welfare.

Keep calling, keep emailing, keep making noise.  We are a democracy, but it only works, and can only be sustained, if we participate.  And if ever there was a moment, this is it.

Yours,

Frankie

 

 

 

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Trump’s Problematic Hero Worship

It’s no secret that our President fawns over Putin and appreciates the Russian’s haughty brand of governing-and-giving-zero-f’s  with regards to human rights and democracy.  And there was the praise of the Philippine president who is mass incarcerating his own citizens.

Adding to his list of “people to keep on a pedestal if your a power hungry megalomaniac”, our President  called Recep Tayyip  Erdogan to applaud his success at throwing away democracy in Turkey.   I don’t know about you, but I’m noticing a trend here.

It’s troubling, this sort of maligned hero worship emanating from our elected leader. Mostly because I’ve come to learn that there is in the works a constitutional amendment, employed by a governor’s convention . The Koch brothers and their ilk have been systematic in their funneling of nearly two billion dollars in local elections to have gained enough governors under their control to call a convention and successfully amend our founding document. Such an amendment strips down the government roles and spending, so ‘state’s rights’ presumably gets priority and the federal government is just a shell.

To many, the idea might seem like a good one.

The truth is that as much as the government has grown, so has our standing in the world and our growth as a population and we need a decent level of government in order to thrive.  One of the lessons we learned (or not) from the Great Depression is that private business cannot fulfill the fundamental gaps that a vibrant society requires to operate: interstate roads, railroads, bridges, national defense, and social services.  Today we still see that when private businesses do provide a service, the tendency to overcharge and price out the middle class becomes an issue (pharmaceutical industry anyone?).   Government is absolutely required so that proper legislative actions bring a balance to corporate greed. Not to mention that with a hallowed out government where everything is privatized, the shots are wholly called by the corporations and there’s nothing to stand in their way of pillaging for whatever they can get.

It’s important to the citizenship of the US that its leader acknowledges and even demonstrates a star struck admiration for his cohorts who are dissolving democracy and replacing it with tyranny. A US president who idolizes brute force and centralized power over checks and balances is just the right ingredient needed for the Koch brothers to realize their vision of a shell government and corporate domination with a constitutional amendment, at which time the financialization of our nation will be complete.

Get involved and hold your government accountable.

Thanks for tuning in,

Frankie

 

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Capitalist No More: The New American Economy

I attended a local forum group yesterday at my local library, the topic was “The Economy under a Trump Presidency.”  The panel consisted of three men of varying backgrounds, all from the area:  an economics professor, a former Tea Party member, and the county Democratic Chair.  Of the three two of them touted the idea of de-regulation and a ‘Free Market.’

It struck me as I listened to them that we have to redefine what a free market actually means.  We no longer live in the nostalgic time of simple capitalism/consumerism kind of system wherein companies are focused on manufacturing a good and selling it for the best possible price.  Ostensibly, this type of free market economy encourages innovation and creativity and allows the ‘invisible hand’ to guide supply and demand.

The problem with that perception is that companies and corporations no longer focus on actual product manufacturing and profits.   Today’s financialized economy is now run from the boardroom and only shareholder interests matter.   The manufacturing and actual productivity are a side note.

So what does a ‘free market’ mean to a financialized economy?   It means deregulation so that markets can be manipulated with sketchy things like derivative trading, which created the housing bubble that sent us into a major recession.   It means no accountability with regard to public safety – think EPA rollbacks.  It means curbing the federal government’s roll in our system and replacing it with corporate legislation designed only for the benefit of the elite.   This is the new ‘free market’ with which we must wrestle.

In an interview with Salon magazine, economist Gerald Epstein discusses a recent paper he published concerning this ‘free market’ and ‘Trumponomics’.  Here is his perception:

The one that I’m most familiar with is getting rid of Dodd-Frank, and deregulating finance. We know that this is likely to generate, at least in the short run, a lot of profits to the Goldman Sachs friends of Trump by letting them do whatever they want to do with borrowed money. We’ve seen this picture before, and we know that it’s not going to end well. We know that it could lead to more financial instability and maybe even another economic crisis, and then the government will be placed in the same kind of bind it was before.

Capitalism works, and worked well enough for the US so that we could claim ourselves as the most affluent nation on earth.   But we are no longer a capitalist nation, we are a financialized nation and the idea of a ‘free market’ means something entirely different in this world.

Yours,

Frankie

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Koch Bliss: Donald is Their Dream Distraction

It was telling to me that the Koch brothers declined to support or endorse a Donald Trump candidacy, on a couple of levels.

The first is trivial, I confess, yet it’s an indicator. It piqued my curiosity that the Koch brothers wouldn’t hobnob with Donald.That is to say, like hangs with like, and the elite tend to hang out in very tight circles. So it’s a measure of Donald’s ‘likability’, to some extent, that the two brothers didn’t/don’t embrace him in a social and political manner.  Take a step further, and I thought, who does hang out with the President-elect? Too few, he had very little popular endorsement and struggled to get performances for his inauguration (I had to laugh/cry at this reality considering this piece I wrote over a year ago, when a Trump presidency seemed wholly unlikely.)

The second issue that raised my concern to alarming level was that their  resources (money) were instead being funneled into the state races, effecting a sweep of the congress and in many state governor races. Especially when we consider Article V of the constitution which allows for amending by two thirds congressional consent OR a three-fourths governor’s consent, something Texas governor Greg Abbott is considering himself.

Bottom line: the Koch brothers have subversively and effectively managed to turn the political tide in our nation enough to perhaps amend our only protective document and we’ve given more notice to Donald Trump’s twitter storms, ‘locker room’ talk, and other vulgarities. We forgot about the real races, the ones that mattered, the ones to which the Koch brothers were attending. True, the same conservatives that voted for Trump would most likely have voted a straight Republican ticket and we now know which demographic constituted that vote, but it was Koch dollars that provided commercials and nurtured the anti-liberal frenzy.

We begin the a new year with an inauguration of a con-man to the highest office of our nation. He’ll continue his dog and pony show because it feeds the attention ogre.

While he does, I can’t help but think that somewhere this New Year’s Day, the two brothers are toasting their good fortune at having the perfect distraction for their ploy of changing the political landscape of our nation as we know it.

May change our focus to meet their mettle.

Yours,

Frankie

 

 

 

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Thanks Obama! Now It’s Your Turn Donald…

Perhaps, one measure of a President can be seen in the way he leaves his nation’s economic health to his successor.

If so, let’s use this article from the Financial Times to gauge where Donald and the US will be in four, or gods forbid, eight years.  Oh, the writ also brings  up some important points about financialization.

The Times writes: “An analysis of economic metrics paints a picture of an economy finding solid footing after the financial crisis. Unemployment stands at a nine-year low, the S&P 500 continues to break records, and home sales hit their highest rate since 2007,” (there are some spiffy charts in the article to check out, don’t miss them).

Unemployment numbers are slippery fish and must be taken with a shot of soy sauce, but the overall downward trend of unemployment is commendable and encouraging, especially considering where we were eight years ago.    The stock market is an even  more dodgy animal than unemployment and should always be considered with a shot of whiskey or gin, but there’s no doubt that Wall Street has flourished under Obama’s tenure, and in the end, it’s health does translate to a sense of economic security, both individually and nationally.   (Incidentally, one of the red flags the incoming president has illicited is his ability to drastically move the market with just a tweet – will the market tire from his shenanigans and learn not to react?  or will it continue to swing in concert with Donald’s unhinged short sentences?   This particular dynamic and relationship will be important to watch.)  As for housing sales, this is good news; it means people are able to get credit again, prices are more affordable, and interest rates are healthier.  Excellent.

It’s also  good news, as the article points out, that inflation is holding at a fair rate and this motivates the ever mysterious ‘fed’ to raise interest rates.   Inflation driven economics is an interesting notion -as opposed to employment driven economics (See G. Epstein’s paper, Financialization, Rentier Interests, and Central Bank Policy).  The jury is out as to whether an inflation-policy vs. full-employment policy is better, but Epstein does recognize the convenience of an inflation drive policy for our oligarchy, “…inflation targeting and central bank independence makes the central bank less accountable to the government, and more accountable to financial markets and those who operate them.”  It will be important, on the financialization front, to look for the long term affects of inflation driven economic policy.  Stay tuned.

There’s a discussion about our national debt in the Times piece. Unsurprisingly – we have had to pay for two wars – our debt level is at the highest its ever been (High consumer and government debt are both symptomatic of the financialization of our economy, by the way.)  A Donald presidency will only increase that, the Times says.  It’s not rocket science to figure out that, eventually, this debt will become the elephant in the living room.

To finish up, the Times highlights some of the problems Donald will have, despite inheriting a fairly decent economy.  “Growth has stagnated in both the developed world and in emerging markets. Manufacturing employment, of course, remains much lower today than it was four decades ago.” Stagnate economic growth is a harbinger of financialization.  The reason ‘manufacturing employment’ is low is because corporations focus more on stocks and shares as profit margins instead of products and services.   Growth is therefore encouraged at the market level, not at the productivity level, stagnation is a direct result of that.

President Obama has been productive when it comes to reinvigorating an economy mired in one of the two worst financial debacles to strangle this country.  He’s left a fairly decent inheritance for any incoming person.  Now, let’s see what ‘that person’ will do with such a gift.  Serious thanks to President Obama, now,  it’s your turn Donald.

Yours,

Frankie

 

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