We retired just in time to take a hit on wife’s retirement funds secured through a church agency. Having banking experience, she insisted on secured bonds only. The Securities Exchange Commission (SEC) eventually investigated that Agency and we discovered her “secured” bonds had been exchanged (without her knowledge) for unsecured bonds she knew better than to buy.
Two leaders were found guilty in civil court, but church leaders refused to press criminal charges. She lost substantially, and we lost our “margin of difference” between comfortable retirement and tough stretching, and Church Leaders could not adequately cushion the worst losses.
That explains part of my interest in today’s political climate; it is where I live. It helps me understand Kevin Phillips, onetime Republican strategist, when reporting, “Nearly 90% of all shares were held by the wealthiest 10% of households in 1997, up from 68.2% in 1983. Stock options pushed the ratio of executive pay to factory workers pay to 419.1 in 1998, from 42.1 in 1980” (italic mine). He concludes, “Succinctly put, the two-decade stock market boom, together with the tax advantages that accrued to investment income over earned income, became the motive force of a new national economy” (italic mine)
The new national economy, so highly touted at the time by Milton Friedman our top government economist and a strong free-marketer, supported a system in which the top 1% held 40% of stock doubling from 10% in 1980 to 20% in 1999 - while the average household stagnated (Phillips/American Dynasty/ NY/Viking Penguin/ 2004/ 66, italics mine).
Another author announces “There were dozens of accounting frauds in these years, and Anderson [Arthur Anderson Accounting Firm] was involved with many of them. Only a few of the CEO’s who perpetrated the major frauds served jail time or were severely fined compared to their substantial wealth…
“In 1997, Arthur Levitt, the SEC chairman, at last realized he had to take more aggressive legal action and the SEC started to bring suits, including those against CUC and Waste Management. But the campaign almost completely neglected the newer, more innovative kinds of accounting manipulation [cooking the books], and the growing derivatives market…
“Unethical accounting standards were, in large part, a consequence of the outsize personal compensation CEOs could earn because compensation was linked to rising stock prices through generous stock options. Theoretically, if they managed the company well, share values would rise and options with them…
“Stock options ... it was discovered, were illegally backdated … the price at which the shares could be bought had already been exceeded when they were issued. The practices did not fully come to light until 2006... Approximately one hundred companies were involved in cases brought by the SEC. By 1996, average CEO compensation among the Standard & Poor’s 500 companies was 210 times the level of average pay for production workers compared to roughly one hundred times in 1990.
“It was only twenty-five times higher in 1970" emphasis mine). Many CEOs profited handsomely from the roaring bull market of the late 1990s, no matter how poorly they managed their firms” (Jeff Madrick/Age of Greed/NY/Knopf/2011/326-328).
Adjunct professor of humanities at The Cooper Union, senior fellow at the Roosevelt Institute and the Schwartz Center for Economic Policy Analysis, The New School, and an economics columnist, Madrick reviews America’s financial history since 1970: “The triumph of finance and the decline of America, 1970 to the present.”
I see it as a moral indictment of an immoral financial system that capitalizes on greed and only uses politics to satisfy that greed. So, when I say that we live in a financial system stacked to favor special interests groups of the wealthy, some of my friends whine that I am only reading liberal “left-wing rags.” They ask “why”” are you so opposed to the Republicans. They call me a “socialist” for supporting President Obama; some add the bullying rhetoric of “baby killer.”
My well-meaning friends are shooting themselves in the foot at the ballot box. “Free market” sounds good, but it was never intended to become a survival of the fittest through cannibalizing corporations, manipulating the money market so only the top 1-2% can pay themselves obscene fortunes, while companies they buy go out of business, or downsize the labor force to expand stock values, etc.
The companies have to play the game or get swallowed up. The purpose for their existence and what they produce no longer matters--only the stock values that allow speculators to up the market-value long enough to buy, sell, or trade for an obscene amount of money, purely for investor’s profits.
Mention any kind of controls and somebody screams “Communism! … Socialism …” ad infinitum … Do you know what the Stock Market is? It is a wealthy play-boy’s gambling casino--largely unregulated and highly protected. Try buying into it.
I fail to understand Christians insisting on protecting unborn babies and feeling no social responsibility for America’s underclass. They support a political-financial system that protects individuals at the top of the pinnacle. They elevate obscene greed as the epitomy of success while supporting a political structure that feeds and protects that system. The words of Jesus mean nothing!
The Prophet Amos thundered, You cows of Bashan … who oppress the poor and crush the needy and say to your husbands, ‘Bring us some drinks!“ …You trample on the poor and force him to give you grain … you oppress the righteous and take bribes and you deprive the poor of justice in the court … I hate, I despise your religious feasts … away with the noise of your songs! But let justice roll on like a river, righteousness like a never-failing stream! (Amos 4:1-7:14, NIV).
From Warner’s World, I am walkingwithwarner.blogspot.com
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