MarketWatch: 21/08/2013 (09h33min - horário de Brasília) 10 mega-trends that make the super rich richer Commentary: Bogle’s ‘Battle for the Soul of Capitalism’ is raging By Paul B. Farrell, MarketWatch SAN LUIS OBISPO, Calif. (MarketWatch) — “Doomsday Capitalism?” Yes, Jack Bogle’s classic, “The Battle for the Soul of Capitalism” hit the stands in 2005. The first assault ended four years later. “They” won. In 2009 we suggested a sequel: “Capitalism Died a Lost Soul.” We lost more than the American dream. What Bogle diagnosed as “mutant capitalism” is killing America’s “soul.” Still, “they” won’t stop fighting. Their greed is all-consuming. More is never enough. “They” want absolute power. “Mutant capitalism” has morphed into “doomsday capitalism.” Bogle’s battle rages on and on ... and on. Today, four years later: Wall Street’s resurrected from defacto bankruptcy ... raided the U.S. Treasury ... taxpayers have trillions in new debt ... the dollar is devalued ... degraded our global superpower role is degraded ... Wall Street, big oil billionaires and lobbyists have taken control of government. And the battle rages on, accelerating. Worse, the capitalism virus is raging across the planet, infecting the “world soul” of seven billion inhabitants, extracting natural resources at will, polluting the environment at will, aggressively concentrating more and more wealth for an elite super-rich. No, Bogle’s battle never stopped. Nobel Economist Joseph Stiglitz wrote about endgame of this raging battle in “The Price of Inequality: How Today’s Divided Society Endangers Our Future.” Recently macro-economist Robert J. Gordon emphasized the coming disaster in his NBER Working Paper, “Is U.S. Economic Growth Over?” At the 2013 World Economic Forum: “From 1993 to 2008, the average growth in household income was 1.3%. But for the bottom 99%, only 0.75%, a gap of 0.55. The top 1% captured fully 52% of the income gains during that 15-year period,” as capitalism keep making the super-rich richer. 10 trends killing the 99% The endgame: Even with the most favorable assumptions about future innovations, our GDP is headed on downward trajectory, collapsing to under 1% by the end of this century, confirming the fact that the 10 “Doomsday Capitalism” trends are accelerating. How bad? Bloomberg Markets asked Pimco’s Bill Gross about Gordon’s no-growth projections: A mere “one percent differential means a lot in terms of unemployment” and “corporate profits grow more after the overall economic growth hits 2%. Below that, they stall out.” Get it? Capitalist ideologues are self-destructing, themselves and America’s future. The “great paradox:” On one hand, these 10 trends are killing the future for most Americans. On the other, billionaires, bankers, corporate CEOs and other capitalists love them, embrace the ideology they stand for, promote and fight to keep these ten trends raging. Why? Because super-rich capitalists keep getting richer off these self-destructive macro-trends that are destroying the future for 99% of all Americans. Yes, Bogle’s battle rages on. It’s time to review the ten trends destroying the America’s “soul” from within: 1. Doomsday Capitalism—free market greed destroying core principles After a bankrupt Wall Street was resurrected in 2008, it became clear that capitalism is killing America’s soul. Nobody trusts government. No matter who’s elected, the super-rich run America, collapse is already in progress. As independent Senator Bernie Sanders said it best: “There is a war going on in this country … the war waged by the wealthiest people in America on the disappearing and shrinking middle class of our country. The nation’s billionaires are on the warpath. They want more, more, more. Their greed has no end and they are apparently unconcerned for the future of this country if it gets in the way of their accumulation of power and wealth.” 2. Doomsday democracy — democracy is dead, the super-rich rule America Let’s stop kidding ourselves, democracy is dead: “All men are created equal” is a political fiction. The public has no real say in a nation where wealth buys votes, a naive public is easily manipulated, and elected officials have a price. The “invisible hand” no longer serves “we the people.” The super-rich are our new “invisible hand:” Today, the insatiable super-rich 1% rule America, again obsessed with gambling in the same speculative, unregulated, free-market $600 trillion derivatives casino that triggered the 2008 meltdown. It’ll repeat soon. 3. Doomsday conspiracy — new “invisible hand” has no moral compass Throughout history, the super-rich have always had a hand in America’s destiny, operating from the shadows. Today, this mutant conspiracy of Wall Street, CEOs, politicians and billionaires operates openly, with absolute power and an arrogance that’s corrupted America’s soul, your soul. This conspiracy has no moral compass. Why? Wealth easily buys favorable laws that make even the most unethical, selfish, corrupt behavior “legal.” 4. Doomsday politics — super-rich lobbyists rule from the shadows Forget buzzwords like oligopoly, plutocracy, socialism. Washington is now a pure anarchy, a game played by tens of thousands of high-priced lobbyists. Our economy is a monopoly of super-rich anarchists. There are 261,000 special interest lobbyists each fighting for a bigger slice of the $1.5 trillion federal budget pie — tax loopholes, regs, exemptions, loans, earmarks, agency appointments, defense contracts — endless gambits that consolidate power at the top for super-rich donors. 5. Doomsday economics — “perpetual growth” is a game played by fools The bizarre principle of perpetual growth, once a given for politicians, is being challenged by new “growth and die” research. And still, economists keep playing a costly “numbers racket” to manipulate the truth, investors, consumers, voters, the public. Biased economists all have political agendas, and function more as speechwriters to justify partisan policies, ignoring long-term consequences for the public. 6. Doomsday psychology — behavioral science betrayed the public trust A decade ago, behavioral science offered investors hope: Psychologist Daniel Kahneman won the 2002 Nobel Economics Prize for exposing Wall Street’s myth of the “rational investor.” They promised to help America’s 95 million investors enhance their brains, make better decisions. You’ll be “less irrational,” a more successful investor. Wrong: Your brain will always be irrational. Worse: Kahneman’s neuroscience disciples now work as Wall Street quants, are light-years ahead of Main Street’s naïve amateurs. So the house always wins. 7. Doomsday technology—unbeatable high-frequency derivatives casino Sophisticated new technologies, mathematical algorithms and neuroscience all guarantee Wall Street insiders huge margins gambling in their derivative casinos. Wall Street is now more obsessed, playing for hi-risk profits in a tough “new normal:” high volatility, more risk, lower returns. Main Street amateurs are no match for Wall Street’s “high-frequency traders” who daily win by huge margins on this rigged casino. Meanwhile, naïve investors just keep betting despite evidence that the “more you trade, the less you earn.” 8. Doomsday warfare — Pentagon planning for long devastating global wars The Pentagon predicts that by 2020 “warfare will define human life” as population explodes 50% to 10 billion in 2050. “Unrest would create massive droughts, turning farmland into dust bowls and forests to ashes. Rather than causing gradual, centuries-spanning change, they may be pushing the climate to a tipping point. By 2020, there is little doubt that something drastic is happening. As the planet’s carrying capacity shrinks an ancient pattern reemerges: the eruption of desperate, all-out wars over food, water and energy supplies and warfare defining human life.” 9. Doomsday history — leaders “running amok” trigger sudden collapses Bubble/bust cycles have been documented for centuries. Still, the lessons of history are never learned. Euphoria blinds us in boom times. We deny risk. Bubbles blow. Meltdowns happen. We are convinced we’ll always recover. Wrong. A naïve assumption challenged in financial historian Niall Ferguson’s “Rise and Fall of the American Empire”: “Collapse may come much more suddenly than many historians imagine. Fiscal deficits and military overstretch suggests that the United States may be the next empire on the precipice. Many nations in history, at the very peak of their power, affluence and glory, see leaders arise, run amok with imperial visions and sabotage themselves, their people and their nation.” 10. Doomsday investing — survival strategies in coming “post-capitalism era” Former Morgan Stanley guru and hedge fund manager Barton Biggs offered his “super-rich” investors a doomsday strategy in his “Wealth, War and Wisdom.” Prepare for “the possibility of a breakdown of the civilized infrastructure.” How? “Think Swiss Family Robinson, your safe haven must be self-sufficient, capable of growing food, well-stocked with seed, fertilizer, canned food, wine, medicine, clothes. And be ready to fire a few rounds over the approaching brigands’ heads, to persuade them there are easier farms to pillage.” Read our 12 tips and 6 worst-case scenario rules for average investors preparing for the coming doomsday scenario. Has America passed the “point of no return?” Is there time? Can we deflect history’s inevitable trajectory? Yes, but America needs a fundamental shift in leadership, how they think, says Jared Diamond in “Collapse: How Societies Choose to Fail or Succeed.” We need leaders with “the courage to practice long-term thinking, and make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions.” But that will never happen, says Jeremy Grantham, who’s GMO firm manages $100 billion: “It’s more or less guaranteed that every time we get an outlying, obscure event that has never happened before in history” the conspiracy of mutants across Wall Street, Washington and corporate CEOs “are always going to miss it.” So Bogle’s “Battle for the Soul of Capitalism” rages on. “They” can’t stop, want absolute power. Yes, America’s trapped in “Doomsday Capitalism.” marketwatch/Story/story/print?guid=B62B1C68-09D3-11E3-A54E-002128040CF6
Posted on: Wed, 21 Aug 2013 12:39:47 +0000
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