Monday, August 27, 2007

The Game Is Rigged

The Game Is Rigged So The Ruling Classes Get Richer As We Get Poorer

“Living standards for the working and middle class and the urban poor have declined substantially over the past thirty years (1978-2006) to a point where one can point to a burgeoning crises. While real hourly wages in constant 2005 dollars have stagnated, health, pension, energy and educational costs (increasingly borne by wage and salary workers) have skyrocketed. If extensions in work time and intensification of work place production (increases in productivity) are included in the equation, it is clear that living (including working) conditions have declined sharply. Even the financial press can write articles entitled: “Why Ordinary Americans have Missed Out on the Benefits of Growth” ( FT November 2, 2006 p.11)...The impact of the policies of the financial ruling class on both the manufacturing and service sectors transcends their profit skimming, credit leverage on business operations and management practices. It embraces the entire architecture of the income, investment and class structure. The growth of vast inequalities between the yearly payments of the financial ruling class and the medium salary of workers has reached unprecedented levels. The financial elite receives something in the range of a ratio of 500 up to 1000 times that of an average worker, depending on how narrowly or broadly we conceive of the financial ruling class.” Who rules America? James Petras

As the meltdown of the US and global economy proceeds unabated, one could be forgiven if he or she innocently thought this was a case of Cosmic Justice or Karma for the financial elites, that it served them right for what they’ve done to working class and poor people around the world with their greedy predatory policies. However the fact of the matter is, while some of the investment bankers and financial capitalists are being hit hard by the ripple effects of the so called Subprime/credit collapse, percentage-wise it is working folks who will bear the brunt of the crisis. Yes Bear Sterns, Citigroup, JP Morgan Chase, Goldman Sachs and Bank of America, their mortgage subsidiaries and hedge funds are really taking major hits and losses on this; but don’t forget the pension funds, 401Ks and mutual funds of ordinary working folks are also heavily invested in their portfolios and products. A billionaire can afford to lose a few million or even a few hundred million, but Joe and Jane Sixpack who have negative savings as it is, can’t afford to have their 401K or defined benefit pensions wiped out like the suckers who lost all their money when they went for the Enron okey-doke!
Not only are working folks losing their homes through loan defaults, foreclosure and eviction, their retirement “nest eggs” as also being wiped out. The problem is the impact of this crisis is so huge because the Wall Street Bankers cleverly lumped all kinds of home and commercial loans together with other products like bonds and resold them around the world, no one really knows just how extensive the defaults will be and who will suffer the most. But one thing is for sure the big boys made their money off of all this. “While the ‘hedge fund’ speculators receive the highest annual salaries, the private equity executives can equal their hundreds of millions payments through deal fees and special dividend payments from portfolio companies. This was especially true in 2006 when buyouts reached a record $710 billion dollars. The big bucks for the private equity bosses comes from the accumulating stake executives have in portfolio companies. They typically skim 20% of profits, which are realized when a group sells or lists a portfolio company. At that time, the payday runs into the hundreds of millions of dollars. The subset of the financial ruling class is the ‘junior bankers’ of private equity firms who take about $500,000 a year. At the bottom rung are the ‘junior bankers’ of publicly traded investment houses (‘Wall Street’) who average $350,000 a year. The financial ruling class is made up of these multi-billionaire elites from the hedge funds, private and public equity bankers and their associates in big prestigious corporate legal and accounting firms. They in turn are linked to the judicial and regulatory authorities, through political appointments and contributions, and by their central position in the national economy. Within the financial ruling class, political leadership does not usually come from the richest hedge fund speculators, even less among the ‘junior bankers’. Political leaders come from the public and private equity banks, namely Wall Street - especially Goldman Sachs, Blackstone, the Carlyle Group and others. They organize and fund both major parties and their electoral campaigns. They pressure, negotiate and draw up the most comprehensive and favorable legislation on global strategies (liberalization and deregulation) and sectoral policies (reductions in taxes, government pressure on countries like China to ‘open’ their financial services to foreign penetration and so on). They pressure the government to ‘bailout’ bankrupt and failed speculative firms and to balance the budget by lowering social expenditures instead of raising taxes on speculative ‘windfall’ profits.” Who rules America? James Petras
The financial elites weld power by influencing the political process thereby rigging the whole socio-economic system, keeping the poor out of the loop and at their mercy. “First, wealth can be seen as a ‘resource’ that is very useful in exercising power. That's obvious when we think of donations to political parties, payments to lobbyists, and grants to experts who are employed to think up new policies beneficial to the wealthy. Wealth also can be useful in shaping the general social environment to the benefit of the wealthy, whether through hiring public relations firms or donating money for universities, museums, music halls, and art galleries...
There's a much deeper power story that underlies the self-dealing and mutual back-scratching by CEOs now carried out through interlocking directorates and seemingly independent outside consultants. It probably involves several factors. At the least, on the worker side, it reflects an increasing lack of power following the all-out attack on unions in the 1960s and 1970s, which is explained in detail by the best expert on recent American labor history, James Gross (1995), a labor and industrial relations professor at Cornell. That decline in union power made possible and was increased by both outsourcing at home and the movement of production to developing countries, which were facilitated by the break-up of the New Deal coalition and the rise of the New Right (Domhoff, 1990, Chapter 10). It signals the shift of the United States from a high-wage to a low-wage economy, with professionals protected by the fact that foreign-trained doctors and lawyers aren't allowed to compete with their American counterparts in the direct way that low-wage foreign-born workers are.” Who Rules America Power In America Wealth Income and Power by G. William Domhoff September 2005 (updated December 2006)
Like all pyramid schemes, the game is rigged, the fix is in so those at the top get the most. This current collapse is designed to further rob the poor and give to the rich via the massive foreclosure sales that will take properties (homes) from working folks and allow certain groups to acquire them at fire sale prices at pennies on the dollar. “Economic collapse is one of the final stages of the cabal's overall policy of cultural devastation. Many of their earlier phases of contrived collapse have been largely unseen or ignored by most Americans. But the final economic breakdown--now in its first stages with the bursting of the housing bubble and the collapse of the dollar--are realities U.S. citizens can no longer turn a blind eye to, because many Americans are literally being thrown out on the street through foreclosure and eviction. Through real estate shell games, the super-rich have looted at least $10-$15 trillion from workers. ‘Buy a house with a low interest loan,’ they lied to the workers, ‘and it will rise in value indefinitely.’ Workers were swindled into buying property with interest-only loans--or other predatory financing--deluded into believing that with their increased property value they could later refinance to pay off the balloon payments and sky-rocketing mortgages...
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was a massive restructuring of federal bankruptcy laws which punishes middle-class debtors and awards increased payouts of as much as $4 billion a year to their creditors, mainly banks and credit card issuers. The cannibal corporations spent $40 million and eight years lobbying Congress for legislation that makes it virtually impossible for individuals to escape debt repayment. The 500-page bill was largely written by bank and credit card lobbyists. The law imposes a two-stage means test on bankrupt debtors that will reduce the number permitted to file for bankruptcy under Chapter 7, which provides for liquidation of most debts, and force more debtors to file under Chapter 13, which requires significant repayment.” Political-Economic Cannibalism
Onerous debt is another form of slavery. Most AmeriKKKans are in debt up the wazoo. But we cannot blame anyone but ourselves. Our predicament is based upon our own gullibility, crass materialism, and our total ignorance of the power of compound interest! We have become debt slaves and wage peons to the fascist financial and corporatist oligarchy that run this country. This is modern day serfdom. Their plan is to transfer as much of if not all of the private wealth and resources of the world into their hands by making humanity poorer and poorer. Their policies have the US on the brink of psychological, moral and financial collapse. Perhaps this too is part of their plan. “The paradox is that some of the most wealthy and powerful beneficiaries of the ascendancy of finance capital are precisely the same class of people who are financing their own self-destruction. While cheap finance fueling multi-billion dollar mergers, acquisitions, commissions and executive payoffs, heightened militarism operates on a budget plagued by tax reductions, exemptions and evasions for the financial ruling class and ever greater squeezing of the overburdened wage and salary classes. Something has to break the cohabitation between ruling class financiers and political militarists. They are running in opposite directions. One is investing capital abroad and the other spending borrowed funds at home. For the moment there are no signs of any serious clashes at the top, and in the middle and working classes there are no signs of any political break with the two Wall Street parties or any challenge to the militarist-Zionist stranglehold on Congress. Likely it will take a catastrophe, like a White House-backed Israeli nuclear attack on Iran to detonate the kind of crisis which will provoke a deep and widespread popular backlash of all things military, financial and made in Israel.” Who rules America? James Petras
As I stated in the beginning of this essay, this could be Cosmic Justice, our Karma; the inevitable consequences of our ignorance, greed and hubris. At any rate unless we change our values, alter our ways of doing business and consciously thwart their plans to enslave the world by getting out of debt as soon as we can (if we can) , they will get richer while we get poorer, more depraved and indebted with every passing day.




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