What, Exactly Do They Produce?

One of the things that really make me laugh hysterically, to the point of slapping my knee, then leaning back and falling out of my chair, is the relentless whining that corporate America does when they hear that the public criticizing their extreme sense of entitlement to wealth. So, we're stuck with this sentiment that it's so unfair to criticize those that have supposedly worked so very hard to attain their entitled positions, and have earned their wealth because they are the only ones in society that effectively "produce" (1). The comedy stems from the mere absurdity of how people who confess to huge success, remain victims of the criticisms of society, as if society looks at corporate America and literally says that being successful is bad, but corporate America is avoiding the point being made. Being successful is not bad at all, but the method by which that success was attained, if corrupt or damaging to the public good and even the markets, does in fact make it bad, especially when success is directly linked to the ability to persuasively furnish things for the market, and literally be a "very productive" member of society.

So, what I have to ask you, corporate America, is, in a time of crumbling economies, markets that tread barely above deep recession levels, a large number of unemployed, the lack of new and innovative industry, discontent mobs in the streets chanting down Wall Street, large financial institutions receiving taxpayer funded bail outs, the government rescue of the American auto industry, and more, what have you actually produced? In what matter is corporate America actually being "very productive"? It's a very mocking behavior, to claim that public criticism of corporate America is destructive, when there is greater income inequality in America, than in China or India before the recession hit (1). Corporate America, you subsist off the lowest taxed nation in the world, so you cannot possibly use the age-old conservative excuse that high taxes prevent you from producing jobs (5). Even though it claims to have its hands tied by too much regulation and high taxes when it wants to create jobs, it still doesn't produce a significant amount of jobs to make up for those lost. What is it? What is the missing ingredient? What else can the American people provide for you in order to avoid any criticism? The American public is still waiting for an answer, and a payback on their bail out investments. If corporate wealth keeps increasing, while the rest of working America sees no exceptional result, how can they effectively label themselves as "very productive"?

Financial institutions around the world, especially now in Europe, while creating an environment for austerity in nearly every nation, in order to buffer the collapse of market stability, have shocked investors with the "sheer amount of money" that banks have demanded, while those investors notice their shares deplete in value, with minimal gains, and a complete lack of growth instilled. So even after a Euro-zone near collapse, a U.S. collapse that's been patched up, and still flounders, and the looming threat of another recession, I reiterate to also the global corporate producers, where is the product (2)?

When it comes to corporate production, the only thing worth noting that gets "produced" are bets against the growth of the economy. Basically, unregulated financial capital companies work hand-in-hand with Senators in Washington D.C. They produce profits for themselves, by getting non-public information from our publicly elected representatives, in order to place bets on elements of the market that are detrimental to creating growing markets, like health care, and banking regulation. These are called hedge funds, and more often than none, these days, hedge fund brokers are looking for bets against growth. If they know that a particular market will fail, or go negative, they will heavily bet on that failure, instead of placing financial resources in growth markets. It apparently doesn't matter to financial corporate America whether or not a business or policy will "produce" for the gain of the markets. It doesn't really factor into that fact that these monied interests that are well connected in American politics will go to no-end, in order to gain profit, yes producing money for themselves, but failing to fill the void created by betting on failure. What is getting produced here, if a particular market no longer exists to produce anything (3)?

This mechanism of investing is bad, and very non-productive, except for those who exploit it. And, that is just what these so called "producers" are doing is manufacturing exploitation. As an author, Henry Mintzberg, puts it, there are two sides to every economy: exploration; and exploitation. Our current economy and political sphere, for whatever reason favors exploitation. It is the bets and the bailouts that are true to the form of exploitation, because it sure isn't those powerless and stigmatized Occupiers who have the leverage to attain fortunes through non-productive means. It is Wall Street, and the political power brokers who do, and they are simply exploiting our markets, leaving the rest of the economy to wonder why everything is out of control and there is nothing they can do about it. In contrast to exploitative enterprise, there is the exploration version, and this is what is disabled in the current economy. It is a feasible way of having monied private interests invest in risky ventures, because they are not bad ideas, but just new, and have an undetermined course, but they can easily succeed as much as they can easily fail (4).

When Mintzberg mentions economists, and how they boast about America's "great productivity", he emphasizes that it is great, because it is the enterprise of exploration, not of exploitation. Exploitative enterprise is what we have now, and that has been and continues to be very destructive to our economy, because unlike exploration, it does not aim to "do things better". It only preserves the current market we have now, that doesn't produce, but instead sells supply, which is only manufactured outside of our markets, and why, because production comes in the form of near slavery -- cheap foreign labor.

Corporate America is not producing anything. In fact all they do is sell. Home Depot doesn't produce hand drills, and hammers, it sells them. Staples doesn't produce staplers, and reams of paper, they only sell them. Best Buy doesn't produce electronics, they are manufactured overseas, and shipped here, and simply sit on a shelf. But even that's not even the worst case, because this holiday season, even after successful sales, Best Buy didn't even have any product on the shelf to sell (6). Hedge fund brokers don't even produce money, they just sell faulty market mechanisms that tempt desperate investors away from exploratory investments, and place value on non-productive facets of our economy. The scenario we have now in America, is just a bunch of overpaid, over-valued, salesmen, and even though they stake claim to production, they have nothing really in production, just a lot of leftovers to sell. Mintzberg puts it like this, if "a company that fires all of its workers and then ships its orders from stock", and economically that may seem like production, but what happens when the supply runs out? Mintzberg, simply, states, "America is running out of stock" (4).

The only other thing left to do is produce, and that can only be effectively done by the explorers of enterprise, who will invest in new industries, or those that create new, efficient, and progressive forms of production.When all corporate America is doing is enabling the the mechanisms, like "disruptive day trading and other exploitative speculation that crowds out sustainable investment and disrupts regular business activities", then productivity by definition and practicality are non-existent. So, how can they possibly claim that they are productive?

1. Bankers Join Billionaires to Debunk ‘Imbecile’ Attack on Top 1%
2. Stocks Subdued After European Lending Move
3. Inside Capitol, Investor Access Yields Rich Tips
4. Who Will Fix the US Economy?
5. GRAPH: Contrary To GOP Claims, U.S. Has Second Lowest Corporate Taxes In The Developed World
6. Whoops! That Stuff You Ordered Weeks Ago from Best Buy? It’s Not Coming

Why There's No Value

I had an interesting conversation with my mutual fund adviser this morning, on the matter of why the current economy is in such a funk. In a time when most baby boomer retirees are looking to collect on their hefty funds, they stare dividend declines in the face, and there's not a damn thing we can do. Yet, there is a large contingency, including myself, that has been brought up by these baby boomers, who taught us to save, save, save, and I do, among many others that I know who are trying to commit as much of our paycheck to our retirement plan as possible, among the overwhelming amount of other outrageous expenses we all have nowadays.

When I asked my adviser if he thinks that the lack of efficiency in out financial system is the root cause of why the markets are crumbling, he said "Yeah that's a very large factor!" There was a certain confidence in his voice, that made me absolutely believe him. He went on to mention that when the "big boys" want to invest, they can do it, without delay, and that their money is immediately passed into the investments without processing, and stocks and the market can both be monitored and traded in almost real-time. Unlike, us, retail investors, who are forced to operate through corporate brokers, in order to invest, and often times these investments spend days if not weeks being processed, and there is no way for the average investor to analyze or monitor the market, and compete at all with said "big boys".

Confidence in investing means that the avenue that an investor uses to access investment must be a level playing field. Consider for example the old school marketplace. Trades were handled face-to-face, in person, and in real-time, thus allowing any buyer to see, feel, and have 100% confidence in that the investment would be put into action right at that moment. Now, in today's markets there are so many different market approaches, and 9 times out of 10 those markets are unseen, because they are operated by middle men (large corporate financial investment firms), and the markets are only available to them, and not the actual investor. Now because an individual is forced to use this system, he has to await processing of his money, in order for the firm to implement his investment. Processing takes time, and as they say time is money. If an investor knows about a good stock today, by tomorrow that stock may be a completely different story. And, that is where the confidence in the markets fails the economy.

Why is the individual investor's money processed? Why isn't the investment firm's assets placed in check like that of the individual? There is no confidence in the economy because the economic institutions don't have confidence in the buyers or the face-to-face consumers. Everything is kept in check, as if even hard assets are considered credit, until it is processed by a higher entity in the financial system. Not a single person wants to have confidence in something they cannot buy or sell on site. If it is not available at that time of value, what will its value be a few days later? Should he preserve their confidence in that product if they don't yet own it? Of course not.

In conclusion, it should be noted that in this day and age where our credit can be monitored faster then our ability to own stock, why can't the process of investments be improved. There is no excuse for our technologies to enhance this system, and make it safer, easier, and more substantial of a market for consumers and investors to invest in.

Offer of Services for the FBI

Dear Mr. Mueller,

Today, I came across an article in the New York Times, titled, F.B.I. Struggles to Handle Wave of Financial Fraud Cases. The first paragraph stated that your agency "is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country’s economic crisis". It would be my pleasure to offer my services to help you and your bureau investigate these corporations who have robbed my American people blind. If you need help just ask! I have a steeped background in research, since my background consists of library work, and having done research at the levels of higher education.

I find it hard to believe that with a seven percent unemployment rate in this country, that you cannot locate at least several employees to analyze and research those institutions that have created our economic fallout, and are mainly responsible for stealing the livelihoods of each and every hard working American. I would be more than willing to find ample information for your agents to bring down the corrupt and greedy individuals who were only concerned with bringing themselves to the top on the stairway built on Americans hard working backs. Help me give us back the control that is deemed necessary.

If you cannot bring those employees of yours dedicating their time to useless investigations of phantom menaces overseas, the terrorists that are ever-lurking outside America's door, then offer me a job at the FBI. I feel that our nation's security can best be upheld, by fighting the terrorists from within, who go overseas to avoid helping the same country that gave them so many opportunities, yet they offshore their profits so as to reap more gain, and put the American taxpayer at a great disadvantage. I can do this job of fighting corrupt corporations.

Thank you, for your time, and I look forward to hearing from you. If you have any questions or concerns about my background or experience, please, do not hesitate to contact me.

Best regards,
C.J.

Confidence is Nothing Without Value

Headlines everywhere today, are discussing how investors need to hold out and keep a positive outlook on where the markets are going. For seven days straight, the markets have been in negative territory, and yet the general public is being asked to stay positive, instead of dealing with the reality of the situation. How can people possibly hold their heads above water, when governments are tossing money at financial institutions that are failing, not because they are losing money, but because the average investor can't remain confident in an institution that has been absorbing money faster than the investors can put back into it.

Blame Wall Street, and blame the government for not owning up to being responsible with money. It is nearly impossible to look at an investment portfolio these days, and confidently get a solid understanding of what it's doing. For example, today I accessed my 401K plan online, and looked over my portfolio. Talk about scant information! I had one table showing all my funds, bonds, stocks, etc., along with prices of the stock at purchase, and quantity of stock I owned. Fair enough. Then it shows way at the bottom, my total earnings on these investments. No current stock price, no market values, and no break down of gains or losses. The company that runs this online software is CitiSmithBarney, which when I opened the 401K, was just SmithBarney, and also not to mention, that when I log in, I get a disclaimer saying that ING has just completed its acquisition of CitiStreet, which is an affiliate of CitiGroup. My eyes began to cross after the acknowledgment of CitiSmithBarney.

Wait, there's more! Now I see my list of investments, and then decide I'm going to look the stocks up on Google's finance site, and I could only find four out of the ten items in there. For instance, I was looking to do more research on the value of one of the items, Western Asst Mgmt US Gov. What the hell is that? There was no corresponding stock symbol. Why is it abbreviated. It doesn't come up in a search on Google, and Western Asset's web site, does even list it as a product, unless it's been named something else. I couldn't find any contact information on the site, so that I could call someone, and ask my unfulfilled questions. What kind of operation is this?

It is very frustrating to see that a Wall Street company, that is responsible for millions of people's hard earned money, and makes millions in profits a day, can offer up such a lousy excuse for an investment portfolio. It's almost as if they don't want you to understand it, because then it would be a lot easier to manipulate your money to grant them more profit.

The lesson for Wall Street to learn today is to respect your customers, and show a little more consideration for those who keep your hefty paychecks rolling in. If there is no confidence in the market, then it's because people just don't know. We are given half rate information, and expecting our advisers to do their job, and make sure we are headed toward a more secure future. So much for that. Would you invest in something you were unsure of, or something you nothing about, and if you did invest, would you be sure that things were going well, considering you nothing about what was going on?

Even our government is not providing the confidence we need in the markets. Today, George W. Bush gave a speech in the Rose Garden, explaining to us, all the facets of a failing economy. He simply restated everything we already know, and is not providing Americans with a sound and consistent plan. It's been 2 weeks already since the plan has been put into place, and the market is just getting worse. What is the plan? Why isn't it working? Why are we being told to not worry about the economy, yet every morning we wake up to a market that is diving? More rules need to be in place holding the Treasury accountable for all purchases and bail outs. All transactions should be openly available online for the taxpayer to see, so that they know what their return will be if and when the market climbs out f the depths. Also, all Wall Street firms need to be handed regulation making robust information readily available to public investors. Information just as well structured, and easy to understand as that of Google's or Yahoo's financing sites.

Information is a powerful tool. It can be used to take advantage of certain situations by limiting the amount that is granted forthwith. It can also benefit those who want to be informed, in order to make better decisions, because if those who are limiting information are harnessing that power, then the less informed will fail to effectively support the systems to which they contribute.

A Clueless Economy

Why does Congress vote no on a bill to rescue Wall Street, then turn around, and vote yes? Why does Lehman Brothers get tossed overboard while other financial firms get rescued by the U.S. government? It's really not absurd to say that there was a failure, and it is easy to assume that failure is always due to someone abusing the system. Bob Moon, stated on National Public Radio's Marketplace, stated that American's have lost well over a trillion dollars in retirement funds since the Wall Street fallout bail out. Now there has been this huge amount of lending over the past decade, so much lending that banks, and financial firms were giving out endless amounts of credit without any sound collateral, and by overlooking the risks of loaning to unchecked borrowers. These financial firms were giving out money like it was going out of style, and now they've been bailed out by the government, and at the same time are locking up the credit and the flow of money. Moon, even went onto say by "painting a word picture" for the listeners, that "the fire hose is going, it is just gushing out money right now, to make sure there is an adequate money supply around the world. What's happening is, it's going directly into the coffers of those banks (ones that survived the financial fall out), and they are drinking it all up." Thus the banks are reluctant to distribute any of the money that is amply available to them.

So today we have market analysts, the Fed, and Wall Street all scratching their heads, wondering why this is occurring. Simply put, the money is not there. The consumer is tapped out. They can't turn to credit because it's been all frozen up. They cannot turn to cash, because it's being heavily absorbed by banks and any other lenders. It's like the parents asking their children why they are not eating dinner, yet there's no food on the table.

Most analysts at this point are blaming confidence, and that's apparent, in that financial confidence deems monetary assets, and we have financial firms with more debt than assets, and consumers tightening their spending, and at the same time losing future assets through investments, and retirement funds. If Wall Street wants to blame confidence, that's fine, but it should be secondary to the blame pointed at itself for absorbing all the cash. If the banks can look at its own low confidence levels, then they would relinquish the cash, and maybe things could get back to normal. These financial giants got there bail outs, so they should quit their collective wining, and be more responsible with value in the market.

Come on, really, either we have a monetary system or we don't, but give us something here!

Wall Street, You Can't Have Anymore!

Last night the New York Times released a column that could possibly place the source of blame on Wall Street for our current financial crisis (Agency’s ’04 Rule Let Banks Pile Up New Debt, and Risk). Now, will the House of Representatives move forward in passing the current Economic Stabilization Act? I hope not. Financial firms less than ten years ago have been misrepresenting their accounting, if at all publicizing factual assets. In 2004 major investment banks came to the Security and Exchange Commission to beg for "exemption from an old regulation that limited the amount of debt they could take on". Now hold on to your seats, because it gets even more atrocious. These five investment banks, "including Goldman Sachs, which was headed by Henry M. Paulson" the current U.S. Treasury secretary, were now being funneled billions of dollars from the Federal Reserve, in order to have "a cushion against losses on their investments" further down the road. This was a precedent to being bailed out, and yet their financial structure was hedged on failing, and these Wall Street institutions took full advantage of deregulation in the name of profiting at the cost of the American taxpayer.

Now, Congress intends to give these thieves another Federal hand out. These firms had full intention of getting permission from the government to perform unrestricted lending, and by getting this, would have the potential for what the New York Times calls a sharply increasing leverage ratio. In other words each company, for example Bear Stearns, had more debt than they had in value of all its assets. They were pretty much in the situation of every foreclosed homeowner in America at this point in time, because these firms took full advantage of deregulated lending and authorized loans on overvalued assets, for which they could not afford. How do you payback debt on a loan that has undefined of fuzzy value boundaries? This made Wall Street in all senses of the word, deadbeats.

This is why the Fed is buying out all these companies, and may get the chance from Congress to funnel some more money up the pipe. Instead of going back to stricter regulation, like it should have been all these years of shady Bush administration tactics, and failed domestic policies. No financial rescues will make the economy sickness better, simply on principle. These companies were expected to responsibly "police" themselves. It is ridiculously laughable that the Fed would allow this to happen, and then put the burden of expectation on the taxpayers, the financially broken homeowners, and responsible Americans in general.

Of course the Bush administration wouldn't rescue its own citizens. It sent its country men and women into a war to protect its energy sector cronies interests in the Middle East. So it was about money at the top. It spent billions and billions of dollars a year waging war against a billionaire terrorist, and oil rich Iraq, while back home Wall Street acted like a band of pirates pillaging American taxpayers, who were struggling to pay off their overvalued debts, and struggle to get proper health coverage. Not to mention, that most of the "war on terror", or should I call it the "price is right on terror", was a war fought by mercenaries, all of which were private contractors and cronies of the Bush administration, all of whom made off with billions of dollars in taxpayer money also.

Now, this morning, it seems inevitable that the House of Representatives will simply pass an unpopular bill, having not listened to the people, but instead listening to a fear-mongering Bush administration. The administration is partially at fault for our financial problems, by neglecting its responsibility of keeping Wall Street in check, by injecting fear, proposing the bail outs, injecting fear into the minds of our representatives in Washington, and by rushing them to make a decision, has made confidence dwindle among all parties, whether it be Wall Street or the taxpayer, Republican or Democrat.

The theft, and intentional plundering of our financial system by Wall Street, has driven our government into helping a system that does not work. It cannot work because as has been stated many times before, the debt heavily outweighs the actual value. Every entity, from the individual all the way up to financial giants, subsists on borrowed value. Look at today's news about Governor Schwarzenegger, asking Paulson to bail out the state of California. California has been in financial decline for years, and is only a glimpse at how deep this financial crisis truly goes, and how Wall Street has been the main contributor to causing America's financial sickness. Who will ask for a bail out next? Cities, then towns, then actual taxpayers? It is a system of cyclical bailout, which at this point in time is increasing the risks, and beginning to wear down the intrinsic value of outright ownership. There is no permanent safety net for anyone, and the only ones that are safe, are those who can swindle the government to "help a big brother out", in so many words. It is absurd how shortsighted the U.S. leadership can be.

You've Been Had

Obama said something that made a huge amount of sense, today, "the American people have been suffering long before Wall Street has." This couldn't be made clearer to the current leadership, who has devastatingly ignored the real problem that the U.S. was and is currently facing. All of this could have been avoided, but when the wealthy in this country are not effected, and the wealthy are so closely tied in with the political elite it is no wonder no one in the U.S. congress, the presidential administration, or the treasury couldn't accept or acknowledge the looming financial crisis that has slammed us hard.
It is worth noting that the current Bush administration has, since 9/11/2001, has governed with the drive of its own interests, committing it's political maneuvers to high level secrecy, without an ounce of regard for the American people and its well being. Now in an attempt to secure our financial crisis, Congress has made an attempt to shore up this crisis, by obliterating party lines, and seriously taking care of this matter once and for all. But, yet again, the Bush administration has not offered up any information regarding its approach to salvaging flailing Wall Street firms, and members of Congress are still in the dark, on both side of the aisle, to boot.
So, the U.S. Treasury is planning to buy up bad mortgages with a estimated value of 2 trillion dollars, and will implement a ban on short selling of financial stocks. The ban is a great idea, because it is definitely a Wall Street trait of abusing financial security and is representative of its ability to abuse the markets. This may work or it may not, but the point is that this was an administrative decision to put a proxy in place to shore up the crumbling walls of big financial firms on Wall Street, at the cost of the American taxpayer. Congress (in other words your voices in government), had no say in the matter.
With all the sympathy from Obama and McCain (not both Congressional members) about how much middle America is suffering and is in financial dire, yet the government insists on shoveling more money into failed business ventures, not because the failure was circumstantial, but because that failure was a product of cheating the American people out of their hard earned money, and the government blatantly wants to foster that with financial rescue.
It's not the smaller number of investment firms with larger amounts of financial debt, but the folks at the bottom end of the market, the taxpayer, the individual investor, the homeowner, who need the bailouts, and may make up a smaller dollar amount of the nation's debt. Yet the government wants to shove 2 trillion dollars into bad mortgages, that will undeniably force a raise in taxes for the individual American.
America's outstanding credit in 2006 reports by the U.S. Census shows that American consumers owe $2,405,000,000,000.00. The financial market's outstanding credit comes in at a whopping $14,129,000,000,000.00. Now I'm willing to bet that those numbers have since increased, and the ratio of difference has, if not remained the same, has also increased. And one could only assume that the best way to approach fixing the market is putting cash into the lower of the two, since it would be a more feasible strategy toward economic stabilization, and let the money trickle up.
There is no financial backbone in America. The value at the top is so ridiculously inflated, that Americans are not capable of reaching for a balance that isn't justifiably within reach. It is so inflated that practically is fictional and non-existent. Those who owe will owe forever because the final balance keeps moving upwards, and continues to be pushed away by the actions of the Federal government. Those who owe are losing jobs, losing investments, face mediocre salaries, and higher costs, and will await an increase in taxes. With that we are expected to pay back on ever-inflating balance sheets. How much more can we possibly endure?
How's this? Why don't all Americans withdraw all of their investments, and use the tax from that to dump back into Wall Street? There's really no difference between that and having to pay more taxes further down the road, which is money that could be placed into a thriving market's investments. This way we could benefit from a thriving market, and not continue to lose our money to bad decisions, and a corrupt corporate America, and government.