Weapons Wall Street Uses To Manipulate US and Tennessee Titanic Sinks

I had an essay that I'd worked on for over six hours today before it was eaten whole by the Blogger dog. Sorry. I'll try to recover it as much as possible tomorrow.

In its stead, we can ponder again how the stock market has been so manipulated by the owners of industry that no one in our nation's non-super-rich citizenry should expect fair play from it.

Or it could just be voodoo. (H/t to GHWB.)

Paul Farrell is a behavioral economist I've listened to attentively for three decades (mostly on Lou Rukeyser's Wall Street Week and in his business columns) and think he's pretty much a straight shooter. He's shooting deadly bullets aimed at the Wall Street con artist crowd today. Not that people won't rate a good crash as a buying opportunity.

On a personal note, I should mention that I haven't invested in the stock market since the obviously orchestrated (Thanks, Alan!) market crash of the dot coms, at one of which I was employed as the technical program manager. (An aside:  Frank Cappiello, a regular guest on Wall Street Week was one of my profs at Hopkins!) And, yes, if you think the market always recovers and goes even higher (using the past as your guide), then it will be a buying opp.

10 Weapons Wall Street Uses to Manipulate You

No quantum computer needed for this profit-making machine

By Paul B. Farrell

February 16 2014

Market Watch

I’ve been observing the Wall Street machine in action since my days at Morgan Stanley years ago. The truth is, Wall Street really doesn’t need a sophisticated high-tech “Infinity Machine.” They’re already in a Snowden-style low-tech “Singularity,” “accelerating returns” skimming money from 95 million Main Street investors.

Remember, Wall Street has only one goal, make insiders superrich, and shareholders rich. The public interest and the rest of the world are never part of their competitive algorithms. Never.

They achieve their goal with the basic ideas of behavioral-finance geniuses like Richard Thaler, by keeping investors in the dark, dependent, irrational and uninformed. Very simple. Here are 10 of Wall Street’s high-tech/low-tech weapons used by their psychological/neuroscientific/behavioral finance cyberwarriors to control their casinos:

1. Hire psychologists, neuroscientists to manipulate the media

Use consulting contracts, grants and retainers and lock up the best talent to work to keep America’s 95 million individual investors “irrational and uninformed” as Thaler says.

2. Free experts constantly deliver Wall Street’s message to media

Network, cable, bloggers must fill their channels every day. Talking heads are free advertising for Wall Street to manipulate investors using so-called news content.

3. Invest megabucks on lobbyists to control politicians, government

Lobbying is one of Wall Street’s best investments. Lobbyists control Washington: control politicians, fight reforms, push favorable laws, regs, spin the truth to mislead investors.

4. Fuel anxiety by pushing the investor’s buy/sell/ trade button

Wall Street’s a casino, makes money on “the action,” skimming a percentage off the top. They fuel investor anxieties, fears, optimism, volatility, maximize action on exchanges.

5. Kill our savings button, undercut self-confidence, long-term planning

Wall Street uses neuroscience technology to sow doubts about retirement security, do-it-yourself investing, how indexing beats trading, then overloads us with misleading ads.

6. High-frequency trading, misleading Wall Street and Main Street

Short-term online trading makes Wall Street billions annually. Hyperactive traders have a competitive edge using high-tech neuroscientific strategies, plus keep markets churning.

7. Brokers trained on aggressive selling and closing techniques

Securities are sold not bought: Broker’s advice is self-serving, often misleading, anything to get a commission. They’re trained to use high-powered psychological techniques.

8. ‘Investor education’ programs are self-serving sales gimmicks

Most Wall Street-sponsored “investor education” programs are loaded with new business, sales and promotional gimmicks. But they help Wall Street present a “we care” persona.

9. New ‘designer’ funds based on latest fads to replace losers

Fund companies constantly design new funds based on the latest fads, for anxious investors chasing higher returns, driven like teenagers who need the latest video games.

10. Retirement gatekeepers: kept in the dark and manipulated

Two-thirds of all funds are controlled by corporate pension and retirement managers. So Wall Street focuses sales pitches on easy-to-manipulate naïve plan managers.

Yes, Wall Street is already in its “Singularity.” The rest of us must wait till 2045.

Meanwhile, Americans need to start asking the hard questions now: Will these new “Infinity Machines” have a soul with a conscience? Know right from wrong? Stop drones from killing good people? Force corporations to put the public interest ahead of shareholder profits? We need to ask the tough questions today ... later may be too late.

(Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell.)

Unionization hasn't only been defeated by the right-wing organized efforts of the millionaires destining themselves for billionaire status since the Raygun '80's.

It's been defeated by the people who would most benefit from it because they're terrified that someone in a social class below them (oh my!) might also benefit from it.

A Titanic Defeat

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February 15, 2014 | Erik Loomis

The United Auto Workers lost its attempt to unionize the Volkswagen plant in Chattanooga after Tennessee politicians interfered to defeat the vote when VW acquiesced to unionization.

In a defeat for organized labor in the South, employees at the Volkswagen plant here voted 712 to 626 against joining the United Automobile Workers.

The loss is an especially stinging blow for U.A.W. because Volkswagen did not even oppose the unionization drive. The union’s defeat — in what was one of the most closely watched unionization votes in decades — is expected to slow, perhaps stymie, the union’s long-term plans to organize other auto plants in the South.

A retired local judge, Samuel H. Payne, announced the vote results inside VW’s sprawling plant after officials from the National Labor Relations Board had counted the ballots. In the hours before the votes were tallied, after three days of voting at the assembly plant, both sides were predicting victory.

The vote this week came in a region that is traditionally anti-union, and as a result many said the U.A.W. faced an uphill battle. The union saw the campaign as a vital first step toward expanding in the South, while Republicans and many companies in Tennessee feared that a U.A.W. triumph would hurt the state’s welcoming image for business.

It’s hard to overstate what a terrible defeat this is. Here you had the company suggesting the UAW enter their plant so they could create the American version of the German works council that would be illegal without a union election (would violate the company union provisions of the National Labor Relations Act).

The UAW will never receive a more favorable opportunity in the American South and just like its failures in the 90's, it came up short. From what I have read so far, it does not seem the UAW messed up the campaign. They did agree with VW to not do home visits, since those went against German union norms.

If the UAW had conducted home visits, no doubt they would have more effectively fought back Bob Corker and Grover Norquist and the outside group propaganda. But if they had pushed home visits from the beginning, they wouldn’t have had a campaign because VW wouldn’t have gone along.

So why did it fail? We can’t blame it all on the politicians and scaremongering. Yes, that probably clinched the failure, but it did not turn 712 votes. There were almost certainly several hundred no votes from the beginning.

Why? First, the white South has always been very difficult to organize. A combination of ideas of self-reliance, the fact that unions are seen as something northern with Yankee ideas, the impact of evangelical religion, and a culture that united rich whites and poor whites through racial solidarity that also created other ties within communities that cut across class have all made unionization strikingly difficult.

For an additional example of the last point, see how the people of West, Texas rallied around the fertilizer plant owner last year after his facility caused an explosion that wiped out half the town. They went to church with him after all.

So there are long, historical struggles to unionize white workers here that go back to the textile towns of southern Appalachia in the 20s and the failure of Operation Dixie in 1946. And while I have not seen any demographics on the racial breakdown of workers in Chattanooga, pretty much all I’ve seen in interviews are white; at the very least, it seems to lean pretty heavily white. So outside groups tainting the UAW with Obama no doubt helped, but it doesn’t explain 712 votes.

There’s also the specter of capital mobility looming over the plant. Even though VW said it wasn’t moving the plant, this was a major theme of the outside groups and it does seem to have affected some workers. Despite left-leaning labor activists beating up Big Labor for a lack of union democracy, far and away the top reason for labor’s decline is the jobs disappearing to nonunion states and to foreign nations.

Given what capital mobility did to Detroit and the subsequent almost mythological role Detroit has played in American culture, it becomes easy to taint the UAW with the decline of Detroit, which was a central part of the anti-union strategy.

On top of that, the UAW having to agree to two-tiered contracts so the Big Three auto makers would keep jobs in Michigan and Ohio, contracts that drastically lowered wages for new workers, did not lend itself to potential new members thinking the UAW was going to make their lives better. That’s a tough spot for the UAW to be in and the blame goes to capital mobility because if the UAW doesn’t agree, those jobs are gone and Lansing and Toledo and other union towns are just dead. So long as corporations can move at a whim, it will be tremendously difficult for labor to win meaningful victories.

But I think another major reason for this loss was that it was never clear to many workers why they were joining a union. Some claim to have been UAW members in the past and had a bad experience, which is the kind of low-level complaining fairly common in all unionized workplaces, often by people who lost a grievance or who screwed up and the union didn’t take on their hopeless case, or they weren’t friends with the shop steward, or whatever.

Who knows. But in any case, the usual union victory results from dissatisfied workers organizing with demands. That really wasn’t the case here. To quote a union organizer friend of mine, “If the vote becomes “Can we trust the Union?” instead of “Should we unite to solve our problems?”, the boss wins.” I think this is fundamentally what this vote was about.

The UAW is considering filing to have the election thrown out because of Bob Corker’s intimidation and there is a real chance he crossed the line. But this is probably a dead campaign. And it’s hard to see how the UAW or any union comes into southern factories and wins major victories at this point. Incredibly dispiriting.