Saturday, February 1, 2014

Why To Hate the Superrich? (Richest 85 People Have Wealth Equal To The Bottom Half of World's Population) In US, Wealthiest 1 Percent Received 95 Percent of Growth Since 2009, While the Bottom 90 Percent Were Left Poorer (Obama's Roth MyRA Steals More)

Oscar-winning actor Maximilian Schell dies at 83

One of my very favorite actors since I was a little girl. He won Best Actor for Judgment At Nurenberg, a Golden Globe for Stalin, and was nominated as Best Supporting Actor for Julia.

Today's billionaire egomaniacs have turned the art world into a high-stakes poker game — but the loss is ours.*

Every now and then I stop to consider that there are lots of reasons the greedy rich should not have used their power to capture almost all the wealth of the country (and the world). You know them as well as I. The question remains, why don't they know them?

And why do we continue to play nice and allow our leaders to continue to cater to them and reap the bounty inherent in the sellout of their voters?

According to Joel Hirschhorn there are lots of legitimate reasons to hate the superrich (and their leaders).

Choose your poison.

How Many Billionaires Are There?

According to the inaugural Wealth-X and UBS Billionaire Census 2013, the global billionaire population reached a record 2,170 individuals in 2013, with a combined net worth of $6.5 trillion. What happened after the most recent global economic meltdown? Some 810 individuals became billionaires since the 2009 global financial crisis. In other words, plain millionaires moved up to billionaire status.

But the super rich include many more than the billionaires, because the top one percent on the economic scale have monster size wealth, according to a new report Working for the Few. The one percent of the richest people in the world have $110 trillion. That equates to some 65 times the total wealth of the bottom half of the world’s population. But among the millions of the top one percent, the richest 85 people, true billionaires, have wealth equal to the bottom half of the world’s population. As to the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer. That leaves 9 percent, about 30 million Americans, in the upper class that did very well as they strive to make it into the top one percent.

When people talk about economic, wealth or income inequality they are really talking about the incredibly small fraction of the richest people relative to the larger population that still are not sharing in the global jackpot, no matter how hard they work. Inequality means that money is not being fairly distributed.
There have been times in history when prosperity was shared, as in the several decades after World War II.

No surprise that only 7 percent of Americans, according to a Gallup report, currently feel “very satisfied” with our nation’s distribution of income and wealth. Similarly, a new NBC/Wall Street Journal poll found that 81 percent of Americans believe the economy is working very or fairly well for the wealthy, compared to 22 percent for the middle class.

Why hate the super rich and the rising economic inequality that benefits them?

This distorted economic system means that democracy is more delusional than real. Consider this: Supreme Court Justice Louis Brandeis once said, “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

Truly wise words.

The near total lack of public confidence in Congress, both major political parties and the whole political system by Americans goes hand-in-hand with the perverted economic system.

You have every right to hate the super rich because for a long time in many visible and invisible ways they have intentionally manipulated the political system to create and maintain the unjust economic system.

Their economic power gives them political power. Rather than one person one vote, think in terms of one dollar one vote.

Hate the super rich because their degree of wealth and power is obscene.

Hate the super rich because they persecute the vast majority of people worldwide. Some of the super rich play up their charitable activities, but that does not negate all the evil consequences of economic inequality on the daily lives of billions of people.

Hate the super rich because their greed is ungodly. If true democracy is to be restored, then Americans need to be much more than dissatisfied. They need to get more emotional. They need to hate. Then they must convert that hatred into political demands and actions.

Chris Floyd at Empire Burlesque: High Crimes and Low Comedy In the American Imperium illuminates this issue brilliantly and speaks for me and most of my readers:

. . . Oxfam released a report on the astonishing, well-nigh incomprehensible level of inequality between the Times' celebrated super-rich and the rest of the human race.

The Oxfam study showed that the richest 85 individuals on earth have as much wealth as the poorest 3.5 billion people on the planet. 85 people control as much wealth as 3.5 billion

This is not the natural fruit of the market's mythical "invisible hand." It is the result of carefully crafted, deliberate policies put in place over the past 40 years by elected leaders who have been bought, like chattel, by the rich, and have used the power of  the state to skew the political, economic and social structure of nation after nation toward the ever-increasing domination of an ever-smaller circle of elites. As Larry Elliot points out in the Guardian:

For much of the 20th century, the more far-sighted business leaders … understood that their workers needed reasonable wages so that they could buy the goods and services they were making. They grasped the idea that a market system in its rawest form was incompatible with democracy and so acquiesced while some of the rough edges were knocked off via progressive taxation, welfare states and curbs on capital. Deep down, they feared that the Russian revolution would provide a template for disaffected workers in the west.
Attitudes have changed in the past 30 years. The so-called Great Compression of incomes seen from the 1930s to the 1970s went into reverse, with the top 1% grabbing the fruits of growth. The rich used their money and their influence to ensure that governments did their bidding. After the Berlin Wall came down, there was no rival model and less need to show restraint.

With the arrival of a unipolar world came a return to a more aggressive form of market economics that had not been seen since the early days of industrialisation.

Elliot then quotes the Oxfam report:

"When wealth captures government policymaking, the rules bend to favour the rich, often to the detriment of everyone else. The consequences include the erosion of democratic governance, the pulling apart of social cohesion, and the vanishing of equal opportunities for all. Unless bold political solutions are instituted to curb the influence of wealth on politics, governments will work for the interests of the rich."

Anyone see any sign of one of these fatcat-curbing "bold political solutions" coming down the pike anytime soon? In most countries - including most emphatically the US and UK - even the so-called "progressive" or "liberal" factions who one might wistfully expect to wanly offer such solutions long ago sold themselves, happily, giddily, to Big Money.

Who dismantled most of the (few) "curbs on capital" that had been instituted during those 40 years of growing income equality (and more widespread prosperity)? Why, Democrat Bill Clinton and Labour's Tony Blair, who else? Both of these cool, young, swinging liberal-type guys did more to destroy the restraints and unleash the elite dogs of domination than their conservative predecessors such as Reagan and Thatcher.

And the beat goes on under the even cooler, younger, hipper more liberal progressive-type guy in the White House today. As Elliot notes, one of "the most striking findings of the Oxfam report is this little nugget:

"…In the US, the wealthiest 1% have captured 95% of post-financial crisis growth since 2009 while the bottom 90% have got poorer."

Yes, this is the real truth of the much-vaunted "recovery" of the U.S. economy under the leadership of Barack Obama: 95 percent of the tepid growth since he took office has gone to the 1 percent. A full 90 percent of the American people have grown poorer.

This is because Obama's carefully crafted, deliberately chosen economic policies have been designed to use the power of the state to skew the nation's economic, social and political structures toward the super-rich, in some of the most brazen ways imaginable.

From the very beginning, the focus has been almost exclusively on "saving" the financial sector that caused the crisis, bailing it out, protecting its privileges, extending its reach and - as the statistics clearly show - enriching it at the expense of every other sector of American society.

Obama's defenders will point to the intransigence of the Republicans as the reason why the rich are getting obscenely richer under Obama while the rest get poorer and the 'safety net' and social structures (and infrastructure) of American life are relentlessly degraded.

But of course, it is only this intransigence that has saved us so far from the even greater degradation that Obama has been seeking since his first days in office: the "Grand Bargain" that will slash the remaining threads of the safety net and gut most non-military spending in order to "balance the budget" (while maintaining a world-encircling military machine and all-pervasive "security" apparatus).

Over and over, Obama has offered the Republicans savage budget cuts and safety-net gutting that were beyond the wildest dreams of the arch-conservatives of yore - or even, say, Newt Gingrich in the 1990s, or George W. Bush's administration.

But the GOP is now dominated electorally by theocratic extremists who believe any tax rise (even the minuscule bumping Obama meekly suggests as part of his "bargain') is of the devil, while the corporate interests who let these theocrats front for them have decided to vanquish even the pretense of any restraint on their power once and for all.

Their scorched-earth campaign and the zero-cooperation stance of the zealots have blocked Obama's frantic efforts to destroy the remnants of the New Deal, but one day, they may take the bait - and then you can tell Granny to go dumpster-diving, because the state ain't gonna feed no useless eaters no more.

And let's not forget that it was Obama's choice not to spend the enormous political capital of his first election triumph to rescue the millions of workers and homeowners going under, but to instead put all his energy into "saving" the perpetrators of the global collapse - and pushing a  "health reform" plan created by a right-wing think tank in the 1990s: a wretched piece of corporate profiteering that cleverly, and completely, co-opted the "left" into defending an elitist boondoggle and effectively killing genuine health care reform for years, perhaps for generations.

No; we are where we are because our elected officials, of both parties, on both sides of the ocean, have long been and still are the prostituted servants of a rarefied, ravening, bellicose elite.

The elite have won the war; they've imposed a brutal occupation on the vanquished - and now they are withdrawing beyond the clouds, to golden citadels and 'specialist suites,' where they can disport themselves in luxury and safety, while looking down, with a satisfied smile, on the billions and billions of worthless suckers they've left behind.

And as for Obama's high-falutin' speechifying decision from on high to offer a new type of IRA for the peasants called MyRA?

Not so new.

Or My.

Or honest.

Try to remember, class. The brilliance of the Social Security fund is that your contributions built it and maintain it. Every new venture that privatizes the investment impoverishes it and has no government guarantee of returns. Except to the private interests who now have their hands out.

The Presidential Memorandum, surprisingly, was devoid of any salient details of how the MyRA would work and effectively gave the U.S. Treasury Secretary, Jack Lew, carte blanche to tailor the account as long as it complied with the following: “By December 31, 2014, you shall finalize the development of a new retirement savings security that can be made available through employers to their employees. This security shall be focused on reaching new and small-dollar savers and shall have low barriers to entry, including a low minimum opening amount.”

The President’s memorandum adds further that “within 90 days of the date of this memorandum, you shall begin work with employers, stakeholders, and, as appropriate, other Federal agencies to develop a pilot project to make the security developed pursuant to subsection (a) of this section available through payroll deduction to facilitate easy and automatic contributions.”

This is the first we’ve heard to date that the MyRA is just a pilot project and not going to be a full scale rollout. After speaking with the U.S. Treasury, and scouring fact sheets provided by the White House, this is the detailed outline of how the MyRA is currently envisioned.

Firstly, this is not a new retirement account. The President has no authority outside of Congress to start creating retirement accounts for the country. This is the existing Roth IRA account that is being offered a new investment product from the U.S. Treasury which has low dollar minimums in order to reach less affluent workers.

The new product is U.S. Treasury securities which will be backed by the U.S. government against loss and earn a floating rate based on the Thrift Savings Plan’s Government Securities Investment Fund that is offered to Federal workers. While there is no guarantee of what that will earn going forward, over the past decade it has averaged approximately 3.6 percent.

Under Roth IRA rules, the account is eligible to workers earning less than $191,000 for 2014 if you’re married filing jointly; less than $129,000 for 2014 if you’re single or the head of a household. Under Roth IRA rules, not everyone is able to make the full maximum contribution of $5500 (2014) or $6500 (2014) if you’re age 50 or older. The IRS provides an easy table showing how to figure out your own specific contribution limits based on your modified adjusted gross income and tax filing status.

>The White House has touted the fact that the employee can always withdraw the money at any time. That’s not completely correct.

Because workers get no tax deduction for contributions to a Roth IRA, the money is going in on an after tax basis, unlike a traditional IRA where contributions are tax deductible. That fact allows the worker to withdraw Roth IRA and MyRA contributions without paying additional taxes or a penalty. Withdrawal of the interest earned on the account is only tax-free if you’ve reached age 59 ½ or older and you’ve had the account for at least 5 tax years. There could also be a 10 percent federal penalty tax on the interest under certain conditions. (Participants in any form of retirement account should always speak with a tax advisor before making any withdrawals.)

The President’s fact sheet states that participants will be able to make a first time contribution to their MyRA for as little as $25 and $5 thereafter. Once the account reaches $15,000 it will be mandatory for it to roll over to a private sector company.

As incorrectly reported by some media outlets, the U.S. Treasury will not be administering this plan. The U.S. Treasury acknowledges that it will be hiring an outside money management firm with the capability of keeping track of all of these small contributions and disbursements.

Since small accounts are not attractive to most money management firms, it is likely that the U.S. government will pay significant sums to this outside firm, and/or offer it the inside track of rolling over the accounts to their own investment products when the accounts reach $15,000 in size.

It’s at the $15,000 level that the worker who is unsophisticated in the ways of Wall Street will need to pay very close attention. At that point the worker is likely to get hustled to buy a high commission annuity or a high commission mutual fund that seriously eats into the earnings he has made.

If, at this point, the MyRA participant still wants a risk-free investment, low to no-cost rollover accounts will still hopefully be available at community banks offering FDIC-insured certificates of deposit inside of Roth IRAs.

What the MyRA does not address, of course, is the reason that most workers have so little to contribute toward their own retirement plans: wage stagnation.

From World War II onward to the early 1970s, the income of the middle class was on a consistent upward trajectory. Then, in the late 70s, the progress abruptly stopped. For the next three decades, adjusted for inflation, middle class incomes stagnated.

To make ends meet, women joined the workforce; workers took on longer hours and part-time jobs. Still struggling to keep pace with inflationary costs for food, housing, medical insurance, and college tuition, the middle class took on increasing levels of debt on high-interest credit cards.

Wage stagnation was further aggravated by a loss of good union jobs. Over the intervening years, the number of people represented by unions fell from one-third of all workers to a stunning seven percent. The ability of union workers to negotiate for higher wages, and set a higher benchmark for all wage earners, died with the decimation of unions.

Before the President can effectively address the plight of future retirees, he must deal with wage stagnation, the effective looting of Wall Street-managed retirement plans through exorbitant fees, and the lopsided playing field that pits the financially unsophisticated against an army of financial hustlers.

Have I mentioned lately that I don't believe Obama has much of an Economics background? Certainly not in this instance.

Nor do his "advisors."

Not that his opponents want you to understand things any better either.

I guess it's now back to the "rip-off the consumers" season full-bore?

You'd think we had had a "recovery."

* The scene at Christies where the wealthy elbow each other to grab a bigger piece of the new pie (bubble).

Bull Market

I have been an invited interloper in the fiefdoms of the decimal-pointed rich long enough now to know that when rich men want to distinguish themselves from other rich men they buy art. Among practitioners of modern-day social one-upmanship this is hardly new. The nouveaux riches of the Gilded Age were the first Americans to discover the class-enhancing power of nailing a Titian above the mantel. But those robber barons were different from ours in a very important way: To those less formally educated, more red-bloodedly capitalist men, art was a way to wash themselves clean, to refine their own taste and that of their fellow citizens, and in that way to share some of the vast wealth that had been made by the few in disproportion to the many.

There are, to be sure, still sterling examples of amateur connoisseurs who spend the lifetime and personal fortune it takes to put together a first-rate collection and then generously decide to give it away. Leonard Lauder's recent bequest to the Metropolitan Museum of Art of 78 important Cubist works, estimated to be worth more than a billion dollars, sets a high bar for future Olympic collectors with philanthropic ambitions.

It is perhaps a bit premature to read too much into the record-breaking November auctions at the New York branches of Sotheby's and Christie's, which, in combined gavels, raked in more than a billion dollars. But what is clear is that against the elegant backdrop of such noblesse oblige is a growing breed of money changers whose idea of cultural enrichment involves buying and selling works of art as if they were trading them on the New York Stock Exchange.

A tableau vivant of those who attended the auctions, for instance, would include a brass-knuckled hedge fund manager who is himself a collector and is currently agitating for bigger profit margins at Sotheby's; a member of an international family of textile tycoons who instead of adding to a hoard of some 800 Warhols flipped one at Christie's for $57.2 million; and an uptown gallerist indicted for running a gambling ring connected to the Russian mob who hid behind the one-way glass of the newly built VIP "skybox" at Christie's. "I am a collector," Mike Ovitz is reported to have said upon taking in the scene, apparently with disgust. "This is not about collecting."

The news of Francis Bacon's three-part study of Lucian Freud going for a record $142.4 million isn't what makes me think there's a bubble, though clearly there is one — and has been one for years. It was something much more disturbing: the realization that a comment Gordon Gekko made has come true on a scale grander than even he, in all his lacquer-haired rapaciousness, could have dreamed. "This painting here," Gekko coldly boasts in his corner office in Wall Street, "I bought it 10 years ago for $60,000. I could sell it today for $600,000. The illusion has become real, and the more real it becomes the more desperate(ly) they want it."

Tulips, anyone?


Tom Harper said...

Not very encouraging, with both parties up to their necks in it. It's like the old saying, "if voting made any difference, they wouldn't allow it."

Cirze said...

You're right, Tom.

I think of that all the time.

And I'm not encouraged in the face of Obama approving the XL pipeline even though he knows it's death to our environment and that everyone knows if he does it, it merely proves he's been paid off.


I cannot figure out how these people can walk down the public streets and not fear being spit on.

And they will not be safe after they retire.

Unless they move to he Moon.

So frigging depressing.