"A Cynical Means for the Affluent to Transfer Ever More Wealth From the Rest of Society to Themselves"

"In private equity, there is a saying that goes: 'Every day you're not selling, you're buying.' It means that as long as you hold on to a company or some other asset without profiting from it, you're betting on its longer term success. Behind it is a principle that is widespread on Wall Street: that there are only two sides to every trade--the winner and the loser. The same might be said about society's relationship to private equity: every day we're not regulating it, we're letting it regulate us. We're letting it take over our cells and replicate aggressively. It's clear who's on the winning side of that bargain."

In a 2024 Guardian article, Alex Blasdel explores the world of private equity.

"The Gen X Investors and CEOs Who Run the Industry Are Stuck on the Idea That Private Money Will Protect Them from a Promised Hellscape"

"One way to respond to the Reaganite degradation of government and other public-sector institutions is to (1) get yours as fast and with as many zeroes as you can, and (2) tell yourself you're doing right and find motivated reasons to believe it. The idea of privately exploring space and privately colonizing Mars or other worlds as backups to Earth fits right in with this worldview. So does disrupting public goods (like money or transit) that you believe are doomed anyway. Collective action to preserve and improve these common goods requires coordination across centuries-old institutions—that's not easy to address through software, or without deeply human organizational work that Silicon Valley culture dismisses as 'soft skills.'"

Cyd Harrell at Wired writes that she has "come to recognize some of my generation's worst pathologies in the extractive, divisive models promoted by Silicon Valley's venture capital class."

"'Historians Can Never Forget That It Is a Debate They Are Interpreting'"

"Journalist and author E.J. Dionne once observed that we are a nation conceived in argument. None of these were more important than the meaning attached to the Constitution, which played such a central role in creating our sense of nationhood. I would caution my conservative friends from trying to hijack the meaning of the Constitution for their own ends by playing the trump card (no pun intended), that the founders were all in agreement with modern right-wing politics. How could this be true when they didn't even agree among themselves about how to interpret the Constitution? Instead, lets debate the issues of our day so the American people can make an informed choice without resorting to historically dubious claims."

Donald J. Fraser at History News Network asks, "What do historians make of originalism?"

"America's Economic Illness Has a Name"

"This sickness, not so much the product of venal interests as of a complex and long-term web of changes in government and private industry, now manifests itself in myriad ways: a housing market that is bifurcated and dependent on government life support, a retirement system that has left millions insecure in their old age, a tax code that favors debt over equity. Debt is the lifeblood of finance; with the rise of the securities-and-trading portion of the industry came a rise in debt of all kinds, public and private. That's bad news, since a wide range of academic research shows that rising debt and credit levels stoke financial instability. And yet, as finance has captured a greater and greater piece of the national pie, it has, perversely, all but ensured that debt is indispensable to maintaining any growth at all in an advanced economy like the U.S., where 70% of output is consumer spending. Debt-fueled finance has become a saccharine substitute for the real thing, an addiction that just gets worse. (The amount of credit offered to American consumers has doubled in real dollars since the 1980s, as have the fees they pay to their banks.)"

Rana Foroohar at Time in 2016 explains the scourge of "financialization."

And David Dayen at The Nation shows how private equity killed Toys "R" Us.

"This Is a Robbery in Progress"

"Private equity firms borrow massively to buy companies, and use corporate cash reserves to pay themselves back. Workers who supply the value to the business see nothing; in fact, to service the debt, companies usually cut staff. When the retailer collapses under the borrowing weight, all workers lose their jobs. And even when sales go up, like they have by 5 percent annually in the toy sector over the past five years, dominant toy sellers like Toys"R"Us cannot compete because of the debt burden. The company's profitability was increasing when it filed for bankruptcy."

David Dayen at the New Republic argues that the retail "apocalypse didn’t have to happen."

And Derek Thompson at The Atlantic discusses the rise of "bricks-and-clicks" stores

"Billionaire Reading Name In Panama Papers Totally Forgot He Even Had Funds In Seychelles"

"'Wow, I haven't thought about that in years. How much was it again? $30 million? $40 million? Anyway, I'm glad they reminded me. Who knows how long that would have slipped my mind.'"

From The Onion.

"Isn’t Meant to Start a Socialist Revolution—It’s Meant to Stave One Off"

"Martin sides strongly with the camp that says the financial system failed, particularly the banking system. He suggests that banks broke their traditional bond with governments by going rogue: issuing trillions of dollars of derivatives that flooded the shadow banking system and creating a largely unregulated 'parallel monetary universe.' He calls it a coup d’état, and he’s sympathetic to the dissidents—'Why respect the rules of the system, ask the Occupy protesters and indignados in Madrid, if the system consistently generates crises?'—but rejects financial anarchy and interlopers like Bitcoin and comes down on the side of changing our financial system for the better."


Heidi N. Moore in The New York Times reviews Felix Martin's Money: The Unauthorized Biography.

Be Evil

"Tech world conspicuous consumption isn’t quite the same as Wall Street conspicuous consumption. A Silicon Valley executive isn’t likely to spend his cash on bottle service and a Porsche; a trip up Kilimanjaro and a Tesla is far more the norm. Slate’s Farhad Manjoo, who lives in San Francisco and is hardly a kneejerk critic of wealth, told me he plays a little game with himself where he counts the number of Teslas he sees in any given day. It used to be one a day, now it’s up to five or ten. That kind of lifestyle is certainly expensive (Teslas start at $62,000 or so, without any of the add-ons), but there’s also an element of virtuousness to it—which to some can be more grating than the unapologetic materialism of a stereotypical banker: I spend a lot of money, but it’s to save the earth, not to burnish my own image. And then there's Google Glass: an unsettling-to-the-rest-of-us status symbol that only a tech-head could love."

Noreen Malone in The New Republic asks, "[a]re tech entrepreneurs replacing Wall Streeters as the rich bad guys in the popular imagination?"

"We Have Been Scared, Misled or Bamboozled"

"While we know intellectually that we need to save and invest for our future, our ability to do so varies enormously, Ms. Olen points out.
"'Between 1979 and 2007, the average after-tax income for the top 1 percent of earners in the economy soared by 281 percent,' she writes. 'The top 20 percent would see their incomes increase by 95 percent. The middle fifth? A mere 25 percent.'       

"THE solutions offered by the personal finance world have been unrealistic, she says, contending that 'the increasing problem Americans were having keeping up financially was not viewed as a social justice problem, but as a knowledge and smarts problem that could be solved on an individual basis, one investor at a time.'"

 

Caitlin Kelly in The New York Times reviews Helaine Olen's Pound Foolish: Exposing the Dark Side of the Personal Finance Industry.

Not O(k)

"The 401(k) experiment has been a disaster, a disaster which threatens to doom millions to economic misery during the later years of their lives. Proposals to improve our system of private retirement savings--even good ones--will offer little to no help for the baby boomers who are currently nearing retirement, and are also unlikely to be of sufficient help for current younger workers. We need to increase Social Security benefits, now and in the future. It's the only realistic way to provide people with guaranteed economic security and comfort post-retirement."

Duncan Black at USA Today warns of impending poverty for the soon-to-be retired.

"The Deep, Founding Roots of Rowdy, American Populist Protest and Insurrection"

"Like it or not, though, it is Occupy Wall Street that has the most in common, ideologically, not with those Boston merchants and their supporters but with the less well-known, less comfortably acknowledged people who, throughout the founding period, cogently proposed and vigorously agitated for an entirely different approach to finance and monetary policy than that carried forward by the famous founders. Amid horrible depressions and foreclosure crises, from the 1750′s through the 1790′s, ordinary people closed debt courts, rescued debt prisoners, waylaid process servers, boycotted foreclosure actions, etc. (More on that here [9] and here [10].) They were legally barred from voting and holding office, since they didn’t have enough property, so they used their power of intimidation to pressure their legislatures for debt relief and popular monetary policies."

William Hogeland in Salon compares Occupy Wall Street with the Shays' and Whiskey Rebellions.

But Lee Fang at Think Progress connects the protests to the Boston Tea Party.

Necessary and Proper

"So whereas Tea Partiers sometimes associate their objections to federal taxes with a desire to 'get back to the Constitution,' federal taxation is one of the Constitution's central purposes. And we can thank the wunderkind Alexander Hamilton for proposing the legislation by which the first U.S. Congress imposed the first federal tax ever on an American product."

William Hogeland in Salon wishes Alexander Hamilton a happy tax day.

"We Can Have Concentrated Wealth in the Hands of a Few or We Can Have Democracy"

"In its first 60 years, the estate tax, along with other progressive policies, went a long way toward accomplishing this goal. By 1976, the amount of the nation’s wealth controlled by the richest 1 percent of Americans had fallen from more than 50 percent to only 20 percent. And this greater dispersal of wealth fostered a strong middle class.
"The tax policies of the past 35 years, however, have reversed the trend."

In The New York Times, Ray D. Madoff argues in favor of taxing inherited wealth as income.

Report on the Public Credit

"'The current type of investment is … more like spreading peanut butter,' she says. 'It’s not really based on strategic economic criteria.' She argues that, assuming the bank is truly independent and decisions are actually made by experts, it will lead to a projects being selected 'based on a cost-benefit analysis,' and their 'national and regional importance.'
"That’s how the system’s supposed to work now, isn’t it?"

In The New Republic, Alexander C. Hart compares President Obama's proposed infrastructure bank with a European predecessor.

Myths of the Near Future

"For a generation, most Americans have been told by left, right and center that they would be failures if they ended their educations with high school, worked hard, saved cash for emergencies and bought modest homes they could afford. They have been told that to succeed in life they need to ape the lifestyles of the upper middle class that provides most of America’s politicians, pundits and scholars.
"The result has been an experiment in social engineering that has gone horribly wrong: the creation of a faux mass upper middle class."

Michael Lind in Salon explains how "the American dream has turned into a nightmare."

"Ensure That It Is More Profitable to Play By the Rules Than to Game the System"

"While a number of factors led to such a severe recession, the primary cause was a breakdown in our financial system. It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington. For years, our financial sector was governed by antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy.
"Unscrupulous lenders locked consumers into complex loans with hidden costs. Firms like AIG placed massive, risky bets with borrowed money. And while the rules left abuse and excess unchecked, they left taxpayers on the hook if a big bank or financial institution ever failed.
"Even before the crisis hit, I went to Wall Street and called for common-sense reforms to protect consumers and our economy as a whole. And soon after taking office, I proposed a set of reforms to empower consumers and investors, to bring the shadowy deals that caused this crisis into the light of day, and to put a stop to taxpayer bailouts once and for all. Today, those reforms will become the law of the land."

The New York Times prints President Obama's remarks on signing the Dodd-Frank Wall Street Reform and Consumer Protection Act.

"The Financial Crisis of 2007-2009 Has Made Jefferson a Little Less Out of Fashion"

"To put it bluntly, as this book does: the efficient-market hypothesis does not work. It never has. Markets are not self-­correcting. Left to their own devices, bankers at the biggest institutions can’t seem to stop themselves from speculating with borrowed money until they inevitably crash the system."

Louis Uchitelle in The New York Times reviews Simon Johnson and James Kwak's 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown.

"A Free Market Was Never Meant to Be a Free License"

"In the end, our system only works--our markets are only free--when there are basic safeguards that prevent abuse, that check excesses, that ensure that it is more profitable to play by the rules than to game the system. And that is what the reforms we've been proposing are designed to achieve--no more, no less."

The New York Times prints President Obama's remarks in New York regarding new financial regulation.

"The Old Ways that Led to This Crisis Cannot Stand"

"There are those who would suggest that we must choose between markets unfettered by even the most modest of regulations—and markets weighed down by onerous regulations that suppress the spirit of enterprise and innovation. But if there is one lesson we can learn from the last year, it is that this is a false choice. Common-sense rules of the road do not hinder the markets but make them stronger. Indeed, they are essential to ensuring that our markets function, and function fairly and freely."

The New York Times prints the text of President Obama's speech on Wall Street.

The Financial Product Safety Commission

"The situation with some financial products is similar to the drug market of the early 1900s, Schumer said. The government responded by regulating 'quack' medicine, he said.
"'Those who sell quack financial products in the 21st century' should be 'reined in, not with disclosure, but with real limits,' Schumer said."

Jeff Plungis on Bloomberg reports on a bill introduced by Senators Charles Shumer and Richard Durbin to create a new financial oversight agency modeled on the Consumer Product Safety Commission.