escrap

It is difficult to “get ahead,” as in “accumulate assets,” in today’s radically uncertain investment markets. Nevertheless, it is received opinion in the US that if one “plays by the rules” one can “succeed.” This kind of success is defined narrowly as being able to save up enough money to buy a home, raise children, send them to college, and then retire without being a “burden on society.” These rules included legal protections for workers and consumers. More people prospered under these regulatory regimes.

Now, the regulatory regimes have been attenuated, weakened, maligned, and captured. As a result, corporations have been allowed to legally plunder the people that they are meant to serve. Their avarice knows no bounds. These financial actors are cannibalizing their hosts, we the people and the planet we depend upon for life, without even a thank you. In the corporate jubilation that followed every deregulation and privatization, our savings and home equity were plundered without apology or punishment of the perpetrators. I aim to show the levers and gears of these financial meltdowns, their causes, the failures that follow, and the effects of those failures on the typical nuclear family. I intend to demonstrate that a paradigm shift is occurring right now about how the USA might right its financial ship and get back in touch with its inhabitants. Young people are saying we have to figure out how to reward ourselves in ways that take into consideration equity, equality and fundamental fairness. We have to figure out how to invest in ways that create happy communities and happy families. How can investors protect their assets in a world gone mad?

Table of Contents

1)     Abstract 3

2)     Introduction. 5

3)     Inspiration. 6

5)     The WWII Postwar Period 1946-1960. 7

  1. a) How war profiteering led to the Marshall Plan. 7
  2. b) Erosion of Labor Law @Taft-Harley & Demobilization of female workforce after WWII. 8
  3. c) Remobilization of armament industry (Red Scare) 8
  4. d) The Bracero Program.. 9
  5. e) Steel Industry Strikes. 9

6)     The Last Decade of Dominance 1960-1969. 10

  1. a) The Pill 10
  2. b) The Stock Market seeks growth opportunities – Equity Funding. 11
  3. c) Studebaker Pension Fund failure. 11
  4. d) The conquest of cool 14

7)     The Seventies Changed Everything 1970-1979. 17

  1. a) The fiscalization of national product 17
  2. b) Oil embargo. 18
  3. c) Wage and price controls. 19
  4. d) Interest rate climb. 19
  5. e) War on Inflation. 19

8)     The Eighties – Business is Cool 19

  1. a) Deregulation and privatization. 19
  2. b) The fiscalization of national product 20
  3. c) The Savings and Loan crisis. 20
  4. d) Early 1980s recession. 22
  5. e) Black Monday 1987. 23

9)     The Nineties. 24

  1. a) Early 1990s recession. 24

10)        The 2000s. 25

  1. a) Early 2000s recession – dot com bust 25
  2. b) The collapse of Enron 2001-2002. 26
  3. c) WorldCom accounting scandal 27
  4. d) Subprime mortgage crisis. 27
  5. e) Real estate market cratered, stock market crashed AGAIN.. 28
  6. f) The Housing Bust, the Repo scams, and Middle class hollowing out 29

11)        The – “20teens” – A decade of crises in only 6 years. 30

  1. a) Irish and Icelandic banking crises. 30
  2. b) Student debt crisis. 31
  3. c) 2014 Russian financial crisis. 31
  4. d) 2015 Chinese Stock Market Crash. 31

12)        Increasing inequality without fundamental fairness brings new dynamics. 31

  1. a) Arab Spring & Libya & Occupy. 32
  2. b) The rise of Bernie Sanders and the return of class analysis. 32

13)        Conclusion. 32

1)      Abstract

It is difficult to “get ahead,” meaning “accumulate assets.” However, it is received opinion in the US that if one “plays by the rules” one can “succeed.” This kind of success is defined narrowly as being able to save up enough money to buy a home, raise children, send them to college, and then retire without being a “burden on society.” These rules included legal protections for workers and consumers. A broader range of society prospered under these regulatory regimes.

Now, the regulatory regimes have been attenuated, weakened, maligned, and captured. As a result, corporations have been allowed to legally plunder the people that they are meant to serve. Their avarice knows no bounds. These financial actors are cannibalizing their hosts, we the people and the planet we depend upon for life, without even a thank you. In the corporate jubilation that followed every deregulation and privatization, our savings and home equity were plundered without apology or punishment of the perpetrators. I aim to show the levers and gears of these financial meltdowns, their causes, the failures that follow, and the effects of those failures on the typical nuclear family. I intend to demonstrate that a paradigm shift is occurring right now about how the USA might right its financial ship and get back in touch with its inhabitants. Young people are saying we have to figure out how to reward ourselves in ways that take into consideration equity, equality and fundamental fairness. We have to figure out how to invest in ways that create happy communities and happy families. How can investors protect their assets in a world gone mad?

2)      Introduction

In 2015, Japan’s sovereign debt offerings went into “negative” territory. This means that Japan is offering its bonds on the market and expecting investors to pay for the privilege of holding its debt rather than paying interest.

Japan can expect to sell its debt instruments, even with that premium cost to the holder, because sovereign debt of big rich nations like Japan and the USA is considered a safe and stable place to park investor funds when other markets are deemed too risky for investment. In other words, people do not want to purchase the debt of countries like Greece (an extreme example to illustrate the argument) because there is no assurance that their funds will be safe.

Why do nations have to sell bonds to finance their operations? Because their current accounts do not have enough money to fund all the services the nation provides. Why is it that nations do not have enough money to fund their services? There’s a two part answer: first, nations must invest in capital-intensive projects like maintaining roads and schools that cannot always be financed with current tax revenues and second, individuals and corporations avoid or evade their tax obligations using a combination of legal and illegal means. There’s a third reason that most students of economics are reluctant to raise: the economic system itself, prone to booms, bubbles and busts, makes it difficult to accumulate and retain capital. There are winners and losers in monopoly capitalist systems and the losers are more likely to be small investors and governments. The system has been rigged for the rich. Movements of large sums are artificially influenced by the basic view that capital has to earn income. Transnational corporations have near complete control over movements of capital in the 21st century; thus governments are starved and people are starved, enslaved, made ill, injured or killed.

The preceding views spring from a background in the Critical Law and Economics discipline. Nothing happening today in the world economy gives us cause to celebrate. Not just Japan, but many European countries have been running negative interest rates since 2015.

Complaints across the political spectrum about continually increasing amounts of regulation to control money flows and dampen capital flight may make it mandatory for us to look at ways to “take it off the top” rather than spend billions chasing the money after it has flown. The Financial Transaction Tax in its various forms, also known as a Tobin Tax, presents itself as a rational method for governments to collect enough taxes to take care of their people’s needs.

3)      Inspiration

This work springs from research conducted in support of a thesis, a risk/benefit analysis on using a Financial Transaction Tax rather than FATCA and international tax treaties to raise funds to satisfy the tax needs of nations on a global basis. The unfathomable size and scope of the colossal government and private institutional bureaucracies needed to enforce FATCA and tax treaties could make the discussion in favor of an FTT with global reach fruitful to analyze.

Holding up a new analysis of the risk/benefits of FTT alongside the ever-increasing need for global Anti-Money-Laundering (AML) laws, regulations, policies and operationalization may make the case for an FTT impossible to ignore.

  1. I bolster my argument by providing an historic excursion through a few decades worth of misguided-at-best, war-crime-bad at worst, geopolitical financial actions. For many observers, it is clear that trusting the invisible hand of the market makes cash disappear like magic into the unaccountable maw of vertical integration, offshore banking and underground economies.
  • Operationalization
    1. This paper will provide a “people’s history” rather than a close financial analysis of each of the events listed herein. There will be plenty of room for quibbling with each of my analyses but the arc of history will demonstrate that emphasizing faith in a rigged system is a ludicrous fantasy.
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