This is not an investment piece, rather it is a philosophy article. We think it really sums up the difference between the two parties in this election year. It will effect the future of the United States.
We would like to hear your take.
Conservative Tom
We would like to hear your take.
Conservative Tom
Is This 'Untruth' Keeping You From
Getting Rich?
By Alex Green, Chief Investment Strategist, Investment U
By Alex Green, Chief Investment Strategist, Investment U
I know it's a political year, but I
don't generally like to talk politics.
When I'm not making readers money, I'd like to at least make them happy. And when you talk politics, you often make half your audience – and sometimes more – unhappy.
Still, I'm shocked and surprised by an ominous development in this year's presidential election. No, not the personal attacks, negative ads, or over-the-top promises. Those have been staples in national elections for more than 200 years. What's new – and troubling, in my view – is that some see political gain in demonizing economic success.
I don't get it. As a kid growing up in a solidly middle-class family, I admired the businessmen, entrepreneurs, and professionals in my community who earned large financial rewards. I remember feeling that these folks must have studied hard, put in long hours, or taken big risks. I didn't envy them. I wanted to be like them.
Yet there was former President Bill Clinton at the Democratic Convention stoking the flames of resentment with his remark that some "want a you're-on-your-own, winner-take-all society."
I find this disheartening, in part because Bill Clinton is not a left-wing ideologue. Yes, he's a card-carrying liberal but in his two terms, he promoted free trade, slashed capital gains taxes, and reformed the welfare system.
I thought the class-warfare remarks were beneath him. For starters, capitalism is about voluntary exchange for mutual benefit. Businesses don't "take" money. Only government (which has a monopoly on the legal use of force) and criminals do that. Businesses merely collect the money that consumers and other businesses voluntarily trade for products and services.
Perhaps Clinton meant the rich "take" in that they don't pay their fair share in taxes. This is certainly a debate worth having – and opinions are bound to vary. But we should begin with the facts. According to the Internal Revenue Service, the top 10% of Americans pays almost 70% of all personal income taxes. The bottom 50% pays essentially nothing. What would George Orwell say about calling the 10% of Americans who pay 70% of the taxes "takers" … and stoking a sense of grievance among the half that pays nothing?
I'm also confused about the "you're-on-your-own" bit. No one objects to a social safety net for the truly needy. But when I reached the age of majority – after receiving a free public-school education and a library card – I expected to take care of myself.
If I couldn't take care of myself in a pinch, I knew I might have to lean on family or friends temporarily. If I couldn't find help there, I might have to count on churches or local charities for a while. And if that still weren't enough, maybe I would have to turn to the state government as a last resort.
I never imagined that some bureaucrat in far-off Washington cared about me… or even wanted to meet me. Some folks seem to mistake government for community.
My point is that class warriors aren't just attacking Mitt Romney and Paul Ryan (two men with whom I have my own differences). They aren't just vilifying the Republican party (a party fully deserving of some vilification). They are attacking the very notion of individual initiative and personal responsibility. Now that's new.
You might reasonably ask what this has to do with investing. My answer is everything. Investment begins with savings. Savings comes from earned income. An income high enough to permit saving comes from education and hard work. And the desire to get educated and work hard comes from a belief that the system is fair and these qualities will be rewarded.
To me, it seems particularly corrosive to tell people – for political advantage – that they don't have a fair shot… that the system is rigged… that Wall Street is corrupt… that the rich don't pay their fair share… and that, somehow, you have less because "millionaires and billionaires" have more.
This strategy may win votes in some quarters… But that doesn't mean we shouldn't call it what it is: a profound untruth.
Good investing,
Alex Green
When I'm not making readers money, I'd like to at least make them happy. And when you talk politics, you often make half your audience – and sometimes more – unhappy.
Still, I'm shocked and surprised by an ominous development in this year's presidential election. No, not the personal attacks, negative ads, or over-the-top promises. Those have been staples in national elections for more than 200 years. What's new – and troubling, in my view – is that some see political gain in demonizing economic success.
I don't get it. As a kid growing up in a solidly middle-class family, I admired the businessmen, entrepreneurs, and professionals in my community who earned large financial rewards. I remember feeling that these folks must have studied hard, put in long hours, or taken big risks. I didn't envy them. I wanted to be like them.
Yet there was former President Bill Clinton at the Democratic Convention stoking the flames of resentment with his remark that some "want a you're-on-your-own, winner-take-all society."
I find this disheartening, in part because Bill Clinton is not a left-wing ideologue. Yes, he's a card-carrying liberal but in his two terms, he promoted free trade, slashed capital gains taxes, and reformed the welfare system.
I thought the class-warfare remarks were beneath him. For starters, capitalism is about voluntary exchange for mutual benefit. Businesses don't "take" money. Only government (which has a monopoly on the legal use of force) and criminals do that. Businesses merely collect the money that consumers and other businesses voluntarily trade for products and services.
Perhaps Clinton meant the rich "take" in that they don't pay their fair share in taxes. This is certainly a debate worth having – and opinions are bound to vary. But we should begin with the facts. According to the Internal Revenue Service, the top 10% of Americans pays almost 70% of all personal income taxes. The bottom 50% pays essentially nothing. What would George Orwell say about calling the 10% of Americans who pay 70% of the taxes "takers" … and stoking a sense of grievance among the half that pays nothing?
I'm also confused about the "you're-on-your-own" bit. No one objects to a social safety net for the truly needy. But when I reached the age of majority – after receiving a free public-school education and a library card – I expected to take care of myself.
If I couldn't take care of myself in a pinch, I knew I might have to lean on family or friends temporarily. If I couldn't find help there, I might have to count on churches or local charities for a while. And if that still weren't enough, maybe I would have to turn to the state government as a last resort.
I never imagined that some bureaucrat in far-off Washington cared about me… or even wanted to meet me. Some folks seem to mistake government for community.
My point is that class warriors aren't just attacking Mitt Romney and Paul Ryan (two men with whom I have my own differences). They aren't just vilifying the Republican party (a party fully deserving of some vilification). They are attacking the very notion of individual initiative and personal responsibility. Now that's new.
You might reasonably ask what this has to do with investing. My answer is everything. Investment begins with savings. Savings comes from earned income. An income high enough to permit saving comes from education and hard work. And the desire to get educated and work hard comes from a belief that the system is fair and these qualities will be rewarded.
To me, it seems particularly corrosive to tell people – for political advantage – that they don't have a fair shot… that the system is rigged… that Wall Street is corrupt… that the rich don't pay their fair share… and that, somehow, you have less because "millionaires and billionaires" have more.
This strategy may win votes in some quarters… But that doesn't mean we shouldn't call it what it is: a profound untruth.
Good investing,
Alex Green
This is he battle cry of all the Wall Street apologists. Where does this guy think all that money came from that Wall Street raked in with their securities frauds via derivatives, credit default swaps, etc.? Where does he think all that money came from in the bailouts of the banks? Who does he think is going to end up paying for all the trillions the FED is loaning at nearly zero interest to the banks through QE1-QE3 and buying up their "toxic" mortgage-backed securities? Millions of Americans lost their jobs, their homes, and their life savings to the banks during the financial crisis. But if anybody points this out, it is called "class warfare". If that is "class warfare," sign me up!
ReplyDelete--David (OWS)
David, you missed the entire point in his article. You need to re-read it. He was talking about the effort that is being taken by the Administration to say that someone who achieves somehow did it illegally or immorally. That we denigrate achievement. That we should be encouraging individual initiative and personal responsibility.
ReplyDeleteHe makes it pretty clear that he has lots of bad things to say about Romney and Ryan and the Republican party, so your comments are way off the target.
Class warfare is toxic as it only creates victims of those who think they are abused. Get over it. Business cycles occur, businesses make bad decisions, governments make bad decisions. All of this is part of living in a partially free society.
BTW, these "toxic mortgage backed securities were all the result of government agencies requiring banks to make bad loans to people who could not afford the loans. If the bank did not have a certain percentage of these loans, the FED charged them more for the loans they got from the FED. Bundling these garbage loans seemed to be a good idea at the time. Put together a bunch of loans on residences that were constantly going up in value, who knew we would have a financial crisis.
However, it would never had occurred had government not forced the banks to make the loans in the first place!
What Wall Street did to crash the economy was not the result of bad decisions. It was done deliberately to make money for the CEO and top management. It was securities fraud. It was illegal and immoral. Goldman Sachs knew they were selling garbage to their own clients. They were were short-selling these derivates KNOWING their clients would lose their investments. They paid a $500 million fine for securities fraud and still made huge profits. Nobody went to prison. The Wall Street apologists blame the government for the toxic mortgages. Two points are critical here: (1) the vast majority of defaulting loans were NOT issued by federally regulated banks. Their loans had a much lower default rate. These toxic loans were mostly made by outfits like Countrywide that were virtually unregulated. Second, and more importantly, the global collapse was NOT caused by the bad mortgages. It was caused by the TRILLIONS OF DOLLARS in derivates that Wall Street created on top of them.
ReplyDeleteThe Big Lie is that the government was responsible for the financial collapse. No. The government was the ENABLER of Wall Street via deregulation, low interest rates, and very poor supervision by the SEC and Federal Reserve. There are many good scholarly works as well as the full report of Congress to prove this beyond any reasonable doubt.
You can read their report here…
http://cybercemetery.unt.edu/archive/fcic/20110310173539/http://c0182732.cdn1.cloudfiles.rackspacecloud.com/fcic_final_report_conclusions.pdf
Note, for example, that they report Goldman Sachs sold $73 billion in synthetic CDO's. The government did not require them to do this securities fraud. The government -- through deregulation and oversight negligence -- simply ALLOWED it to happen. You will never hear about that from the Wall Street apologists.
-- David (OWS)
Here is what the report says about the Wall Street apologists' BIG LIE (i.e., blame the CRA for the financial crisis)…
ReplyDelete"The Commission concludes the CRA was not a significant factor in subprime lending or the crisis. Many subprime lenders were not subject to the CRA. Research indicates only 6% of high-cost loans—a proxy for subprime loans—had any connection to the law. Loans made by CRA-regulated lenders in the neighborhoods in which they were required to lend were half as likely to default as similar loans made in the same
neighborhoods by independent mortgage originators not subject to the law."
Wall Street derivates, not loans make under CRA, is primarily what caused the financial collapses. This point is not even debatable among those who have studied the facts.
--David