YOUGHAL, IRELAND — The stock market is hitting new high after new high. But the economy is slipping.
Wall Street and the rich flourish; Main Street and the middle classes fall behind. Capitalists get rich; the proletariat gets nothing. That has been the main storyline in the U.S. for the last 30 years.
Pretax corporate profits — the actual earnings of America’s biggest businesses — have gone nowhere since 2012. But the Dow is up by more than 100%.
Battle of the Billionaires
A big story in the papers lately is that arch-capitalist Michael Bloomberg may enter the Democratic race. If so, the election of 2020 could turn into a Battle of the Billionaires. Trump vs. Bloomberg.
But they have more in common than just money. They’re both New Yorkers. And both believe in the power of Big Government to make the world a better place.
But today, we focus on the money — on Wall Street, not Main Street. More specifically, we look at the rich. Not with our mouths open, drooling in envy, struck dumb by their private jets and gaudy mansions. Nor in a spirit of revulsion or revenge.
We have nothing against them. Nor do we particularly admire them.
We’ve lived among them. We’ve learned their language and their ways. And guess what? They’re just like everyone else. Except they have more money. And one other thing … which is probably more important.
Not Feeling the Love
But first, let’s see why they’re not feeling much love these days. Then, we’ll take a quick gander … and not for the first time … at how they got so damned rich and what they’re doing with their money now.
The Guardian reported:
The share of wealth owned by the top 0.1% is almost the same as the bottom 90%.
Wealth inequality in the U.S. is at near-record levels, according to a new study by academics. Over the past three decades, the share of household wealth owned by the top 0.1% has increased from 7% to 22%. For the bottom 90% of families, a combination of rising debt, the collapse of the value of their assets during the financial crisis and stagnant real wages have led to the erosion of wealth.
The Guardian, the rest of the media, academia, the Democrats and much of the public think there’s something wrong. They claim wealth inequality causes “social tension.” Some think great wealth disparity slows economic growth. And many believe that the rich get rich by taking wealth from the poor and middle classes.
They’re almost right about that final charge … as we’ve explored in these Diaries … but few have any idea how the swindle works. But we’ll come back to that … again … and again … and again, because it is what is driving the whole world to its biggest financial crisis ever.
Sticking with the rich … most people just don’t like to see people getting so much richer than they are. And they look to the feds to square things up. CNBC:
Presidential contender Elizabeth Warren infuriated America’s wealthiest individuals when she unveiled her wealth tax proposal earlier this year, which would tax them 3 cents on every dollar over $1 billion in net worth.
Now, seeking to pay for an overhaul of the nation’s health care system, she’s calling on them to pitch in a bit more.
The Massachusetts senator on Friday called for a doubling of her billionaire wealth tax as part of a new “Medicare for All” proposal, from 3% to 6% on wealth over 10 figures.
Warren’s wealth tax proposal would also impose a 2% tax on net worth between $50 million and $1 billion.
Ms. Warren thinks she has a winning campaign issue. After all, there are only about 600 billionaires in the U.S. (And if Bloomberg announces … three of them — Trump, Bloomberg, and Steyer — will be running for president.)
Ms. Warren figures that everyone hates billionaires and everyone loves free medical care — which they think they can get by forcing the rich to pay for it. CNBC again:
Sen. Elizabeth Warren (net worth: $12 million) is launching a new attack on the billionaires who have criticized her proposed taxes and policies with a new ad set to air on CNBC this week, according to a campaign aide.
Titled “Elizabeth Warren Stands Up to Billionaires,” the ad takes aim at longtime investor Leon Cooperman, former CEO of TD Ameritrade Joe Ricketts, former Goldman Sachs CEO Lloyd Blankfein and Silicon Valley investor Peter Thiel.
But standing up to the billionaires may not be the winning strategy Ms. Warren hopes. Billionaires have few votes, but they have lots of money. And they’re likely to use it to make sure someone else is elected in Ms. Warren’s place. CNBC:
Democratic donors on Wall Street and in big business are preparing to sit out the presidential campaign fundraising cycle — or even back President Donald Trump — if Sen. Elizabeth Warren wins the party’s nomination.
In recent weeks, CNBC spoke to several high-dollar Democratic donors and fundraisers in the business community and found that this opinion was becoming widely shared as Warren, an outspoken critic of big banks and corporations, gains momentum against Joe Biden in the 2020 race.
Blame the Rich S.O.B.s
In some ways, the rich have never had it so bad. Americans used to admire them … and aspire to join them. Now, Americans think there was something underhanded about the way they got their loot and that they should “give back” some of it.
Politicians rip into them. Movies portray them as villains. The police love to make them do the perp walk.
Yet it is likely to get worse for the rich, not better. When the next crisis comes … who’ll take the fall?
The Federal Reserve — for not restocking its shelves with interest rates so it would have something to cut to fight the downturn? The president — for running trillion-dollar deficits when he was flush, leaving little room for maneuvering when times got tough?
Or, the no-good, greedy, rich S.O.B.s who profited most from the boom? They’re likely to be blamed for the crisis … and soon, they’ll be accused of poisoning the wells, putting the hex on their neighbors and cavorting with the devil too.
Next week — the real source of the rich’s riches. And what they are doing with it now …
• This article was originally published by Bonner & Partners. You can learn more about Bill and Bill Bonner’s Diary right here.