THE DEMISE OF THE MIDDLE CLASS AND THEIR POWER:
In America, ‘capitalism’s’ spiritual home, a survey conducted in 2016 found that just 54% had a positive view of the term. This seems to be the case because the benefits of ‘capitalism’ have recently only gone to the top 1%. Most everyone else feels insignificant. There seems to be a crisis in confidence as the Supreme Court has an approval ranking of only 30%, public schools 26%, the criminal justice system 23%, and Congress 7%. In the US, all the growth in income is going to the top 1% as some 400 families control 62% of the wealth. It’s actually a little worse worldwide where only 80 families control over 50% of the wealth.
The 2016 election showed just how unsatisfied people are. They voted for change ( a Republican President, House, Senate and Supreme Court), but change was unlikely to come. Republicans promote an ideology of saying they are for business, free markets, less taxes, less regulation, reduced defects, balanced budgets and guns. They are against abortion, immigrants, non-whites and they mistrust big government. However, this ideology is really a subterfuge to help get elected and to help the oligarchy. Under Trump, Conservatives disappeared, when it came to a balanced budget with huge tax cuts for the rich. Trump kept the voters attention away from the real issues of global competition, automation and a carbon free technology, while the super rich played ‘winner take all’. The 2020 presidential and Senate election may help. However, the die may already be cast in huge federal debt and the economic effect of the pandemic on the banks balance sheets as rents and mortgages become unpaid.
Between 1980 and 2017, almost all of the income growth has gone to the top 1%. One family, the Walton’s earn more income each year, than the bottom 40%, or 130 million Americans. Pew Research said that this bottom 40% can not even come up with a mere $400 in case of emergencies. (landing many in jail for parking tickets or moving violations). With productivity up, there has been little increase in working wages and yet CEO pay has gone up from 65 times, to 250 to 500 times the average worker’s pay. Small businesses and entrepreneurs, who employ 80% of the nation’s people, are being squeezed out of business by unfair advantages given to ‘Large Corporations’ and ‘Big Banks.’
According to a recent Pew Research report, the United States, as ranked against other nations, is 44th in health care, 44th in math scores, 39th in basic education, 34th in access to clean water, 35th in meeting basic human needs, has the highest first day infant mortality rate and the highest child poverty rate (21%) among industrialized nations. That’s one in every five of our children living in poverty! We are the only industrial nations without the availability of health care for the poor. As great nation, we must be better than that.
THE ILLUSION OF POWER: Since Citizens United, that declared corporations are people (If they are people, they are sociopaths), most changes in government and the SEC are dictated by donors and election contributions. A recent Princeton study has shown that public opinion has no effect on the outcome of an issue in Congress, whether there is 0% approval or 100% approval, the line of accomplishment is flat-lined. ‘Donor power,’ has taken over the rights of ‘We the people’. Most of the tax cuts went to the top 1% and Corporations and very little will trickle down. To believe that investors and voters are being heard, is an illusion in my opinion. There is a big risk that since government agencies are not responding to the public (“We the people”). The public may not bail out the Banks and their high priced executives during the next financial crisis and stock market collapse. The Congress, by its inaction of Dodd/Frank are allowing the banks more lead way with derivatives (3x as much as 2008) and are increasing influenced by large donations, have pursued economic policies, which I believe, are damaging to the common good. Us government and corporate debt and worldwide debt is a dangerous glutinous levels! Can another Bear Market happen? Sure! Read, This Time its Different: Eight Centuries of Financial Folly by Carmen M. Reinhart, Kenneth S. Rogoff.
I believe political stagecraft, through skilled manipulation of facts, has given the public the perception and the illusion of power, rather than participation in real power. Public opinion has been manipulated and nullified. The Middle class is disappearing. We have only ourselves to blame. Like Pogo said “We have seen the enemy and it is us
NEED FOR A NEW AWAKENING: In my opinion the current political setbacks are the last vestiges of a backlash against immigration, multiracial and multicultural progress and a reaction to global and automation competition by our workforce. People are frustrated. They do want America to be great again. However, we cannot go back to a time when after World War ll, when we were the only nation with our industry intact. Now we have heavy competition from other nations, many of whom are better educated than the average American. People are frightened, as a new era of globalization, global warming, multiculturalism, automation, bio-technology, artificial intelligence and a carbon free economy is descending on us. We must address these challenges of the new economy as opportunities! We can’t solve this problem with old oil economy tactics of bringing manufacturing and coal back. We need, better education and training of our citizens and a plan to use new technologies to solve our problems. We need to bring stock brokers back to help investors design a portfolio of stocks that is tailored just for them as individuals.
We need to help initiate a new era of opportunity, which will lift the world into a ‘New Awakening’ of wisdom, love, compassion and generosity for the common good of all. (See my Investment Strategy Letters). In my opinion, neither the Republicans nor the Democratic Party are prepared to initiate a new era of opportunity for the future benefit of all Americans.”
ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
Mr Birkelbach does not offer investment advice, but merely his own personal opinion. This report has been prepared from original sources and data we believe reliable but make no representations as to the accuracy or completeness. Mr.Birkelbach , his affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold or sell a position in securities. Past performance is no guarantee of future success. Upon request, we will supply additional information. CarlBis@aol.com