Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20
Gold Gann Angle Update - 10th Jan 20
Gold In Rally Mode Suggests Commitment of Traders (COT) Data - 10th Jan 20
Disney Could Mount Its Biggest Rally in 2020 - 10th Jan 20
How on Earth Can Gold Decline During the U.S. – Iran Crisis? - 10th Jan 20
Getting Your HR Budget in Line - 10th Jan 20
The Fed Protects Gamblers at the Expense of the Economy - 9th Jan 20
Last Chance to Get Microsoft Windows 10 for FREE! - 9th Jan 20
The Stock Market is the Opiate of the Masses - 9th Jan 20
Is The Energy Sector Setting Up Another Great Entry? - 9th Jan 20
The Fed Is Creating a Monster Bubble - 9th Jan 20
If History Repeats, Video Game Stocks Could Soar 600%+ - 9th Jan 20
What to Know Before Buying a Land Rover Discovery Sport in 2020 - 8th Jan 20
Stock Market Forecast 2020 Trend Analysis - 8th Jan 20
Gold Price at Resistance - 8th Jan 20
The Fed Has Quietly Started QE4 - 8th Jan 20
NASDAQ Set to Fall 1000pts Early 2020, and What it Means for Gold Price - 8th Jan 20
Gold 2020 - Financial Analysts and Major Financial Institutions Outlook - 8th Jan 20
Stock Market Trend Review - 8th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Economic Armageddon Is Coming

Economics / Global Financial System Apr 24, 2007 - 12:50 PM GMT

By: Joel_S_Hirschhorn

Economics Stop being a compliant consumer. Face the ugly truth. Don't get fooled by the stock market. Accept the need for the mistreated middle class to become the revolutionary class. The British military establishment's most prestigious think tank sees what too few over-consuming Americans are willing to anticipate. Unjustified and mounting economic inequality is planting the seeds for global economic conflict.

Here is what the new report from the UK Defense Ministry's Development, Concepts and Doctrine Centre warned might happen by 2035. "The middle classes could become a revolutionary class. The growing gap between themselves and a small number of highly visible super-rich individuals might fuel disillusion with meritocracy, while the growing urban under-classes are likely to pose an increasing threat...Faced by these twin challenges, the world's middle-classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest."


Consider the wisdom of economist John Maynard Keynes: The rich are tolerable only so long as their gains appear to bear some relation to roughly what they have contributed to society. Think of it as proportional and justified economic success. This can be tolerated by poor and middle class people if they believe the economic system is fair and properly rewards those who work harder or have better capabilities. But truly obscene economic rewards angers people. When most prosperity and wealth is unfairly channeled to relatively few Upper Class people, it is only a matter of time until fuming, resentful people in the Lower Class decide enough is enough and revolt. Perhaps violently, if the political system remains controlled by the Upper Class.

A ton of data demonstrate how crazy our economic system has become where a relatively few receive astronomical gains that no rational person could see as justified. One study tracked down home ownership data for 488 CEOs in the S&P 500 Index set of companies. The typical home of the CEOs has 12 rooms, sits on 5.37 acres, and carries a $3.1 million price-tag. Companies big enough to rate S&P 500 status hiked their median CEO pay by 23.78 percent in 2006 to $14.8 million. In comparison, U.S. worker weekly wages rose just 3.5 percent in 2006.

Despite what you hear about the sagging housing market and the many people facing foreclosure, business at the top end of the U.S. housing market is booming. Sales of homes in the $5 million-and-up price range rose 11 percent last year, reports the Dallas-based Institute for Luxury Home Marketing. Ten residential properties sold for over $28 million in 2006. The most expensive in New Jersey sold for $58 million; it went to Richard Kurtz, the CEO of Advanced Photonix, a telecom supplier. In the “ultra-luxury market” a set of suites in New York's fabled Plaza Hotel was converted last year into one-bedroom condos that start at $6.9 million.

From another study we learn that pay for American college presidents over the past decade has jumped seven times faster than pay for college faculty. In 1996, only one college president took home over $500,000. In 2006, 112 college presidents hit that mark. Meanwhile, after inflation, compensation for college professors increased just 5 percent since 1996. And college students have faced rapidly mounting tuition far higher than inflation rates.

CEOs are getting away with economic murder. Bob Nardelli, the CEO who departed Home Depot early this year, had an exit package worth $210 million. IBM CEO Sam Palmisano took home $18.8 million in 2006 and will receive $34.9 million in deferred pay and $33.1 million in retirement benefits when he leaves IBM. Even more extreme is the case of Occidental Petroleum CEO Ray Irani. The interest income alone on the $124 million that ended the year in Irani's deferred-pay account totaled $679,396. The Los Angeles Times estimated Irani's total payoff for 2006 at $460 million. Leslie Blodgett, the top exec at cosmetics giant Bare Escentuals, collected $118.9 million in 2006, with most of that coming from the $117.7 million she cleared cashing out stock options. She received 4 million additional stock options before 2006 ended.

Economists Emmanuel Saez of the University of California at Berkeley and Thomas Piketty of the Paris School of Economics found that the richest 10 percent of the U.S. population received 44 percent of the pretax income in 2005. This was the highest since the 1920s and 1930s (average: 44 percent) and much higher than from 1945 to 1980 (average: 32 percent). With more than 140 million U.S. workers, that top 10 percent equals 14 million workers. The bottom half of that top 10 percent had incomes of about $110,000. That may not seem all that high, except that the overwhelming majority of Americans can never expect such income. And remember that many of these top 10 percent Americans are married to or living with equally highly paid people.

When it comes to obscene economic inequality, however, you must focus on the huge gains received by the richest 1 percent - some 1.4 million people. Their share of pretax income has gradually climbed from 8 percent in 1980 to 17 percent in 2005. Their average income was $371,000. Who is in the top sliver of richness? Economists Steven Kaplan and Joshua Rauh of the University of Chicago estimate that there were about 18,000 lawyers, 15,000 corporate executives, 33,000 investment bankers (including hedge fund managers, venture capitalists and private-equity investors) and 2,000 athletes who made roughly $500,000 or more in 2004.

Do those at the top pay their fair share of taxes? Middle class Americans, after nearly 30 years of tax-cutting, are now paying about the same share of their incomes in federal taxes that they paid before Ronald Reagan entered politics. In contrast, America's richest have seen the share of their incomes that goes to federal taxes cut by over half. That what happens in a failed democracy and the rich control the political system.

What the future holds for the victimized middle class will not only depend on the uncontrolled greed of the wealthy Upper Class and its control of the political system. It will also be linked to the coming tsunami of global warming impacts on climate, sea level, water supplies, crops and disease. There will be devastating impacts on hundreds of millions and perhaps billions of people worldwide. Lower Class people will be sacrificed – left to suffer the consequences. The rich will retreat to their walled, protected and well stocked havens.

Add to this scenario the inevitable collapse of the entire economic system. At some point it will not be controllable as it is now by those in banking and finance, able to manipulate it to sustain economic injustice. Eventually the inherent fundamental absurdities of the global economic system will prove unsustainable. The wealthy Upper Class will have siphoned off most of the world's wealth and hoarded resources to maintain a luxury lifestyle.

What the future holds: Lower Class economic slaves fighting to survive in a medieval, ugly and bleak world that so many science fiction stories have portrayed. In that hell their best option will be to rise up and revolt against the rich and powerful Upper Class. With such a prospect, global class war on a sick planet, prevention is a priority. For us, that requires paying much more attention now to economic inequality, economic injustice, economic apartheid and the many attacks on the middle class. If not, we get Economic Armageddon along with environmental disaster.

 

By Joel S. Hirschhorn

http://www.delusionaldemocracy.com/

Joel S. Hirschhorn has been widely published; his previous book is Sprawl Kills - How Blandburbs Steal Your Time, Health and Money - see www.sprawlkills.com .  He has published many articles and oped pieces in major newspapers (Washington Post, New York Times, Baltimore Sun, Chicago Tribune) and on progressive web sites such as CommonDreams, The Progress Report, SmirkingChimp and Opednews; Google Joel S. Hirschhorn to see his writings and achievements and see link below.  Before becoming a writer and consultant, he was a senior staffer for the U.S. Congress (Office of Technology Assessment), Director of Environment, Energy and Natural Resources at the National Governors Association, a full professor at the University of Wisconsin, Madison, and head of an environmental consulting company.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules