Category: News and Opinion

You Can Only Fool People For So Long

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In an article, Bloomberg News wonders why people continue to pull money out of the stock market. “The stock market has effectively doubled since the March ’09 low, and we’re still in redemption territory for equity funds,” Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab Corp., said in a Feb. 2 phone interview. Her firm has $1.7 trillion in client assets. “That’s never happened.” It happened after the Great Depression. For decades after, corporations had to pay dividends to attract investors.

“The price-earnings ratio for the benchmark gauge of American equities has fallen to 14 times reported income, down from 24 at the end of 2009.” But are those earnings real, or fraudulent, as in the 1990s? And if they are real, how dependent are those earnings on the federal government running a massive budget deficit and the Federal Reserve keeping interest rates artificially low, neither of which is sustainable? And even if the earnings are sustainable, why should investors care if all the money goes to excess executive pay in the form of stock options and awards rather than dividends? The dividend yield is about 2.0%, less than half its historic average. Instead of real investor returns today, the executive class promises investor returns tomorrow, but it has been making the same promise for nearly two decades. Public employee pension funds remain available as a sucker, but even these are starting to get fed up – and to object to small returns in exchange for outsized pay in hedge funds and private equity.

Younger Generations Have No Lobbyist Either

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At this point, only insiders know what it is that Governor Cuomo is proposing for public employee pensions in New York. But we do know this; the pensions that most recently retired and soon to retire public employees were promised back when they were hired were not “unsustainable.” They were made unsustainable in subsequent deals. We are suffering higher taxes and diminished public services because older generations cut deals with themselves to drastically enrich those pensions and inflate their cost. And now, according to the Governor and Mayor Bloomberg, future hires will receive retirement benefits that are worth far less than what current generations had been promised to begin with. And every institution, including the media, run by Generation Greed cheers.

But no one will connect the two. No one will explain why younger generations deserve so much less in retirement than older generations. And why older generations, retired and current workers, should not be made to sacrifice as well to offset the harm their self-dealing created. And no one will tell younger generations the truth – that they will be less well off than those who came before, on average, at each point in their lives because of what was taken by those who came before and continues to be taken by those who came before, at their expense.

STATE SENATOR ERIC ADAMS WILL TRY TO MAKE HISTORY NEXT YEAR; WATCH OUT, SINCE HE PROBABLY WILL.

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Come September 2013, state senator Eric Adams (20SD/Brooklyn) will be a candidate in the primary election, seeking the democrat’s nomination for Brooklyn’s Borough Presidency. A win in the primary will give him at least a ninety-nine per cent chance of winning the general election; since in Brooklyn, democrats have a minimum five to one edge in registration, over all other political parties combined. Adam’s will be attempting to make history, by being the first black person (male or female) elected to that office. 

The Minimum Wage

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In recent weeks Sheldon Silver has taken time out from advancing the interests of older generations and politically connected interests (at the expense of the common future and the less well off), and proposed an increase in the minimum wage for New York State to a higher level than the federal minimum wage. Mayor Bloomberg has concurred. In response, the predictable battle has emerged between those who claim that a higher minimum wage would wipe out jobs that businesses could not afford to fund at those levels, and those who claim that the higher wages would lead to more consumer spending and thus create jobs. In reality, however, both sides are right, about different places. As I’ve noted previously, a higher than the U.S. mandated minimum wage makes perfect sense in Manhattan, where Silver and fellow supporter Mike Bloomberg are from, and no sense in Upstate New York. The higher minimum should not be imposed on Upstate; neither should Downstate be precluded from a higher minimum because of Upstate objections.

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