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The Return Of The Robber Barons

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As usual, for interest only, and perhaps not on topic......

Return of the Robber Barons

By Paul Craig Roberts

08/02/07 "ICH" -- -- As the Bush Regime outfits B-2 stealth bombers with 30,000 pound monster “bunker buster” bombs for its coming attack on Iran, the US economy continues its 21st century decline. While profits soar for the armaments industry, the American people continue to take it on the chin.

The latest report from the Bureau of Labor Statistics shows that the real wages and salaries of US civilian workers are below those of 5 years ago. It could not be otherwise with US corporations offshoring good jobs in order to reduce labor costs and, thereby, to convert wages once paid to Americans into multi-million dollar bonuses paid to CEOs and other top management.

Good jobs that still remain in the US are increasingly filled with foreign workers brought in on work visas. Corporate public relations departments have successfully spread the lie that there is a shortage of qualified US workers, necessitating the importation into the US of foreigners. The truth is that the US corporations force their American employees to train the lower paid foreigners who take their jobs. Otherwise, the discharged American gets no severance pay. [see, for example, http://www.amren.com/mtnews/archives/2006/..._train_your.php ]

Law firms, such as Cohen & Grigsby, compete in marketing their services to US corporations on how to evade the law and to replace their American employees with lower paid foreigners. As Lawrence Lebowitz, vice president at Cohen & Grisby, explained in the law firm’s marketing video, “our goal is clearly, not to find a qualified and interested US worker.”

Meanwhile, US colleges and universities continue to graduate hundreds of thousands of qualified engineers, IT professionals, and other professionals who will never have the opportunity to work in the professions for which they have been trained. America today is like India of yesteryear, with engineers working as bartenders, taxi cab drivers, waitresses, and employed in menial work in dog kennels as the offshoring of US jobs dismantles the ladders of upward mobility for US citizens.

Over the last year (from June 2006 through June 2007) the US economy created 1.6 million net private sector jobs. As Charles McMillion of MBG Information Services reports each month, essentially all of the new jobs are in low-paid domestic services that do not require a college education.

The category, “Leisure and hospitality,” accounts for 30% of the new jobs, of which 387,000 are bartenders and waitresses, 38,000 are workers in motels and hotels, and 50,000 are employed in entertainment and recreation.

The category, “Education and health services,” accounts for 35% of the gain in employment, of which 100,000 are in educational services and 456,000 are in health care and social assistance, principally ambulatory health care services and hospitals.

“Professional and technical services” accounts for 268,000 of the new jobs. “Finance and insurance” added 93,000 new jobs, of which about one quarter are in real estate and about one half are in insurance. “Transportation and warehousing” added 65,000 jobs, and wholesale and retail trade added 185,000.

Over the entire year, the US economy created merely 51,000 jobs in architectural and engineering services, less than the 76,000 jobs created in management and technical consulting (essentially laid-off white collar professionals).

Except for a well-connected few graduates, who find their way into Wall Street investment banks, top law firms, and private medical practice, American universities today consist of detention centers to delay for four or five years the entry of American youth into unskilled domestic services.

Meanwhile the rich are getting much richer and luxuriating in the most fantastic conspicuous consumption since the Gilded Age. Robert Frank has dubbed the new American world of the super-rich “Richistan.”

In Richistan there is a two-year waiting list for $50 million 200-foot yachts. In Richistan Rolex watches are considered Wal-Mart junk. Richistanians sport $736,000 Franck Muller timepieces, sign their names with $700,000 Mont Blanc jewel-encrusted pens. Their valets, butlers (with $100,000 salaries), and bodyguards carry the $42,000 Louis Vitton handbags of wives and mistresses.

Richistanians join clubs open only to those with $100 million, pay $650,000 for golf club memberships, eat $50 hamburgers and $1,000 omelettes, drink $90 a bottle Bling mineral water and down $10,000 “martinis on a rock” (gin or vodka poured over a diamond) at New York’s Algonquin Hotel.

Who are the Richistanians? They are CEOs who have moved their companies abroad and converted the wages they formerly paid Americans into $100 million compensation packages for themselves. They are investment bankers and hedge fund managers, who created the subprime mortgage derivatives that currently threaten to collapse the economy. One of them was paid $1.7 billion last year. The $575 million that each of 25 other top earners were paid is paltry by comparison, but unimaginable wealth to everyone else.

Some of the super rich, such as Warren Buffet and Bill Gates, have benefitted society along with themselves. Both Buffet and Gates are concerned about the rapidly rising income inequality in the US. They are aware that America is becoming a feudal society in which the super-rich compete in conspicuous consumption, while the serfs struggle merely to survive.

With the real wages and salaries of American civilian workers lower than 5 years ago, with their debts at all time highs, with the prices of their main asset--their homes--under pressure from overbuilding and fraudulent finance, and with scant opportunities to rise for the children they struggled to educate, Americans face a dim future.

Indeed, their plight is worse than the official statistics indicate. During the Clinton administration, the Boskin Commission rigged the inflation measures in order to hold down indexed Social Security payments to retirees.

Another deceit is the measure called “core inflation.” This measure of inflation excludes food and energy, two large components of the average family’s budget. Wall Street and corporations and, therefore, the media emphasize core inflation, because it holds down cost of living increases and interest rates. In the second quarter of this year, the Consumer Price Index (CPI), a more complete measure of inflation, increased at an annual rate of 5.2% compared to 2.3% for core inflation.

An examination of how inflation is measured quickly reveals the games played to deceive the American people. Housing prices are not in the index. Instead, the rental rate of housing is used as a proxy for housing prices.

More games are played with the goods and services whose prices comprise the weighted market basket used to estimate inflation. If beef prices rise, for example, the index shifts toward lower priced chicken. Inflation is thus held down by substituting lower priced products for those whose prices are rising faster. As the weights of the goods in the basket change, the inflation measure does not reflect a constant pattern of expenditures. Some economists compare the substitution used to minimize the measured rate of inflation to substituting sweaters for fuel oil.

Other deceptions, not all intentional, abound in official US statistics. Business Week’s June 18 cover story used the recent important work by Susan N. Houseman to explain that much of the hyped gains in US productivity and GDP are “phantom gains” that are not really there.

Other phantom productivity gains are produced by corporations that shift business costs to consumers by, for example, having callers listen to advertisements while they wait for a customer service representative, and by pricing items in the inflation basket according to the low prices of stores that offer customers no service. The longer callers can be made to wait, the fewer the customer representatives the company needs to employ. The loss of service is not considered in the inflation measure. It shows up instead as a gain in productivity.

In American today the greatest rewards go to investment bankers, who collect fees for creating financing packages for debt. These packages include the tottering subprime mortgage derivatives. Recently, a top official of the Bank of France acknowledged that the real values of repackaged debt instruments are unknown to both buyers and sellers. Many of the derivatives have never been priced by the market.

Think of derivatives as a mutual fund of debt, a combination of good mortgages, subprime mortgages, credit card debt, auto loans, and who knows what. Not even institutional buyers know what they are buying or how to evaluate it. Arcane pricing models are used to produce values, and pay incentives bias the assigned values upward.

Richistan wealth may prove artificial and crash, bringing an end to the new Gilded Age. But the plight of the rich in distress will never compare to the decimation of America’s middle class. The offshoring of American jobs has destroyed opportunities for generations of Americans. Never before in our history has the elite had such control over the government. To run for national office requires many millions of dollars, the raising of which puts “our” elected representatives and “our” president himself at the beck and call of the few moneyed interests that financed the campaigns.

America as the land of opportunity has passed into history.

http://www.informationclearinghouse.info/article18109.htm

Ehrlich: Things are now going to move fast. Buckle up. Prepare for dark days (they are already here but most Americans are too numb to know it).

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Ashamed as I am to bump my own post, I'm going to because:

1) I've had 3 cans of Baltika 7 (well past bedtime here)

2) I believe that there's some important information in it that may benefit people.

3) It was posted at an extremely quiet time on the forum.

4) I'll be off the forum for a while soon, while we "relocate", and won't see any "you tw at" type comments!

I promise not to do it again, even if it hasn't had a comment by the time it's drifted to page 3 :lol:

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Ashamed as I am to bump my own post, I'm going to because:

1) I've had 3 cans of Baltika 7 (well past bedtime here)

2) I believe that there's some important information in it that may benefit people.

3) It was posted at an extremely quiet time on the forum.

4) I'll be off the forum for a while soon, while we "relocate", and won't see any "you tw at" type comments!

I promise not to do it again, even if it hasn't had a comment by the time it's drifted to page 3 :lol:

Dont worry, I have read it, sheds a lot of light on whats going on in the UK also.

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Ashamed as I am ....

I think it's just that le tout Blighty is orf on their ollerdize.

Never mind, FWIW I'm about to rip the caps off some old bottles of homebrew, so while I'm still legible in English, I'll say that, re that article, I don't really give too much thought to what the "elite" get up to, and as for being reduced to peonage, well, we could already be there.

Kind of suits me in an odd way, the vast majority of the people having nothing much to lose. I have barbarian instincts.

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In Richistan there is a two-year waiting list for $50 million 200-foot yachts. In Richistan Rolex watches are considered Wal-Mart junk. Richistanians sport $736,000 Franck Muller timepieces, sign their names with $700,000 Mont Blanc jewel-encrusted pens. Their valets, butlers (with $100,000 salaries), and bodyguards carry the $42,000 Louis Vitton handbags of wives and mistresses.

Richistanians join clubs open only to those with $100 million, pay $650,000 for golf club memberships, eat $50 hamburgers and $1,000 omelettes, drink $90 a bottle Bling mineral water and down $10,000 “martinis on a rock” (gin or vodka poured over a diamond) at New York’s Algonquin Hotel.

It's a good article Dubai, actually makes me feel a bit better about myself as it shows that these people are not so far detached from us. They're just like a bunch of consumers after all, only they've got better 'stuff'. The most important point though is that they can't have what i've got, because what i've got is not for sale.

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How the hell can an omlette cost a thousand bucks!!???

The point is, look at "luxury goods" makers. Their shares aren't plunging. They're going up. here in Dubai no-one is interested in "Holiday Inn" type hotels.... it's all 7 star these days.

There must be a shed load of money around somewhere, but all I've seen amongst me and my colleagues is reductions in pay and conditions for the last 5 years.

Bah, humbug!

PS... thanks all for sparing me further embarrassment :P

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Beware the military-industrial complex.

America (and Britain) are fighting wars they cannot afford. Al-Qaeda's stated aim is to bankrupt the US. Looks like the US is going to oblige them.

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I wish I could work out multiple quotes...

jimmy, great article.

solvent.... that's a given.

I have a feeling that there's an upper crust engineeering all of this for their benefit.

Time for a Global Sicky??

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I have a feeling that there's an upper crust engineeering all of this for their benefit.

Time for a Global Sicky??

I think you are right, and a lot of what the article says is relevant to UK. However no one gave a toss when it was car workers jobs being outsourced. Worth another bump anyway.

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As usual, for interest only, and perhaps not on topic......

Return of the Robber Barons

By Paul Craig Roberts

08/02/07 "ICH" -- -- As the Bush Regime outfits B-2 stealth bombers with 30,000 pound monster “bunker buster” bombs for its coming attack on Iran, the US economy continues its 21st century decline. While profits soar for the armaments industry, the American people continue to take it on the chin.

The GBU-28 ('Bunker Buster') weighs 5,000lbs not 30,000lbs. I assume the rest of this tripe is equally inaccurate.

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I think it's just that le tout Blighty is orf on their ollerdize.

Never mind, FWIW I'm about to rip the caps off some old bottles of homebrew, so while I'm still legible in English, I'll say that, re that article, I don't really give too much thought to what the "elite" get up to, and as for being reduced to peonage, well, we could already be there.

Kind of suits me in an odd way, the vast majority of the people having nothing much to lose. I have barbarian instincts.

It might not bother you, but it should. As this "elite" is dipping into your pockets for their dosh.

KKR's takeover of Boots lands the company with massive debts. Last year Boots made ca £480m in profit. They then paid something like £120m in corporation tax to the Treasury.

Next year they will pay no tax as all their profits are taken out by debt repayments. This is exactly the same strategy BTLers are adopting. It's why debt is so popular. And the nett result - we all pay more in tax to make up. As the UK's tax base shrinks, you know who is in line to be robbed; the dutiful serfs who can't evade their tax.

So next time you think, indulgently, ahh the excesses of the Richistanis, what's all that got to do with me?, bear in mind that the Boots takeover alone means that every man, woman and child in the UK is paying £2 directly to KKR and their minions to make up for that lost £120m.

They are making their money by robbing the government and thereby you. Frankly it makes my bloody furious and being complacent about this is naive in the extreme.

Next we'll get the "risk-taking entrepreneur" line - no they're not, they've off-loaded the risks onto the banks and thereby to pension funds and other investment vehicles that Johnny Punter has his/her pension and other assets in.

Or maybe - but they're growing the economic cake, it isn't a matter of dividing up a fixed amount of whatever, etc etc. Sure, sometime in the past. That isn't the game now. In a world of saturated markets it's about ruthlessly robbing everybody else blind to get more for yourself. That's what this article is about. And that's why the middle class is disappearing, here and in the States.

The only response should be a political one but we have a spineless buch of politicians who won't stand up to big business. Instead they are, as that prat Mandy said, "intensely relaxed about the filthy rich". Wrong. Dead wrong. Welcome to the new serfdom.

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So next time you think, indulgently, ahh the excesses of the Richistanis, what's all that got to do with me?, bear in mind that the Boots takeover alone means that every man, woman and child in the UK is paying £2 directly to KKR and their minions to make up for that lost £120m.

I think you overstate the issue. Remember that whoever is lending the money must pay tax on their profits.

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Greatly exaggerated article..

The US is still the worlds economic power house and that’s not going to change for decades..

Yeah got a link or did the fairy tell you that

American has to much debt and with India and China coming on line the americans, like the brits can not compete because making t-shirts for 10pence each is not going to cover the repayments on all the outstanding debt.

As we speak the $ is being dumped as the worlds reserve currency because the FED is printing 24/7 and many in the asian block have stopped founding the debt via goverment bonds.

1928 kicked in over night and with all the computers doing the buying/selling it will come much faster this time.

i was stupid and brought $ back around 2000 but soon got rid of them and had noticed that when i went to the states my $ got me less and less each time so i knew the inflation figures were fixed.

name one thing apart from weapons that is holding the states up before talking about decades and i listen.

watch money masters or monoply men to get a clue into what is going on.

Edited by Justice

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name one thing apart from weapons that is holding the states up before talking about decades and i listen.

watch money masters or monoply men to get a clue into what is going on.

Innovation, a fair business environment, a ‘can do’ attitude.

If you’ve ever worked with US companies you would probably noticed they are superb at what they do, it has a dynamic and innovative economy and if I was going to start a technology company I think the best place to do it would be the US.

True the debt stats don’t look too good but watch as the Americans pull a rabbit out the hat to avert an economic melt down like a good Hollywood production!

A few years of light recession might just be what the US and UK need!

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Innovation, a fair business environment, a ‘can do’ attitude.

If you’ve ever worked with US companies you would probably noticed they are superb at what they do, it has a dynamic and innovative economy and if I was going to start a technology company I think the best place to do it would be the US.

True the debt stats don’t look too good but watch as the Americans pull a rabbit out the hat to avert an economic melt down like a good Hollywood production!

A few years of light recession might just be what the US and UK need!

I think you have to say that in industries like software, web, film, music, culture most global exports originate from America. There is definitely some re-balancing going on but I think the USA has far better prospects than the UK. China is never get to average salaries that are equivilent to what the US has today (of course neither may the US itself). I would still struggle to name a brand that is Chinese which doesn't mean that everything is not made in China but a successful China that brings riches to its workers is a kind of suicide pill.

The crux of the article is not so much other countries doing better in place of the US but more like riches getting increasingly concentrated in a smaller number of hands. I guess the reason countries like the UK are popular with immigrants especially rich immigrants is that they are paying for our protection in terms of courts and law and order. Countries like China have shocking human rights, and people making money but without the power to back it up will quickly get stamped on like in Russia. Also a country that avoids mass environmental damage will also command a premium with the Super rich. Will the rich always survive without the masses rising up and taking their riches off them, who knows.

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It might not bother you, but it should. As this "elite" is dipping into your pockets for their dosh.

KKR's takeover of Boots lands the company with massive debts. Last year Boots made ca £480m in profit. They then paid something like £120m in corporation tax to the Treasury.

Next year they will pay no tax as all their profits are taken out by debt repayments. This is exactly the same strategy BTLers are adopting. It's why debt is so popular. And the nett result - we all pay more in tax to make up. As the UK's tax base shrinks, you know who is in line to be robbed; the dutiful serfs who can't evade their tax.

So next time you think, indulgently, ahh the excesses of the Richistanis, what's all that got to do with me?, bear in mind that the Boots takeover alone means that every man, woman and child in the UK is paying £2 directly to KKR and their minions to make up for that lost £120m.

They are making their money by robbing the government and thereby you. Frankly it makes my bloody furious and being complacent about this is naive in the extreme.

Next we'll get the "risk-taking entrepreneur" line - no they're not, they've off-loaded the risks onto the banks and thereby to pension funds and other investment vehicles that Johnny Punter has his/her pension and other assets in.

Or maybe - but they're growing the economic cake, it isn't a matter of dividing up a fixed amount of whatever, etc etc. Sure, sometime in the past. That isn't the game now. In a world of saturated markets it's about ruthlessly robbing everybody else blind to get more for yourself. That's what this article is about. And that's why the middle class is disappearing, here and in the States.

The only response should be a political one but we have a spineless buch of politicians who won't stand up to big business. Instead they are, as that prat Mandy said, "intensely relaxed about the filthy rich". Wrong. Dead wrong. Welcome to the new serfdom.

A very good post Munro

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The GBU-28 ('Bunker Buster') weighs 5,000lbs not 30,000lbs. I assume the rest of this tripe is equally inaccurate.

Well, to be fair, he didn't mention a GBU-28. He said a 30,000lb bunker buster..... maybe the "Big BLU"? Under development in 2002, http://en.wikipedia.org/wiki/Massive_Ordnance_Penetrator

So, no need to assume the rest of the tripe is wrong. Even if exagerated, you must surely have noticed that the rich are getting richer, and the poorer, poorer? Maybe I see it more because of being in the UAE where we have the world's biggest superyacht, the worlds biggest building, some of the richest people on earth.... and the people who are building it all earning just over 100 quid... a month.... living in squalor and working at least 12 hours a day, 7 days a week for the duration of their contracts. The social injustice here just beggars belief, and it may be coming to a country near you soon, in a slightly diluted form maybe.

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