I've been reading with great interest the richly detailed Times series about the claque of international high rollers creating a luxury real estate bubble in New York City. I am shocked, shocked that corruption is going on here.
This scam is one more manifestation of the global plutonomy -- an economy controlled by and benefiting only the extremely rich. Nations and their laws are being rendered moot faster than you can say TPP, IMF, WTO, NATO, the banking mafia, and the Obama Justice Department. Rather than enforcing the laws on the books, the DoJ is doing nothing, zilch, nada about tax-evading oligarchs. The job of Eric Holder, the keeper at the plutocratic gates, is to give the malefactors a slap on the wrist at irregular intervals in order to placate a seething public.
The most recent case, outlined in today's Times, has Holder cajoling the TBTFs (too big to fails) to enter into a felony plea agreement for the crime against humanity of international currency manipulation. At most, some low-level traders might be sent to jail. But if recent history is any indication, the Wall Street mafia's stock prices will actually go up with news of the pending deal, the DoJ's implicit message being that the crime spree may continue unabated. Crime literally does pay when you're a corporation or a billionaire headquartered in the One Indispensable Nation.
In the latest known case of fraud and larceny, leaked emails exposed Wall Street currency traders actually mocking their clients for being too stupid to realize they were being scammed. When they were caught doing the mega-banks' bidding, they blamed the usual technical glitches. Mistakes were made.
Actually, the ruling class racketeers are laughing their heads off at the prospect of paying another huge fine, because they can claw every penny back in the form of tax rebates for their "losses" and still collect bonuses as their reward for stealing other people's money. And the stock market will soar.
Citigroup, one of the banks being charged with felony currency manipulation even as its executives remain embedded deep within the Obama administration, actually invented the concept of the Plutonomy. As deregulation and globalization were beginning to widen the wealth gap into a diseased maw of corruption and greed, they were already laughing their heads off a decade ago too. They joked in private reports that "a rising tide will lift all yachts" as they smacked their lips in anticipation of an epic spending and hoarding binge by the uber-wealthy few.
When the memos first leaked in all their unfiltered greed, Citigroup executives were hugely successful in getting them suppressed by the corporate media. That's because they make the latest leaked emails from the latest crop of crooked currency traders look banal. You can watch forensic economist Bill Black dishing the dirt on the plutonomy porn here.
In pre-meltdown "Plutonomy: Buying Luxury, Explaining Global Imbalances," published in 2005, and its 2006 sequel, "Revisiting Plutonomy: The Rich Getting Richer", bank analysts concluded that it was ultra-high net worth driving the economy. "We think the plutonomy is here, is going to get stronger, its memberships welling from globalized enclaves in the emerging world, we think a ‘plutonomy basket’ of stocks should continue to do well … Binge on Bling … These toys for the wealthy have pricing power, and staying power.They are … more desirable and demanded the more expensive they are."
The markets might have collapsed, but the banksters were certainly right about the rich only growing stronger as a result of losses being socialized and all the gains being privatized into fewer and fewer hands.
The bankers writing those internal memos to their wealthy clients shrugged their shoulders and sighed that gross wealth inequality is just a matter of mathematics, not morality. (Shit happens.) They wouldn't know morality if it bit them in their sociopathic asses. But they're not stupid. Their Achilles heel remains fear of the great unwashed masses:
Plutonomy, we suspect is elastic. Concentration of wealth and spending in the hands of a few, probably has its limits. What might cause the elastic to snap back? We can see a number of potential challenges to plutonomy.
The first, and probably most potent, is through a labor backlash. Outsourcing, offshoring or insourcing of cheap labor is done to undercut current labor costs. Those being undercut are losers in the short term. While there is evidence that this is positive for the average worker (for example Ottaviano and Peri) it is also clear that high-cost substitutable labor loses.
Low-end developed market labor might not have much economic power, but it does have equal voting power with the rich. We see plenty of examples of the outsourcing or offshoring of labor being attacked as “unpatriotic” or plain unfair. This tends to lead to calls for protectionism to save the low-skilled domestic jobs being lost. This is a cause championed, generally, by left-wing politicians. At the other extreme, insourcing, or allowing mass immigration, which might price domestic workers out of jobs, leads to calls for anti-immigration policies, at worst championed by those on the far right.Mind you, these centrist Democrat-oriented (pro-cheap immigrant labor and secret trade deals) Citigroup memos were written in the pre-Citizens United era, before money was declared speech and the ultra-wealthy were invited to openly and legally bribe and buy their politicians. The poor and working class were effectively silenced. And that silencing was subsequently and scientifically proven by Martin Gilens and Benjamin Page.
But even though we no longer have a functioning democracy, the proles must be stroked to avoid a repeat of 1789... or a new New Deal. Ten years ago, the Citigroup analysts stressed the necessity of politicians being skilled enough to fool us into continuing to think that our votes really do count. If we aspire to greed, we can then succeed:
Perhaps one reason that societies allow plutonomy, is because enough of the electorate believe they have a chance of becoming a Pluto-participant. Why kill it off, if you can join it? In a sense this is the embodiment of the “American dream”. But if voters feel they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to being truly rich.
Could the plutonomies die because the dream is dead, because enough of society does not believe they can participate? The answer is of course yes. But we suspect this is a threat more clearly felt during recessions, and periods of falling wealth, than when average citizens feel that they are better off. There are signs around the world that society is unhappy with plutonomy - judging by how tight electoral races are.
|You Too Can Be a Pluto-Participant (All You Need Is a Bootstrap and a Dream)|
And this brings us to poor, rich Hillary Clinton. It turns out that her biggest challenge is how on earth she'll be able to wage a populist campaign while still doing the bidding of Citigroup and Goldman Sachs and without offending the donor-folks, both foreign and domestic, owning property in luxury towers. Her own daughter bought a $10.5 million apartment in a New York City luxury tower and received a nearly $1 million LLC tax break, for crying out loud. (not covered in the Times series.) Since it is very doubtful that Hillary can accomplish her tightrope walk of subterfuge with as much grace and finesse as the facile Mr. Obama, it's not a matter of if she'll crash and burn on her own gaffitude. It's when. So don't count Bernie Sanders or other backbenchers out just yet. And the Green Party is coming out hibernation, too.
Now, back to the Times series on the money-laundering, tax-evading scam dressed up as investment in high end real estate. Lest the wealthy be unduly offended by the revelations of greed in their midst, the newspaper is also running a helpful companion piece on how the merely rich can cash in, too. (That's right: class envy has reached the point where multimillionaires are jealous of billionaires. Manhattan millionaires consider themselves middle class because of out of control housing costs. The whole definition of middle class should be changed, or maybe we should stop using the term entirely. In pricey Manhattan, for example, a family of four with an income of around $65,000 is considered poor enough to qualify for social services assistance, while such a salary in the rural heartland would probably make for a comfortable existence. "Middle class" is turning into more of a verbal ploy used by politicians in search of voters to groom and inspire to aspire, just as the Citigroup analysts have insisted they need to do in order to get elected.
The way for the One Percent to get richer is by betting on the .001 Percent. You mere mortal millionaires out there can get a sliver of the pie simply by investing in billionaires. You won't get to actually live in even one square foot of their luxury digs, but you can still belong to an LLC in-crowd or hedge fund. Even the family of Louise Storey, one of the writers of the Times series, owns real estate under LLC (limited liability corporation) tax-evasive and lawsuit-immunity protection. (h/t Meredith-NYC).
Good luck finding the humans behind the LLCs to sue in small claims court when you get bitten by your merely rich neighbor's dog. Nobody need ever own up to ownership. Magnify this scam a thousandfold when a Saudi prince's diamond-studded poodle bites you, and you get my drift. The tycoons in their towers are judgment-proof. And you can pay your own emergency room bill.
It's the plutonomy, stupid.
Oh, and wouldn't you know it: the very last foreign godzillionaire to be exposed in the Times series is a Russian oligarch. How very nicely this ties in with the recent anti-Putin propaganda being broadcast in order to soften us up for a new war in Ukraine. We have a "responsibility to protect" those starving, freezing Russians, dontcha know. So they gin up the xenophobia, and call it a fight for world freedom. Making Putin a proxy for the despised Walton Family in the bitter hearts and jaded minds of the American precariat is just what the plutonomy ordered to keep itself whole.
Good (less evil) oligarchs vs bad (devil incarnate) oligarchs: that just about sums it all up.
And if the luxury real estate scheme crashes and burns, the criminals hiding behind their LLCs will get sanctuary in an undisclosed bank vault location or on a floating yacht-country somewhere, while you-know-who will left holding the bag.
Oh, what a revolting state of affairs that will turn out to be. Because it's not if the next toxic greed-bubble will burst. It's when. You can bet on it.