Tuesday, February 10, 2015

It's the Plutonomy, Stupid

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.


Denis Neville said...

“One of the privileges of the great is to witness catastrophes from a terrace.” - Jean Giraudoux, Tiger at the Gates: A play in two acts

Last November, Bill Moyers illustrated how the soaring towers of the plutocrats were changing the Manhattan skyline by blocking sunlight on Central Park (aka Central Dark). Inequality is literally blocking out the sun! Why should the people's park, also a major tourist attraction, lose sunlight for the benefit of the ultra-rich?


"One may safely say that it would be no sin if statesmen learned enough of history to realize that no system, which implies control of society by privilege seekers, has ever ended in any other way than collapse." - William E. Dodd, US Ambassador, Address to the American Chamber of Commerce in Berlin, 1933

Hillary Clinton, with advice from more than 200 policy experts, is trying to answer what has emerged as a central question of her early presidential campaign strategy: how to address the anger about income inequality without overly vilifying the wealthy.

In other words, how to appear to be on the side of the little people without actually being there.

Excerpts from Henry George’s Progress and Poverty (1879):

“So long as all the increased wealth which modern progress brings goes but to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent. The reaction must come. The tower leans from its foundations, and every new story but hastens the final catastrophe. To educate men who must be condemned to poverty, is but to make them restive; to base on a state of most glaring social inequality political institutions under which men are theoretically equal, is to stand a pyramid on its apex…

The wide-spreading social evils which everywhere oppress men amid an advancing civilization spring from a great primary wrong-the appropriation, as the exclusive property of some men, of the land on which and from which all must live. From this fundamental injustice flow all the injustices which distort and endanger modern development, which condemn the producer of wealth to poverty and pamper the non-producer in luxury, which rear the tenement house with the palace, plant the brothel behind the church, and compel us to build prisons as we open new schools…

But as sure as the turning tide must soon run full ebb; as sure as the declining sun must bring darkness, so sure is it, that though knowledge yet increases and invention marches on, and new states are being settled, and cities still expand, yet civilization has begun to wane when, in proportion to population, we must build more and more prisons, more and more almshouses, more and more insane asylums. It is not from top to bottom that societies die; it is from bottom to top…

The civilized world is trembling on the verge of a great movement. Either it must be a leap upward, which will open the way to advances yet undreamed of, or it must be a plunge downward which will carry us back toward barbarism.”

Meredith, NYC said...

Karen, I scanned your post and will read in more detail later.... quick reply for now.....
So the NYT reporter, Storey, used that reader comment to show the world that she belongs to the IN CROWD, that her own family has LLC real estate and that she agrees with his outlandish statement—“ You are right to note that rule of law in New York - and in the US in general - is among the strongest it is in the world.”.

Unbelievable. Out of 1526 comments, Storey picked that one to reply to.

Karen Garcia said...

Hi Meredith,

I also got the impression that this series was not exactly designed to foment a domestic class war, or appeal much to "middle class" sensibilities.

The only time I ever asked one of those readers' questions was when the Times published the Wikileaks memos. They chose mine and maybe two others. (one of which, I recall, was simply a fawning"you go, NYT!") I'd asked Bill Keller if the White House had asked him to withhold publication, or otherwise put pressure on the newspaper. He said of course they didn't!!! In other words, he totally lied. (Keller, remember, did the govt's bidding when he squashed James Risen's phone collection blockbuster right before Bush's re-election, and he felt he could save face by publishing what Assange gave him before trashing him every chance he got.)

And these clowns wonder why they got scooped by the Guardian on the Snowden revelations.

Karen Garcia said...

Hi Denis,

I really miss Bill Moyers' TV program, but am happy to see he is still blogging and fighting the good fight.

We've always had a class war and income disparity, but not this extreme and not with such awful propaganda to the contrary being spewed on such a constant basis by the media-political complex.

Weimar is busting out all over.

annenigma said...

The greed bubble can't burst fast enough.

Let's also not forget that the Democratic Party is joining the international plutocratic propaganda program called Inclusive Capitalism. This movement pretends to address income inequality but is really a desperate attempt to save capitalism and plutocracy.

Guardian columnist Dr. Nafeez Ahmed summarized it well in the title and substance of his article 'Inclusive Capitalism Initiative is Trojan Horse to Quell Coming Global Revolt'. He states that 'the inclusive capitalism movement represents less a meaningful shift of direction than a barely transparent effort to rehabilitate a parasitical economic system on the brink of facing a global uprising.'


This is the plutocrat's answer to the global Occupy movement. They are trying to rehabilitate the image of Capitalism by convincing us to become more like them - wealthy, greedy, and selfish. It's the American Dream writ large, the Global Dream. Dream on, peasants! Hope! Change! You too can become a millionaire!

Chrystia Freeland wrote an article in Politico about last May's Inclusive Capitalism conference in London. Her article is titled 'It's Not Just George Soros Anymore - What Does it Mean When the Capitalist Vanguard Starts Talking About Inequality?' They're saying all the right words but we know words are cheap and so are these people.

'Most of the Inclusive Capitalism conference was off the record, but its invitation-only attendees were a roll call of the global plutocracy, including Google executive chairman Eric Schmidt, Blackstone co-founder and CEO Stephen Schwarzman, and the CEOs of UBS, GlaxoSmithKline, Dow Chemical and Honeywell.' Add to that list the Democratic supporters such as Chuck Schumer, Hillbilly Clinton, Barack Obama, John Podesta, and Lawrence Summers, among others.


They're scared. Good, they should be. Occupy lives!

Karen Garcia said...


The fact that the ultra-rich can't even stop the leaks from their private retreats shows that wealth and smarts don't necessarily go hand in hand. I mean, what reasonably intelligent person would ever need to designate oneself a "thought leader?"

Ever notice that all the thought leaders are millionaires and billionaires and that much of their brain function centers around how to cut Social Security and eviscerate unions and public education?

I liked Chrystia Freeland's "Plutocrats" -- I believe she has now quit journalism and is a member of the Canadian parliament.

But for some good news, The Guardian has hired Chelsea Manning as a regular columnist.

Meredith, NYC said...

Any opinion on Room For Debate, Feb 10? Please read when you have time.
“Does Helping Condo Developers Hurt the City?
“Have tax breaks, zoning and other policies that have fueled condo development unfairly benefited the rich at the expense of other residents?”

Includes essay by Pres of Real Estate Board of NY who says the Time Warner Center wasn’t given a tax exemption, which the NYT article series did not mention---and it pays 57million/year he says. Interesting other essays if you have time to read. Only 1 person commented to all 4 essays, so far.
How does this relate to Deblasio’s plans---I haven’t had time to delve.

annenigma said...


As an aside, did you read this?
'NYT Columnist Maureen Dowd Gets Under Obama's Skin'


David Axelrod says Obama is an avid reader of the NYT Opinion section - probably looking for praise or to see where he needs to lie more effectively.

Ax says Obama tore into Maureen Dowd back in the day and still won't invite her to meetings. She refuses to kiss up to get invited - I like her more all the time. Keep commenting there if you have been, and let us know if you do. He might just read some of the comments, especially in the columns of those who routinely lavish praise on him on a personal level. That said, I doubt he bothers reading Krugman - not enough gushing and too wonky. Obama is primarily interested in his own popularity.

Karen Garcia said...


I've briefly scanned Room for Debate, where the NYT tends to bury the views from the left instead of giving them a regular, prominent spot on the main op-ed page. They cover social injustice issues and poverty way too sparingly.


I'm of two minds about Maureen Dowd. Her sometimes catty way of dissing Obama for his lack of social skills is just a magnet for Obamabots, whom she seems to delight in deliberately provoking. She relies too much on quoting disgruntled insiders and dwelling on his personality disorder instead of on his foul deeds.

And where, for example, is the Dowd column on Jill Stein or even Elizabeth Warren? I wish she used her considerable talents to go after the bad guys in more substantive ways. For example, she should treat Obama the same way she treats "Darth" Cheney: as a corrupt warmonger. Calling him "Obambi" just feeds into the mindless tribalism and turns the drone prez into an innocent victim.

But it's interesting to discover how Obama rudely took Dowd to task over something she wrote. This was during the same era that he got into trouble for calling a woman reporter "sweetie". He couldn't call Dowd sweet, could he? There's a lot of the male chauvinist in Obama, who comes off as an insecure creep in Axelrod's telling of the Dowd feud. The latest example of this is his appearance at the Grammies, when he felt compelled to inform us that "rape is not O.K." I mean, who knew that rape is not O.K. until Obama announced it?

I've mostly quit commenting on Dowd's Obama columns. Top rated commenters are the "liberals" who denigrate her as a scorned jealous girlfriend. There were plenty of Obama sock puppets stalking me on those threads, too. Their favorite word for female commenters they don't like is "shrill."

Kat said...

probably looking for praise or to see where he needs to lie more effectively.

That made me laugh, Anne.(I'm sure you consider this the highest honor ever.)

Denis Neville said...

Karen said, “Their favorite word for female commenters they don't like is "shrill."

Yes. Nothing gets online trolls goat more than uppity, outspoken women. If a woman has an opinion, she's vilified as “shrill” and “emasculating” for having the audacity to have one.


“When a man gives his opinion, he's a man. When a woman gives her opinion, she's a bitch.” - Bette Davis

The misogyny of morons still reigns supreme!

“Men know that women are an overmatch for them, and therefore they choose the weakest or the most ignorant. If they did not think so, they never could be afraid of women knowing as much as themselves.” - James Boswell, quoting Samuel Johnson

“Wherever you find a great man, you will find a great mother or a great wife standing behind him -- or so they used to say. It would be interesting to know how many great women have had great fathers and husbands behind them.” - Dorothy L. Sayers, Gaudy Night

Will said...

Here's a couple of my favorite quotes:

"Being a woman is a terribly difficult task, since it consists principally in dealing with men." - Joseph Conrad

"Here's all you have to know about men and women: women are crazy, men are stupid. And the main reason women are crazy is that men are stupid." - George Carlin

Meredith NYC said...

Did you comment on Tom Edsall’s column re gop sudden concern for inequality? The late time of the columns now is still a problem. Some at 330am or so, but a few earlier I’ve noticed. The comments moderator is Bassey Atim, you said? ...do you have his email? Can’t find.

I commented to Edsall that nobody is writing about the crucial topic of campaign financé reform. The Senate voted to repeal Citizens United some months ago, and some states have mvmts to repeal. No reporting I can find on this. I saw it on Moveon.org.

So Edsall, the political science prof, should mention cfr in his columns -- it directly pertains to the problems he brings up. Is this a verboten or a boring topic for Times columnists??

Karen----if you know of any journalists writing about CFR or comparisons to other nations’ public funding, please let me know.

I commented to Edsall re our campaigns:
... It would be interesting to compare our years' long corrupt process with other democracies' campaigns where they use public funds, strictly limit private donations, use free media time for all candidates, have multi parties offering to the voters a wider range of platforms. And where they lack a Supreme Court blessing big money as guaranteeing constitutional rights to billionaires.

Compare and contrast. One result is universal health care achieved generations ago. Maybe these other countries don't value 'freedom' the way we do, is what the gop rw would say. Ok, what's the argument? Mr. Edsall, you're the political scientist--how about it?

Karen Garcia said...


Most op-eds are still being posted at 3:30 a.m. EST, excluding weekend nights. (Fri and Sat) So I don't comment as much as a result. With Krugman, it is possible to "pre-comment"(write something now, paste up later) because he often previews his subject matter in his blog. I did that with his column on Greece.

The editor in charge of comments is named Bassey Etim, his title is Community Manager. I don't have an email address for him, but if you write him c/o NYT he will probably get it. There's also an email address listed in the commenting FAQs, I believe.

Re money in politics, there was some coverage of yesterday's public hearing at the FEC re McCutcheon. It seems to have been a yawner.

voice-in-wilderness said...

I find myself singing like the Geto Boys" Damn it feels good to be a bankster."

Duane, Geneseo, NY said...

Hi Karen,
Glad to see a post about the Citibank Plutonomy memos. I was on the verge of sending you a copy, and if desired I'll be happy to do so.

A point to note is that the writers of these memos are very pragmatic, and that their predictions have been very much on target: the high-end retailers of luxury goods have done quite well in the last 10 years, while the middle-class retailers have struggled.

I think their attitude is shared by many of the very wealthy: this ride is not going to last forever, but they'll enjoy it while it lasts. As for their offspring (and the rest of us and our children), their attitude is: why care about you when I'm so busy amusing myself?

Keep up the good work!

Karen Garcia said...

Hi Duane,

Sorry for the delay in replying as I had missed your comment to this, one of my older posts.

The Citigroup memos are readily available online as pdfs despite the fact that the honchos tried to scrub them. It's interesting that they were published during the boom years of the housing bubble and were actually brutally honest on rising wealth inequality. They simply didn't follow their own study to its logical conclusion, which was CRASH. Then again, they probably knew that they themselves would never suffer.