Juggling Dynamite

With government deficits compounding already record debt levels across most of the world, something has to give in budget planning. Increasing efficiency to waste less is key, but increasing tax revenues will be necessary too, unfortunately. Poor planning and wasteful financial choices over the past three decades have left us with few good options now. Allowing corporations to escape tax so they can funnel trillions into share buybacks and other financial gimmicks will become increasingly impossible to defend or tolerate.  Gilded ages always end.  Corporate subsidies are overdue for a mean reversion phase.

Amazon pays almost no federal tax, despite being worth over $700 billion. President Trump has criticized the company for this, yet he recently reduced the corporate tax rate, making it even easier for large companies to pay less.  Here is a direct video link.

Why should we mind that public company CEOs are making an outrageous 272x more than the median employee? Because the costs are underwritten by taxpayers one way and another.  This is especially true for big bank CEO’s where reckless risk-taking– encouraged by stock-based compensation schemes–lead to financial busts that exact a heavy price from the economy, workers and all taxpayers, repeatedly.

For an important discussion on this topic, see 10 years after the Great Recession, big banks are still making outrageous profits:

The Institute of Policy Studies and Public Citizen compiled CEO-employee pay ratios for the nation’s biggest banks. Both Citigroup CEO Michael Corbat and JPMorgan Chase CEO Jamie Dimon make more in one day than their bank’s typical employee earns in a year. CEO Brian Moynihan earned 250 times the salary of the median Bank of America employee. Scandal-ridden Wells Fargo’s CEO Tim Sloan earned a whopping 291 times the median Wells worker. For the top six U.S. banks, the average pay ratio between CEOs and median paid employees came out to 272 to 1.

Why should we begrudge CEOs their soaring pay packages? Because, ultimately, they are coming out of our pockets.

First, the CEOs profit from us as customers — and not always honestly. Second, we subsidize their executives’ salaries with our tax dollars because bonuses are tax-deductible. And third, compensation in the form of stock-based pay encourages CEOs to take excessive risks to boost share prices, risking a financial crisis and taxpayer bailout.

Usually, when you hear the word collusion, you might think of Russia and Special Counsel Robert Mueller’s investigation. But there’s also a troubling financial issue associated with that word exposed by former Wall Steet insider Nomi Prins. Ali Velshi speaks with Prins about the her new book, “Collusion: How Central Bankers Rigged the World.”  Here is a direct video link.

Lest anyone get confused about Central Banks and who owns and directs them:

“The FOMC is composed of the Federal Reserve’s seven-member Board of Governors, the president of the New York Fed, and four presidents from the other 11 Federal Reserve Banks on a rotating basis. All 12 Federal Reserve Banks are corporations, the stock of which is 100% owned by the banks in their districts; and New York is the district of Wall Street…The Federal Reserve calls itself “independent,” but it is independent only of government. It marches to the drums of the banks that are its private owners. To prevent another Great Recession or Great Depression, Congress needs to amend the Federal Reserve Act, nationalize the Fed, and turn it into a public utility, one that is responsive to the needs of the public and the economy.” — Ellen Brown, April 23, 2018