Juggling Dynamite

Lincoln’s definition of democracy from the Gettysburg Address has been perverted over the past 30 years, to “Government of the people corps, for the people corps, and by the people corps.”  Not just in America, but worldwide.  The extract all, pay as little as possible model, has run to the end of all reason and moral justification, and beyond all semblance of sustainability.  Continuing the status quo is in no one’s best interests.  Lest anyone forget, the French Revolution ended with the prevailing powers beheaded and monarchy abolished.  Greed to the point of self-destruction is a gruesome mental illness to behold. Time to restore some math and basic equilibrium to the corporate-controlled governance systems now dominating the, so called, free world.  Or will it take another civil war?

Corporations used to pick up 25% of the cost of running the government. Now it’s 9% – and @SenateGOP wants to slash their taxes even more. pic.twitter.com/EKVwDmHTgr

— Elizabeth Warren (@SenWarren) November 30, 2017

“Based on research from the Economic Policy Institute, we already know that the CEOs of America’s largest firms earn far more today than they did in previous decades, with CEO compensation having risen a whopping 807 or 937% (depending on how it is measured) from 1978 to 2016.  A recent study from The Conference Board showed that the median pay for CEOs of S&P 500 firms was $11.5 million in 2016, up 6.3% from the prior year.  Compare this with the decades-long stagnation in real wages for average workers and the 2.9% increase in average hourly earnings for all employees in the private sector last year.”  See:  What is just when it comes to average CEO-to-average-worker-pay? Here’s the chart.

Corporate profits were already at historic highs and effective corporate tax rates at historic lows when Trump took office. Here is the historical data summary.

An economist’s perspective on the flawed logic behind the proposed 2017 tax bill, and what policy makers could do to encourage U.S. economic growth.  Here is a direct video link.

Also see: It started as a tax cut. Now it could change American life. No responsible fiscal conservative could support a plan that will add to debt in order to help corporations buy back more of their own shares and flow more cash to shareholders, while deficits gap, pensions bust, critical infrastructure rots and the social fabric frays further.  Madness.

Investments in syndicated mortgages and related securities have been heavily sold to yield-hungry savers and retirees the past few years, especially as our world-famous realty bubble has billowed in Canada. Advertising yields of 7 and 8%+– in a world where GICs and government bonds are paying 1-3%–many who can ill-afford the risk of loss have been sucked in like bugs to a zapper.

The fact that these securities are eligible for RSPs/RIFs is also a big draw and serves to imbue a false of security or government endorsement of the products.  As many are just starting to find out, these instruments are no safe bet.  See Canada regulator ignored warnings on risky mortgage investments:

Syndicated mortgages, which pool investors’ money to finance construction of condominiums, retirement communities and the like, aren’t suited to most retail investors. The instruments typically fund more speculative projects that can’t rely solely on bank lending, making them relatively high-risk even in the best of times, suited to deep-pocketed professional investors. The risks have only grown as Canada’s real estate market has shown signs of slowing, potentially amplifying investor losses if more projects fail.

…brokerage firms’ promotions do not necessarily tell investors that Fortress and brokers take a big chunk of the money raised, or that investors are typically last in line, behind banks and other institutions, to get their money back if a project goes belly-up.

…Barry Stevens, a 70-year-old retiree in Canada’s capital, Ottawa, invested a total of C$150,000 in a Fortress condominium development in Barrie, Ontario, beginning in 2012.

He said a broker told him that syndicated mortgages “gave 8 percent interest, every one of these is a success, there are never any issues, and you always get your principal back.” The clincher, he said, was that the investment could be put in his RRSP.

He received regular interest payments, but when the loan matured in October 2016, he got back none of his principal. Fortress representatives assured him the money would arrive in mid-November, he said. It didn’t. Fortress later told him the developer had walked away from the project.