Streetwise for Friday, July 28, 2017

Each year at the end of July, I like to repeat Benjamin Franklin’s rather astute comment that while you may delay, time will not. And with that I also point out that the sands of time have once again marked another year’s anniversary for Streetwise, its 29th as a nationally distributed column without a single missed week. (If you are keeping count, those years represent 1,508 columns.)

What is so ironical is that the more things change, the more they remain the same. Consider that on Sunday, July 31, 1988 the following prologue appeared in the Trenton Times of Trenton, NJ.

“Today Lauren Rudd begins writing a weekly column about Wall Street for The Trenton Times…”

Space does not permit a full recital, but the following words that began the column back then might once again be considered a prescient commentary on today’s market activity.

“The individual investor has been pummeled and is ready to surrender. What with the debacle of last October (Refers to the market crash of October 19, 1987), many are deciding that they have had enough and are leaving Wall Street, an action reminiscent of an audience walking out on a bad play.

After going down in flames that fateful day, individual investors retreated to lick their wounds and to decide what to do next. This left Wall Street worried as well it should. The individual investor has always been its bread and butter. However, these same investors now feel that their trust in Wall Street may have been misplaced and that the game is rigged with the spoils going to the large institutions.”

Yes, there has been a degree of change over the ensuing years, 29 in this case. For example, the fair disclosure rule requires that everyone receive the same information at the same time, while Sarbanes Oxley helps ensure that what you read in a financial statement is accurate.

The Dodd-Frank Wall Street Reform and Consumer Protection Act and the Consumer Financial Protection Bureau are additional small steps forward despite the continual efforts to abandon and/or defund them.

No, the oversight is not perfect as the victims of various Ponzi schemes can readily attest to. Just as damaging is the continual violation of the public trust.

Meanwhile, the economy as typified by Main Street has for the most part recovered and is doing well. Yet, how soon we forget that Main Street is not some ethereal concept but rather, as I am so often given to say, is comprised of honest people who do honest work ó crack-the-bones work; lift-it, chop-it, empty-it; feel-the-flames-up-close work; crawl-down-in-there work – work that someone must do.

Washington would be well served to learn from Main Street about the need to do the things that no one wants to do but that someone must do. Otherwise we will continually face potential economic destabilization as less than one percent of the work force flaunts its ownership of a disproportionate amount of our nation’s wealth.

I have also made the following point many times in the past but it bears repeating again. March 5, 2006, saw an Equity Strategy Note, released by the analysts at Citigroup in which they stated that the rich are the dominate drivers of demand, enjoying an increasing share of the country’s income and wealth as they convert global resources into personal affluence at the expense of labor. Nothing has changed in the ensuing 11 years.

David Gordon and Ian Drew-Becker of the National Bureau of Economic Research once wrote that the top one percent of the population have benefited disproportionately from the country’s productivity surge.

An economy significantly influenced by the very wealthy is not without risk. Political enfranchisement remains one person, one vote and Main Street will fight back to prevent Medicare, Medicaid and Social Security from becoming sacrificial lambs to be slaughtered on the altar of fiscal austerity.

Keynes was right when he commented about austerity never being the correct answer to an economic discourse over how to increase a country’s well-being.

Lauren Rudd is a financial writer and columnist. You can write to him at LVERudd@aol.com. Phone calls accepted between 9 AM and 3 PM at (941) 706-3449. For back columns please go to www.RuddReport.com.

 

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