Streetwise for Sunday, July 22, 2018
Each year towards the end of July, I repeat Benjamin Franklin’s rather astute comment that while you may delay; time will not. I am also gratified and honored that it has been another year for Streetwise, its 30th as a nationally distributed column without a single missed week. (If you are keeping count, those years represent 1,612 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. For example, the fair disclosure rule requires that everyone receive the same information at the same time, while Sarbanes Oxley helps ensure that the content of financial statement is accurate.
The Dodd-Frank Wall Street Reform and Consumer Protection Act and the Consumer Financial Protection Bureau are small steps forward despite the continual efforts to abandon and/or defund them. Although the latest news might refute that statement.
The Fed has laid out a jarring view of what might be on the horizon “in principle” if trade threats turn into globally higher tariffs: lower wages, less investment, lower productivity, and the sort of stagflation that would leave the Fed struggling against both rising prices and ebbing growth.
No, governmental oversight is not perfect, and many believe that there is a continual violation of the public trust in with regard to the environment.
Nonetheless, the economy should do well for at least the next 12 to 24 months, along with corporate earnings. Yet, lest we forget, Main Street is not some ethereal concept. Rather, it is encompassing honest people doing honest work — 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.
The following point had been made here in the past, but it bears repeating. 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 12 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.
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.RuddInternational.com.