I see that Wall Street has been under seige lately by protesters, and I say it is about damn time. However, I feel that the protesters are wasting their time. All they are doing is making a lot of noise and drawing a lot of attention for the time being, but in the end when they leave and the messes have been cleaned up, it will be business as usual.
Now, this may seem a very strange thing for a capitalist to say, but I do feel very strongly that Wall Street, as it is currently constituted, is immoral. And I don't use that word lightly. But, why is it wrong to buy lottery tickets or go to the casino, but not wrong to buy shares of stock in the hopes that their value will go up? Gambling is gambling.
I realize that for businesses to function they need capital and to get capital they must have investors. I do not have a problem with that. There is, however, a difference between investing and speculation. Traditionally, when you invest in a company, you research it. By buying its shares you are becoming a partner. If things work out the stock will pay dividends and both you and the company win. But it is always understood that there is a risk that things will not work out and you will lose your money. That is why investment counselors always say only invest money you can afford to lose.
Speculation is another animal entirely, and unfortunately our whole system is built around it. Hence the anger at Wall Street. Speculation is gambling pure and simple, and it pits worker against stockholder. For example, my retirement account is what they call a 401(k). It consists of several mutual funds. Unlike the traditional investor, I do not know what companies I am investing in at any given time, or how they treat their workers or the environment; I don't really know anything at all about these companies. So I am a player on Wall Street, like it or not, and my goals regarding how I want my stocks to perform (because my retirement depends on it), may be at odds with my interests as an employee. Think about all the layoffs and cutbacks. There is a reason that many of them happen around the winter holidays. What is good for the market isn't always good for the employee.
It is very interesting that when the trust company that manages my 401(k) came to my company to sell the plan they tried to market it as a savings plan. Which it is not at all in the least. The money is not insured, and yes, you can lose it all. Although they tried to reassure the more skeptical of us that it was not likely that we would lose it all or a substantial part of it, that would only happen if the market itself collapsed and that was not likely--well, we all saw what happened in 2008 and I do not care what anyone says, I do not see the economy reviving. Instead I heard at the food pantry where I volunteer once a month that we'd better start gearing up for more families as two major employers are laying off, and driving around town I see more and more For Sale signs in front of houses every week. So I don't know where this revival is but it is not around here.
I also think it interesting that my employer told us he had no intention of making our company publicly traded (as the earlier incarnation of my company was, and many people, including myself, lost a great deal when it collapsed due to the CEO's criminal behavior). He said that to do so would mean that any profits would first have to go to the stockholders (people like myself with 401(k)'s who are depending on that money for retirement), and only if there was anything left over would he be able to reinvest it in buildings, equipment and other needed things. Unfortunately, we grew too fast in the heady years before the collapse and now a bank has got its hooks in the company. They forced a layoff two years ago because there were too many people on the payroll to suit them, too much going out in pay. And you can better believe that "Wall Street" had its hands in that little matter. Because banks have investors and investors need their dividends. People like myself need our 401(k)'s to grow.
Some years ago I read a book called "Will Boomers Be Able to Retire?" As a member of the Boom Generation I am of course very interested in that question. The answer was in many cases, no. The author made the case that much of what we call wealth is actually phantom wealth. It doesn't really exist. If I look at my 401(k) statement, it will say my retirement account has X amount of dollars. Those dollars don't exist. It does not matter what my 401(k) statement says today, October 25, 2011; what matters is what that statement will say when I reach 72 years of age and must start making withdrawals. Only, this is not a bank account. How will I get that money? By selling the stocks in my mutual funds. And to whom will I sell them? Take a look at the housing market right now, it's a great market if you have enough money to buy a decent house, but if you are forced to sell your house, as are quite a few people I know, it is not so great. And what this author predicts is when the Boom Generation starts to retire and starts to unload their stocks--are forced to unload their stocks--it will be a good thing for the would-be buyers because they will get these stocks cheaply since there will be so many on the market. While I haven't heard anything about that on the news, I am just wondering if that also is affecting the economy, since the Boom Generation is starting to retire.
It's a terrible, terrible game, and the sad thing is that there seems to be no other game in town.
Now, this may seem a very strange thing for a capitalist to say, but I do feel very strongly that Wall Street, as it is currently constituted, is immoral. And I don't use that word lightly. But, why is it wrong to buy lottery tickets or go to the casino, but not wrong to buy shares of stock in the hopes that their value will go up? Gambling is gambling.
I realize that for businesses to function they need capital and to get capital they must have investors. I do not have a problem with that. There is, however, a difference between investing and speculation. Traditionally, when you invest in a company, you research it. By buying its shares you are becoming a partner. If things work out the stock will pay dividends and both you and the company win. But it is always understood that there is a risk that things will not work out and you will lose your money. That is why investment counselors always say only invest money you can afford to lose.
Speculation is another animal entirely, and unfortunately our whole system is built around it. Hence the anger at Wall Street. Speculation is gambling pure and simple, and it pits worker against stockholder. For example, my retirement account is what they call a 401(k). It consists of several mutual funds. Unlike the traditional investor, I do not know what companies I am investing in at any given time, or how they treat their workers or the environment; I don't really know anything at all about these companies. So I am a player on Wall Street, like it or not, and my goals regarding how I want my stocks to perform (because my retirement depends on it), may be at odds with my interests as an employee. Think about all the layoffs and cutbacks. There is a reason that many of them happen around the winter holidays. What is good for the market isn't always good for the employee.
It is very interesting that when the trust company that manages my 401(k) came to my company to sell the plan they tried to market it as a savings plan. Which it is not at all in the least. The money is not insured, and yes, you can lose it all. Although they tried to reassure the more skeptical of us that it was not likely that we would lose it all or a substantial part of it, that would only happen if the market itself collapsed and that was not likely--well, we all saw what happened in 2008 and I do not care what anyone says, I do not see the economy reviving. Instead I heard at the food pantry where I volunteer once a month that we'd better start gearing up for more families as two major employers are laying off, and driving around town I see more and more For Sale signs in front of houses every week. So I don't know where this revival is but it is not around here.
I also think it interesting that my employer told us he had no intention of making our company publicly traded (as the earlier incarnation of my company was, and many people, including myself, lost a great deal when it collapsed due to the CEO's criminal behavior). He said that to do so would mean that any profits would first have to go to the stockholders (people like myself with 401(k)'s who are depending on that money for retirement), and only if there was anything left over would he be able to reinvest it in buildings, equipment and other needed things. Unfortunately, we grew too fast in the heady years before the collapse and now a bank has got its hooks in the company. They forced a layoff two years ago because there were too many people on the payroll to suit them, too much going out in pay. And you can better believe that "Wall Street" had its hands in that little matter. Because banks have investors and investors need their dividends. People like myself need our 401(k)'s to grow.
Some years ago I read a book called "Will Boomers Be Able to Retire?" As a member of the Boom Generation I am of course very interested in that question. The answer was in many cases, no. The author made the case that much of what we call wealth is actually phantom wealth. It doesn't really exist. If I look at my 401(k) statement, it will say my retirement account has X amount of dollars. Those dollars don't exist. It does not matter what my 401(k) statement says today, October 25, 2011; what matters is what that statement will say when I reach 72 years of age and must start making withdrawals. Only, this is not a bank account. How will I get that money? By selling the stocks in my mutual funds. And to whom will I sell them? Take a look at the housing market right now, it's a great market if you have enough money to buy a decent house, but if you are forced to sell your house, as are quite a few people I know, it is not so great. And what this author predicts is when the Boom Generation starts to retire and starts to unload their stocks--are forced to unload their stocks--it will be a good thing for the would-be buyers because they will get these stocks cheaply since there will be so many on the market. While I haven't heard anything about that on the news, I am just wondering if that also is affecting the economy, since the Boom Generation is starting to retire.
It's a terrible, terrible game, and the sad thing is that there seems to be no other game in town.
