When Fat Cats Were Proud and We Weren’t Green with Envy

From :

The author, David Moore, recounts a frightening incident that happened to him recently. After having been approached by a panhandler and offering a dollar, the ungrateful wretch hurled it to the ground and cursed, “Wall Street fat cats!”

Wall Street fat cats! The very phrase President Obama used ! What could cause a homeless panhandler, normally paragons of rational discourse, to act suddenly mean and crazy? Yes, it was President Obama arguing for higher taxes on the rich:

It was as if the class-warfare rhetoric of the left had surfaced on 55th Street, while I was just trying to show some goodwill and help a guy out. He didn’t even ask for a little more, as sometimes happens. (“How about $5 for a meal? … $20 for a bus ticket?”) He simply judged that my $1 gift was not sufficient and threw it on the ground. I had not given my “fair share.”…
The president’s incendiary message has now reached the streets. His complaints that rich people must “pay their fair share” have now goaded some of our society’s most unfortunate, including one who felt compelled to refuse money because it was not enough. …

An isolated incident on 55th Street? Perhaps. But in a sample of more than a dozen people I know who have collectively given money to panhandlers well over 1,000 times in New York during the past few decades, not one could recall ever being turned down, much less having their money tossed away as insufficient. The rhetoric of class warfare has now invaded spontaneous charity.

Now I’ve heard everything!  Blaming Obama for being dissed by a panhandler!

Bankers used to take a certain pride in being called ‘fat cat’.  It conjured up the portly little millionaire icon in the game Monopoly.  Being a fat cat, after all, was the goal of the popular board game.  Who didn’t want to buy up Boardwalk and Park Place.

My grandfather was disinherited by his proper Swiss family when he came to American in the late 1890s.   Family legend says his two sisters  married into Swiss banking families.  As kids, we dreamed of one day traveling to Switzerland, tracking down my great-aunts, reconciling and inheriting millions!  That’s what kids in America were supposed to dream!

Bankers were boring back then.   Only jocks who wanted a light load majored in business.  Jimmy Stewart in It’s a Wonderful Life was so bored he contemplated suicide.

What happened?  The 1980s.  No decade had been as destructive to American values, dreams and the ‘social contract’  than the ’80s.  The pillars of American industry, auto and steel, had been brought to their knees during the ’70s oil crisis and subsequent stagflation.  New York City had to be bailed out of financial collapse.

Then came the 80s, an era of deregulation and new ways of making money.  Debt-financing, leveraged buy-outs, and an explosion in the junk bond market replaced the old, stodgy invest for the long-run model.   The leveraged buy-out schemes, led by KKR’s take over of Nabisco, made fewer and fewer people super-rich.  Wall Street was a hit movie. For the first time in TV  history, JR Ewing and other bad guys won.  Tom Wolfe’s Masters of the Universe became an instant best-seller.

The ‘quant’ was born-  the super-smart Ivy Leaguer whose math skills devised ever more sophisticated schemes to make money off of money.  Arbitrage became a household word.  Puts and calls ushered in the derivative market.  The transition from old-line industrial giants to finance as the driver of Wall Street was excellently reported in the classic, Barbarians at the Gate.  Consumer debt skyrocketed alongside corporate debt. (Even I could get an American Express card!)  Junk bond dealers and corporate raiders were lionized by the media.  Men slicked back their hair, women wore shoulder pads as symbols Wall Street’s ‘killer instinct’ ethos.

Before the 2008 crash, finance accounted for 40% of GDP.  Billions of American investment dollars began to finance debt-laden take-overs instead of innovation.  CEOs became slaves of quarterly earnings reports.

Anyone can draw a straight line from the mid-1980s to today.  The ethic of ‘make as much money as you can in any way you can’ began in the’80s.   Cautious investors like pension funds and charities began to dabble in less-than-triple-A investments.  I knew construction workers who took up day-trading on the side.  Everyone wanted in on the prize.

The ‘fat cats’ who are so defensive and whining about being dissed today are the direct descendants of that era?  Their day in the sun has come to an end.  The 2008 crisis was a financial crisis, a different creature than others. It wiped out trillions of dollars invested in financial instruments that themselves did little to expand the real economy; accelerated the  destruction of the housing market and caused a world-wide collapse.  We’ve been warned it will take years to wind down the trillions of debt gambled by Wall Street denizens.  The portly banker had becomethe mean, lean money machine, now trying to climb out of disaster.

There is a reason Steve Jobs’ death drew an outpouring of grief from people he’d never met.  Apple produced state-of-the-art products that fit the needs of huge numbers of people and businesses that were socially useful.  Useful products are the antithesis of Credit Default Swaps and other exotic financial products limited to the oligarchy that traded them.

There’s a reason why Jobs,  Bill Gates and Warren Buffet don’t quite fit the ‘robber baron’ stereotype of early 20th century industrialists.  They stand out in today’s climate as innovators and investors, made hugely wealthy by producing goods as opposed to gaming the financial markets.

Anyone who has read Michael Lewis’s exposes of the dynamics behind the 2008 financial crisis, The Big Short and Boomerang, will understand that financiers live and work in a world of their own, making huge amounts of money from packaged and even synthetic financial derivatives that feed off themselves.    Subprime lending served low-income home owners well for 30 years before Wall Street came to tap a seemingly limitless market in mortgage bonds and before mortgage brokers cut corners to feed Wall Street demand.  Only in the last decade have brokers sold mortgages to people with no proof of income, with ARMs whose rates ballooned in two years and the notorious ‘interest-only’ mortgage that left the home-buyer sucker with nothing.

In the late 1980s, some of the most fraudulent savings and loans big-shots were tried and imprisoned.  Charles Keating and  Michael Milkin, the Drexel junk bond king, were tried and served time.  The 2008 crisis was global, much more extensive and dangerous than the savings and loan crisis of the late ’80s.

No one has been held responsible.  Panhandlers may have come upon bad times, but they’re not blind.

 

 

 

 

 

 

 

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