Bringing a Structures and Systems Analysis to the Crisis in American History
By Edwin L. Young, PhD
November 6,  2008

Remember, folks, what you are buying when you buy stocks. If you buy preferred stock, blue chip stocks, you own the chance to get dividends if the corporation makes a profit and you, usually, own the right to vote at stock holder meetings (often, this right is usurped by special rules and behind the scenes manipulations by management and large stock holders). If you buy common stocks, the largest percentage of available stocks, you own hope for the possibility that your stock increases in value (stock price on the stock exchanges) and you can sell it at a profit. The point is that playing the stock market with common stocks is playing Monopoly but with your real money at stake. If you buy bonds, typically, you own what you put in plus what the interest yields over time. What happens with buying and selling common stocks is that records of the parties and amounts involved in the exchange are merely recorded on the brokers’ and/or the corporation’s accounting books. That’s it! If your stock price goes down and you sell, you lose real money in the stock market Monopoly game. Incidentally, a corporation’s stock price can go up or down regardless of how solvent their business is. A corporation could be making huge profits and have tons of liquidity and cash-on-hand and still their stock price can go down. If it goes down, do they go out of business? No.

After the Bush tax cuts and refunds, many corporations bought their own stocks, called buy backs, so that they could gain majority control over votes at stock holders’ meeting and later, if their stock price went up, and if they so chose, they could sell at a profit. Some did just that. They sold small percentages for a profit, thus forcing the Dow Jones, S & P, NASDAQ, NYSE, etc. averages to shoot up. This gave a false impression that the economy was great. Recall that the corporation’s solvency and their stock price on the markets are independent of one another. At the same time that this forces were ongoing, the Attorney General was encouraged to allow huge mergers between large corporations based on the rationale that this was a necessary cost saving move. In fact, for example, media corporations like Newscorp were allowed to acquire both horizontal and vertical media corporations leading to a virtual unimpeded domination of all news outlets whereby people get their news. This made it possible to create a national blackout of news that the big media’s corporate sponsors wanted withheld.

If the economy appears to be in great shape, it is hard to argue that economic conditions for the population are getting bad if the stock market is soaring; there is a censuring or blackout of countervailing news; and a distraction such as the ‘illegal immigrant’ issue. Yet, that was just what was happening: the economic conditions were getting very bad as seen with the outsourcing of jobs, closing of plants, and the steadily and ever-increasing statistics concerning national job loss. The federal government added a million jobs; a million full time jobs changed to part time jobs with no benefits, particularly health insurance; and, of course, a large percentage of the male work force was shipped, as military, to Iraq, and Afghanistan. These latter phenomena made the unemployment statistics look far less bad than they actually were. While the media was focusing on immigrant, Mexican workers as the problem affecting the downturn in the economic welfare of average Americans, it was, in fact:

the government’s policies with respect to encouraging Corporations to outsource jobs;

making the case for corporations to cut back on their manpower cost and outlay for health insurance and other benefits by switching to part-time jobs;

encouraging mid-level wealthy who got Bush’s tax benefits to use them and home equity loans to speculate in the real estate market, thus falsely inflating the appearance of the economy;

the government’s strategy of manipulating the employment situation by increasing the military, putting laid off people in government jobs;

lifting regulations controlling the stock market exchanges and decommissioning the Sherman Anti-trust Act;

all of these factors led to increasing trade deficit, deflation of the dollar; and increasing the national debt which, unfortunately, the US now owes to other countries such as China;

the retail business, a major portion of the Gross National Product was, at first, divided on the road to disaster as the mid-pricey stores began to suffer while the high-pricey ones and the discount ones flourished, however, since the middle class and the mid-level rich were becoming maxed out on credit cards and high interest loans, the high-pricey stores fell like humpty-dumpty and this heralded the dénouement of the current economic crisis and the big Bailout.

So, who is to blame for this cesspool? Remember, it is never the individual person; it is the system! It is the system! The system: all of the government and its agencies, the structure of our economy, our legal system, the entire media as a system within itself, our political system, our educational system, and the way we think about and structure our organizations in general, and, finally, our view and interpretation of our history. You cannot reform one part and not the whole because, eventually, the whole will such the one part back into the status quo ante.