20 reasons America has lost its soul and collapse is inevitable
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) — Jack Bogle published â€œThe Battle for the Soul of Capitalismâ€ four years ago. The battleâ€™s over. The sequel should be titled: â€œCapitalism Died a Lost Soul.â€ Worse, weâ€™ve lost â€œAmericaâ€™s Soul.â€ And, worldwide, the consequences will be catastrophic.
Thatâ€™s why a man like Hong Kong contrarian economist Marc Faber warns in his Doom, Boom & Gloom Report: â€œThe future will be a total disaster, with a collapse of our capitalistic system as we know it today.â€
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No, not just another meltdown, another bear-market recession like the one recently triggered by Wall Streetâ€™s too-greedy-to-fail banks. Faber is warning that the entire system of capitalism will collapse. Get it? The engine driving the great â€œAmerican Economic Empireâ€ for 233 years will collapse, a total disaster, a destiny we created.
OK, deny it. But Iâ€™ll bet you have a nagging feeling that maybe heâ€™s right, that the end may be near. I have for a long time: I wrote a column back in 1997: â€œBattling for the Soul of Wall Street.â€ My interest in â€œThe Soulâ€ — what Jung called the â€œcollective unconsciousâ€ — dates back to my Ph.D. dissertation, â€œModern Man in Search of His Soul,â€ a title borrowed from Jungâ€™s 1933 book, â€œModern Man in Search of a Soul.â€ This battle has been on my mind since my days at Morgan Stanley 30 years ago, witnessing the decline.
Has capitalism lost its soul? Guys like Bogle and Faber sense it. Read more about the soul in physicist Gary Zukavâ€™s â€œThe Seat of the Soul,â€ Thomas Mooreâ€™s â€œCare of the Soulâ€ and sacred texts.
But for Wall Street and American capitalism, use your gut. You know somethingâ€™s very wrong: A year ago, too-greedy-to-fail banks were insolvent, in a near-death experience. Now, magically, theyâ€™re back to business as usual, arrogant, pocketing outrageous bonuses while Main Street sacrifices, and unemployment and foreclosures continue rising as tight credit, inflation and skyrocketing federal debt are killing taxpayers.
Yes, Wall Street has lost its moral compass. It created the mess, but now, like vultures, Wall Streeters are capitalizing on the carcass. They have lost all sense of fiduciary duty, ethical responsibility and public obligation.
Here are the Top 20 reasons American capitalism has lost its soul:
1. Collapse is now inevitable
Capitalism has been the engine driving America and the global economies for over two centuries. Faber predicts its collapse will trigger global â€œwars, massive government-debt defaults, and the impoverishment of large segments of Western society.â€ Faber knows that capitalism is not working, capitalism has peaked, and the collapse of capitalism is â€œinevitable.â€
When? He hesitates: â€œBut what I donâ€™t know is whether this final collapse, which is inevitable, will occur tomorrow, or in five or 10 years, and whether it will occur with the Dow at 100,000 and gold at $50,000 per ounce or even confiscated, or with the Dow at 3,000 and gold at $1,000.â€ But the end is inevitable, a historical imperative.
2. Nobodyâ€™s planning for a â€˜Black Swanâ€™
While the timing may be uncertain, the trigger is certain. Societies collapse because they fail to plan ahead, cannot act fast enough when a catastrophic crisis hits. Think â€œBlack Swanâ€ and read evolutionary biologist Jared Diamondâ€™s â€œCollapse: How Societies Choose to Fail or Succeed.â€
A crisis hits. We act surprised. Shouldnâ€™t. But itâ€™s too late: â€œCivilizations share a sharp curve of decline. Indeed, a societyâ€™s demise may begin only a decade or two after it reaches its peak population, wealth and power.â€
Warnings are everywhere. Why not prepare? Why sabotage our power, our future? Why set up an entire nation to fail? Diamond says: Unfortunately â€œone of the choices has depended on the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions.â€
Sound familiar? â€œThis type of decision-making is the opposite of the short-term reactive decision-making that too often characterizes our elected politicians,â€ thus setting up the â€œinevitableâ€ collapse. Remember, Greenspan, Bernanke, Bush, Paulson all missed the 2007-8 meltdown: It will happen again, in a bigger crisis.
3. Wall Street sacked Washington
Bogle warned of a growing three-part threat — a â€œhappy conspiracyâ€ — in â€œThe Battle for the Soul of Capitalism:â€ â€œThe business and ethical standards of corporate America, of investment America, and of mutual fund America have been gravely compromised.â€
But since his book, â€œWall Street Americaâ€ went over to the dark side, got mega-greedy and took control of â€œWashington America.â€ Their spoils of war included bailouts, bankruptcies, stimulus, nationalizations and $23.7 trillion new debt off-loaded to the Treasury, Fed and American people.
Whoâ€™s in power? Irrelevant. The â€œhappy conspiracyâ€ controls both parties, writes the laws to suit its needs, with absolute control of Americaâ€™s fiscal and monetary policies. Sorry Jack, but the â€œBattle for the Soul of Capitalismâ€ really was lost.
4. When greed was legalized
Go see Michael Mooreâ€™s documentary, â€œCapitalism: A Love Story.â€ â€œDisaster Capitalismâ€ author Naomi Klein recently interviewed Moore in The Nation magazine: â€œCapitalism is the legalization of this greed. Greed has been with human beings forever. We have a number of things in our species that you would call the dark side, and greed is one of them. If you donâ€™t put certain structures in place or restrictions on those parts of our being that come from that dark place, then it gets out of control.â€
Greedâ€™s OK, within limits, like the 10 Commandments. Yes, the soul can thrive around greed, if there are structures and restrictions to keep it from going out of control. But Moore warns: â€œCapitalism does the opposite of that. It not only doesnâ€™t really put any structure or restrictions on it. It encourages it, it rewardsâ€ greed, creating bigger, more frequent bubble/bust cycles.
It happens because capitalism is now in â€œthe hands of people whose only concern is their fiduciary responsibility to their shareholders or to their own pockets.â€ Yes, greed was legalized in America, with Wall Street running Washington.
5. Triggering the end of our â€˜life cycleâ€™
Like Diamond, Faber also sees the historical imperative: â€œEvery successful societyâ€ grows â€œout of some kind of challenge.â€ Today, the â€œlife cycleâ€ of capitalism is on the decline.
He asks himself: â€œHow are you so sure about this final collapse?â€ The answer: â€œOf all the questions I have about the future, this is the easiest one to answer. Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent … overspends … costly wars … wealth inequity and social tensions increase; and society enters a secular decline.â€ Success makes us our own worst enemy.
Quoting 18th century Scottish historian Alexander Fraser Tytler: â€œThe average life span of the worldâ€™s greatest civilizations has been 200 yearsâ€ progressing from â€œbondage to spiritual faith … to great courage … to liberty … to abundance … to selfishness … to complacency … to apathy … to dependence and … back into bondage!â€
Where is America in the cycle? â€œIt is most unlikely that Western societies, and especially the U.S., will be an exception to this typical â€˜society cycle.â€™ … The U.S. is somewhere between the phase where it moves â€˜from complacency to apathyâ€™ and â€˜from apathy to dependence.â€™â€
In short, America is a grumpy old man with hardening of the arteries. Our capitalism is near the tipping point, unprepared for a catastrophe, set up for collapse and rapid decline.
15 more clues capitalism lost its soul … is a disaster waiting to happen
Much more evidence litters the battlefield:
1. Wall Street wealth now calls the shots in Congress, the White House
2. Americaâ€™s top 1% own more than 90% of Americaâ€™s wealth
3. The average workerâ€™s income has declined in three decades while CEO compensation exploded over ten times
4. The Fed is now the â€˜fourth branch of governmentâ€™ operating autonomously, secretly printing money at will
5. Since Goldman and Morgan became bank holding companies, all banks are back gambling with taxpayer bailout money plus retail customer deposits
6. Bill Gross warns of a â€œnew normalâ€ with slow growth, low earnings and stock prices
7. While the White Houseâ€™s chief economist retorts with hype of a recovery unimpeded by the â€œnew normalâ€
8. Wall Streetâ€™s high-frequency junkies make billions trading zombie stocks like AIG, FNMA, FMAC that have no fundamental value beyond a Treasury guarantee
9. 401(k)s have lost 26.7% of their value in the past decade
10. Oil and energy costs will skyrocket
11. Foreign nations and sovereign funds have started dumping dollars, signaling the end of the dollar as the worldâ€™s reserve currency
12. In two years federal debt exploded from $11.2 to $23.7 trillion
13. New financial reforms will do little to prevent the next meltdown
14. The â€œforever warâ€ between Western and Islamic fundamentalists will widen
15. As will environmental threats and unfunded entitlements
â€œAmerica Capitalismâ€ is a â€œLost Soulâ€ … weâ€™ve lost our moral compass … the coming collapse is the end of an â€œinevitableâ€ historical cycle stalking all great empires to their graves. Downsize your lifestyle expectations, trust no one, not even media.
Faber is uncertain about timing, we are not. There is a high probability of a crisis and collapse by 2012. The â€œGreat Depression 2â€ is dead ahead. Unfortunately, thereâ€™s absolutely nothing you can do to hide from this unfolding reality or prevent the rush of the historical imperative.