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Go get Karen Ho’s book and read it NOW

Last night, I read more of Karen Ho’s book, Liquidated- An Ethnography of Wall Street and it should be required reading for every literate person in America.  I am not exaggerating.  But if you read it late at night, it might just scare the bejeesus out of you so keep your light on when you go to bed.

What scares me the most is how true it rings to my own experiences at work over the past two decades.  Ho writes like an academic.  This is not a beach read.  You will have to reread passages if you’re not familiar with how finance works.  Her descriptions of capitalism and securities over the country’s history are not easy to get through.  But it’s worth the effort because “vampire squid” does not begin to describe the horror that is Wall Street and what it has done to this country. Somewhere in this book Wall Street is referred to as “parasitical and predatory” and I’d say that’s just about right. But it is precisely Ho’s detached, dry academic style that makes the details so disturbing and makes this book more effective than Occupy Wall Street at focussing our attention on the real culprit of our middle class demise.

Several times while reading this I’ve had to stop and ask myself if all this is true or if I’m just being duped by confirmation bias.  But having seen the evidence of what the pressures of Wall Street have done to Big Pharma since the 80’s, Ho’s hypothesis makes too much sense to deny.  All the pieces fit neatly into place.  And now I realize that I missed my true calling in life.  I should have been an anthropologist because I haven’t missed a thing except some of the backstory that only a person of Karen Ho’s socioeconomic privileged background would be able to ferret out.

I’m only half way through the book so I don’t know if Ho has any recommendations but I know what would get Wall Street’s attention, and I think I’ve mentioned this before: sell your 401K.  Yep, get out of the market altogether.  As long as you have investments in that thing, you and the country will never be free.  And to tell you how much Wall Street has a grip on you, that very suggestion probably made you choke on your Starbucks, right?  You’ve been told for decades that it’s the height of irresponsibility to spend your retirement account (who says you have to spend it?).  You’ve been made to feel like a stupid person eating your seed corn if you take that money out.  Or the fact that the taxes you have to pay for early withdrawal are outrageous makes you think twice about it.  Believe me, I know how you feel.  I have all of my retirement savings tied up in two 401K accounts and the thought of taking it out and paying that criminal excise tax makes my blood boil.  You can bet our buddies at the big investment banks were behind that.  They want access to your money and they want to make it as painful as possible for you to take it away from them.  And it’s not even that they want to play with your hard earned dollars at the casino, although that’s true.  It’s that trapping you and your money in the stockmarket means they can fashion this country’s political system any damn way they please.  Your agency will be harnessed to *their* political goals.  The more you give them, the less you will get back.  The whole goal is to atomize the welfare state so that each person is left completely vulnerable and on her own, a single individual plugged into the Wall Street system without any other means of support.  If the market goes down, YOU go down with it.  So, cash in the 401K if you are unemployed and stop making contributions.  Or if you can’t do that, try to get out of stock funds.  One or two people won’t make any difference to them but millions?  Yeah, that ought to make them blink.

If I and my colleagues hadn’t experienced the effects of Wall Street first hand in the most painful way possible, I would think that Ho’s book was an over the top diatribe against Wall Street.  But Ho does something that the left does not expect.  She rescues the word “corporation”.  Half way through the book, you will start to realize what I have been trying to say for a couple of years now.  Corporations that produce things and employ thousands of people are not the enemy here, or at least the people who work for them and the products are not the enemies.  Even corporate management didn’t start off as bastards, even if some of them have not been overly friendly to labor.  You might say that corporate money has too much influence in politics but as you read the book, the reasons behind that become clear.  And if lefties continue to throw themselves against the word “corporation”, they are only going to be wasting their time.  It is too imprecise.  There are industries that work through corporations and then there are the big investment banks on Wall Street and they haven’t always been the same.  Teasing the agents apart at this point in time is going to be tricky but necessary.

Anyway, just read it.  Make sure you have your Teddy Bear to clutch in the middle of the night.

One very interesting fact from Ho’s book: Wall Street investment banks recruit heavily from a handful of prestigious Ivies.  There are two in particular that the bulk of Wall Street analysts and associates come from: Harvard and Princeton.  I’m not surprised about Princeton.  A few years ago, when I was trying to get Brooke into a private school that wouldn’t drive us all crazy, I toured several in the Princeton area and was surprised to see all the cable business channels running on multiple tv screens in the student lounges.  The kid was waitlisted, probably because we asked for financial aid.  But I digress.  The investment banks seem to think that Harvard and Princeton nurture their students in a way that make them perfect for Wall Street.  They’re smart, driven, ambitious, used to the finer things in life and they are looking for the next Harvard after graduation.  A few others get their attention, like MIT and Wharton.

But investment bankers do not like to recruit from Yale.  They don’t trust Yale graduates because they think they are too liberal.

So, maybe it shouldn’t be a surprise that when Wall Street knew it was going down in 2007, it recruited a presidential candidate from Harvard and passed on the one from Yale.

Oh, and Ho uses the word “schmooze” to describe the front office guys (almost all of them are guys) who use their relationships and connections to get to the top.  Some of them didn’t learn a thing during their investment bank’s finance training classes.  Apparently, you don’t have to know anything about finance to climb the corporate ladder to success.  You just have to know the right people and be really good at golf.

28 Responses

  1. Need more starbucks. My coffee habit is expensive. (Yes, I brew it myself)

  2. I divested in 2000. Cashed in everything. I figured it was all insider trading, and I wasn’t an insider, so I was getting out. I also sold my house and never owned a house again. Needless to say, I have not lost one dime in this latest and grandest criminal theft that has been going on ever since 401ks were just an idea in some scheming, corrupt Wall Streeter’s brain. Unfortunately, most people are more trusting and less willing to take a risk than I. I just could never get with the program, or any program for that matter.

    • I’m getting the feeling that there’s no other option. This book scares me more than I thought. Pensions are illusory too. There’s no way the Wall Street guys are going to let us have our money. They don’t consider it *our* money. They think it is the shareholder’s money that was illegitimately given away to employees without shareholders’ consent.
      No, I am not kidding. The 401K system has to go. Anyone who is still clinging to it hoping to somehow beat the house and keep their job is delusional.

      • They also don’t HAVE the money. It’s gone. That’s why we bailed them out, and we’ll bail them out again, without even a slap on the wrist. There is no money. If everyone was aware of that, the country would collapse toot de sweet. But the day is coming regardless, and it’s not that far off. That’s how I see it.

      • For most people with a 401K, it is a good idea to get out of the stock funds, especially since most people do not closely watch the funds they’re in and manage them accordingly. Many are too afraid to even look at their 401K statements when the stock market is down (the time when they MOST need to view their statements).

        Given the stiff penalties for early withdrawal, though, transferring the money to the low risk, fixed income fund (certificates of deposit, basically) in the 401K is not necessarily a bad alternative.

        • I had someone far savvier than me set up my account for me. It auto rebalances. Since I set it up, I haven’t looked back and didn’t look at all when the market tanked in 2008. But it only looks great and growing when you’re employed and your company is making contributions. Honestly, I can’t take the risk that there will be another crash and I don’t want to participate in betting against other American workers anymore just so my own stash grows. It’s sinful.

        • The only reason I put money into my 401K is because I am not taxed on it. If one has to pay any tax on one’s income, not being taxed on money put into a 401K is definitely a bigger payback that post-tax money put in a CD or money market fund.

          • I used to think that way too but then I realized that all that untaxed 401K money is contributing to starving the beast, which is just what they want. So, I am seriously contemplating taking my money out, taking the hit and socking it away someplace boring.

          • Most, if not all, 401Ks, include a “fixed income fund” for the risk-averse. Such a fund typically invests in CDs, money market accounts, that sort of thing. You get the safety of CDs and the tax benefits of 401Ks.

          • Yep, I’m diversified. But the problem is the concept of the 401k. Read the book.

          • If you’re going to close out your 401K and take the money, you should consider putting some of it in a whole life insurance policy and annuities. Northwestern Mutual Life offers such investments. Treasury bonds are another option.

          • I already have a term life policy with metlife. Not sure what I’m going to do yet. But after reading Ho’s book, I think we should all be very concerned with what is going to happen there.

  3. I recently looked at who was on the board of directors for most of the local big companies and found pretty much all of them have a seat filled by a “representative” for an investment firm. They bought a seat at all these tables… yes, things have changed and the predatory behavior is just a symptom.

    I wouldn’t be surprised to eventually see all the board seats filled by investment firms and you KNOW their interest will have nothing to do with the product but rather the extraction of wealth.

  4. And now I realize that I missed my true calling in life. I should have been an anthropologist ..

    You still can, you know.

    • Gotta put the little one through college first, unless she scores a full ride somewhere.

  5. Good news: second opinion on car will save me about $200.
    Bad news: they found $600 worth of different stuff that needs to be done.
    Shoot me now.

    • That is a common scam. Ask them to do the stuff you asked for. The other stuff can wait.

    • I’m gonna have to call the guy we go to for inspections, tires and stuff. The missus’ Honda Fit has the clutch going out and the dealer wanted $1200+ . This guy gave an estimate of $800. Replacing the clutch means separating the engine and trans-axle and all that involves. At one time the tariff was $30/hr.

      I was looking at a Mitsubishi Eclipse Spyder convertible for my third childhood, the party selling it said the rack went South and their mechanic quoted $600 parts and labor. The Rockauto price on a rebuilt unit was around $300.

  6. Off Topic Warning….If the Democrats and Republicans don’t start talking REAL women’s issues soon I think I may have found my write in candidate. She comes in 4 different races! http://shine.yahoo.com/work-money/serial-career-changer-barbie-now-running-president-180500637.html

    BTW, I consider REAL women’s issues to be. Equal pay for equal work and equal job and educational opportunity. Images of women and girls in media and parity of media ownership and control. Equal and relevant health care for women (I don’t want to be taxed to pay for unmarried or unfaithful men’s Viagra). Parity in political representation.

  7. ZeroHedge: The unemployment rate drops to 8.2% for one simple reason: the number of people not in the labor force is back to all time highs: 87,897,000.

  8. I just got my copy of Ho’s book — I’ll try to get caught up with you so we can talk about it.

    • Honestly, what’s to talk about?

      Attila the Finance Capitalist is going to plunder and pillage and Obama is going to give him a get out of jail card and more of your tax money.

  9. A post-crash Survival Blogger named Sharon Astyk wrote a blogpost shortly after the Bernie Madoff affair. Her thesis is that “economic growth” is a ponzi concept and we all live in the midst of an overarching ponzi economy. Our mission, should we decide to accept it, is to defect from the ponzi economy as best we can and invest our time, effort, and “money” ( before the “value” of “money” becomes zero) in personal and community economic-survivalism of the sort which will out-survive and out-live the Long Crash to come. (Link to follow in self-subreply).

  10. If enough 401k-holders back out of their 401-ks, pay the penalty, and invest the money in something else, the 401-k industrial complex will buy a congressional law outlawing premature cancellation of 401-ks altogether. They will also buy the necessary presidential signature.
    So rather than loudly divesting from 401-ks to make a statement, it might be better to quietly divest from 401-ks to invest in personal survivalism once one has determined to the best of one’s ability that one knows what that is. And one hopes one is one of the lucky ones who can “move their money” out of the system and into personal survivalism before the systemlords buy the needed laws to trap every other 401-k victim in their sitting-duck-accounts. Once that happens, all people can do is to decline to invest any more of their money into the 401-k traps at all, until the system lords make future-forward paymenst-opt-out illegal as well.

    Have I taken my own advice? I’m afraid not. I’ve spent the last years of my life in a state of inertial disorder . . . maintaining just enough discipline to go to work, work, and get paid. Most of my retirement money is in what I believe is called a “403-b” and the rest is in a 401-k. When I get my poop in a group enough to know how to pursue personal survivalism, I will cancel out of my 401-k to put the money into personal survivalism if the 401-k has anything left in it.

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