Nash's world

Citigroup memo predicted Occupy Wall Street Movement

by on Oct.12, 2011, under Uncategorized

Citigroup Centre, Sydney

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Linked here is a paper by Citi group that predicted the current climate of back lash  against the robber baron‘s of wall Street. I find the following except particularly haunting :-

A third threat comes from the potential social backlash. To use Rawls-ian analysis, the invisible hand stops working. Perhaps one reason that societies allow plutonomy, is because enough of the electorate believe they have a chance of becoming a Pluto-participant. Why kill it off, if you can join it? In a sense this is the embodiment of the “American dream”. But if voters feel they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to being truly rich.

Could the plutonomies die because the dream is dead, because enough of society does not believe they can participate? The answer is of course yes. But we suspect this is a threat more clearly felt during recessions, and periods of falling wealth, than when average citizens feel that they are better off. There are signs around the world that society is unhappy with plutonomy – judging by how tight electoral races are. But as yet, there seems little political fight being born out on this battleground.

A related threat comes from the backlash to “Robber-barron” economies. The population at large might still endorse the concept of plutonomy but feel they have lost out to unfair rules. In a sense, this backlash has been epitomized by the media coverage and actual prosecution of high-profile ex-CEOs who presided over financial misappropriation. This “backlash” seems to be something that comes with bull markets and their subsequent collapse. To this end, the cleaning up of business practice, by high- profile champions of fair play, might actually prolong plutonomy.

Our overall conclusion is that a backlash against plutonomy is probable at some point. However, that point is not now. So long as economies continue to grow, and enough of the electorates feel that they are benefiting and getting rich in absolute terms, even if they are less well off in relative terms, there is little threat to Plutonomy in the U.S., UK, etc.

But the balance of power between right (generally pro-plutonomy) and left (generally pro-equality) is on a knife-edge in many countries. Just witness how close the U.S. election was last year, or how close the results of the German election were. A collapse in wealth in the plutonomies, felt by the masses, and/or prolonged recession could easily raise the prospects of anti-plutonomy policy.

I think the saddest and most interesting part is just how well the writers of this report understand “the system”. Referring to Rawls is a nice touch, but you can feel the disconnected analysis come through rather than the feeling of empathy you get when you read Rawls’ work. Fortunately for the rest of us, it doesn’t seem “they” predicted social media’s role in helping the masses organize against them.

I think JPChase’s donation to the NYPD shows they’re relying on standard police intervention to solve their problem. Though, I can’t help but wonder just how organized “they” are…on the one hand you’ve got conspiracy-level paranoia, and on the other there’s just a bunch of like-minded powerful people trying to hold on to their giant slice of the pie.

That is a stunning memorandum. The laissez faire attitude toward vast and growing wealth disparity between the plutocrats, and the 99% is revolting. The one thing this memo does show is that business knew, by at least 2005, that we don’t live in a real democracy, and that our government has been complicit to the point of treason.

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