In March 5, 2006, Citigroup issued an “Industry Note” (1) which gives the coup de grace to “trickle-down” Reaganomics.
Wealth, which was seen as forming at the top, was supposed to, through the job creation function of capitalism, trickle down to the bottom. In 2006, Citigroup showed that it had no interest in seeing that the wealth of the top one percent of society went anywhere other than into the pockets of that small group of people.
Citigroup called its ideology “plutonomy.”
Michael Moore revealed the existence of these two reports in his film, Capitalism: A Love Story. They clearly show a disdain for American democracy and a distinct preference for plutocracy.
Let’s look a little at Citi’s history.
Citigroup Inc., doing business as Citi, is a major American financial services company based in New York, NY. Citigroup was formed from one of the world’s largest mergers in history by combining the banking giant Citicorp and financial conglomerate Travelers Group on April 7, 1998.
Citigroup Inc. has the world’s largest financial services network, spanning 107 countries with approximately 12,000 offices worldwide.
The company employs approximately 300,000 staff around the world, and holds over 200 million customer accounts in more than 100 countries. It was the world’s largest bank by revenues as of 2008.
It is a primary dealer in US Treasury securities and its stock has been a component of the Dow Jones Industrial Average since March 17, 1997.
Citigroup suffered huge losses during the global financial crisis of 2008 and was rescued in November 2008 in a massive bailout by the U.S. government. Its largest shareholders include funds from the Middle East and Singapore.
On February 27, 2009 Citigroup announced that the United States government would be taking a 36% equity stake in the company by converting $25 billion in emergency aid into common shares. (2)
In its March 5, 2006 report, it noted that the latest Survey of Consumer Finances for 2004, released by the Federal Reserve, showed that “the rich are in great shape, financially.”
“We think the rich are likely to get even wealthier in the coming years,” it continued.
Back in October 2007, Citi coined the term “plutonomy,” the report says, in an article in The Global Investigator called “Plutonomy: Buying Luxury, Explaining Global Imbalances,” Oct. 14, 2005.
The report continues:
“Our thesis is that the rich are the dominant drivers of demand in many economies around the world (the US, UK, Canada and Australia). These economies have seen the rich take an increasing share of income and wealth over the last 20 years, to the extent that the rich now dominate income, wealth and spending in these countries.
“Asset booms, a rising profit share and favourable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries.
“Also, new media dissemination technologies like internet downloading, cable and satellite TV have disproportionately increased the audiences, and hence gains to “superstars” – think golf, soccer and baseball players, music/TV and movie icons, fashion models, designers, celebrity chefs, etc.
“These ‘content’ providers, the tech whizzes who own the pipes and distribution, the lawyers and bankers who intermediate globalization and productivity, the CEOs who lead the charge in converting globalization and technology to increase the profit share of the economy at the expense of labor, all contribute to plutonomy. (1)
“Asset booms” – the subprime mortgage scandal plus the sale of American assets to foreigners, the only thing America had left to sell after it shipped its factories overseas.
“Increase the profit share of the economy at the expense of labor.” According to Michael Moore, the increase in labor’s share of wealth since the days of Ronald Reagan remained flat, increasing by no more than 1%. No wonder the share of the top 10% increased.
Citigroup goes on to state that it is particularly interested in not just the top 10%, but particularly the top 1% of the US – the plutonomists in our parlance who have benefited disproportionately from the present productivity surge in the US.”
This productivity surge saw jobs automated, factories sent offshore, and the remaining workers obliged to work more at longer hours for the same amount of money, year after year since Reagan.
The report contrasts the performance of what it calls “egalitarian” countries such as Japan, France and the Netherlands. Egalitarianism “has kept the rich to a similar share of income and wealth that they accounted for in the 1980s – in other words, they haven’t really gotten any richer, in relative terms.”
Citi furnishes us with their vision of where they want to take the global economy in coming years.
“Despite being in great shape, we think that global capitalists are going to be getting an even greater share of the wealth pie over the next few years, as capitalists benefit disproportionately from globalization and the productivity boom, at the relative expense of labor. As we believe plutonomy explains away some of the conundrums [low consumer confidence, high consumption, low savings rates, etc.].” (3)
Plutonomy, which wants labor to go to the wall, had no difficulty asking for and receiving a $25 billion bailout itself when it own fortunes plummeted in late 2008. While capitalism meant sink or swim for the poor, it meant no such thing for the rich, leading some to say that capitalism was for the poor and socialism was for the rich.
I say that the “plutonomists” are some of the black hats who now must go from the citadels of power. As the American economy falls to the ground, to be replaced by NESARA, the wisdom economy, these are some of the people whose grips will be loosened and whose fortunes will disappear.
(2) Citigroup Inc. (TARP bailout by U.S. Government) at http://www.scripophily.net/citigroupinc.html.
(3) Equity Strategy, Vol. 1, p. 1.