Pumping and Dumping the 401(k) Crowd

In America, the people are mad as hell and they aren't going to take it anymore. Or that's what you would think if you tuned in to any cable channel spewing the new populism.
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This is what we know: The fractional-reserve-banking-enabled, Fiat-currency-assisted credit derivatives bubble that grew 10 times larger than Earth's GDP has popped.

And the collapse of this greatest global Ponzi scheme since the South Sea Bubble has taken world markets with it. It has destroyed pension funds and wiped out banks across the planet. Economies have screeched to a standstill. Trade has collapsed. Fifty million have lost their jobs. A hundred million have been pushed into hunger.

This is what we don't know: when, or if, the banking bailouts, money printing and other wealth transfer schemes will stop.

In America, the people are mad as hell and they aren't going to take it anymore. Or that's what you would think if you tuned in to any cable channel spewing the new populism.

The Wall Street Journal is reporting, however, that all that televised "populism" is a whole lot of hot air: "Today's populism has created no large scale protests in the US."

In France, I see almost weekly small scale protests and monthly large scale ones since the global Ponzi scheme popped last year. No, the French aren't taking this lying down:

That isn't the case overseas. Close to one million French demonstrators on March 19 protested the government's handling of the economic crisis, and thousands blocked London streets on April 1 during a G-20 meeting, events that dwarfed any protests in the U.S.

On top of the protests, the French have also taken to "boss napping." Basically, when a "boss" informs employees that they are all being laid off, the workers will then hold the "boss" hostage until the boss delivers certain promises to the workers. I was on a France 24 news program last week debating the issue:

The bossnapping continues because only 7% of the French population is against the practice:

In a poll last week by the IFOP survey group for Paris Match magazine, 30% said they approved of taking managers hostage." Another 63% said they "understood but don't approve." Only 7% said they "condemned" the practice. A separate poll taken a few days earlier by survey group CSA showed 45% approved of "bossnapping."

It's funny that many Americans will call the French 'cheese-eating surrender monkeys,' and, yet, the French would never quietly slip away into the night to live in a carpark or a tent city while bankers get billions in taxpayer financed bonuses. So why do Americans go so quietly?

The country today is different. America has an enormous middle class that is heavily invested in the financial system and is hardly about to organize for its overthrow.

This mentality, of course, allowed for the greatest transfer of wealth in America since the pilgrims first took this country from the original inhabitants. George Bush and Hank Paulson, with the help of their friendly media barons (the same ones that are now pumping faux populism), warned the country that if they didn't hand over $700 billion for Hank's three-page wealth transfer plan, the markets would crash. Well, the ransom got paid, and the markets crashed regardless, but at least the financial oligarchy got their bonuses.

People who have lost half the value of their 401(k) plans, in other words, want to regain it by having the economy rebound, not by seizing the assets of ExxonMobil Corp. People who have lost a home want to rebuild their credit and buy another one, not liberate the property of the wealthy.

As a broker, these are your favorite sort of clients. Desperate to make back lost money, they will hold on to the dear end, trading in and out in a panic.

Now these 401(k)-holding, shouting-at-the-television-screen-while-waiting-for-a-market-miracle citizens are about to find themselves at the other end of Geithner's latest wealth transfer scheme masquerading as a bank bailout, the Public-Private Investment Program. According to this Bloomberg News commentary the scheme is a potential pump and dump scam:

The main premise of Geithner's plan is that the banks' toxic assets are now priced at artificially low levels. As the federal bailout program's Congressional Oversight Panel wrote in an April 7 report, "Treasury has not explained its assumption that the proper values for these assets are their book values," rather than the prices unsubsidized investors would pay for them.

If Treasury's premise proves false, we may end up looking back on the Public-Private Investment Program as an elaborate pump-and-dump game. Only this time, unlike with the pools that sucked in gullible investors during the 1920s, the big losers would be taxpayers -- who never had the choice of not playing.

Of course, these kind of scams are easier to execute on a 401(k) crowd that has proven they will pay the ransom quickly if held hostage as with the Hank Paulson's three page wealth transfer plan.

Thomas Jefferson would be turning over in his grave if he saw that many of his predictions of a banking oligarchy had not only come true but that the population had remained so impotent, scared and silent in the face of it.

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