Let them eat iPhones

You say you are struggling to cover your rising expenses while your pay is stagnant? You should have become an executive at a bank. Break the economy and earn big rewards!

But don’t sweat it — you have a phone and that more than makes up for your lack of adequate wages, declining ability to access health care and lack of a pension. Just ask JPMorgan chief executive officer Jamie Dimon.

Mr. Dimon’s pay is more than 220 times that of the average employee at JPMorgan, reports Business Insider, but he says you underpaid employees shouldn’t complain — because you have iPhones! At least Marie Antoinette’s alleged belief in cake allowed France’s plebeians to eat, more than can be done with a phone. Here is what Mr. Dimon said in his latest attempt to show compassion, according to BloombergBusiness:

“ ‘It’s not right to say we’re worse off,’ Dimon said [last September 17] at an event in Detroit in response to a question about declining median income. ‘If you go back 20 years ago, cars were worse, health was worse, you didn’t live as long, the air was worse. People didn’t have iPhones.’ ”

Cutting the pay of chief executive officers would do nothing to solve inequality, Mr. Dimon proclaimed. Instead, “investing in ‘intelligent infrastructure’ ” is what is needed. If possessing a “smart phone” is the key to happiness, apparently “smart buildings” would make us still happier. There’s progress for you — Marie Antoinette never offered anyone a bakery. But as you apply ketchup to your iPhone, you will surely digest smoothly with the knowledge that the chief executive officers of Goldman Sachs and JPMorgan officially became billionaires during 2015.

U.S. Treasury Department under new management (photo by takomabibelot)

U.S. Treasury Department under new management (photo by takomabibelot)

Goldman Sachs’ chief, Lloyd Blankfein — or Lord Blankcheck, as Occupy Wall Street activists memorably dubbed him — took home US$23 million last year, while Mr. Dimon “earned” $27 million, a healthy 35 percent raise. And shed no tears for those who have yet to reach the corporate pinnacle — three Goldman Sachs executives each took home $21 million and three JPMorgan execs each were awarded more than $10 million in stock alone.

Profits of biggest banks increase again

When we last heard from Mr. Dimon, about this time last year, he complained that “Banks are under assault,” adding that “We have five or six regulators coming at us on every issue.” As the six biggest banks in the U.S., which includes JPMorgan, racked up profits totaling $75 billion for 2014, you will be excused for having doubts about just how tough regulators are.

Profits for those banks were no more endangered in 2015, totaling almost $93 billion. Here is how they fared in the just concluded year:

  • JPMorgan Chase & Company: net income of $24.4 billion on revenue of $96.6 billion. JPMorgan reported its highest-ever net income in 2015, and paid out $11 billion to shareholders through stock buybacks and dividends.
  • Bank of America Corporation: net income of $15.9 billion on revenue of $82.5 billion. Net income more than tripled from 2014, and it nearly doubled the dividend it paid shareholders — the bank said it handed out $4.5 billion through common stock buybacks and dividends.
  • Citigroup Incorporated: net income of $17.2 billion on revenue of $76.4 billion. Although revenue was down slightly, net income more than doubled because Citigroup wasn’t troubled with having to pay out billions in fines over its toxic derivatives as it was in 2014.
  • Wells Fargo & Company: net income of $23 billion on revenue of $86.1 billion. The bank reported it handed out $12.6 billion through stock buybacks and dividends, yet it relentlessly demands its tellers pressure customers to open multiple accounts and pays those tellers too little to live on.
  • The Goldman Sachs Group Incorporated: net income of $6.1 billion on revenue of $33.8 billion. Goldman Sachs’ net income was below that of 2014 due to a $3.4 billion deduction (or “charge”) from its earnings due to its reaching a settlement with government regulators over its toxic mortgage-backed securities; profits would have risen without the fine. But please don’t shed any tears for the investment bank — it proudly reported that it “advised” on corporate mergers and acquisitions worth more than $1 trillion, work that by itself netted it billions of dollars while jobs disappeared.
  • Morgan Stanley: net income of $6.1 billion on revenues of $35.2 billion. Similar to its peer banks, Morgan Stanley shelled out $2.1 billion to buy back its stock in an effort to have its profits shared among fewer stockholders. Despite that profit, the bank has said it will lay off staff as part of an effort to “cut costs” under Wall Street pressure.

The biggest get bigger

Yes, the biggest banks keep getting bigger. The four banks with the largest holdings accounted for a composite 42 percent of all U.S. banking assets in 2014, a total that has steadily increased, both before and after the 2008 crash.

Wells Fargo Plaza, HoustonAnd not even the fines levied by regulators slow them down. Earlier this month, Goldman Sachs announced that it had agreed to $5 billion in penalties to settle claims arising from the marketing and selling of dodgy mortgage securities, although nearly $2 billion of that is “consumer relief” in the form of loan forgiveness, the bank said.

Banks have paid a total of $40 billion to settle claims by financial regulators and prosecutors, yet these penalties are bumps in the road for them, no more than a business expense. In part, perhaps that is because much of these penalties come in the form of mortgage modifications, rather than cash, and often these modifications are to loans that the banks service but don’t actually own — allowing them to get credit for modifying loans belonging to another company.

Banking of course is not the only industry undergoing consolidation. Mergers in 2015 were bigger than ever, with corporate deals worth $4.7 trillion. Investment banks earn huge fees for arranging mergers and acquisitions, none more so than the biggest U.S. banks. Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America and Citigroup ranked as numbers one through five in the world in terms of the value of the deals banks “advised” on.

Competitive pressure accounts for some corporate mergers — the capitalist imperative to grow or die does not abate even for the biggest corporations — but pressure to “enhance shareholder value” plays a significant role. “Enhancing shareholder value” is finance-speak for acceding to speculators’ demands for more short-term boosts to profits and higher stock prices, no matter the cost to others or the long-term damage to the company itself. Hedge-fund billionaires are among the fiercest in pressing these demands, continually demanding cuts to jobs that serve only to fatten their swollen wallets. The big banks, as major Wall Street players themselves, both apply this “market” pressure for the same reasons and further profit from acting as “advisers.”

Reforming such insanity is a hopelessly sisyphean task. What if instead banks became a public utility with an end to speculation? Proposals are being floated in the U.S. to create state banks, perhaps on the model of the successful Bank of North Dakota, and the Left Party of Germany has a detailed plan to bring banks under democratic control. Capitalist propaganda aside, there is no need for banking to exist as an uncontrollable behemoth extracting wealth from all other human activities. Why shouldn’t it be a utility under public control that exists to serve the productive economy? We can’t survive on iPhones alone.

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16 comments on “Let them eat iPhones

  1. Asteroid Miner says:

    Thank you. Did you send this to politicians?

  2. xraymike79 says:

    “Reforming such insanity is a hopelessly sisyphean task.”

    —The allusion to Sisyphus is probably even more apropos than you had intended, since the Too-Big-To-Fail Banks are the embodiment of a modern day Sisyphus who was known in Greek mythology for his cunning and trickery. In his time on earth, he “killed, raped and stole.”

  3. Tom Welsh says:

    “ ‘It’s not right to say we’re worse off,’ Dimon said…”

    Damn straight it’s not right to say HE’s worse off. And his pals. They are a very great deal better off, and the correlation between how much better off they are and how much worse off everyone else is strongly suggests a zero-sum game.

  4. Tom Welsh says:

    “Reforming such insanity is a hopelessly sisyphean task. What if instead banks became a public utility…?”

    Excellent idea. Unfortunately such a reform could be made only with the help of the political class, which has been 100% “acquired” by the banks.

    Pity, it would have been nice.

    • Political office holders indeed would be largely uninterested, but the way to accomplish change is always through mass grassroots action, not relying on officials. Many ideas that political leaders were uninterested in came to be through people organizing and acting together. A rational economic system — that would be a revolution, not a reform — is possible only through mass movements. Office holders follow when an idea takes firm enough root.

  5. I listened to an excellent talk by Robert McChesney last night about the imminent replacement of all white collar and blue collar jobs by robots – how this will result in a return to slavery unless workers can seize control of the technology: https://beta.prx.org/stories/169836

  6. Alcuin says:

    “ ‘It’s not right to say we’re worse off,’ Dimon said [last September 17] at an event in Detroit in response to a question about declining median income. ‘If you go back 20 years ago, cars were worse, health was worse, you didn’t live as long, the air was worse. People didn’t have iPhones.’ ”

    That man is soooooooo out of touch with the real world.

    On the subject of banks getting bigger: it’s at the local level, too. Our home-town bank, owned by a local family since 1932, was just sold to a holding company with 57 locations. No doubt the owners got a big payoff, but at the expense of a lot of local jobs and community support activities. I don’t know the assets of the bank, but they were probably in the neighborhood of $100 million. The holding company has assets of over $4 billion. Chump change compared to Goldman Sachs, etc., but the trend is everywhere, not just the big boys. That’s capitalism, right?

    • It sure is capitalism. Many years ago, my savings were in a local bank with maybe four branches. It got bought, and I think there were another three rounds of being swallowed by a bigger bank. Similarly, I think the baseball stadium in San Francisco has had three names because the bank it was originally named for keeps getting swallowed by a bigger one.

      It could be worse: The baseball stadium in Houston was originally “Enron Field.” I wonder if the Astros ever took the field with six players to show the other baseball teams how much more efficient they were …

  7. Joel Meyers says:

    The closest thing to bringing the banks under democratic control (huh?) in this country has been the creation of the Federal Reserve System, a gigantic agglomeration of capital merged with the capitalist state. Powerful as the major privately operating banks were, all have now been reduced to branches of the so-called Federal so-called Reserve. While the bankers, even the top bankers, had some resentment of the discipline under which it placed them, it was all done for their own good, as an ongoing bailout, as the pre-Fed banking system was collapsing under its own weight.

    The Fed, with a status somewhere between private and governmental, now also has taken on the function of controlling all money and credit, printing paper no longer a specie of anything of intrinsic value, essentially a counterfeiting operation. It is a veritable house of cards which cannot be sustained that much longer. The purchasing power of the dollar is way down in come transactions, such as stocks, until recently, but up in certain commodities, such as oil. Around the fall in the price of oil, there is developing a general deflationary trend concerning the dollar, which will stunt whatever sick recovery now being hailed by the usual boosters of capitalism, and particularly the Democratic Party, looking to create some illusion for which it will strive to take credit (pun not originally intended) in this election year.

    It should be noticed that World Wars 1 and 2, and subsequent wars, invasions and occupations, would not have been possible without Federal Reserve financing, and the deficit spending of the welfare-warfare state that colonizes our minds and militarizes our bodies. About that status between private and governmental: It is even more murky than that, since the status of the governmental is increasingly that of a privately owned corporate enterprise, leveraged as it is by the Federal Reserve as the core of the nominally private-civilian capital complex.

    Some think it can overcome its crisis by an accelerating bankruptcy causing the world economy to increasingly flee to the dollar. In the short run, this will increase the value of the dollar relative to other currencies and quasi-currencies, but only at the price of overloading the burdens of the dollar economy, leading to a larger collapse in the long run. Keynes, I believe, is the attributed coiner of the defense and dismissal that in the long run, we are all dead. Yes, he will not have to face accountability for the coming catastrophe.

    • Joel Meyers says:

      Correction: The reference to “democratic control” above can be confusing, since it was meant sarcastically. The merger of government and high finance in the U.S. central banking sustem known as the Federal Reserve, underlies tendency that is totalitarian, as opposed to even democratic, even of the most illusory nature.

    • The Federal Reserve exists as a stability mechanism for capitalism; without it, the booms and busts would be even more severe, as they were in the 19th century. As I have said before, if people don’t like the Federal Reserve, what they really don’t like is the capitalist system. You have put it well here, Joel, including pointing out that the endless series of maneuvers won’t in the long run stave off a collapse.

      For now, the U.S. dollar is the world’s reserve currency. As long as that status holds, the U.S. will be able to run deficits at will and manipulate the world financial system to the advantage of its multi-national corporations. When that status is gone — that won’t be soon, but someday it will happen — things will become very ugly indeed. Chickens have a way of eventually coming home to roost.

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