Follow this blog:: RSS

The big disconnect: What can be done about the Main Street, Wall Street divergence?

By Larry Dignan | December 21, 2009, 4:50 AM PST

In 2010, the smartest minds out there are going to need to come up with something that will bridge the big gap between Wall Street and Main Street, according to data from TrimTabs Investment Research.

Indeed, TrimTabs is reporting that the take-home pay of all taxpayers in 2009 fell $800 billion, or 12 percent, to $5.8 trillion. The value of all U.S. stocks rose $3.5 trillion, or 27 percent, to $16 trillion.

TrimTabs note that the policy response to the economic meltdown has been to print money. That money had to go somewhere and it went to the market.

The larger issue here is whether the Feds are relying on flawed data. Are we flooding the liquidity pump when we need to pull back? TrimTabs argument is that the Feds are relying on data from the Bureau of Economic analysis, which doesn’t use tax data. According to the BEA, 2009 personal income only fell 1 percent.

Add it up and we have Main Street-Wall Street, data and policy disconnects. And while we’re at it we might as well toss in the laws of unintended consequences because you know that’s around the corner as fixes are crafted.

Start your week smarter with our weekly e-mail newsletter. It's your cheat sheet for good ideas. Get it.

About Larry Dignan

Larry Dignan is editor-in-chief of SmartPlanet.

Full Bio
Disclosure
Contact

If you liked this, don't miss...

Comments

Add Your Opinion

Join the conversation!

Follow via:: RSS

Just
In

I received a letter from Citibank

After almost 10 years of overpayment and never missing or late. My credit rating when I got the card was 10.9 percent and my Fico was about 600.
Now my Fico is over 760 and they first raise me to 14.9 and now want to charge me 20 percent?
I cancelled the card, but this is the issue; why would i struggle to make these criminals happy all these years? So I could get stiffed later?

Why should we as taxpayers NOT play by the same twisted rules they do? Hmmm, I smell a payment revolt, after all, Discover denied me a card with my credit rating so high and the only reason I made sure everything was paid ontime in the past was so I could continue getting a cushion via credit.
Now they are closing the door on everyone after I BAIL YOUR CRIMINAL *SSES OUT?

Guess who is not going to pay ANY of his credit bills? Gee going to wreck my credit? And what are the consequences of that? I wont be able to get credit? LOLOL I'm over 760 and I cant get credit.

Time to walk away just like the criminals did and got my tax money for it.

Mike

Posted by miraclemike

21st Dec 2009

Show:

Please Select

0 Votes

+ -

RE: The big disconnect: What can be done about the Main Street, Wall Street divergence?

Wall Street does NOT get it. Bankers do NOT get it. CEOs do NOT get it. In a world where doing a good job gets you a bonus, but doing badly gets you the same or a bigger bonus they don't know or care. Stock brokers who get paid on your transactions if you gain or lose, don't have your best interest at heart. The occassional 'churning' of accounts to make that car payment or kid's tuition, nothing personal it's just business. Their bosses are too busy chasing bonuses for bringing in business transactions. Bonuses for good business and bonuses for bad business - like sub-prime mortgages. Manipulating numbers to claim non-existatnt value is always bad business. Milliken's junk bonds, S&L real estate disasters, Dot com dreams that didn't pan out are ALL paid for by those of us who do work with our hands and actually create value. Hidden as devalued dollars the tax of bad business threatens the economy and democracy itself. Economic instability can and will cause political upheavals. As the 'Boomers' come to retirement and find more than half their savings stolen by bad business it will get ugly.

Posted by plumley@...

21st Dec 2009

Reply
Flag

0 Votes

+ -

Congrats for catching on to what the fed doesn't dare tell us.

Beyond some bounceback resulting from the overcorrection from the
lows of last March, the current run-up of the market is mainly the
inflation that is the inevitable result of the fed printing trillions
of unbacked dollars. Since real estate was/is still seen as somewhat
toxic, it all had to go somewhere.

Don't worry; consumers will start to experience inflation as well
once they're willing to spend again, and start bidding up the prices
of the limited amount of goods available. I've been trilled to watch
my portfolio grow since march, but I'm also not fooling myself into
believing that I'll be able to get all that much for that money in
the long term.

BTW: I think that anyone who uses the term "Main Street" to describe
everything that is not "Wall Street" should be shot. It's probably
the most overused and irrelevant term of the year.

And why should we expect Wall Street to get it when we so willingly
shield them from the consequences of their actions? I will be
campaigning against any politician who supported bailouts of any
kind.

Posted by JohnMcGrew@...

21st Dec 2009

Reply
Flag

0 Votes

+ -

Out of touch..

Both Wall Street and Pennsylvania Avenue have been out of touch with Main Street for years.

Laws governing the separation of investment banks from commerce banks were put in place because of the financial chaos that triggered the Great Depression. Those laws protected Main Street from Wall Street?s risk taking for over 50 years and kept the nation and the world out of major financial trouble.

Starting in the 1980?s and continuing through early 2008 the incompetent occupants of Pennsylvania Avenue, both Republican and Democrat, slowly repealed those protective laws and created flaws in the nations financial system that exploded in 2008.

A good start to reining in Wall Street would be to roll back all the stupid financial laws made in the past 30 years and start with a return to the financial system that successfully carried us for 50 years.

I agree some items will need to be modernized to account for the changes in society and technology, but the core pieces are the key to bring back long term stability.

Posted by Hates Idiots

21st Dec 2009

Reply
Flag

0 Votes

+ -

RE: The big disconnect: What can be done about the Main Street, Wall Street divergence?

Big banks are hot to repay their TARP money -- and why? Not because it would be good for the bank, or good for the shareholders, but because they want to pay themselves gigantic bonuses. (For their job performance in 2009.)

These are the same banks that are driving their own customers into bankruptcy. ("You're having difficulty with that 12% rate? Let's make it 30% and see if that helps. Oh, and we just doubled your minimum monthly payment. That should really help.") The customer goes bust, the loan never gets paid, the bank loses the money ... and they want BONUSES for engineering this insanity? The true "disconnect" is between Wall Street and the real world.

Posted by jpdemers@...

21st Dec 2009

Reply
Flag

0 Votes

+ -

I received a letter from Citibank

Posted by miraclemike

21st Dec 2009

Reply
Flag

Join the SmartPlanet community and join the conversation! Signing up is fast and free. Don't wait -- we want to hear your opinion!