3. THE BANKERS

The previous chapter described the role of the necronomist in rationalizing the decapitation of the production. Within the chapter were descriptions of how the necronomists misused many words to justify counter-productive actions on the part of the individual and industries. The necronomists could not work necrophilial effects without financing for the

Great American Decapitation.

Financially, the bankers of America must accept the responsibility for mishandling the savings of many small people. Financially, the bankers institutionalized the vocabulary of the necronomists as a functioning process. This necrotic metastasis is decapitalizing and destroying the human system of production.

Wall Street Is 90% Decapitalism

One of the biggest falsehoods perpetrated by the American financiers is that Wall Street is the center of capitalism. The truth is the opposite: less capitalism is transpiring in the transactions of the bankers and the brokers who are responsible for managing the symbols of production: currency, stocks, and bonds.

Acquiring, streamlining, and reducing production is not capitalism. Capitalism in fact as well as name requires the capitalizing of new expanded levels of production. The following quotations depict how little capitalism occurs on Wall Street.

merger activity in the U.S. during this year's first half ran at a $50 billion annual rate. Investment bankers figure that is enough to generate fees of at least $750 million for the specialists who facilitate the deals--many times the level 10 years ago.

On the other hand, new issues were less than $1.4 billion in value. Using the figures of $1.4 billion to $50 billion, one can see that new issues are less than 10% of the amount of money spent on acquisitions and mergers. Furthermore, the fees paid to people for specializing in non-capitalistic activity was almost 1/2 the $1.4 billion figure for new issues ... and that doesn't include fees paid to individual speculators.

Really now, can Wall Street be called capitalistic in the sense of capitalizing new and expanded production? Hell no! Is capitalism or decapitalism the future of America?

Watch out for another wave of business mergers before long. Stocks are underpriced, ready for the raiders to pluck. Interest rates are heading down, making cheaper money available to finance takeovers.

Federal money managers will fight the trend, try to discourage banks from lending funds for essentially non-productive purposes such as takeovers.

But that probably won't work Big money usually finds a way.

These quotations show, for one thing, that the source of the decapitalists' funds is not retained earnings; rather, other people's money OPM is the source in the form of savings at banks that lend to decapitalists.

The above quotations were written before the Republicans, Reagan, and Regan won the Presidency in November of 1980. The following quotations show which way the wind blows for the merger-masters, especially those at Merrill Lynch.

The SEC has relaxed Rule 144, relating to insiders' sales of stock ...

Government May Abandon Fight to Stem Conglomerate Takeovers.

"Big No Longer Bad in Antitrust Thinking"
The political and judicial posture on antitrust issues is changing as well. Several developments illustrate that antitrust efforts are being reigned in: the waning interest in Senate anti-merger legislation; a string of general conservative court decisions in both private and government cases; the Reagan transition team's pronouncements ...

Summarized, these excerpts indicate that more money was diverted by bankers into counter productive uses (mergers, acquisitions, insiders) as a legal barriers fall during Reagan-Regan deregulation. A Reagan transition team report wants the SEC to stop pursuing "illegal tender offers, insider trading, and foreign payoffs", in addition to eliminating the "'policy of publicly disclosing" the SEC investigations.

The phrase "capital formation" is another expression misused by the necronomists and the financial community. What they mean is "symbols of capital formation". Real capital formation requires that the pooled symbols of capital circulate in the production, not merely in the hands of the handlers and manipulators of symbols. Wall Street is not in the business of capital formation: it misuses the symbols of capital so as

to reduce production per CAPITA,
to decapitalize production,
to deform the system of capital production, and
to reduce real capital gains.

Rather than looking upon Wall Street of the center of capital formation, one should view Wall Street as the center of "capital deformation," based on the effects per capita.

Leadership in Mergers and Acquisitions

With necronomics, one hears pronouncements that are only favorable within the limited framework of necronomics. For instance, the First Boston Corporation had a full-page ad listing the mergers and acquisitions which it had helped to finance over the last three years. Each year the list has grown longer. Of course, 1st Boston no doubt regards the growing list as an indication of what a great capitalistic bastion it is. It labeled the ad "Leadership in Mergers and Acquisitions." However, if one understands the difference between capitalism and decapitalism, one knows what the ad really means. It is the difference between following the grain harvester and the grim reaper.

Another example of grim banking activity is "redeployment" of the funds that banks control. Until 1980, banks could not operate interstate facilities or own more than 5% of a full-service bank in another state. However, as a result of the modern politicians in Congress, a new omnibus banking law allowed interstate banking. Through this new law, banks are redeployed their funds in ways even less productive than before.

Besides the inevitable despotic effects from increased, over-centralized, decision-making of deregulated, interstate banking, the omnibus bill portends specific negations of production. These necronomic effects are showing up. Funds within the banks are not lent for production. Instead, they are used to buy other banks in anticipation of banking deregulation, as the following shows.

"Banks Grab Footholds Out of State, Betting That Restrictions Will End"

Federal law forbids banks from offering a full range of services in more than one state. But some banks believe that might change soon--and hoping to beat their rivals to new markets, they're quietly buying stock in out-of-state banks.

Provident National Corp. [of Philadelphia] says it's "redeploying" the banks assets. "We're in the business of making money, and one industry we should understand is banking," says one executive.

Provident says it has a 4.9% interest in American Security Corp., Colorado National Bancshares Inc., Hibernia Corp., Lincoln First Banks Inc., National Central Financial Corp., Pittsburgh National Corp., Southwest Florida Banks Inc., and Texas American Bancshares Inc. It also has stakes in others it won't identify, partly because it's still buying into those banks, Mr Sparks says.

Talk about a lot of small saver's capital not going into anti-inflationary production. Provident National shows how banks are using money in acquisitive ways that simultaneously "crowd-out" cash-starved essential production.

What are bankers buying? Production? Or merely the symbols of Production? What are they in the business of making? Useful goods and services? Or, "the business of making money"?

The phenomenon of banks "redeploying" their assets (other people's) money so as to buy each other is merely another example of "currency dislocation." Multi-branched Financial Banks (MFBs) dislocate currency from economic communities. The MFBs are not keeping money within the originating communities, so as to maintain or improve production. Instead, the MFBs engage in the extremely inflationary activity of competing with each other to acquire vulnerable members of the banking community. And what is the reason for dislocating the currency from local production, in specific, and from national production, in general? Speculation that the law-makers will legisflate increased private nationalization of the banking community.

Any way you look at it, when the businesses that make money are booming and production is recessing, you have massive inflation. When the executive at Provident National conceitedly said, "We're in the business of making money", he was really saying that he was in the business of generating inflation and deriving income from inflationary returns.

A sad ad of the banking community is the one using an Einstein look-alike who is struggling with interest on checking. Would Einstein, the man who first recognized the relationship between time and speed, have lent his image to an organization that slows down the speed of production time? Probably not, for it was he who said

They have cheated us. They have fooled us. Hundreds of millions of people in Europe and in America, billions of men and women yet to be born, have been and are being cheated, traded and tricked out of their lives and health and well-being.

Einstein was referring to the politicians and the statesmen which is synonymous with bankers in light of the dominating voice that bankers play in politicians' lives. And even if he did not have the bankers foremost in his mind when he said it, the words fit the inflationary bankers of the 80's. Re-read Einstein's assessment of top public policy makers and see if they don't fit the bankers.

Of course, the bankers could not work their decapitalism if people did not lend them money through savings and checking. Bankers would not be able to pool the capital so as to make $3.2 billion acquisition loans as they did to Seagrams of Canada.

Given the rise in decapitalistic activity, Wall Street would be more capitalistic if no transactions occurred at all. Eliminating the decapitalistic activity would increase the capitalistic nature of Wall Street. However, such will not occur. Already enough quotes have been given to show how decapitalistic Wall Street won the last election, not the American people suffering from inflation. In addition, trends were cited in the previous chapter detailing how the small persons naively or blissfully are flocking to Wall Street at the rate of 4,000 per day. In addition to these small speculators (who foolishly try to beat the odds that are set by the professional insiders) there are those who unknowingly participate in the Great American Decapitation through Mutual Funds and Money Markets.

"Money Market Dollars To Wind Up in Stocks?"

Some analysts view the stockpile of money in those funds as a future source of demand for stocks.

What makes the money market funds attractive is the present high interest rates on the short-term investments and the ease of jumping in or out of the funds.

What most people do not realize is that the return from "Money Markets" are high only in what the name implies, money. Money is a symbol of production, not production itself. When people naively, ignorantly, or deceitfully pursue the symbols of production instead of the substance of production, the product value of the symbols is less and less. Putting one's money into a decapitalistic fund is self-defeating.

"Capitalism Is Going to Hell!"

Before continuing with a delineation of how bankers are financing the Great American Decapitation, a listing of the what is being foremost decapitalized is important. If one looks at where the financial community is directing the symbols of production, where the velocity of circulation is increasing, one finds that it is not in the essential goods and services. In reading about declining essential production, remind yourself that the essence of life depends on essential production. This book is not a mere gripe against economics; it is raising the alarm on what the essential effects are. In the end, no one can escape the cheapening of essential goods and services, for as the poor are pushed toward starvation, some of them will push back in order to maintain their life essence.

Within the essential goods and services is the busyness of transportation. The heading of this section is a quote by the chairman of Chrysler, Lee Iacoaca. His exclamation is true, but is incomplete. More fully is the expression that

Capitalism is going to hell,
and decapitalism is pushing it there.

The decapitalism is being fomented by the bankers and brokers of America. They are not directing the symbols of production into production, especially essential production.

Chrysler is not the only transportation company that is having financial problems. Forbes magazine had a cover article entitled "Ford's Financial Hurdle." In the last month of 1980, the Wall Street Journal noted that Ford had contracted for loans amounting to $750 million. In the same period when Forbes and the Journal were listing the woes of Chrysler and Ford, accounts of the $3.2 billion acquisition loan to Seagrams were printed, and a loan put together involving American banks. Would not Chrysler and Ford have fewer financial problems if American bankers did not lend the savings of American workers to foreigners to acquire, streamline and reduce American production?

More essential than transportation is the cultivation and processing of food so that humans can fulfill their basic biological needs. Are the acquisition loans beneficial to less expensive food? If the decapitalistic acquisition loans did not occur, the following quotations would not burden the reader or the eater.

"FOOD, THE MARGINS KEEP GETTING THINNER"
This is going to be a bad year for most of the nation's food processors. Declining consumer buying power, high inventory carrying charges, and soaring production costs are all hitting the packaged foods processors simultaneously.

Wouldn't the inventory carrying costs, financed by loans, be less if there was not the decapitalistic competition for the limited amount of loans at any one time? This is true not only for food processors but for the farmers who grow the food and for the truckers who transport the food.

Should illogical, decapitalistic acquisition loans be illegal?

"Where Venture Capital Is Likely to Go"

Increasing productivity per capita in essential production would lower the cost of the bare essentials. Without replacement of necronomics, improved productivity per capita in essential goods and services will not occur--shortage inflation is here to stay. The legal laws are against logical investment for productivity gains in essential goods and services. An example is venture capitalism. The heading of this section (Where Venture Capital is Likely to Go) was the heading of an article which contained an indication that productivity per capita in essential products is not going to improve.

"Not a lot of this money will be lent to what is thought of as small business," says a venture lender.

The new money venture-capital companies get from public stock sales likely will go mostly to high-technology companies because they've shown the biggest payoff. The success of Apple Computer Inc., for example, has meant an enormous profit for the venture lender that financed its early growth.

Based on the principle of "crowding out", if the government arranges the laws so that short-term gains are fastest in non-essential high-technology, capital will be drained from maintaining or improving essential productivity.

"AMERICA'S NEW FINANCIAL STRUCTURE"

An article in Business Week details how the politicians are arranging the laws. The modern politicians passed a law that deregulates banking: Depository Institutions Deregulation and Monetary Control Act of 1980. What follows is a listing of the ramifications of what will be, as a consequence, "AMERICA'S NEW FINANCIAL STRUCTURE." The upheaval facing financial institutions, emanating mostly, but not totally, from the 1980 law, will bring the following:

"True cost" banking requiring consumers and corporations to pay higher borrowing costs, but a more efficient way of providing money to borrowers.

["True cost"? What about the decapitalistic cost in sinflation? It may be legal, but it sure isn't logical when increased efficiency is accompanied by higher costs. Another example of deregulated bankers inflationarily charging more for a service which they themselves declare is more efficient is the "debit cards."]

Higher mortgage rates, but a wider selection of mortgage instruments from which to choose.

[Would you rather have the fewer instruments of the past with the lower rates? At least that way Americans can afford a mortgage. Presently, a fewer few can afford the mortgage rates despite the wider selection of mortgage instruments.]

Higher rates paid on checking and savings deposits of consumers, with all institutions free to pay what they wish by 1986 at the latest, when all interest-rate ceilings to die.

[When people are encouraged to pursue acquisition of the symbols of production by unlimited interest rates, people will ignore investment into real production. Consequently, the system of production will collapse. An answer exists for those who say that the banks will channel the money into production. The answer is in three parts. Historically, the track record of banks is one of counter productive inflationary lending. Capitalistically, is it not better to have direct capitalism in which people handle their own capital rather than having a bureaucratic middle man that exacts a handling charge. Indirect capitalism has an obvious handling charge that pays the middleman's wages. Less obviously, indirect capitalism has a charge involving the missing production because human resources are tied up in handling the symbols of production. Economically, the rationale that allows people to gain income for doing nothing will pervade the system of production further; this necrotic something for nothing mentality will imbalance the economy even further.]

Less differentiation between commercial banks and thrift institutions.

[The necronomics of commercial banks--lending for mere acquisition rather than capitalization of production--will pervade more of the economy. As the commercial banks expand their range, they will take necronomics with them; in the face of the higher returns from lending for inflationary speculation, the thrifts will have to cease productive loans in order to survive--the system of production will collapse.]

"One-stop" banking for consumers and, ultimately, for corporations.

["One-stop" banking is like one-shot Russian Roulette, with a certain spin, you are all spun out.]

Less geographic segmentation as electronic funds transfer makes money move across today's arbitrary barriers. Eventually, the reality of the marketplace and the tendency toward "federalization" of regulatory oversight will hasten the adoption of some form of interstate banking in the U.S.

[Will "federalization" be necronomic and collective centrism with despotic decision-making or will it be democratic-tuning of the investments?]

The new politically sponsored and legisflated financial structure is going to be the decapitalistic end of America. Of course, the private individual could negate and reverse political corruption and incompetence by avoiding all contact with bankers. Anyone suffering from inflation and unemployment who keeps his money in banks is a self-defeating fool: he is providing the money that has and will decapitate his existence.

Warning: Anyone found stealing lifehours will be forever banned from participation in and rewards of Better Democracy and Capitalism.

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