Wall Street’s Bull Has a Problem

By Pam Martens and Russ Martens: September 2, 2014 

Wall Street Bull Statue in Lower ManhattanFiguring out how to write ever creative versions of headlines that say the market is hitting a new high is commanding a lot of energy in newsrooms these days. What should be commanding more energy in the newsrooms is writing about the market structure that is underpinning this “bull”.

On Friday, TheStreet.com went with the headline “S&P Books Best August Since 2000.” Bringing up the year 2000 is a bit like bringing up the Hindenburg during an air show. The year 2000 marked the peak in Wall Street’s dot.com bubble, whose bust erased 78 percent of the Nasdaq stock market over the next two and one-half years.

Wiped-out Nasdaq investors were eventually to learn that much of this so-called bull market was a highly orchestrated fraud by some of the biggest firms on Wall Street. The fraud worked like this:

Research analysts at marquee firms like Salomon Smith Barney and Merrill Lynch issued knowingly false research reports urging small investors to buy young, unproven companies while calling the same stocks “crap” or a “pig” in private emails. When new tech or dot.com companies went public, favored big clients at Wall Street firms were instructed when to buy on the opening day of trading at rising prices to make the stock appear to be in high demand. This fraud on the market is called laddering.

To allow Wall Street’s most important clients to benefit by selling out at the doubled or tripled prices, stockbrokers for the little investors were incentivized to keep their clients in the stocks by their firms imposing a system called a “penalty bid” where the stockbrokers’ commissions would be removed if their clients sold into the run-up in price.

From Nasdaq’s peak in March 2000 to its trough in October 2002, approximately $4 trillion was transferred from those who did not know the market was a fraud to those who did.

TheStreet.com’s article last Friday posits this theory for the current market’s advance: “The S&P 500 hit a new closing high. A continued flow of good economic data and speculation about European Central Bank stimulus both played bolstering roles in the markets relentless advance.”

The “flow of good economic data” is certainly a subjective point of view. Earlier in August, the Federal Reserve released a study finding that 52 percent of Americans would not be able to raise $400 in an emergency by tapping their checking, savings or borrowing on a credit card, which they would be able to pay off when the next statement arrived.

But the part of the article that really caught our eye was this quote from the senior index analyst for S&P Dow Jones’ Indices, Howard Silverblatt, who says: “It’s amazing that with all the geopolitical tension in the world, the U.S. market was able to post its strongest August in 13 years, while the other 25 developed markets as a group were in the red. Speaks to the relative strength and stability of the U.S. system.”

As far as the geopolitical tension is concerned, it doesn’t hurt that there is an ocean between the U.S. and the multiple conflicts or that the U.S. has a larger military budget than the next ten biggest spenders combined. In 2012, according to the Office of Management and Budget, the U.S. spent $682 billion on its defense budget.  The next ten largest spenders collectively spent $652 billion. Those countries were, in order of spending, China, Russia, U.K., Japan, France, Saudi Arabia, India, Germany, Italy and Brazil.

There is no question, none whatsoever, that the sophisticated manner in which today’s stock market is rigged makes the market manipulators of 2000 look like a bunch of pikers. The question is, do the various prosecutors examining the frauds have the courage to prosecute it, thus taking away the punch bowl.

We certainly know that Alan Greenspan, Chairman of the Federal Reserve Board during the dot.com frauds, didn’t have the courage to speak out. Greenspan told Congress that the market was efficient; that stock prices were being set by the judgment of millions of “highly knowledgeable” investors. But small investors did not know what crooked stock analysts were saying about their stock picks in private emails; they did not know about laddering or penalty bids.

Today, thanks to author Michael Lewis appearing on 60 Minutes on March 30 and his latest book, Flash Boys, becoming a bestseller, the public has been told in the most dramatic way that the stock market is rigged against them.

Class action lawsuits from Chicago to New York are not just saying the same thing but describing in exquisite detail exactly how the markets are rigged and why they can’t be trusted. Moving a market to new highs can be easily facilitated when regulators are tolerating illegal manipulations like wash trades and spoofing.

A wash trade involves the same party conducting or authorizing simultaneous buying and selling of a stock or futures trade. To move a market higher, the trades are simply done at orchestrated rising prices.

Spoofing involves the rapid fire placing of orders with corresponding cancellations, often at the open or close of the stock market, in order to manipulate the price of a stock, stock index or commodity.

So the question today is whether hapless stock investors will be seduced once again or dig deeper into the research that has been put painstakingly before them. Frothy, rigged markets have a way of getting much frothier before they collapse under the weight of their own corruption. They get frothier with the help of headline writers.

Related articles:

The High Frequency Trading Lawsuit That Has Wall Street Running Scared 

Lawsuit Stunner: Half of Futures Trades in Chicago Are Illegal Wash Trades

Wall Street Journal Reporter: “The Entire United States Market Has Become One Vast Dark Pool” 

The Cleveland Fed’s Puzzle on Future Economic Activity

By Pam Martens and Russ Martens: August 28, 2014

Edward S. Knotek II of the Cleveland Fed

Edward S. Knotek II of the Cleveland Fed

Edward S. Knotek II and Saeed Zaman work for the Federal Reserve Bank of Cleveland. On August 19 they posted a paper at the Cleveland Fed’s web site that looked at causal relationships between wages, prices and future economic activity.

Knotek and Zaman have two Ph.D.s between them. Their paper arrives at this conclusion:

“…subdued wage growth is symptomatic of the existence of slack in the labor market. But given wages’ limited forecasting power, they are but one piece in a larger puzzle about where the economy and inflation are going.”

What Knotek and Zaman are pumping out as forecasting research at the Cleveland Fed is important because the President of the Cleveland Fed, Loretta J. Mester, is a voting member of the Federal Open Market Committee (FOMC) that sets monetary policy for the U.S. central bank. Mester will help decide when interest rates are hiked to help thwart future inflation.

If rates are hiked prematurely, the country could end up in the safety-net-enhanced version of the Great Depression (indeed, we already may be in just that) or in a Japan-esque multi-decade effort to climb out of the quicksand hell of deflation.

Saeed Zaman of the Cleveland Fed

Saeed Zaman of the Cleveland Fed

What Knotek and Zaman have done here is to make an omelet and forget the eggs. One can’t have a cogent discussion today about where the economy is going without including the perhaps uncomfortable but essential ingredient – unprecedented wealth and income inequality.

Here’s an alternative analysis that includes the eggs:

Yes, there is slack in the labor market. Yes, that induces fear among workers who resist asking for wage increases. The fact one’s neighbor lost his job and has been unemployed for more than a year adds to that fear. The fact that the bright college graduate down the block is working as a waiter also adds to that fear. The reality that unions can’t negotiate for higher wages across a broad swath of the labor force because their ranks have been decimated to just 6.7 percent of private sector workers adds further to the downward bias on wages.

Take a frightened workforce and add to that the disappeared workers – the labor force participation rate stood at a meager 62.9 percent in July – and one begins to see why inflation has been running at an annualized rate of less than 2 percent this year. (To broaden the record, interest rates were negative for nine months out of twelve in 2009, the first year after the Wall Street crash – looking eerily similar to the onset of a depression. A panicked Fed secretly pumped a collective total of  $16 trillion in below market-rate loans to the Wall Street banks that created the crisis as well as foreign banks over the crisis years of 2007 through 2010 in hopes of averting a Great Depression style deflation.)

The U.S. worker is also a consumer and with tepid wage gains and lack of heft in disposable personal income it is incontrovertible that there will be tepid consumption. Since consumption represents 70 percent of U.S. GDP, we don’t believe there’s any puzzle at all about where this economy is going.

Just this month, the Fed’s own scholars found that 52 percent of Americans would not be able to raise $400 in an emergency by tapping their checking, savings or borrowing on a credit card, which they would be able to pay off when the next statement arrived.

Equally alarming, with a $17.7 trillion national debt and the Fed tapped out with a $4.3 trillion balance sheet, just where is the stimulus going to come from to jolt this economy out of the next leg of the downturn.

We also don’t think there’s any puzzle at all about where the economic problems arise in the U.S. It’s the income inequality – period. No Phillips’ curves and cross-correlations are needed to figure this out.

Think Progress posted a clear, jargon-free report on the problem just yesterday. Citing data from a new paper by Elise Gould at the Economic Policy Institute, author Bryce Covert notes that productivity grew by approximately 65 percent between 1979 and 2013, but hourly compensation for workers, not including supervisors and managers, grew by just 8 percent.

Covert writes: “The top 1 percent, on the other hand, got a 154 percent raise in wages over the same time period, far more than the growth in productivity and more than four times more than average wage growth.”

An updated study released last year by noted economists Emmanuel Saez and Thomas Piketty found that in 2012 the top 10 percent of wage earners took home more than half of the nation’s total income – the largest share since the government began collecting the data a century ago – while the top 1 percent accounted for more than 20 percent.

If the Cleveland Fed or any other regional Fed Bank is serious about researching future economic activity, it will add income and wealth inequality to the mix.

The Unprecedented Failure to Regulate Citigroup Continues

By Pam Martens and Russ Martens: August 27, 2014

Sanford (Sandy) Weill, the Man Who Put the Sprawling Citigroup Behemoth Together and Sat At Its Helm Until 2006

Sanford (Sandy) Weill, the Man Who Put the Sprawling Citigroup Behemoth Together and Sat At Its Helm Until 2006

Yesterday, Wall Street’s self-regulator, the Financial Industry Regulatory Authority (FINRA), charged Citigroup with cheating its customers out of fair prices on preferred stock trades — 22,000 times. Citigroup was fined a meager $1.85 million, ordered to pay $638,000 in restitution, allowed to neither deny or admit the charges, and sent on its merry way to loot the next unwary investor.

Why do we believe there will be more charges of malfeasance in Citigroup’s future? Because it is an unrepentant recidivist. Yesterday’s FINRA fine was the 408th fine that FINRA has levied against Citigroup Global Markets or its predecessor, Smith Barney, for trading violations, market manipulations or failure to supervise its traders or brokers.

And that’s just FINRA – the light-handed disciplinarian with industry ties. Citigroup has kept other Federal regulators, including the U.S. Justice Department, very busy as well.

It is now six years since Citigroup’s serial history of rogue conduct rendered it insolvent. Under the law, the U.S. government is not allowed to prop up insolvent banks with taxpayer money. But from 2007 to 2010, in the largest bank bailout in history, over $2.3 trillion was lavished on the serial recidivist Citigroup.

Citigroup received $25 billion in Troubled Asset Relief Program (TARP) funds on October 28, 2008. Less than a month later, Citigroup had blown through those bailout funds and required another $20 billion TARP infusion. But its situation was so wobbly that the government had to simultaneously provide another $306 billion in asset guarantees.

After Bloomberg News fought years of court battles to find out what Citigroup and other banks were getting in bailouts behind the dark curtain of the New York Fed, the public finally learned in 2011 that the Federal Reserve Bank of New York was providing trillions of dollars in below-market rate loans to Wall Street banks and foreign financial institutions. According to the Government Accountability Office, Citigroup received more in New York Fed loans than any other bank – over $2 trillion dollars. Many of its loans were made at rates below one percent while it was charging double digit interest rates to some of its struggling credit card customers.

Below is just a sampling of the milestones in Citigroup’s long march toward its well-earned reputation of a bank that neither its management nor its regulators can control. It is a siren call to fire both its management and its regulators.


September 19, 2002: FTC Announcement —  “In the largest consumer protection settlement in FTC history, Citigroup Inc. will pay $215 million to resolve Federal Trade Commission charges that Associates First Capital Corporation and Associates Corporation of North America (The Associates) engaged in systematic and widespread deceptive and abusive lending practices.”  The firms were owned by Citigroup.

October 31, 2003: U.S. District Court Judge William Pauley signs a settlement order agreed to by multiple regulators for Citigroup to pay $400 million over issuance of fraudulent stock research.

May 28, 2004: The Federal Reserve announces a $70-million penalty against Citigroup Inc. and CitiFinancial Credit Co. over their handling of high-interest-rate “subprime” mortgages and personal loans.

May 31, 2005: SEC announces a $208 million settlement with Citigroup over improper  transactions by its proprietary mutual funds.

June 28, 2005: Citigroup agrees to pay the UK regulator, the FSA, $25 million over its “Dr. Evil” trade that manipulated the European bond market.

March 26, 2008: Citigroup settles a suit with Enron creditors for $1.66 billion over claims it aided and abetted Enron in hiding its debt.

August 26, 2008: California Attorney General Edmund Brown Jr. announces a settlement with Citigroup to return all monies improperly taken from customers through an illegal account sweeping program. According to the Attorney General: “Nationally, the company took more than $14 million from its customers, including $1.6 million from California residents, through the use of a computer program that wrongfully swept positive account balances from credit-card customer accounts into Citibank’s general fund…The company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps,” Attorney General Brown said. “When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice.”

December 11, 2008: SEC forces Citigroup and UBS to buy back $30 billion in auction rate securities that were improperly sold to investors through misleading information.

February 11, 2009: Citigroup agrees to settle lawsuit brought by WorldCom investors for $2.65 billion.

July 29, 2010: SEC settles with Citigroup for $75 million over its misleading statements to investors that it had reduced its exposure to subprime mortgages to $13 billion when in fact the exposure was over $50 billion.

October 19, 2011: SEC agrees to settle with Citigroup for $285 million over claims it misled investors in a $1 billion financial product.  Citigroup had selected approximately half the assets and was betting they would decline in value.

February 9, 2012: Citigroup agrees to pay $2.2 billion as its portion of the nationwide settlement of bank foreclosure fraud.

August 29, 2012: Citigroup agrees to settle a class action lawsuit for $590 million over claims it withheld from shareholders knowledge that it had far greater exposure to subprime debt than it was reporting.

July 1, 2013: Citigroup agrees to pay Fannie Mae $968 million for selling it toxic mortgage loans.

September 25, 2013: Citigroup agrees to pay Freddie Mac $395 million to settle claims it sold it toxic mortgages.

December 4, 2013: Citigroup admits to participating in the Yen Libor financial derivatives cartel to the European Commission and accepts a fine of $95 million.

July 14, 2014: The U.S. Department of Justice announces a $7 billion settlement with Citigroup for selling toxic mortgages to investors. Attorney General Eric Holder called the bank’s conduct “egregious,” adding, “As a result of their assurances that toxic financial products were sound, Citigroup was able to expand its market share and increase profits.”

Are U.S. Markets Liquid and Deep or Rigged and Broken?

By Pam Martens and Russ Martens: August 26, 2014

U.S. Attorney General Eric Holder Testifying on High Frequency Trading Before the House Appropriations Committee on April 4, 2014

U.S. Attorney General Eric Holder Testifying on High Frequency Trading Before the House Appropriations Committee on April 4, 2014

Every time a Wall Street honcho is hauled before Congress to explain the latest fleecing of the unsophisticated investor, he can be counted on to punctuate his testimony with this: “the U.S. markets are the deepest, widest, most liquid markets in the world.” Or words to that effect.

There are now two gripping questions before Congressional investigators, the FBI, the Justice Department and the New York State Attorney General’s office as they look at High Frequency Trading operations in U.S. markets:

Can markets give the appearance of liquidity while simultaneously being rigged?

How much “liquidity” is being created because the current market structure offers a slam-dunk opportunity for High Frequency Traders to loot the unsophisticated with impunity, thus drawing a steady flow of big money to the looting enterprise?

This, naturally, leads to two final questions: will market liquidity be negatively impacted, and by how much, if the incentive to steal without penalty is removed; has it come down to America having to accept a less liquid market or a market filled with thieves running a wealth transfer system in broad daylight?

On April 4, U.S. Attorney General Eric Holder appeared before the House Appropriations Committee. Congressman Jose Serrano of New York asked Holder what he was doing in regard to high frequency trading. Holder responded:

“As I indicated in my opening statement, I’ve confirmed that the Department of Justice is looking at this matter, this subject area, as well. The concern is that people are getting an inappropriate advantage, information advantage, I guess competitive advantage, over others because of the way in which the system works. And apparently, as I understand it, and I’m just learning this, even milliseconds can matter, and so we’re looking at this to try to determine if any federal laws, any Federal criminal laws, have been broken. This is also obviously something that the head of the SEC, Mary Jo White, would be looking at as well.”

The core of the debate centers around the fact that the SEC which oversees stock exchanges has allowed both the New York Stock Exchange and Nasdaq to create a bifurcated market. The unsophisticated investor is given trading data on which to base trading decisions on a slow data feed called the Securities Information Processor or SIP. The SIP is not only slow in getting the data to the technology-challenged investor, but it has limited data. For the rich and powerful on Wall Street who can afford massive fees, there is another data feed offered by the exchanges called the Direct Feed. The Direct Feed data, which has far more useful information, arrives in the hands of High Frequency Traders and Wall Street’s proprietary traders ahead of the arrival of the SIP data.

This allows the Direct Feed users to buy a stock on the cheap and sell the stock back to the SIP user at a higher price.

At a Senate hearing on June 18, Senator Elizabeth Warren compared the above to the skimming scam depicted in the movie, Office Space. Warren stated:

“For me the term high frequency trading seems wrong. You know this isn’t trading. Traders have good days and bad days. Some days they make good trades and they make lots of money and some days they have bad trades and they lose a lot of money. But high frequency traders have only good days.

“In its recent IPO filing, the high frequency trading firm, Virtu, reported that it had been trading for 1,238 days and it had made money on 1,237 of those days…

“High frequency trading reminds me a little of the scam in Office Space. You know, you take just a little bit of money from every trade in the hope that no one will complain. But taking a little bit of money from zillions of trades adds up to billions of dollars in profits for these high frequency traders and billions of dollars in losses for our retirement funds and our mutual funds and everybody else in the market place. It also means a tilt in the playing field for those who don’t have the information or have the access to the speed or big enough to play in this game.”

The New York Stock Exchange and Nasdaq, which also have a mandated regulatory role to ensure that their markets are fair and non-discriminatory, have allowed the two-tiered market to exist because they are collecting hundreds of millions of dollars a year selling the SIP to the dumb money and the Direct Feed to the smart money.

The exchanges collect tens of millions more by selling co-location services, a system which allows the High Frequency Traders and Wall Street’s proprietary trading desks to park their computers in the same warehouse that houses the exchanges computers, providing even speedier access to the Direct Feed data. The New York Stock Exchange boasts: “Colocation has emerged as a highly desirable service for latency sensitive financial trading firms seeking to gain microsecond benefits when trading in today’s competitive electronic markets.”

In another promotional piece aimed at high frequency traders, the New York Stock Exchange brags that it is offering a “fully managed co-location space next to NYSE Euronext’s US trading engines in the new state-of-the-art data center.” The NYSE says it is for “High frequency and proprietary trading firms, hedge funds and others who need high-speed market access for a competitive edge.”

On March 18, New York State Attorney General Eric Schneiderman said in a speech to the New York Law School that these co-location practices at the exchanges are currently under investigation by his office. Schneiderman mentioned that Mary Jo White was in the audience and suggested that she hadn’t taken this matter seriously enough or done enough to stop it.

Schneiderman stated: “We know that High Frequency Traders are uniquely able to take advantage of co-location, but there are other services also offered…They [exchanges] supply extra bandwidth, special high-speed switches and ultra-fast connection cables to high-frequency traders, so they can get, and receive, information at the exchanges’ data centers even faster.  These valuable advantages, once again, give them a leg up on the rest of the market.”

At least one law professor, Mercer Bullard, of the University of Mississippi School of Law, believes the intentional creation of a slow data feed (SIP) versus a high-speed data feed (Direct Feed) constitutes illegal insider trading. Bullard is not just any law professor — he served as Assistant Chief Counsel at the Securities and Exchange Commission from 1996 to 2000.

In an OpEd for CNBC on April 4, Bullard said: “In a market dominated by electronic trading, investors are having their pockets picked — and individual investors and mutual fund shareholders are among the likely victims. The securities exchanges’ practice of selling early access to their trading data to insiders — as the term ‘insiders’ suggests — is a practice that looks like illegal insider trading.”

Bullard’s rationale for this statement is hard to debate. Bullard explains that “insider trading occurs when a person trades on material (important), nonpublic information in violation of a legal duty.” The trading data coming over the Direct Feed is certainly not public – the public has yet to receive their data on the much slower SIP feed. And key bids and offers that appear on the Direct feed, never make it to the SIP – that data is just not part of the package.

Bullard says the requirement that insider traders have to be trading on material, i.e., very important non-public information, is met by the fact that if it wasn’t important information, the insiders with the Direct feeds couldn’t be reaping “huge profits” on it.

Expect to hear a lot more about all of this when Congress comes back from summer recess.

Memo to Fed: Interest Rates Are a Sideshow; the Problem is Income Inequality

 By Pam Martens: August 25, 2014

The time and effort spent by members of the Federal Reserve Board of Governors debating the timing of rate hikes is an utterly wasted exercise in futility – and the historically astute members of the Fed know it. After eight solid months of blathering about when rate hikes might occur, the real muscle in the bond market – the bond vigilantes – are drawing their own conclusions about what is coming down the pike.

The benchmark 10-year U.S. Treasury note has moved from a yield of 2.85 percent at the beginning of the year to close last week at 2.38 percent. That’s the reaction of a market more worried about constrained income dispersal in the U.S. causing deflation than a market bidding up yields in anticipation of a rate hike.

10-Year U.S. Treasury Note Yield Is Ignoring Fed Talk of Rate Hikes

10-Year U.S. Treasury Note Yield Is Ignoring Fed Talk of Rate Hikes

In early August, the Fed’s own scholars released a report showing just how fragile the U.S. economy remains as a result of Wall Street’s continuing, institutionalized wealth transfer system. The Fed’s Division of Consumer and Community Affairs found that 52 percent of Americans would not be able to raise $400 in an emergency by tapping their checking, savings or borrowing on a credit card which they would be able to pay off when the next statement arrived.

As we have argued repeatedly at Wall Street On Parade, there is a finite equilibrium of income distribution at which the U.S. economy, or any other economy, can sustain momentum without artificial stimulus. In the U.S., 70 percent of U.S. Gross Domestic Product (GDP) is consumption. When workers are stripped of an adequate share of the nation’s income, they cease to be the levers of economic growth.

Not a week goes by that we don’t hear about another retail chain closing stores; last week it was Staples announcing the closing of 140 stores while Sears reported it had lost $975 million in just the first six months of the year.

Wall Street’s institutionalized wealth transfer system is a core component of the crisis in income equality but the decimation of unions is a companion problem.

The late Supreme Court Justice Louis Brandeis said it best: “Strong, responsible unions are essential to industrial fair play.  Without them the labor bargain is wholly one-sided. The parties to the labor contract must be nearly equal in strength if justice is to be worked out, and this means that the workers must be organized and that their organizations must be recognized by employers as a condition precedent to industrial peace.” 

According to 2013 data from the Bureau of Labor Statistics, union membership for all wage and salary workers stands at 11.3 percent but among private-sector workers it is a disastrously low 6.7 percent. According to an article last year by David Madland and Keith Miller at the Center for American Progress Action Fund, between 1967 and 2012, union membership in the U.S. fell from 28.3 percent of all workers to the current 11.3 percent “with significant drops observed in all 50 states.” The authors note further: 

“This trend has been mirrored by the steady decline in the share of the nation’s income going to the middle 60 percent of households, which fell from 52.3 percent to 45.7 percent over the same time period. According to the newly released Census figures, neither measure showed any signs of reversing these troubling trends last year. Between 2011 and 2012, union membership declined even further, by 0.6 percentage points, while the middle class’s share of national income remained stagnant at 45.7 percent, its lowest level since data were first reported.”

On February 19, the International Monetary Fund warned of the risk of deflation, writing: “Low inflation raises the likelihood of a deflation in case of a serious adverse shock to activity.” Data from Bloomberg shows that the Personal Consumption Price Index, minus food and energy, rose a meager 1.2 percent in 2013, “matching 2009 as the smallest gain since 1955.”

Another great tragedy today is that the legions of academics flooding the Fed with research on which to base monetary policy have no historical perspective on Wall Street. They have never intensively studied the deflation of the Great Depression or Wall Street’s wealth transfer devices used then – and now – to concentrate the income of the nation in the hands of the top 5 percent.

And, based on all observable evidence, President Obama understands little about these matters either. That’s a dangerous condition for a President serving a nation in the aftermath of the greatest economic slump since the Great Depression.

President Franklin D. Roosevelt, on the other hand, had an immense grasp of the crisis of the 1930s, explaining publicly the root causes:

“…our basic trouble was not an insufficiency of capital. It was an insufficient distribution of buying power coupled with an over-sufficient speculation in production. While wages rose in many of our industries, they did not as a whole rise proportionately to the reward to capital, and at the same time the purchasing power of other great groups of our population was permitted to shrink. We accumulated such a superabundance of capital that our great bankers were vying with each other, some of them employing questionable methods, in their efforts to lend this capital at home and abroad. I believe that we are at the threshold of a fundamental change in our popular economic thought, that in the future we are going to think less about the producer and more about the consumer. Do what we may have to do to inject life into our ailing economic order, we cannot make it endure for long unless we can bring about a wiser, more equitable distribution of the national income.”