By Pam Martens and Russ Martens: August 10, 2017

On April 7, 2011 the Dow Jones Industrial Average closed at 12,409.49. Yesterday, it closed at 22,048.70, an increase of more than 9600 points over the six-year span. A bull market of this magnitude lasting more than half a decade would have been expected by Wall Street experts to have sucked in even the most cynical Wall Street naysayers. It hasn’t.

Each April, the polling firm, Gallup, conducts its annual Economy and Personal Finance Survey. It asks U.S. adults whether they personally or jointly have money invested in the stock market, either in individual stocks or stock market funds, including through vehicles such as 401(k)s and Individual Retirement Accounts (IRAs).

Gallup began its 2011 survey on April 7, 2011, the day that the Dow closed at 12,409.49. That year’s survey found that 45 percent of Americans owned no stocks. Despite a meteoric rise in the major stock indices since then, this year’s Gallup poll found that 45 percent of Americans still own no stocks. Since 2011, the number of Americans eschewing stock ownership has ranged from the mid 40 percent level to a high of 47 percent in April 2013. In April 2007, before the financial downturn had gripped the attention of Americans, Gallup found that only 34 percent of Americans owned no stocks.

While record household debt levels and inability to save certainly play some role in the low level of stock ownership, continuing distrust in Wall Street is likely also a key factor.

Since the financial crash in 2008, the tentacles of Wall Street corruption have touched every facet of American life and have been chronicled in bestselling books, on the big screen, in documentaries and in the hearing rooms of Congress. Words like “casino,” “rigged,” and “banksters” have become part of the new lexicon to describe how Wall Street functions.

On July 8, 2014, Senator Jack Reed summed up today’s markets in a Senate hearing:

Senator Reed: “The market has changed. The old fashioned nostalgic view of the stock market is capital formation. That’s where you form capital which ultimately created jobs. Now it’s about trading. I’m struck. John Bogle [founder of the Vanguard family of mutual funds], who will know more about this stuff than I will ever, made a speech a few months ago in April and he said, you know, the numbers tell a story: $56 trillion per year in trading volume as investors buy from and sell to one another, minute after minute, day after day, year after year. That $56 trillion of trading volume dwarfs the capital formation total of $270 billion. Result: short term trading on Wall Street’s casino represents 99.5 percent of the market’s activity and long term capital formation – which is the small investor putting money in hoping that some day it will pay for college for the kids – is just a side show really…The market itself, as he says, it’s a casino.”

The Senate hearing followed a March 30, 2014 appearance by Wall Street veteran and bestselling author, Michael Lewis, on 60 Minutes. Lewis was there to explain the narrative of his new bombshell book, “Flash Boys,” which provided an unprecedented behind the scenes look at how high frequency trading had corrupted stock markets. The exchange went like this with 60 Minutes moderator Steve Kroft:

Steve Kroft: What’s the headline here?

Michael Lewis: Stock market’s rigged. The United States stock market, the most iconic market in global capitalism is rigged.

Steve Kroft: By whom?

Michael Lewis: By a combination of these stock exchanges, the big Wall Street banks and high-frequency traders.

Steve Kroft: Who are the victims?

Michael Lewis: Everybody who has an investment in the stock market.

Less than three months later, Senator Carl Levin, Chair at the time of the Senate’s Permanent Subcommittee on Investigations, had convened hearings into the matter. On June 17, 2014, a hearing was conducted under the title: “Conflicts of Interest, Investor Loss of Confidence, and High Speed Trading in U.S. Stock Markets.” Levin had this to say in his opening remarks:

Senator Levin: “We are in the era of high-speed trading. I am troubled, as are many, by some of its hallmarks. It is an era of market instability, as we saw in the 2010 ‘flash crash,’ which this Subcommittee and the Senate Banking Committee explored in a joint hearing, and in several market disruptions since. It’s an era in which stock market players buy the right to locate their trading computers closer and closer to the computers of stock exchanges – conferring a miniscule speed advantage yielding massive profits. It’s an era in which millions of trade orders are placed, and then canceled, in a single second, raising the question of whether much of what we call the market is, in fact, an illusion.

“Many, including this Senator, question whether the rise of high-speed trading is, overall, a good thing for markets or investors. But without question, this era has seen a rise of conflicts of interest. These conflicts will be my focus today. Other Senators may focus on this or other aspects of high-speed trading.

“New technologies should not erase enduring values. Financial markets can’t survive on technology alone. They require a much older concept: trust. And trust is eroding. Conflicts of interest damage investors and markets – first, by depriving investors of the certainty that brokers are placing the interests of their clients first and foremost; and second, by feeding a growing belief that the markets are simply not fair.”

The man ostensibly put in charge of rebuilding trust in the culture of Wall Street is the same man responsible for undermining much of the trust: Bill Dudley, President of the Federal Reserve Bank of New York. As we previously reported last year:

“The New York Fed didn’t see a problem for Bill Dudley’s spouse to collect $190,000 a year in deferred compensation from JPMorgan Chase while the New York Fed served as the bank’s main regulator. The New York Fed didn’t see a problem for Citigroup’s CEO, Sandy Weill, or JPMorgan CEO, Jamie Dimon, to sit on its Board of Directors as their banks embarked on a serial reign of abuses against the investing public. In 2013, Carmen Segarra, a lawyer and former Bank Examiner at the New York Fed, filed a lawsuit alleging that Relationship Managers at the New York Fed obstructed her investigation of Goldman Sachs and attempted to bully her into changing her negative findings. When Segarra refused, she was fired by the New York Fed according to the lawsuit. Segarra later produced internal tape recordings backing up the toothless regulation of Goldman by the New York Fed.

“In 2012, Wall Street On Parade reported on how a Barclays’ bank employee revealed to a Senior Financial Economist at the New York Fed that his bank was not ‘posting um, an honest Libor.’ (Libor is the benchmark interest rate used to set the rates for trillions of dollars of financial products around the globe.) That conversation provided an early window into one of the biggest cartel frauds in history. The conversation occurred in April 2008 and yet no one at the New York Fed saw any reason to alert the U.S. Justice Department that a key interest rate benchmark was being rigged.

“The New York Fed epitomizes failing up. Timothy Geithner was the President of the New York Fed from November 17, 2003 right through the buildup of unprecedented leverage and toxic subprime assets on Wall Street. He continued in the position until 2009, despite failing to foresee the impending crash or the systemic corruption. As a reward for his negligence as a regulator, President Obama appointed him to become the U.S. Treasury Secretary in 2009, where he proceeded to oversee an unprecedented taxpayer bailout of Wall Street.”

With the high frequency traders still firmly in control of U.S. markets, and regulators still as cowed as ever by Wall Street’s money and power in the executive and legislative branches, no one should confuse record-setting stock market indices with a market that deserves the public’s trust.