The growing phenomenon of the Occupy Wall Street demonstrations that spread across the US over the last few weeks, has now gone global. New demonstrations sprang up in Rome, the Philippines, and Hong Kong. The anti-capitalism, pro-entitlement tone that the demonstrations are taking is very likely to have an impact on the direction in which the Western world will be going in the next few years. The fact that the demonstrations are taking place is not unexpected. We have been predicting since 2009 that unrest and the stress of the economic realities would eventually spill into the street.
What is interesting is that the demonstrations still do not yet have a cohesive message. The rapid spread of these demonstrations is reminiscent of the Cartoon Riots of 2006. Their rapid proliferation—months after the cause (the publication of cartoons of Mohammed)—suggested considerable prior planning and sophisticated organization of these ‘spontaneous’ riots that spread from Europe to the Far East and resulted in the deaths of at least 140 people. The signs are certainly there that what may have started as a spontaneous expression of frustration is now being galvanized by groups with more serious agendas.
For example, on October 12, the following advertisement was posted on Craig’s List in Boston.Activists Needed-Work on Campaigns to Fight Big Corporations-$10-15/hr (Downtown Boston)
For many of the people on the street today, it is enough just to be there and be able to have their voices heard through the signs they carry. Their level of frustration is high and there is no motivation for the demonstrations to stop. But for others, it’s a job, sponsored and organized behind the scenes. The organization behind this ad was listed as www.jobsforgoodcauses.org
Not all of the demonstrators are paid recruits. There are those who say simply that they want jobs. Some say prices are too high, some want their student loans forgiven. Some say they want peace not war, that big business is destroying the country, and some say, “The time for revolution is now.” Other demonstrators call for lower prices at the movies, and universal “salaries for everyone”, the ultimate entitlement. The scene in many cities is a gigantic noisy, messy love-in / hate-in, replete with growing piles of garbage and an overwhelming smell.
In Rome, protesters turned their demonstration against corporate greed into a riot, torching cars, smashing store windows, and throwing bottles. They were met by Italian police, who fired tear gas and water cannons.
Demonstrators in New York have not limited themselves to Wall Street, but have marched up Fifth Avenue and picketed in front of the homes of some of the richest people in America. They plan further demonstrations in other parts of the city as well.
The demonstrations have badly hurt the small businesses and the residents of the areas in which they hold their ground. Businesses have lost many of their customers, who avoid the neighborhoods which the demonstrators have taken over and take their business to safer and less aggressive neighborhoods.
They have also created a sanitation nightmare, with no toilets for thousands of people. One demonstrator in New York was photographed defecating on a police car. They have already cost the City of New York over $3.2 million in police overtime alone.
The eventual clean-up will also be costly. There is no way to determine how much will be lost by the small businesses that surround the neighborhoods where they have camped out.
To the demonstrators, Wall Street seems to represent the evil of our stalled economy, with the ‘big banks’ representing all ‘big business’. But while they are demonizing the rich, they are hurting the little shop owners and the residents of the neighborhoods they have taken over.
Nevertheless, there is truth in some of their demands.
Between 2008 and 2009, twelve major financial institutions were ‘bailed out’. The billions of dollars in bailouts given to the major banks were supposed to enable the banks to release money into the economy. Considered “too big to fail”, the banks were more than ready to accept the bailouts, but the money never trickled down to the street level as it was supposed to. Money that was supposed to be loosened up, so that small business could borrow funds to grow and create jobs, was never released. There is a lot of evidence that the bailout was a collusion between the big companies and the federal government, something which is not lost on at least some of the demonstrators.
The Recession and Unemployment For millions of Americans, the results were catastrophic. Since the recession began in 2008, thousands of small companies failed in the tightening economy, many because they could not borrow money to grow their businesses. Millions of jobs were lost, since small businesses create more than half of all private sector jobs and pay 44% of total US private sector payroll. Small business failure rates rose by 40% between 2007 and 2010. According to Bureau of Labor Statistics figures, there were 589,000 fewer incorporated self-employed people and 569,000 fewer unincorporated self employed people in February 2011 than in December 2007.
In the same period, 410 banks that did not get bailouts also failed. Home mortgages became harder, not easier, to obtain. And the end result was the exact opposite from what was intended. The federal government’s largesse to the big banks (and two of the three major American automobile companies) made the economy worse, not better.
Another sign of the times is the level of unemployment, which has reached unacceptable levels over the last few years. According to the Bureau of Labor Statistics September report, unemployment remained at 9.1% in (representing over 14 million people without jobs and seeking unemployment benefits). Another 6% or 9.3 million are people working as ‘involuntary part-time workers’. These are people who cannot find work in their profession and so take part-time work wherever they can, typically jobs for which they were highly over-qualified (executives working as administrative assistants and engineers flipping hamburgers).
Another 2.5 million people are marginally attached to the labor force, meaning that while they had been looking for work some time during the past year, they were not on the unemployment roles. One million of these were discouraged workers who have given up looking for work altogether.
Another group is ‘college graduates’ who have never been employed and cannot find employment after graduation. One report suggested that “in the United States, the official unemployment rate for this group is 11.2%” or 17.2 million people!
‘High school dropouts’ is another category covered in these statistics. Another Bureau of Labor Statistics report stated, “The unemployment rate for recent high school graduates not enrolled in school was 33.4 percent.”
Finally, a recent study showed that among the worst hit by unemployment were black men at 19.1%, more than twice the national average.
A conservative estimate, therefore, using these numbers (and not including unemployed recent graduates who have not yet entered the workforce), would suggest that in reality, there are 33 million people (10% of the entire population!) who are unemployed or underemployed.
These sobering numbers partially explain the desperation that is feeding the Occupy Wall Street movement. People who are out of work have little to lose when they spend days or weeks demonstrating for a better economic environment.
We saw the same dynamic in Tunisia and Egypt, when demonstrators first took to the streets to protest economic ills and to demand better economic conditions. Here in America, the demands range from personal grievances to socialist ideology to legitimate complaints about corporate corruption and high unemployment. But the dynamics are not dissimilar, because the atmosphere is ripe for well-organized groups like unions and social organizations to move in and pre-empt the original motives to match their own agendas.
Unintended Consequences The demonstrators may be working against their own best interests. In the first place, in its current form, the Occupy Wall Street demonstrations are nearly lawless – a combination of flower children hearkening back to the Vietnam War era, vagrants, recent graduates and other unemployed, and a mixture of others who have all come together to demonstrate against one perceived evil or another. If the demonstrators are to achieve the goal of ‘bringing down the banks’, as some of them demand, they had better get their act together, organize, and have a strong, cohesive message.
The reality is, however, that success in that regard would put nearly half a million more workers onto the unemployment roles, making jobs even harder to find. This is because the senior officers who have been guilty of fiscal mismanagement in holding back the capital received from the bailouts are relatively few in number. The first group of people who would suffer would be the vast majority of bank employees who fill the low level slots of tellers, lower and mid-level managers, secretaries, bookkeepers, and cleaners. These are people who need their jobs, but don’t get paid executive salaries and bonuses. So those who would suffer most from the failure of the banks would be people just like the demonstrators who, at least for the moment, have jobs.
The second group who would suffer would be the bank customers, including, no doubt, many of the demonstrators. The result would be more misery, not less.
The Future of the OWS The evolving dynamics of the Occupy Wall Street demonstrations can either lead to further chaos on the streets by demonstrators without a unified mission, or the crowds will be organized to create a new and powerful voice that may or may not speak for them. Once organized, the mixed message on the street today will be consolidated into a much stronger, single-minded message. The impact on both government and industry will depend on what message ultimately evolves from the chaos.
The interesting thing about these demonstrations is that in all of the diverse and conflicting messages, there are pieces that each of us can agree on, whether it is that bank practices need to be better regulated, or that more new jobs need to be created, or that taxes need to be fair. But whatever the messages and however we as individuals feel about them, one thing is becoming clear. The growing urgency of the economic situation in the US has awakened the American people on both the right and the left. For whatever reason, the people are beginning to fight back.
Our country was founded upon the principle that the people have the right and obligation to rise up against oppression. Whether the oppression comes from the government or from the banks (or both), the outrage of the people today is a sign that the love of freedom is still alive and we are still willing to fight for it. All in all, the demonstrations represent a positive sign, just as the Tea Party did when their grass roots activities led to the first public meetings.
The main question is whether the socialist sentiments inherent in destroying the banks and the redistribution of wealth that have been raised in the current demonstrations will become the predominant theme and further polarize the nation. Will the Occupy Wall Street movement become the antithesis for the Tea Party and create a new confrontational polarity in America? Already, union leaders have joined the demonstrations, bringing their union members with them in significant numbers. Democratic leaders, including Nancy Pelosi and John Larson, the fourth-ranking House Democrat, have rallied to support the Occupy Wall Street movement, comparing it to the Tea Party and saying, “The silent masses aren’t so silent anymore. They are fighting to give voice to the struggles that everyday Americans are going through.”
Gerard Direct Forecast: For many years, we have been forecasting important trends in the world. Most recently, we forecast the spread of the “Arab Spring” from country to country, and the preemption of the popular movements by Islamists. These are our forecasts regarding the OWS demonstrations:
1. The efforts to organize the demonstrators will either fail, (in which case the demonstrations will fall into further chaos and eventual violence until everyone just gets fed up and goes home), or it will solidify their message into a cohesive, rallying slogan. Should this happen, the new message will be based on a modified socialist ideology, demanding a form of redistribution of wealth and the protection of entitlements. Millions of dollars will be poured into the organizational effort and an organization, not unlike the Tea Party only left-leaning, will be formed. The impact of this will be substantial, because the message will be one which supports a socialist ideology, leveling the ‘classes’. This will spell the next stage in the ideological battle already being waged in the political arena.
I believe the second scenario will happen.
2. Because it will directly confront the Tea Party in the United States, the message and the movement will further polarize the nation as we approach the 2012 elections. The message will be well-crafted as a focal point for the thousands of demonstrators around the country to rally around. The result will be confrontation and even some violence as frustration boils over.
3. The new message will challenge existing banking processes to the extent that Congress will be compelled to address the demand to loosen capital into the general economy by the major banks. Such a move would positively impact the economy and job creation, but not fast enough to alleviate the severe pressure on the general population. So the unrest will continue.
4. After the dust settles, it will become clear that large organizations moved into the field of demonstrators early on and systematically created some kind of order out of the chaos. Their purpose (not unlike in the early days of the Egyptian revolution of 2011) will be to coordinate activities and keep people focused and in the streets. Identified among those organizing the demonstrations will be unions and Acorn-like groups that are engaged in social engineering.
They will have the backing of the administration and, ironically, of powerful financial interests like George Soros. It will also be discovered that a great deal of money will have been invested in these demonstrations in order to keep people in the streets and to promote an ideology consistent with President Obama’s 2012 presidential campaign platform.
There is irony in the fact that the President has already endorsed the demonstrations. He has been largely unsuccessful in turning the economy around (despite the full support of Congress for the first two years of his presidency), and has now aligned his administration with corporate giants, including General Electric (who has sent thousands of jobs overseas) and Goldman-Sachs (one of the very institutions the demonstrators are protesting against).
Nancy Pelosi also has cheered the demonstrations on. The same person who called the grassroots Tea Party “astroturf”, praised the the Occupy Wall Street demonstrators. “God bless them for their spontaneity,” she said. “It’s—you know, it’s an independent people coming. It’s young, it’s spontaneous, it’s focused, and it’s going to be effective.”
The “Occupy Wall Street” phenomenon is a game changer and will introduce new dynamics into the presidential campaign season. 2011-2012 will be a very interesting year indeed!
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