Streetwise

Lauren Rudd

Sunday, July 28, 2013

25 Years of Streetwise

Benjamin Franklin was given to say that while you may delay, time will not. And so it is that footprints in the sands of time once again mark the anniversary of a journey begun long ago. On Sunday, July 31, 1988 the following prologue appeared in the Trenton Times of Trenton, NJ.

“Today Lauren Rudd begins writing a weekly column about Wall Street for The Trenton Times...”

Streetwise can now attest to its 25th anniversary as a nationally distributed column without a single missed week. If you are keeping count, those years represent 1,300 columns on the subject of Wall Street. The irony of it all is what I wrote on that fateful day many years ago. Space does not permit a full recital, but the following words that began the column back then might once again be considered a prescient commentary on today’s market activity.

“The individual investor has been pummeled and is ready to surrender. What with the debacle of last October (Refers to the market crash of October 19, 1987), many are deciding that they have had enough and are leaving Wall Street, an action reminiscent of an audience walking out on a bad play.

After going down in flames that fateful day, individual investors retreated to lick their wounds and to decide what to do next. This leaves Wall Street worried and well it should. The individual investor has always been its bread and butter. However, these same investors are now beginning to feel that their trust in Wall Street may have been misplaced and that the game is rigged with the spoils going to the large institutions.”

Yet, there has been a degree of change over the ensuing 25 years. The fair disclosure rule requires that everyone receive the same information at the same time, while Sarbanes Oxley helps ensure that what you read in a financial statement is more or less accurate. The Dodd-Frank Wall Street Reform and Consumer Protection Act and the Consumer Financial Protection Bureau are additional small steps forward despite the continual efforts to abandon and/or defund them.

No, the oversight is not perfect, as the victims of various Ponzi schemes can readily attest to. Just as damaging is the continual violation of the public trust, illustrated by the continual stream of insider trading cases being brought by the Securities and Exchange Commission.

Meanwhile, Main Street continues to writhe under the pain inflicted not so long ago by the Great Recession. And Main Street is not some ethereal concept but is comprised of those honest people who do honest work — crack-the-bones work; lift-it, chop-it, empty-it; feel-the-flames-up-close work; crawl-down-in-there work – work that someone must do.

Washington would be well served to learn from Main Street about the need to do the things that no one wants to do but that someone must do. Otherwise we will continually face potential economic destabilization as less than one percent of the work force flaunts its ownership of a disproportionate amount of our nation’s wealth; a point emphasized several years ago by the equity analysts at Citigroup.

In an Equity Strategy Note dated March 5, 2006, they wrote that the rich are the dominate drivers of demand, enjoying an increasing share of the country’s income and wealth; wealth generated over the past 20 years as corporate executives convert global resources into personal affluence at the expense of labor.

David Gordon and Ian Drew-Becker of the National Bureau of Economic Research once wrote that the top one percent of the population have benefited disproportionately from the country’s productivity surge.