ECONOMY - The 30yr Pump-and-Dump

"An Industry Composed Entirely of Bernie Madoffs" by Jill, Brilliant at Breakfast

Here's how the SEC defines a pump-and-dump scheme:

"Pump and dump" schemes, also known as "hype and dump manipulation," involve the touting of a company's stock (typically microcap companies) through false and misleading statements to the marketplace. After pumping the stock, fraudsters make huge profits by selling their cheap stock into the market.

Pump and dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have "inside" information about an impending development or to use an "infallible" combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is "pumped" up by the buying frenzy they create. Once these fraudsters "dump" their shares and stop hyping the stock, the price typically falls, and investors lose their money.

The U.S. economy has been nothing but a pump-and-dump scheme for nearly 30 years. I remember when I started working at Standard & Poor's in 1983 for the princely sum of $19,000/year, having decided that continuing to toil away in what was basically secretarial positions at companies in glamor industries was going to reap me nothing but a life of ever-less-genteel poverty. It was the beginning of the move away from defined-benefit pensions and into 401(k) plans, which were sold as a way of not just controlling your own money, but as an opportunity to earn more returns through investments, and therefore have MORE money in retirement, than you would with a traditional pension. It isn't as if we were given a choice between a pension and a 401(k), companies just decided to eliminate pensions and substitute them with 401(k) plans. If you wanted the company match, you had to participate.

And now, here we are, with the Dow closing at half its peak value. It isn't that baby boomers are all at once taking their money out of the stock market, because only those born in the first year after WWII are even starting to retire, and those would be early retirees at 62 or 63. No, it seems as if the people who run the financial system of this country wanted to make sure that they stole everything we put in before we had a chance to take it out.