“And Wall Street claims they are the Capitalists! Personal freedom is the ultimate casualty of this corrupt manipulation. The axis among the heirs of the House of Morgan, Corporate International and Federal Government, is the death of real business. With the demise of the Merchant Class, the last vestige of LIBERTY ceases to exist and the transition into an Empire of the ‘New Work Order’, becomes complete.” – Sartre

High premiums are being paid today not particularly for quality service or long-term building of a business but rather for making money quickly, getting rich, and getting out. And that’s wrong. – Willard C. Butcher

Wall Street, Money and the Merchant Class

Capitalism is NOT Wall Street. In order to correctly comprehend the nature of the Free Enterprise system, one needs to understand the fundamentals of a business transaction. Real business requires that goods or services are purchased from a seller by a buyer, at a price that both agree upon. A tangible product, skilled service or intellectual property may qualify as an entity of substance. But when we closely examine the composition of equities, warrants, bonds, options, futures or derivatives; we enter a realm that falls outside the scope of normal business transactions.

Some will claim that a stock represents the equity ownership of a particular enterprise. In theory, that would be correct; but in practice the average shareholder has vitally no input into the management of a publicly traded company. A warrant is a right to exercise a future defined claim. Bonds are fixed promises to repay that trade in value as interest rates vary. An Option is the ability to buy or sell purchased at a strike price during a specified time period, for an agreed cost. Futures are leveraged speculation or hedged bets on price movements. And it’s anyone guess what a derivative is . . .

Wall Street was created ostensibly as an auction market for raising capital to finance new business ventures or additional funds to grow a company. The underlying value of the stock price of a company would trade as shareholders wager on the direction of the equity or changes in their needs. Bonds were sold as loans that companies have an obligation to pay and retire the debt. Warrants, options, futures and derivatives emerged as sophisticated methods of refining the general purpose of funding business endeavors.

As any investor knows, they assume the risk or loss of their capital when they gamble on any specific instrument in a financial venture. The Capital Markets offer no guarantee that profits are assured, and provide no pledge that losses will not result. Risk is always present. But the essential question is whether this culture of finance qualifies as legitimate business? Continue reading →