The Paulson bailout plan incensed millions of Americans. Financially responsible individuals were dismayed at the prospect of paying for the speculative improprieties of Wall Street. Some people decided to close stock accounts. Others sent redemption notices to mutual fund companies. As MarketWatch chief economist Irwin Kellner points out, a portion of the exodus reflects “capitulation” — the agony of Americans who cannot afford to lose more money if a market recovery is prolonged. Sadly, the capitulation of these people makes possible fast money opportunities for others who are in a position to buy the panic, then sell the bounce as it runs out of momentum.
Not everyone who closes a Wall Street situated account is “a weak hands loser” — a caricature that Wall Street likes to create as an insult to keep people from leaving the gaming table. To the contrary, some Americans are leaving in pure disgust, fully aware that their decision could cost them greatly in terms of future profits from the Ponzi game — if the bubble re-inflates. Some people are so repulsed by Wall Street after the recent revelations of improprieties and criminal excess that they would rather be hit with the 10% early withdrawal fee (paid to the IRS) than leave their money in tax sheltered vehicles (like 401k accounts) where it contributes to Wall Street’s claim of being the capitol of the world’s capital.
It is not easy to exit the city of financial outrages. There are limited options for investors who want to take passive equity stakes outside the stock market. Frustratingly, the stock market has enjoyed a long monopoly on high return investing where liquidity is a pertinent consideration. Nevertheless, if the retirement accounts of hardworking Americans serve to provide the hedonists of Wall Street platforms from which to exploit productive labor, as well as to hazard the economic well-being of the world, it time for an exodus. What we need now is better visibility for alternatives to Wall Street, as well as congressional legislation to help people who want to pull up their Manhattan Island stakes.