Republican presidential nominee Herman Cain gave his thoughts on the movement last week:

Ronald Reagan used to tell the story about the British worked who stood by the road with his son as a Rolls Royce went by and said someday we’re going to get that guy out of that car. And the American stood by the road as a Cadillac went by and he said some day you’re going to buy that car.

This is a central thesis about American society, that there is clear progress via rapid economic growth, geographic mobility, the resilience of American capitalism, the innovation inherent in American culture, etc. So, as we always try to do at Covert Analytics, let us let the facts speak for themselves:

- Income inequality is sadly high in the US: As measured by the GINI coefficient the distribution of income in the US is below Nigeria, Iran, and Nicaragua!  Note the GINI coefficient is a measure developed nearly 100 years ago by the Italian statistician Corrado Gini and goes from zero (total equality) to 1 (total inequality). View the 2011 rankings:

http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

- Wage growth in the US has stagnated for nearly a decade and education and healthcare costs have soared: total wages as a percent of GDP were as high as 49% in 2000 and are now down to 44%, and using a base of 100 from 1994, CPI has increased to about 150, whereas medical care is reaching 200 and education is reaching nearly 260.

- Migration has been on a downtrend since the 1980s: when one region of America is in a bust you can always pick up and move to a region that is booming, no? A paper by the Federal Reserve Board says migration rates have been in a relatively steady decline since the 1980s.

- CEO and other top executives making ridiculous multiples of  ’average workers’: The Economic Policy Institute recently did a study which noted that in 1985 the average CEO and top executive made approximately 24x the average worker. Now?  262x the average worker. The last study we could find is available here:

http://www.epi.org/publication/webfeatures_snapshots_20060621/

So clearly the underlying US economic fundamentals show that the rising tide has not lifted all boats equally over the past decade, probably longer. What is scary is that similar events transpired in the middle of the Great Depression, with the “bonus army” protests.  History is certainly rhyming …

http://en.wikipedia.org/wiki/Bonus_Army

Background: Bloomberg sends Deirdre Bolton (we assume) to get an insider’s perspective on the local economy in Miami.

What happens: they interview the CEO of Bacardi (yes!!!!), an “expert” on the local real estate market, and … a legal expert on white collar crime to cover the occurrence of scam artists and corporate fraud in South Florida.  The video can be found here

Some immediate things to note on Bloomberg’s coverage:

1. They made some ridiculous errors. Madoff wasnt from Florida, he just owned a home in Palm Beach and had a membership at the ritzy Palm Beach Country Club.  So do all wealthy American tycoons from the Northeast. Also how do you cover the “ponzi schemers” in Florida and not make mention of the rampant healthcare or mortgage fraud!
   
2. Some of it is true sadly. Arthur Nadel was a case of the outgoing tide showing who has been swimming naked. Same with Scott Rothstein. Both were cases of “come  on …. really”? And before these two yokels came Allen Stanford, which was the most ridiculous investment proposition in the universe.  Not only did he claim amazing returns with no volatility, he did it claiming it was invested in US cash assets, and marketed it as a money market fund!
   
3. They missed a couple. There have been some other classic hedge fund con artists, such as KL Capital (http://miami.fbi.gov/dojpressrel/pressrel09/mm121109a.htm), and countless other Venezuelan / Panamian based companies that have a sure fire way to make 10-15% a month investing risk free in “currency markets”. Last but not least there was a few spectacular hedge fund blow ups such as John Devaney’s United Capital 100% decline in a few months, wiping out all investor’s equity.
   
4. A classic example of a “perpetrating media”. This portrayal of South Florida is a bit unfair, and this clearly perpetrates among the financial community that Miami is merely a place for Latin American private bankers to help launder their money into local ponzi schemes and soon-to-be imploding hedge funds.