Image: Anthony Mirhaydari

Anthony Mirhaydari

Sure, life appears normal. Children are shuttled to school. Milk is on the shelves. Most who want to work are working. But beneath it all, tensions are rising.

We see preferential treatment -- from tax breaks to bailouts -- lavished on the wealthy and powerful while mere crumbs of policy support (stimulus checks, Cash for Clunkers, etc.) fall to the rest of us. We see growing income inequality and widening gaps of wealth while upward mobility becomes harder and harder. We see a frightening increase in corporate influence in politics.

We're not splurging. We're not reaching. We're coping. And we're angry about that.

Much of this anger is directed at the so-called 1%, the elites, in what's become a rehash of the old-time division between the aristocracy and the common folk. As an investment professional and a capitalist who came from nothing through hard work and scholarships, I'm wary of drawing such lines, as I believe anyone can still make the leap from one to the other.

But I'm starting to wonder if the 99% is on to something. If so, and if the unruly tide continues to rise, it will go way beyond college kids sleeping in parks or burning trash bins. It will have major implications for public policy, the economy and the markets in the years to come.

Fed up all over

Indignation was on display in Europe last weekend as French President Nicolas Sarkozy and the ruling coalition in Athens were given the boot by voters. This comes hot on the heels of the breakup of the Dutch government, one of the few remaining AAA-rated eurozone countries. That came amid a bitter debate on balancing the budget to comply with the new fiscal pact -- which forces deficits to be quickly closed -- championed by Germany, a country that's tiring of its role as the eurozone's savior.

In less than two years, 12 of 17 member states in the eurozone have seen their governments collapse or get voted out. The masses are tired of harsh austerity, crushing unemployment (Spanish joblessness sits at 24.1%) and a lack of pro-growth measures. Berlin is already pushing back against the French and Greek election results, with German Chancellor Angela Merkel saying the deal, which was signed with great fanfare by 25 countries back in December, is not negotiable.

I've written before -- in columns such as "Welcome to political chaos" -- that history shows that when leaders attempt budget austerity during times of vulnerability, social and political chaos result. That's exactly what's happening now. Kristen Cooper of Stratfor, a research outfit that's Wall Street's equivalent of the CIA, told clients recently that it's becoming clear that "traditional political elites are losing control of the system they once dominated."

There's been plenty of sound and fury here at home, too -- something I experienced firsthand on the streets of Seattle during May Day protests last week. I met a colleague for lunch in the financial district amid broken glass, vandalized banks, hooded vigilantes and hotel managers preparing to barricade doors, medieval-style. As the weather warms, the Occupy Wall Street movement that set up encampments around the country last year looks resurgent.

To be sure, while relatively few 99-percenters are out breaking windows or even demonstrating, there is plenty to be upset about. Things just aren't going well for most people.

University of Michigan: Consumer Sentiment

You can see it in the workforce participation rate, which has fallen to levels not seen in more than 30 years; for men, it's fallen to record lows since the data started in the 1940s. You can see it in the way inflation-adjusted wages have flattened over the past five months, something that's never happened outside a recession before. You can see it in still-depressed measures of consumer sentiment, shown in the graph above.

The simple fact is, despite a "recovery" that's nearly three years old, the average person is still being pinched. You can see this in the precipitous drop in the savings rate, in the huge upswing in people relying on the welfare state via disability and food stamp benefits, in the way credit card usage is on the rise again while student loan debt explodes, and in the way this economic cycle has been led by products -- often pioneered by Apple (AAPL) -- that are in truth merely delivery devices for cheap entertainment courtesy of YouTube and Facebook. You can't put millions back to work in an economy obsessed with costless, mindless diversions.

Americans are used to bigger and better business cycles. This just won't do.