June 20, 2012
BURNING PLATFORM | JUNE 20, 2012
“Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.” – Charles Ferguson – Predator Nation
The Federal Reserve released its Survey of Consumer Finances last week. It’s a fact filled 80 page report they issue every three years to provide a financial snapshot of American households. As you can see from the chart above, the impact of the worldwide financial collapse has been catastrophic to most of the households in the U.S. A 39% decline in median net worth over a three year time frame is almost incomprehensible. Even worse, the decline has surely continued for the average American household through 2012 as home prices have continued to fall. Median family income plunged by 7.7% over a three year time frame and has not recovered since the collection of this data 18 months ago. Even more shocking is the fact that median household income was $48,900 in 2001. Families are making 6.3% less today than they were a decade ago. These figures are adjusted for inflation using the BLS massaged CPI figures. Anyone not under the influence of psychotic drugs or engaged as a paid shill for the financial oligarchy knows that inflation is purposely under reported in order to keep the masses sedated and pacified. The real decline in median household income is in excess of 20% since 2001.
The destruction of the blue collar jobs has been underway since the early 1970s. And the relentless decline in real blue collar wages has followed a bumpy downward path for decades. Sadly, the average person doesn’t understand the insidious destruction caused to their lives by the Federal Reserve generated inflation, as they actually believe their wages today are higher than they were in 1973. The reality is the oligarchy has used foreign wage differentials and the perceived benefits of globalization to ship manufacturing and now service jobs to Asia while using their captured mainstream media to convince the average American that this has been beneficial to their lives. Using one of their 15 credit cards to buy cheap foreign goods made by people who took their jobs was never so easy. I wonder if the benefits of being able to buy cheap Chinese electronics, toxic dog food, and slave labor produced igadgets outweighed the $2.3 trillion increase in consumer debt, 27% decline in real wages, 7 million manufacturing jobs lost since the mid-1970s, 46 million people on food stamps, $15 trillion increase in the National Debt since 1978, and a gutted decaying industrial base.
Not only have the oligarchs gutted our industrial base, resulting in enormous job losses among middle aged industrial workers, but they are now in the process of impoverishing the youth of this country by sucking them into crushing college debt with the false promise of decent paying jobs when they graduate with a degree in feminist studies from the University of Phoenix. The fabricated mantra that a college education guarantees a good paying job and a better future is not borne out by the facts. There are over 4,800 institutions of higher learning in this country, with only about 50 considered elite. There are another few hundred top notch institutions, with a few thousand mediocre schools and hundreds of for profit on-line diploma mills exploiting the easy Federal government debt to lure millions into their profit scheme of bilking unemployed naïve middle aged dupes and eventually the American taxpayer. The average student loan debt per student is $29,000. Student loan debt outstanding has risen from $200 billion in 2000 to over $1 trillion today. The Federal Government is blowing another bubble. They are the issuer, regulator and guarantor of these loans. They are making the loans with teaser rates to the ultimate in subprime borrowers – students without jobs going for worthless degrees at mediocre schools. The taxpayer is on the hook for the billions in loses that will surely follow. The payoff for this quadrupling of debt has been an 8% real decline in wages for college graduates since 2000. The monetary policies of the Federal Reserve and bipartisan fiscal policies of our government have led to this dreadful job market for the middle class.
The mainstream media dutifully reported a few key highlights from the Federal Reserve report and moved onto more important issues like Snooki’s pregnancy and the octomom’s new porno gig. We certainly couldn’t expect business journalists at Bloomberg, CNBC, NYT, or CNN to actually analyze the data, produce an intelligent dialogue of the causes, and reach a conclusion that the affluent and influential on Wall Street and in Washington DC caused the average family in this country to endure tremendous hardship while the oligarchy plundered and pillaged the countryside, stuffing their pockets with ill-gotten gains. Each of the ideological camps within the oligarchy trot out the usual suspects to blame the other ideological camp, while doing nothing to change the existing paradigm. Krugman and Carville are assigned the task of blaming Republican policies and dogma for the demise of the middle class. Obama and his minions already had their press release prepared, blaming George Bush and claiming the median family has made tremendous strides since he assumed command in2009. Mitt Romney (worth $250 million), whose pocket change exceeds the annual median household income of $45,800, feels the pain of the average American family and proposes a tax decrease for billionaires and less overbearing regulation on the honorable Wall Street banks in order to help the average family. It’s nothing but Kabuki Theater as the characters play their assigned parts in this elaborate display. Gary Wills cuts right to the chase:
“Yet while the rest of the populace was suffering, the rich just got richer. In 2009 and 2010, years in which millions were unable to find work, the top one percent reaped 93% of the ‘recovery’ income, and corporations are making more than they ever did. And the Republicans can still propose even further cuts in the taxes of ‘job creators’ whose only job creation has been for their own lawyers and lobbyists.”
What you will not receive from the corporate mouthpieces in the mainstream media is an explanation of where the money went, who stole it and why it happened. The theme from the media is the loss in net worth and decade long decline in household income was unavoidable and due to circumstances beyond anyone’s control. This is a false storyline perpetrated by those who have stolen your money. It’s been a bipartisan screw job and it was initiated by Clinton, Rubin, Gramm and Leach, who deregulated the banking system in 1999 by repealing the Glass-Steagall Act, but made it clear the Greenspan Put would always be in place to protect the banks from their own recklessness, greed and hubris. As a result, Wall Street could go ahead and take irresponsible financial system destroying risks in pursuit of vast riches, knowing they could count on the unlimited checkbook of Uncle Sam if things went south, and that’s exactly what happened. Heads they won, tails you lost. It’s good to own the politicians, regulators, and media.
Dude, Where’s My Net Worth?
“Sometime around the year 2010, Xers will hit a hangover mood like that of the Lost in the early 1930s and the Liberty in the late 1760s: a feeling of personal exhaustion mixed with a new public seriousness. The members of this forty- and fiftyish generation will fan out across an unusually wide distribution of personal outcomes, reminiscent of a night at the bingo table. A few will be wildly successful, others totally ruined, and the largest number will have lost a little ground since the days of Boomer midlife.” – Strauss & Howe – Generations – 1991
Neil Howe and Bill Strauss wrote their first generational theory book six years prior to their epic Fourth Turning prophecy. It appears they nailed it. Generation X households saw their net worth crushed, with a 54% loss in three years. The Baby Boomer households also took a beating in this banker engineered financial collapse. The Silent generation has survived this downturn relatively unscathed. Most of the Silents traded down from their primary residence at or near the top of the housing boom. As Neil Howe points out:
“Most sold or annuitized their financial assets at a much better moment in the history of the Dow. Even if they didn’t, they are more likely than Boomers or Xers to be getting retirement checks from defined-benefit corporate or government plans that are unaffected by the market.”
The Millenials and late Xers did not lose much because they didn’t have much to lose. Most did not own a house or stocks. As the economy continues to deteriorate the generational tension builds. The Silents and Boomers, who vote in large numbers, have not and will not vote for anyone who attempts to reform our entitlement system and make it economically viable over the long-term for young people just entering the job market.
The false storyline about the 2007 through 2010 being an aberration in the long term path to prosperity for the average American family is refuted by the following chart.
This chart paints a long-term picture of generational inequality that has been going on over the last three decades. Over three decades the Silent generation has seen their median real net worth increase by 133%, while GenX has seen their median real net worth decrease by 55% compared to the same age cohort in 1983. Only those 55 and over have seen a real improvement in their net worth over the last 27 years. Considering this period encompassed a seventeen year bull market and the GDP grew from $3.5 trillion to $15.7 trillion, a 450% increase, a few bucks should have trickled down to the average household. Even on an inflation adjusted basis, GDP has risen 125% since 1983. Evidently the economic policies supported by both parties across decades have not floated all boats – just the yachts. Age is only part of the equation. Class is the other piece. There is a class war being waged and the Buffett, Dimon, Blankfein, Romney, Clinton, Koch and the rest of the ultra-wealthy oligarchs are winning. We are now in the midst of a Fourth Turning and the corrupt, dysfunctional, amoral social order will be swept away before the climax of this Crisis.
“Through the Third Turning and into the initial stages of the Fourth, the Silent will prosper, Boomers will cope with declining expectations, and Gen-Xers will get hammered. Throughout history, we have argued, inequality both by class and by age reaches its apogee entering the Crisis era. Indeed, part of the historical purpose of the Crisis is to tear down dysfunctional institutions, vacate positions of entitlement and privilege, rectify the inequality, and create a tabula rasa on which the rising generation can build something new.” – Neil Howe
The reason for the epic collapse of middle class net worth is quite simple when viewed from a 10,000 foot elevation. The great descent in net worth was primarily due to the bursting of the Federal Reserve created real estate bubble. The Case Shiller Home Price Index plunged 28% between 2007 and 2010. The wealth destruction was concentrated among the working middle class because their homes accounted for the vast majority of their household net worth. For the wealthy, housing is a fraction of their vast net worth, while for the lowly poor; homeownership is now only a dream. Of course, between 2000 and 2007 anyone that could fog a mirror was encouraged by George Bush, Barney Frank, the National Association of Realtors, Alan Greenspan, and Wall Street shills to “own” a home. With home prices having fallen an additional 7% since 2010, the middle class has seen a further decline in their net worth. Meanwhile, Ben Bernanke’s ZIRP, QE1, QE2, Operation Twist, and the upcoming “Operation Screw the Middle Class Again” have succeeded in expanding the net worth of millionaires, billionaires and the bonuses of Wall Street bankers, while destroying the fragile finances of little old ladies and middle class risk adverse savers.
Once you dig into the details beneath the thin veneer of Bernaysian obfuscation, you realize the corporate mainstream media storyline of middle class decline has a veiled storyline of a powerful, connected 1%, enriched at the expense of the middle class.
In Part 2 of this three part series I will examine who stole your net worth and in Part 3 why they stole your net worth. Part 4 will require pitchforks, torches and a guillotine.
February 21, 2012
The Holy President highlights his petty list of achievement that is way short than the one he filled with empty promises four years ago. The American dream has gone from owning a home to renting
By Erica Werner
Associated Press
February 21, 2012
This time around, President Barack Obama’s message can sound decidedly down-to-earth.
Four years after winning the White House, Obama is dealing with a different economic and political reality as he seeks re-election. He’s focused less on a lofty vision for overcoming divisions and remaking Washington, and more on the most basic building blocks of middle-class economic security: a job, a house, a college education for the kids, health care, money for retirement.
What Obama describes as the American Dream can seem a spare, fundamental aspiration, tailored for a campaign that looks to be fought over who is best equipped to safeguard the interests of middle-class Americans.
The question is whether it will convince, even as Mitt Romney and the other GOP presidential hopefuls mount a counter-argument that the president has made the American Dream harder, not easier, to achieve. And Obama must overcome the grinding realities many voters confront daily, even with the economy showing signs of life: no jobs, mortgages they can’t pay, dwindling retirement funds and college savings.
The president is betting that if he shows voters he understands their yearning for economic stability and security, they’ll reward him over Republicans he’s casting as just watching out for the rich – even though he hasn’t succeeded in fully reviving the economy so far.
“If you’re willing to put in the work, the idea is that you should be able to raise a family and own a home; not go bankrupt because you got sick, because you’ve got some health insurance that helps you deal with those difficult times; that you can send your kids to college; that you can put some money away for retirement,” Obama said recently in Cedar Rapids, Iowa.
“That’s all most people want,” he said. “Folks don’t have unrealistic ambitions. They do believe that if they work hard they should be able to achieve that small measure of an American Dream.”
The goals can seem almost humdrum in comparison with some of the rhetoric from Obama’s 2008 White House campaign. But the message sounds made for the times, with the country emerging haltingly from recession, the income gap widening and unemployment stuck above 8 percent.
“He can’t run on change because he’s the incumbent, and he can’t paint too rosy a scenario because things aren’t that rosy,” said John Geer, professor of political science at Vanderbilt University. “He’s got to come up with a theme that appeals to voters, especially middle-class voters, alleviates their fears and gives them reason to believe the future will be better.”
The message also creates an implicit contrast with the portrait Democrats are trying to create of front-runner Romney as preoccupied with the concerns of the rich. But Romney is answering Obama’s message head-on, seeking a careful balance between sounding optimistic about the nation’s future and accusing Obama of destroying the American Dream.
Read Full Article…
October 17, 2011 1 Comment
By Steven Thomma
McClatchy Newspapers
October 12, 2011
WASHINGTON — Republican presidential candidate Herman Cain’s proposed 9-9-9 tax plan would shift the tax burden in the United States, raising taxes on the poor while cutting taxes for the wealthy.
Former CEO of Godfather Pizza, Herman Cain
Cain proposes to scrap the current tax code and replace it with a flat 9 percent tax on personal income, a second 9 percent tax on corporate income, and a third 9 percent tax on sales. It also would eliminate the payroll tax paid for Medicare and Social Security, the estate tax, and capital gains taxes.
While the Cain campaign has not produced enough details for thorough independent analysis, a flat 9 percent income tax and a 9 percent national sales tax would almost certainly mean higher taxes for at least the 30 million U.S. households that now pay no federal taxes.
And it almost certainly would mean big tax cuts for the wealthy, who now pay a 35 percent marginal rate on their income above $379,150.
The catchy 9-9-9 tax plan has helped the former Godfathers pizza CEO surge into the top tier contending for the 2012 Republican presidential nomination. With his rising support, Cain’s plan is drawing more scrutiny, with the potential shift of the tax burden just one of the profound effects the dramatic change in tax policy could have — if Cain were elected and managed somehow to get it past an army of lobbyists and through Congress to enactment.
Ultimately, in a second phase, Cain’s plan would eliminate all income taxes for individuals and for corporations in favor of a national sales tax. To raise sufficient money to fund the government, the sales tax rate would rise significantly, perhaps to 23 percent, analysts estimate, though Cain hasn’t specified a level yet.
The changes in income taxes would turn away from the progressive tax policy that’s shaped U.S. policy for a century, based on the principle that the wealthier people are, the more they can afford to pay in taxes to the society that’s enriched them.
“The plan could be expected to raise substantial amounts of revenue, but does so largely by skewing downwards the distribution of tax burdens,” said a new analysis of the Cain plan this week by Edward D. Kleinbard, a professor of tax law at the University of Southern California. He’s also a former chief of staff at the congressional Joint Committee on Taxation, which analyses all tax legislation for Congress. “The 9-9-9 Plan would materially raise the tax burden on many low- and middle-income taxpayers.”
Others agree.
Read Full Article…
July 10, 2011 1 Comment
AP
July 10, 2011
Millions of Americans endured financial calamities in the recession. But for many in the black community, job loss has knocked them out of the middle class and back into poverty. And some experts warn of a historic reversal of hard-won economic gains that took black people decades to achieve.
“History is going to say the black middle class was decimated” over the past few years, said Maya Wiley, director of the Center for Social Inclusion. “But we’re not done writing history.”
Adds Algernon Austin, director of the Economic Policy Institute’s Program on Race, Ethnicity and the Economy: “The recession is not over for black folks.”
In 2004, the median net worth of white households was $134,280, compared with $13,450 for black households, according to an analysis of Federal Reserve data by the Economic Policy Institute. By 2009, the median net worth for white households had fallen 24 percent to $97,860; the median net worth for black households had fallen 83 percent to $2,170, according to the institute.
Austin described the wealth gap this way: “In 2009, for every dollar of wealth the average white household had, black households only had two cents.”
Austin thinks more black people than ever before could fall out of the middle class because the unemployment rate for college-educated blacks recently peaked and blacks are overrepresented in state and local government jobs. Those are jobs that are being eliminated because of massive budget shortfalls.
Since the end of the recession, which lasted from 2007 to 2009, the overall unemployment rate has fallen from 9.4 to 9.1 percent, while the black unemployment rate has risen from 14.7 to 16.2 percent, according to the Department of Labor. Last April, black male unemployment hit the highest rate since the government began keeping track in 1972. Only 56.9 percent of black men over 20 were working, compared with 68.1 percent of white men.
Even college-educated blacks fared worse than their white counterparts in the recession. In 2007, unemployment for college-educated whites was 1.8 percent; for college-educated blacks it was 2.7 percent. Now, the college-educated unemployment rate is 3.9 percent for whites and 7 percent for blacks.
Nearly 8 percent of African Americans who bought homes from 2005 to 2008 have lost them to foreclosure, compared with 4.5 percent of whites, according to an estimate by the Center for Responsible Lending.
Some see a bitter irony in soaring black unemployment and the decline of the black middle class on the watch of the first black president.
“I thought Barack Obama could have provided some way out. But he lacks backbone,” Princeton Professor Cornel West told truthdig.com recently.
West said Obama sold out the poor to become “a black mascot of Wall Street oligarchs and a black puppet of corporate plutocrats. . . . I don’t think in good conscience I could tell anybody to vote for Obama.”
Wiley said Obama should be applauded for several initiatives that have helped the black middle class, such as programs to modify certain mortgages and prevent foreclosure because of job loss. But she would like Obama to aggressively counter the suggestion that first black president would be showing favoritism if he specifically helped black people.
“It’s the right thing to do for the nation,” she said. “Black people are a huge segment of the population, they’re especially hard-hit, and the country cannot recover if the black community — as well as the white community and others — does not recover.”
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