Archive for category Economy

Senator Elizabeth Warren: Who Does Congress Work For?

Wall Street wants to get bailed out by taxpayers AGAIN, the next time they recklessly crash our financial sector with risky derivatives. This could cause the next Great Depression. Senator Elizabeth Warren (D-MA) is trying to stop them, even though the Tea-GOP is threatening to shut down the federal government (in less than five hours) if a Dodd-Frank repeal proposal written by Citigroup lobbyists doesn’t pass.

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Americans Rank 26th in Median Wealth

Inequality cycle
Source: Credit Suisse Global Wealth Databook 2014

Financialization of the economy is both a symptom and a major cause of inequality. Financialization is when making money from money becomes more important than providing real goods and services. It’s characterized by risky asset bubbles and periodic crashes that affect everyone in the 99 Percent because we’re not “too big to fail.” Les Leopold: “Wall Street is out of control. Once deregulation started 30 years ago, money has gushed to the top as Wall Street was free to find more and more unethical ways to fleece us.”

The result: Despite the fact we’re the richest country in the world, U.S. median wealth is just $53,352 according to the Credit Suisse Global Wealth Databook (PDF).

Les Leopold, again:

The U.S. continues to lead the world in billionaires (571 in 2014, with China a distant second at 190). But after decades of financial deregulation and attacks on employee rights, Americans rank 26th in median wealth (defined as assets owned, minus debts owed for the person on the middle rung of the wealth ladder).

The Gini index for the USA has risen to 84.6 (with 0 representing perfect equality and 100 representing perfect inequality). Very few countries can top that, and not by much.

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Here We Go Again

Shutdown 8 days

The question is, with Republican control of both houses of Congress, is our government becoming more dysfunctional or less dysfunctional? During his re-election campaign, incoming Senate Majority Leader Mitch McConnell threatened a string of government shutdowns. Right-wing Republican House members think they have 30 to 40 “no” votes on a government funding bill proposed by Speaker John Boehner, which is enough to shut down the government again.

The government will run out of spending authority on December 11 unless Congress passes a continuing resolution.

Lots of observers are saying, “Last year’s government shutdown was politically disastrous for Republicans.” But was it really? It cost us $24 billion in lost economic activity, but what did the Tea-GOP lose? Economic sabotage has been a winning strategy for them.

UPDATE:
December 11, 9:30 am — A little over 12 hours to go until government shutdown. The $1.014 trillion Consolidated and Further Continuing Appropriations Act (HR 83) has been dubbed “CRomnibus” as it is a combined continuing resolution (CR) and omnibus spending bill. There are so many controversial measures tucked into this legislation that it’s hard to list them all. The main point of contention is the de-regulation of Wall Street investment banks, allowing them to trade in risky derivatives using taxpayer-guaranteed deposits (what could possibly go wrong?). Page 1,599 of the bill effectively kills what’s left of the McCain-Feingold campaign finance reform. There’s much, much more — bad for the average American, bad for the environment, and great for the 1 Percent. Remember everything in this legislation is a surprise because none of it was debated openly and no hearings have been held.

House Dems are being told that they have to vote for this stinker, otherwise the Tea-GOP will come up with something worse after they take over the Senate next year. Some, for example Senator Elizabeth Warren, say the CRomnibus ought to be replaced by a stopgap spending bill. IMHO even a government shutdown at midnight would be preferable to passing this bill.

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WaPo/ABC Poll: 1 Percent Say U.S. Economy is ‘Excellent’

Washington Post-ABC News poll Oct. 23-26, 2014
The 1% says economy is excellent
Mr. Burns

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Hillary: ‘Trickle down should be consigned to the trash bin of history’

Hillary on trickle-down

I know Hillary Clinton would be the Wall Street candidate if she runs for President. I remember how the last President Clinton irritated progressives by embracing right-wing policies, and the last thing this country needs is another dynastic succession. Most of all, as we have seen with President Obama, progressive populist rhetoric can turn out to be meaningless.

But it’s still good news that Hillary said this at an October 24 campaign event for Massachusetts gubernatorial candidate Martha Coakley (emphasis added):

Don’t let anybody tell you that raising the minimum wage will kill jobs. They always say that. I’ve been through this. My husband gave working families a raise in the 1990s. I voted to raise the minimum wage and guess what? Millions of jobs were created or paid better and more families were more secure. That’s what we want to see here, and that’s what we want to see across the country.

And don’t let anybody tell you, that, you know, it’s corporations and businesses that create jobs. You know, that old theory, trickle-down economics. That has been tried. That has failed. That has failed rather spectacularly.

One of the things my husband says, when people say, what did you bring to Washington? He says, well I brought arithmetic. And part of it was he demonstrated why trickle down should be consigned to the trash bin of history. More tax cuts for the top and for companies that ship jobs over seas while taxpayers and voters are stuck paying the freight just doesn’t add up. Now that kind of thinking might win you an award for outsourcing excellence, but Massachusetts can do better than that. Martha understands it. She knows you have to create jobs from everyone working together and taking the advantages of this great state and putting them to work.

By way of explanation, Coakley’s Tea-GOP opponent Charlie Baker won an “Outsourcing Excellence Award” for sending American jobs out of the country.

UPDATE:
Rand Paul Mocks Hillary Clinton Over Jobs Remark

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Half of the Country Hasn’t Taken a Vacation Day Yet In 2014

The Go-Go’s – Vacation from Dan Hunter on Vimeo.

h/t Think Progress.

From the travel website Skift:

We asked Americans, using Google Consumer Surveys, “Heading into Fall, how many vacation days have you taken so far this year?” The majority, almost 51 percent, say they haven’t taken a single vacation day in 2014 so far.

About 15 percent of Americans say they have taken more than 10 vacation days this year, while the rest is split between those who took fewer than 5, and those who took between 5-10 vacation days this year.

The other topline result from the breakdown, as you will see in the charts below: Women, young, old,and the lower-income Americans are the ones taking the least amount of vacations.

Of course, nearly 1 in 4 US workers don’t get any paid vacation days.

Nearly a quarter of the American private-sector workforce, some 26 million workers, doesn’t get paid time off, according to the Bureau of Labor Statistics — compared with less than one-fifth in the 1990s.The United States is the only advanced economy that doesn’t guarantee paid vacation and one of only 13 countries in the world not to do so, according to the World Policy Analysis Center at the University of California Los Angeles.

The American middle class was great, while it lasted.

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American Middle Class Poorest In 25 Years, Now Underemployed

Middle class

Annie Lowrey, New York magazine:

Labor-force participation has declined — partially because the baby boomers are retiring, but also because prime-age workers are fleeing the job market. Churn has remained slow, with workers too timid to quit their jobs. The middle class is poorer than it was when the recession started, poorer than it was when the recession ended, and poorer than it was in 1989. In real terms, wages are stagnant even though the jobless rate has dropped.

At the same time, the earnings of the wealthiest Americans have surged higher. Corporations are rolling in profits. Growth has strengthened. And the stock market has gone on an extraordinary tear.

The headline (U-3) unemployment rate for September was 5.9 percent, however the seasonally-adjusted real (U-6) unemployment rate was 11.8 percent, down from 12 percent in August. The latest Bureau of Labor Statistics (BLS) report estimates that 97,000 people dropped out of the labor force. Because you can’t be officially “unemployed” if you’re not looking for work, having a bunch of people give up looking for work makes the BLS unemployment rates lower.

As Forbes contributor Louis Efron pointed out last month, the U.S. has around 7.5 million underemployed workers. Most of the new jobs in this recovery have been low-wage and part-time jobs, which were taken by Americans just trying to survive while looking for a “real” job.

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45 Million Americans Still Stuck Below Poverty Line

Poverty

Via Mark Gongloff, HuffPo.

More than 45 million people, or 14.5 percent of all Americans, lived below the poverty line last year, the Census Bureau reported on Tuesday. The percentage of Americans in poverty fell from 15 percent in 2012, the biggest such decline since the year 2000. But the level of poverty is still higher than 12.3 percent in 2006, before the recession began.

The percentage of Americans in poverty went up sharply from 1989 to 1992. Then it went down from 1993 to 2000. Then it went up again from 2001 to 2010. Then it started trending downward, slowly. Does anyone see a connection to politics?

UPDATE:
DSWright: Poverty Unchanged By Wall Street Recovery

Trickle-down economics has consistently failed everywhere and every time it has been tried. The theory is simply wrong.

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Facts About The Low-Wage Economy

The high cost of low wages

According to the National Employment Law Project (PDF), low-wage jobs made up 22 percent of job losses from Bush’s Great Recession, but accounted for 44 percent of employment growth after the recession. Today, lower-wage industries employ 1.85 million more workers than at the start of the recession.

On FDL today, Peter Van Buren points out some facts about the low-wage economy:

  • One in four U.S. employees are low-wage workers. That is 20 percent higher than in the United Kingdom, and the highest percentage among industrialized nations.
  • The federal minimum wage has been stuck at $7.25 an hour since 2009.
  • In 1968 the federal minimum was $1.60 per hour, approximately $10.70 in 2013 dollars
  • 88 percent of minimum-wage workers are adults, with more than a third over age 40.
  • The percentage of low-wage workers with at least some college education spiked 71 percent since 1979, to 43.2 percent today.
  • The way you functionally subsidize companies paying low-wages to workers– ponying up the difference between what McDonald’s and others pay and what those workers need to live via taxpayer-paid SNAP (food stamps) and other benefits– is a hidden cost in plain sight.
  • If the nation’s largest private employer Wal-Mart increased wages to $12 per hour it would cost the company only about one percent, so that made-in-China $10 item would run you all of $10.01.
  • A Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington, which also has the highest statewide minimum wage.
  • Nationwide, even a small hike to $10.10 an hour would put some $24 billion a year into workers’ hands to spend and lift 4.6 million Americans out of poverty. Consumer spending drives 70 percent of our economy.
  • Two-thirds of all minimum wage workers are not employed by small businesses. Better yet, one survey shows three out of five small business owners favor raising the minimum wage; their profits depend on a strong local economy, which requires more money in local consumers’ hands.

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‘We’re moving toward a winner-take-all economy’

Dead End One Way

Reportedly 18% of workers in the U.S. now can’t afford to retire.

Lynn Stuart Parramore on AlterNet interviews journalist Jessica Bruder, who gives a bleak picture of the many older Americans who are forced to work past retirement age, and concludes:

The social contract is falling apart. With the death of pensions and the increase of short-term, temporary jobs bearing no benefits, we’re moving toward a winner-take-all economy with no safety net to help people weather hard times.

Lance Roberts looked at employment statistics and found:

With 24% of “baby boomers” postponing retirement, due to an inability to retire, it is not surprising that the employment level of individuals OVER the age of 65, as a percent of the working age population 16 and over, has risen sharply in recent years.

More info:
Can’t find a job? Blame grandma

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11 Banks Still ‘Too Big To Fail’

TBTF

Via HuffPo:

Eleven of the nation’s largest banks have failed to convince federal regulators they could safely be wound down if they neared failure, government authorities said Tuesday, reinforcing the idea that they are too big to fail.

The Federal Deposit Insurance Corp. said October blueprints submitted by banks, including JPMorgan Chase, Goldman Sachs and Bank of America, detailing how they think they’d be resolved in bankruptcy if they neared collapse were “not credible.” The Federal Reserve, another bank regulator, said the so-called living wills need significant improvement by July 2015 or the government may force them to shrink.

…The phenomenon known as too big to fail is based on the notion that government officials will always rescue a failing financial company when it believes the failure would cause financial chaos. Since investors in the company believe they’d be bailed out, they accept a lower return for funding the company’s operations. That in turn enables the too big to fail company to enjoy a taxpayer-provided subsidy unavailable to its smaller rivals.

Tuesday’s announcement by federal regulators that the 11 banks’ living wills were inadequate strikes at the heart of the argument that the banks are no longer too big to fail.

TBTF means bailouts and bonuses for billionaires and corporate execs, and nothing for the ever-shrinking American middle class.

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From 2003-2013, Ordinary Americans Lost a Third of Their Wealth

Via Alternet:

According to new research (PDF) supported by the Russell Sage Foundation, middle class Americans are getting poorer (OK, we knew that, but now the numbers are in – and they are startling).

For the study, researchers gathered information on families in the middle of the wealth distribution continuum. What they found is that in 2003, the inflation-adjusted net worth for the typical household was $87,992. Fast-forward 10 years: that figure is down to a mere $56,335.

Ordinary Americans got 36 percent poorer in just a decade.

…The upshot is that regular people have endured one of the worst periods in recent memory. It will not surprise you to learn that during the same decade of 2003-2013, the rich were partying down. In the 95th percentile of wealth distribution, people got 14 percent richer.

That oughta brighten your day.

More info:
What Recovery? You Probably Became Poorer In the Last 10 Years
Americans In Debt: 35 Percent Have Unpaid Bills Reported To Collection Agencies

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