The middle class in the United States is being systematically destroyed, and nobody is doing much of anything to stop it. Our incomes are shrinking, our share of the income pie is at an all-time low, our jobs are being sent overseas, debt burdens have soared to unprecedented heights and millions of formerly middle class Americans have fallen into poverty. America once had the largest and most vibrant middle class that the world has ever seen, but now it is rapidly being shredded. Unfortunately, this is particularly true for younger Americans. Today, families that have a head of household that is under the age of 30 have a poverty rate of 37 percent. That is astounding. The truth is that there are not enough decent jobs for the hordes of young people that are entering the marketplace each year. Once upon a time, a college degree was just about a guaranteed ticket to the middle class, but in 2011 more than half of all college graduates under the age of 25 were either unemployed (Read More....)
Since December of 2007, the government and mainstream media have pointed to runaway spending and predatory lending practices as the cause of the economic meltdown. The fairytale we’ve been spoon-fed is that borrowing, lending and the derivatives debacle was brought on with the fiscal abandon of a frat boy with a free brewery pass at spring break. There is no doubt that all three lead to foreclosures and financial ruin for far too many US citizens. But that’s only part of the story. The real instigator that has so many of us dodging pink slips, fighting to put food on the table and scrambling to stave off foreclosure began with the restructuring of NAFTA and GATT agreements.
When President George W Bush handed the baton over to President Clinton to sign the beefed-up North American Free Trade Agreement (NAFTA) in 1992, it rang the death knell for America. At the time, concerned citizens were alarmed, for the agreement flew in the face of the constitution: article 1, section 8 that states tariffs are to be levied as a means to support the US government.
Many insiders warned NAFTA was less about improved investments and exchange of goods than it was a means for mega rich investors and multi-national corporations to grow richer and more powerful from the sweat of cheap labor. Others feared for US (Read More....)
We’re entering into a phase of American society that is undoubtedly going to be rather tumultuous and interesting. There are big changes in the works that take years to materialize, but the impact of them will be nothing short of massive. I’m going to attempt to outline some of these major developments.
The area I’m discussing here is mostly financial but the ramifications spread outside the realm of finances. We’re going to start with demographics. In America and other developed countries, we have a bit of a conundrum as aged workers enter the latter years of their life where they have had embedded expectations for some time that they will enjoy a nice retirement full of golf and cruises. The problem, of course, is that almost all that are planning to retire are broke or near broke.
Further weakening the situation is the fact that many of these potential retirees were planning on using their homes as a means to retire. As a housing bubble materialized in the mid 2000’s, these same people doubled down on this idea, took on more debt, and tried to hit a home run in the wealth department by leveraging up on the skyrocketing home values. We all know how that ended, and many of these folks that participated are now worse off years later as a result of a housing bust.
While using your primary residence as a retirement funding vehicle is probably silly in the first place, (Read More....)
Mania and the Economic Meltdown of Society
by Barnabe Geisweiller
During a period of the Dutch Golden Age prices of tulip bulbs reached extraordinary levels. Single tulip bulbs were bought and sold for small fortunes, making some very wealthy. It is widely considered the world’s first speculative bubble and, like all bubbles, it suddenly collapsed. The period is popularly referred to as “tulip mania.”
There have been numerous manias since the tulip craze of the 17th century. Recent bubbles include the dot-com bubble and many real estate bubbles around the world. In bubbles products and assets trade at considerably inflated values compared to their intrinsic ones.
Today, we are at the end of a period of wealth and excess like the Roaring Twenties. This time it is the value of money itself that has been distorted, and the pursuit and concentration of wealth without a relative productive merit to society that has reached the point of mania.
We have come to this point because of corporations and financial markets without integrity, and a government subordinate to these engines of speculation, manipulation and corruption with an unchecked power (Read More....)
by Tucker Scofield
An acquaintance of mine had an opportunity this week to make as much as $25,000.00…she turned it down.
She is a property owner on the Gulf and she received a phone call from a friend regarding BP. They are settling damage claims with anyone who may have been affected by last summer’s oil spill and the caller, who knew others affected by the spill, was passing along the fact that the money was available and ripe for the picking.
There it was…free money. Was BP really going to audit every claim before paying it out of their $20 billion slush fund? Not in a million years. All she would’ve had to do was exaggerate the facts, maybe tell a little white lie or two and POOF, the Oil Fairy would grant a wish that could make the struggles of the past two years disappear. One small bit of paperwork and it would be dead presidents raining down from Heaven! Get that money, dollar-dollar bill, y’all! But she wouldn’t do it. For her, this was a matter of principle.
I asked why she turned it down. “It’s not right,” she said. She didn’t feel as though she’d been negatively affected by the spill at all, despite having received numerous phone calls from concerned renters regarding conditions on the beach. Her rental income was pretty much unchanged from the previous year and she felt as though filing a claim (Read More....)
Reuters’ Emily Flitter asks in a recent column What is Plan B if China dumps its U.S. debt?
It is worth asking about U.S. officials’ Plan B just in case one day relations take a surprise turn for the worse and Beijing dumps its holdings of U.S. treasuries.
China is officially the United States’ biggest foreign creditor, with roughly $900 billion in Treasury holdings — or over $1 trillion with Hong Kong’s holdings included.
That means it could do severe damage to U.S. debt markets if it suddenly started selling large amounts.
This is not a “just in case” scenario. China has already been taking steps to curb their US Treasury purchases, lowering their U.S. debt holdings from $929 billion to $896 billion between November of 2009 and 2010 (Hong Kong’s year over year holdings are down as well). Chinese President Hu Jintao made it clear where the Chinese stand with regards to the US dollar of the future calling the current dollar-led global monetary system a “product of the past.” While this may not necessarily mean the Chinese will one day, all of a sudden, halt all purchases of US debt, it is certainly reason for concern to those hoping to maintain a strong and stable U.S. currency. Our major foreign creditor is reducing their exposure - (Read More....)