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Archive for December 2nd, 2009
Elizabeth Warren: America Without A Middle Class
December 2nd, 2009 | 
Author: Elizabeth Warren: America Without a Middle Class
Posted: 2009-12-02 18:35:41 UTC-08:00
Can you imagine an America without a strong middle class? If you can, would it still be America as we know it?
Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can’t make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.
Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. In the boom of the 1960s, for example, median family income jumped by 33% (adjusted for inflation). But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. While Wall Street executives and others who owned lots of stock celebrated how good the recovery was for them, middle class families were left empty-handed.
The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s.
But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago — for a house that was, on average, only ten percent bigger and 25 years older. They also had to pay twice as much to hang on to their health insurance.
To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases — but it hasn’t been enough to save them. Today’s families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.
Through it all, families never asked for a handout from anyone, especially Washington. They were left to go on their own, working harder, squeezing nickels, and taking care of themselves. But their economic boats have been taking on water for years, and now the crisis has swamped millions of middle class families.
The contrast with the big banks could not be sharper. While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them has prospered at their expense. Consumer banking — selling debt to middle class families — has been a gold mine. Boring banking has given way to creative banking, and the industry has generated tens of billions of dollars annually in fees made possible by deceptive and dangerous terms buried in the fine print of opaque, incomprehensible, and largely unregulated contracts.
And when various forms of this creative banking triggered economic crisis, the banks went to Washington for a handout. All the while, top executives kept their jobs and retained their bonuses. Even though the tax dollars that supported the bailout came largely from middle class families — from people already working hard to make ends meet — the beneficiaries of those tax dollars are now lobbying Congress to preserve the rules that had let those huge banks feast off the middle class.
Pundits talk about “populist rage” as a way to trivialize the anger and fear coursing through the middle class. But they have it wrong. Families understand with crystalline clarity that the rules they have played by are not the same rules that govern Wall Street. They understand that no American family is “too big to fail.” They recognize that business models have shifted and that big banks are pulling out all the stops to squeeze families and boost revenues. They understand that their economic security is under assault and that leaving consumer debt effectively unregulated does not work.
Families are ready for change. According to polls, large majorities of Americans have welcomed the Obama Administration’s proposal for a new Consumer Financial Protection Agency (CFPA). The CFPA would be answerable to consumers — not to banks and not to Wall Street. The agency would have the power to end tricks-and-traps pricing and to start leveling the playing field so that consumers have the tools they need to compare prices and manage their money. The response of the big banks has been to swing into action against the Agency, fighting with all their lobbying might to keep business-as-usual. They are pulling out all the stops to kill the agency before it is born. And if those practices crush millions more families, who cares — so long as the profits stay high and the bonuses keep coming.
America today has plenty of rich and super-rich. But it has far more families who did all the right things, but who still have no real security. Going to college and finding a good job no longer guarantee economic safety. Paying for a child’s education and setting aside enough for a decent retirement have become distant dreams. Tens of millions of once-secure middle class families now live paycheck to paycheck, watching as their debts pile up and worrying about whether a pink slip or a bad diagnosis will send them hurtling over an economic cliff.
America without a strong middle class? Unthinkable, but the once-solid foundation is shaking.
Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard and is currently the Chair of the Congressional Oversight Panel.
Bears In Hibernation
Inquiring minds are looking at a chart of Investors Intelligence courtesy of Bernie Schaeffer.
Bearish sentiment is the lowest in two years and I am also told at lows seen only 3 times in the last 25 years.
The Street Authority offers an explanation of the Investor’s Intelligence Survey.
Each week Investor’s Intelligence surveys approximately 150 market newsletter writers. They take this survey on Friday and release the results to the media the following Wednesday. These results can then be charted.
Like other sentiment indicators, the Investor’s Intelligence figure is thought of as a contrary indicator. This is because the majority of investment advisors tend to trade with the prevailing trend. As the market becomes more bullish, their newsletter outlook and picks come increasingly from the long side. As the market declines, they will increasingly advocate a bearish position. Most of the time these investment advisors are correct. However, at major market turning points they can lag the market. It is in these scenarios that the Investor’s Intelligence survey can provide traders with a contrary indicator.
The manner in which the survey is calculated is pretty straightforward — bullish and bearish advisors are tabulated and the numbers in each camp are totaled together. The end result of this process is a percentage value — the % of advisors who are bullish on the market’s near-term prospects.
Bear in mind these surveys do not make good timing indicators.
However, they do offer a look at how crowded trades are. On the long side, the trade is extremely crowded. The trade can get more crowded of course, but on average it does not pay to be long with fundamentals as poor as they are, with sentiment as lopsided as it is.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
10 States Facing Imminent Bankruptcy? Taxes Set to Explode
Ten states are facing imminent bankruptcy, confounding any possibility of economic recovery as tax revenues continue to decline and unemployment increases nationwide, Jerome Corsi’s Red Alert reports.
Those states in fiscal peril include California, Arizona, Rhode Island, Michigan, Oregon, Nevada, Florida, New Jersey, Illinois and Wisconsin. The surge in looming bankruptcies among state governments is accompanied by a surge in the number of Americans filing for personal bankruptcy – further indicators the economy has a long way to go before an economic recovery is a reality in Middle America, Corsi explained.
The 10 states, accounting for approximately one-third of the U.S. population, face declines in tax revenue as unemployment now officially tops 10 percent and budget gaps that mean higher taxes loom in the future. State government officials have been laid off, key social services including prisons and police are strained and schools have been closed.
Corsi wrote that most states, unlike the federal government, are constrained by state laws to balance their budgets, meaning revenue shortfalls must result in reductions in state government-financed programs. At the same time, the American Bankruptcy Institute reported personal bankruptcies surged 9 percent in October, with a 7 percent jump in business bankruptcies. Total bankruptcies in 2009 are expected to top 1.4 million, an increase of 30 percent from last year and the highest level since 2005, according to CNN Money.
The National Governors Association has reported state revenues across the nation were down 11.7 and 16.6 percent in the first two quarters of 2009, respectively.
LINK HERE
Shocking; Charting The Great World Trade Collapse
LINK HERE
Nine Million US Households Have No Bank Accounts
LINK HERE
Senator Sanders To Place 'Hold' On Bernanke Reconfirmation, Chairman Will Need 60 Senate Votes To Override
Tomorrow’s Bernanke reconfirmation hearing just got more interesting, courtesy of Vermont Senator Bernie Sanders who has stated he will put a “hold” on the Bernanke confirmation process, meaning the Senate will need to amass 60 votes in order to override and proceed with the confirmation process. Yet as the NYT notes: “though the Senate has been paralyzed by similar blocking tactics on
countless other issues, Mr. Bernanke probably has enough support in
both parties to clear the 60-vote hurdle.” It is time to call your Senators and remind them that at best only 21% of Americans favor Bernanke’s reappointment.
Senator Bernard Sanders of Vermont, said Wednesday that he would try to block the Senate from confirming Ben S. Bernanke to a second term as chairman of the Federal Reserve.
The move is unlikely to derail Mr. Bernanke’s reappointment, but it
could slow the confirmation process and give the Fed’s critics
additional opportunity to press their case. As a practical matter, it
means Senate Democratic leaders will have to line up 60 votes in favor
of Mr. Bernanke rather than a simple majority at a time when the
Federal Reserve is under increasing populist attacks from lawmakers on
both the right and the left.Mr. Sanders, an independent, is not a member of the Senate Banking
Committee, but he has frequently accused the Federal Reserve of bailing
out Wall Street firms and the banking industry at the expense of
ordinary citizens.“In this country, there is profound disgust
at what happened on Wall Street,” Mr. Sanders said in a telephone
interview. “People want a new direction and people are asking, where
was the Fed? How did the Fed allow this to happen, when one of their
mandates to oversee the safety and soundness of the banking system?”Mr.
Sanders said he would place a “hold” on Mr. Bernanke’s nomination when
it reaches the Senate floor. Under Senate rules, lawmakers would need
to amass 60 votes to override Mr. Sanders and proceed with a vote on
the nomination.
As pointed out previously, Bernanke is a Bush legacy, yet is somehow supposed to represent Obama’s “change” agenda:
The Fed chairman was originally appointed by President George W. Bush
and took over the central bank in February 2006. Despite his Republican
ties, Mr. Bernanke forged a close working relationship with President Obama and his top economic advisers during the financial crisis.
And some more potential wild cards in tomorrow’s historing hearing:
Senator Christopher J. Dodd,
Democrat of Connecticut and chairman of the banking committee, has said
Mr. Bernanke was “probably” the best person to lead the Fed because he
responded valiantly to the financial crisis when it began two years ago.But
Mr. Dodd has also proposed stripping the Federal Reserve of virtually
all its powers as a banking regulator, and consolidating all the
federal government’s bank regulatory efforts in a new agency. In an
Op-Ed article last Sunday in The Washington Post, Mr. Bernanke sharply
criticized Mr. Dodd’s proposal.Senator Richard C. Shelby
of Alabama, the top Republican on the Senate Banking Committee, has
also been sharply critical of the Federal Reserve but has not yet said
how he would vote on Mr. Bernanke’s nomination.
Even with Zero Hedge polling indicates a mere 11% of our readers would support Bernanke’s reconfirmation, a different poll by Rasmussen finds a comparable result: only 21% favor Bernanke as Chairman.
And here is a reminder of the confirmation whip count in the Senate Banking Committee:
Definite no: 2
Lean no: 3
No indication: 6
Lean yes: 7
Definite yes: 5
Definite no: 2
Bernie Sanders (I-VT):
Senator Bernard Sanders, a Vermont independent who isn’t on the banking committee, said Nov. 29 on ABC television’s “This Week” that he will “absolutely not vote for Mr. Bernanke” and that the Fed chief is “part of the problem.”
Jim Bunning (R-KY):
Jim Bunning, the Kentucky Republican who was the only senator to oppose Bernanke’s first nomination in 2005, hasn’t changed his views.
‘His job rating would be zero minus F,’ Bunning said in an interview yesterday. ‘He has catered to the big banks, to the Wall Street elitists, to every major money concern in the country and in the world.’
It is possible that one or both of these Senators will place a “hold” on the nomination. Such a procedural move would at least delay a vote on Bernake, which would provide opponents of his reconfirmation time to organize. For more details on what a “hold” is, check Tom Coburn’s website (no one places more holds than Coburn).
Lean no: 3
Jim DeMint (R-SC):
“He’s [Bernanke's] going to face some tough questions because he’s got a lot to answer for,” leading Fed critic Sen. Jim DeMint said through a spokesman. “The Fed’s mission is to guard the value of the dollar and to focus on employment, and right now their track record is looking very poor.”
Richard Shelby (R-AL):
Sen. Richard Shelby (R-Ala.), the top Republican on the Banking committee, would not say how he would vote on Bernanke’s nomination, only encouraging reporters to stay tuned for the chairman’s hearing this week.
“I used to be a big defender of the Fed,” he said, adding he believes the institution has “utterly failed” in its role for regulating financial institutions.”
David Vitter (R-LA): As a support of auditing the Fed, everything I have heard is that Vitter is a no–and is even possibly willing to put a hold on Bernake. Still, lacking a public statement to that effect, I won’t put him in the “definite no” category.
No indication: 6
Michael Bennet (D-CO): No word for Bennet one way or the other. His primary challenger, Andrew Romanoff, might be an interesting way to move Bennet on this one.
Mike Crapo (R-ID): Praised Bernanke’s nomination in 2005, but no word on where he stands now.
Herb Kohl (D-WI)
Three said they’re undecided, including Wisconsin’s Herb Kohl, Jon Tester of Montana and Jeff Merkley of Oregon.
Kay Baily Hutchinson (R-TX): I can’t find any indication on Hutchison, one way or the other.
Jeff Merkley:
Three said they’re undecided, including Wisconsin’s Herb Kohl, Jon Tester of Montana and Jeff Merkley of Oregon.
Jon Tester:
Three said they’re undecided, including Wisconsin’s Herb Kohl, Jon Tester of Montana and Jeff Merkley of Oregon.
Lean Yes: 7
Robert Bennett (R-UT)
Utah’s Robert Bennett said he’ll probably vote in favor
Sherrod Brown (D-OH):
“He’s been far from perfect,” Senator Sherrod Brown, an Ohio Democrat, said in an interview yesterday. “He was not quick enough responding last year to many of these issues that we care about, particularly in housing. I want him to focus on jobs. But I think he’s generally done a decent job.”
Tom Carper (D-DE):
“Sens. Charles Schumer (D-N.Y.), Tom Carper (D-Del.) and Mark Warner (D-Va.) all said they’d wait until hearing from Bernanke.”
Bob Corker (R-TN)
Corker noted that he leans toward supporting a second term for the Fed chairman, who was nominated in August to a second term by President Barack Obama, but acknowledged gripes toward the Fed chairman on the left and the right.”
Chris Dodd (D-CT, chair):
I’m inclined to be supportive. I think he’s done a far better job in the last couple of years than he did initially.
Charles Schumer (D-NY):
Sens. Charles Schumer (D-N.Y.), Tom Carper (D-Del.) and Mark Warner (D-Va.) all said they’d wait until hearing from Bernanke.
Mark Warner (D-VA): Over email, a spokesman for Mark Warner told me “Senator Warner is inclined to be supportive of Bernanke’s reappointment, but he’s certainly not a fan of expanding the role or the power of the Fed as part of financial re-reg.”
Definite Yes: 5
Daniel Akaka (D-HI): Bloomberg reports Akaka is a yes.
Evan Bayh (D-IN): Bayh was the first prominent Democrat to support Bernanke in 2005. According to Bloomberg, also support him in 2009.
Judd Gregg (R-NH):
Judd Gregg, a New Hampshire Republican, said Nov. 20 he will “absolutely” vote for Bernanke.
Mike Johanns (R-NE):
Among Republicans, Nebraska’s Mike Johanns said Bernanke “will have my support.
Tim Johnson (D-SD):
Sen. Tim Johnson (D-S.D.) — a favorite of Wall Street — told HuffPost that he has decided to vote to confirm Bernanke.
Posted in Banks, Barack Obama, Ben Bernanke, Bernie Sanders, Bloomberg, Bob Corker, Charles Schumer, Chris Dodd, Citizens, Confirmation, Corruption, Dollar, Economy, Federal Reserve, Financial Crisis, Financial System, Jobs, Money, President Obama, Republicans, Senate, Wall Street, Zero Hedge | 
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“Why Bank of America Fired Me…”
This is an interesting video as it brings up some pertinent issues. At first you may feel as if she was not doing the job she was hired for, and most who understand business will know that it is profit driven.
But here’s what even she doesn’t either know or address. Bank of America did NOTHING to produce the debt that the people now must repay at 29.99%, a rate of interest guaranteed to make any mobster blush, and one that is backed by no assets. Yes, that rate is USURY which is where one person immorally takes advantage of another person via money. That moral concept is rooted directly in the Bible, showing that the practice of controlling people with debt is nothing new.
So, who’s to blame for the unplayable debts? The bank who marketed the accounts and printed money from nothing with no backing whatsoever while charging 30% interest, the very same ones who are supposed to be the experts in the field of money, OR was it the knuckleheaded college student or young couple trying to raise their children while trying to afford overpriced housing? They are both equally at fault you say? I say they are both at fault, but it is not equal, and note simply that we are seeing more and more videos like this.
Obama – “It is in our vital national interests…”
I simply cannot remain silent on this issue. Mr. Obama ran on a platform of ending the war in Iraq and bringing those troops home. When pressed about being soft during the election he did promise to send more troops to Afghanistan, but certainly did not mention or make it sound like we would be ramping to 100,000 troops or more and that they would be staying there likely his entire term, now guaranteed to be at least an 11 year war. And, there’s still no definitive exit strategy, still no explanation of what VICTORY is or what it looks or even smells like.
President Obama has a terrific team of speech writers and is terrific at reading off the teleprompter, I definitely give him credit for that. To me, he sounds like the official mouth piece of the central banks. Here, he is falling back on many of the same old tired, but tested reasons for us to continue waging a completely unwinnable, undefined war, one that is sucking America’s resources dry seemingly without protest.
While our military is unquestionably the most powerful in the history of the globe, and our soldiers honorably and ably execute the tasks they have been given, WAR is really WON through having a moral purpose and by executing a STRATEGIC plan. If our strategic plan is national bankruptcy, then man oh man, are we executing that strategy brilliantly.
And it’s obviously not just Obama who has us headed in the absolute wrong direction, no, he is a late comer to that. Both Republicans and Democrats have forgotten what war is all about:
Mr. McCain, what exactly does winning look like? What are our objectives? To capture the most poppy seeds? To get Osama Bin Laden? To bomb a new way of thinking into the hearts and mind of the people? To spend money we don’t have thus enriching the already rich military industrial complex? What exactly, again is the THREAT to our national security? Are you going to tell me AGAIN that “if only you know what we know?” Pleeese give the world a break from the insanity and get back to understanding the relationship between freedom and security. You will NOT find security by spending more money than you have, it’s that simple. Failing to learn that lesson has brought down many a country, our politicians appear to be hell bent on doing so to the U.S. These additional troops alone said to cost an additional $30 billion per year!
How exactly does that spending (I say conservative estimate), fit into trying to contract the budget deficit that the Administration says is our economic goal? Am I the only one who sees the insanity in spending more money than the rest of the entire world combined on “national defense?” If everything in life is a balance, then our spending is anything but in balance. My warning is simple – bankrupting our nation will eventually render us defenseless.
The military is terrific, but they work on behalf of the true strategic thinkers. I heard Obama, in person, describe how he was the one with the clear strategic thoughts and that he was going to end the wars. Then again, he also got up and said that he was going to hold the people responsible for this economic crises to account. He said that he was going to limit their bonuses – all very fine speeches at the time that they were read from the teleprompter.
We must secure our nation AMERICA! That means not bankrupting ourselves. We must fight wars because they are JUST, not just because! War must serve a strategic goal. Sorry, I simply do not buy the mantra that “we must fight them over there or we will surely fight them over here!” That type of thinking is fraught with danger, not the least of which is bankrupting one’s self. Remember, what gets you into an accident is NOT the accident you see coming, it’s the one that blindsides you! We are wearing blinders now as a nation.
When we enter wars, we must spell out exactly what winning is and how we are going to achieve each strategic goal. We must then set about actually doing it and remove ourselves once that goal is achieved. What we are doing currently is a huge disservice to the fine men and women in uniform. They need leadership that wields their power wisely, not leadership that bows to corporate private interests.
Sorry, but I just don’t buy the bullshit. This has nothing to do with “WINNING.” People who believe in a strong national defense are being suckered into a path of economic ruin. This chasing of security will result in nothing but heartache and an eventual loss of FREEDOM.
If you don’t make the connection soon between our debt backed money system, the central bankers, the politicians, and the profiteers of the military industrial complex, then the backbone of all our retirement plans will be shining the gold plated toilets of the banking elite.
Chalmers Johnson – Military Keynesianism (2003):
proudly supports:
Bill Still For President
for Congress
Michigan 11th District
By Bill Still
There is only one answer for the world economic situation; monetary reform.
1. No More National Debt
2. No More Fractional Lending
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