"Stagnation in middle-class wages is an economic problem" says Eric Schmidt

by Henry Blodget, Business Insider
Jan. 23, 2014


Google Chairman Eric Schmidt gave a "fireside chat" in Davos, Switzerland, at the World Economic Forum.

In the context of talking about global inequality, which Schmidt thinks is partly the result of technology and is going to get worse before it gets better, Schmidt revealed a critical truth about the economy that few other successful investors and executives appear to understand (or at least admit):

The stagnation in middle-class wages is not just a middle-class problem. It's an economic problem. And it's one of the main reasons that global economic growth is so lousy.

Why do stagnant middle-class wages hurt the economy?

Because the middle-class folks whose wages are stagnant are the global economy's biggest spenders.

And when they don't have money to spend, their lack of spending hurts not just them but all the companies that depend on them for revenue.

Including, Schmidt pointed out, Google.

Put differently, one company's expenses (wages) are another company's revenues. So, collectively, when companies are cutting wages, they're also cutting their own future revenue growth.

Right now, companies are so focused on cutting wages — by paying their employees as little as possible and replacing them with technology whenever possible — that wages as a percent of the economy are now near an all-time low (see chart below). And this weakness in wages is the big reason demand in the economy is so weak.

Wages as a percent of GDP.

Very few corporate executives and investors seem to understand this.

Instead, they act like it's a law of economics that they have to pay their employees as little as possible, so they can "maximize profit."  And, in the process, they hobble the economy.

Tea Party House Members Even Wealthier Than Other GOP Lawmakers

Thursday, January 5, 2012 by OpenSecrets Blog

by Seth Cline 

 

Their politics may differ. But both the Tea Party and the Occupy movement have laid claim to representing the interests of the middle class, whose economic frustrations helped spur the groups' establishment and growth.

So which side's congressional lawmakers come closest to embodying that wide swath of the U.S. population? Or, in Occupy terms, which side is closer to the 99 percent?

Neither the members of the House Tea Party Caucus nor those of the House Progressive Caucus -- whose views most closely align with the Occupy Wall Street movement -- are remotely middle class, according to an analysis by the Center for Responsive Politics of congressional personal financial disclosure forms covering 2010, the most recently available data.

The members of the House Tea Party Caucus are especially wealthy, the Center's research shows.

The median average net worth of a member of the House Tea Party Caucus was $1.8 million in 2010. (Financial disclosure forms require lawmakers to value their assets and liabilities only in ranges, so it's impossible to know exactly how wealthy a particular elected official is. However, it's possible to calculate an average net worth for each member of Congress.)

That's significantly higher than the comparable number for the median House member: $755,000. It's also more than 130 percent above the $774,280 average net worth of the median, non-Tea Party Caucus House Republican.

Furthermore, the caucus, a group of 60 House members founded by Rep. Michele Bachmann (R-Minn.), includes 33 millionaires and six members worth more than $20 million, according to the Center's research. That means a member of the group is more likely to be a millionaire than the average Republican who isn't in the caucus.

Christopher Arterton, a professor of political management at George Washington University,  called the Republican lawmakers' personal wealth unsurprising.

“Because they have amassed personal wealth, or inherited it, they are much more likely to be attuned to business or investment as an issue and less friendly towards regulations,” Arterton told OpenSecrets Blog.

“Their own background leads them to lean ideologically in the direction of business interests and free market.”

The median House Republican, generally speaking, was worth significantly more than the median House Democrat last year: $834,250 versus $635,000.

“The Republican Party is known to be a party that has lots of connections to big business, business interests and the so-called job creators so these people do tend to be more wealthy,” Arterton noted. “So it’s not surprising to me that the Republican members are wealthier than Democratic ones.”

The wealth among the House Tea Party Caucus's membership ranges from Rep. Stephen Fincher's (R-Tenn.) estimated average net worth of negative $3.3 million to the $49.3 million of the richest member of the group, Rep. Kenny Marchant (R-Texas).

The congressional offices of several members of both caucuses were contacted by OpenSecrets Blog, but all declined to comment for this story.

Similarly, on the other side of the aisle, members of the House Progressive Caucus may have less first-hand familiarity than some of their fellow lawmakers with the economic pinch being felt by many in the nation. Those in the caucus are less wealthy than the average House member, according to the data for last year -- but actually slightly wealthier than the average Democrat.

The Center's research found that the median average net worth of a member of the Progressive Caucus was about $639,500 in 2010. That's 3.4 percent more than the average net worth of $618,500 of the median House Democrat who is not part of the Progressive Caucus.

The least wealthy member of the House Progressive Caucus is from Rep. Laura Richardson (D-Calif.), whose estimated average net worth puts her $383,500 in debt. At the other end of the spectrum is Rep. Jared Polis (D-Colo.), whose estimated average net worth clocks in at $143.2 million. In all, 24 of the 73 voting members of the caucus are millionaires.

The small number of Senate-side members of both these caucuses may actually be closer, financially speaking, to the 99 percent.

The Senate’s three Tea Party Caucus members are relatively poor compared to their peers.

Sens. Jim DeMint (R-S.C.), Rand Paul (R-Ky.) and Mike Lee (R-Utah) were, on average, each worth less than $774,000. That's well below the $2.6 million average for the Senate, and also well below the $3.2 million average for non-Tea Party Caucus GOP senators.

Sen. Bernie Sanders (I-Vt.), the only senator in the Progressive Caucus, had an average net worth of $429,000 in 2010. That's about one-sixth the average net worth of the median member of the Senate Democratic caucus, which stands at $2.7 million.

Notably, Sanders, DeMint, Paul and Lee are all among the 25 poorest senators, according to the Center's research.

Secrets of the Flat Tax

Middle Class Pays More So Rich Pay Less

by DEAN BAKER

 

With Herman Cain soaring to the top of the Republican pack on the basis of his 9-9-9 plan, a flat tax is once again at the center of public debate. Texas Gov. Rick Perry, and some days Mitt Romney, are always spouting the virtues of a tax system that is “simpler, flatter, and fairer.”

While simplicity is generally desirable in a tax code, it has nothing to do with the tax code being flat. And being flat would be the opposite of being fair, unless people think it is unfair that they don’t pay more taxes.

Confusing a simple tax code with a flat tax is a cheap political stunt. The number of tax brackets doesn’t affect simplicity at all. Regardless of the number of brackets, there is only one calculation needed. The instruction is simple. It looks like this: “pay $1,000, plus 15 percent of income above $50,000.” You can have a flat tax or 100 tax brackets, it is the same formula. Even a Republican presidential candidate can figure it out.

The other part of the story is that the flat tax means a large tax cut for rich people. Every economist who has examined flat tax proposals over the years comes to that same conclusion: A flat tax means the rich pay less.

And if the rich pay less and we raise the same amount of money, then someone else has to pay more. And the someone in this story is the middle class. It really is that simple.

The flat taxers like to run around with Lake Wobegone economics where we are all going to pay less and still have the same amount of money, but the world doesn’t work that way. We have tried reducing taxes to raise revenue. People remember Reagan’s tax cuts and the large deficits they led to. They remember Bush’s tax cuts and the large deficits they led to.

No one is going to fall for this trick yet again. When we cut taxes on the rich, we get less money and the rest of us will have to make up the shortfall.

For middle-class people, a flat tax means that they will have to pay more taxes. If people think it would be fairer that they pay higher taxes, then the Republican Party has the presidential candidates for you.

The Decline and Fall of the American Middle Class

Wednesday, September 14, 2011 by The Guardian/UK
The heart of our political malaise is that the middle class, so long a powerhouse of US prosperity, is being crushed as never before
by Paul Harris

 

 

No one can accuse the candidates on stage at Monday's Republican debate of not discussing a broad range of topics. They talked about big issues like social security, the wars in Iraq and Afghanistan, energy independence, repealing healthcare reform and the need for job creation. And they talked about small issues for political point-scoring: like HPV vaccines for girls.




But missing from the debate – and, in fact, much current discussion of America's politics – is the single biggest issue facing the country: the destruction of the American middle class. For stories on how America is bifurcating into haves and have-nots, with precious little in between, you have to dive behind the headlines of the latest Washington political bun-fight and find the devil in the details.

Take a story that appeared in the Wall Street Journal Monday. The tale is nominally one about marketing strategy and it looks at how giant firm Procter & Gamble sells its household goods to its customers. But the picture that emerges is terrifying. P&G, it transpires, is cutting back on marketing to the disappearing middle classes, instead selling more and more to either high-income or low-income customers and abandoning the middle. Other big firms, like Heinz, are following suit. The piece reveals there is even a word for this strategy, helpfully coined by Citibank: the Consumer Hourglass Theory – because it denotes a society that bulges at the top and bottom and is squeezed in the middle.

The story contains some scary figures, such as the fact that the net worth of the middle fifth of American households has plunged by 26% in the last two years. Or that the income of the median American family, adjusted for inflation, is lower now than in 1998.

Or look at a story in the New York Times Tuesday. It starkly shows how the plight of the American working person has worsened. Solid jobs that once provided a secure grasp on middle class aims (a house, college for the kids, a retirement) have changed to become low-wage ones. It looks at the situation of some Detroit auto-workers, pointing out that new hires can find themselves working opposite long-term colleagues who do similar jobs yet earn twice as much. The system is called a "two tier" wage structure.

Perhaps that system can be justified as an emergency measure to keep Detroit's auto-industry alive and help it survive the current tough times. But, like the Consumer Hourglass Theory, it actually looks far more like the permanent shape of things to come. American society is bifurcating, squeezing the middle class out of existence. The ranks of the poor and low-income earners are growing and the rich are doing just fine – and no one is talking about it, much less doing anything about it.

The black-and-white facts of the case should stun Americans on both sides of the political divide. At the start of this week, Vermont Senator Bernie Sanders published a report on poverty called "Is Poverty a Death Sentence?" It showed that in 313 counties in America, life expectancy for women has actually declined over the last 20 years. It showed six million more people have fallen into poverty since 2004.

Indeed, this week the US Census Bureau has released a survey showing that one in six Americans now live in poverty: the highest number ever reported by the organisation. It also showed that real median household incomes dropped 2.3% in 2010 from the year before, reflecting the decline of the middle class. At the same time, the richest 20% of the US population now controls 84% of the wealth. In fact, so staggeringly unbalanced has America become that the richest 400 American families have the same net worth as the bottom 50% of the nation.

I do not care if you are a Tea Party activist or a Socialist party USA organiser, you should be able to agree on one thing, at least: this is unsustainable. Something has to give. But no one in the current political system looks they have an answer.

America's Real Job Creators Are Broke

Monday, August 8, 2011 by OtherWords
Despite the GOP's ideological claptrap about corporate executives being "job creators," it's ordinary Americans who actually create jobs.
by Jim Hightower

As narrators used to say in Western movies: "Meanwhile, back at the ranch..."

Our policymakers in Washington have totally lost sight of what's happening at the ranch. John Boehner's GOP-controlled House and Barack Obama's White House have agreed to slash trillions of dollars from the federal budget, as though that's America's most important need.

Bovine excrement! If they'd lift their vision to the countryside, even they could figure out that our great economic urgency is for the creation of good, middle-class jobs to get America moving again — moving upward and moving together.

Today, we are a dangerously disunited society. Elite CEOs and big investors are grabbing all the gains, leaving the vast majority mired in recession and facing falling incomes. Since the recession technically "ended" 18 months ago, corporate profits have zoomed, sopping up an unprecedented 88 percent of America's economic growth. Meanwhile, only one percent of the growth that we all help produce has gone to wages and salaries, the primary sources of income for 90 percent of us.

Yet, those same CEOs say they won't invest in new jobs or raise wages until consumers start buying again. That's like saying, "The beatings will continue until morale improves." Hello? The consumers whom CEOs are waiting on are the workers whose jobs and wages the CEOs won't increase.

You see, despite the GOP's ideological claptrap about corporate executives being "job creators," it's ordinary Americans who actually create jobs by spending from their paychecks. This is why our obtuse policymakers need to quit pampering the rich and fussing over budgets.

Instead, they should launch a national, FDR-style jobs program that will immediately increase paychecks, perk up consumer spending, and generate grassroots economic growth.

World's Wealthiest People Now Richer than Before the Credit Crunch

 (Raise your hand if this surprises you in the least...--jef)

= ++++++++++++=

Wednesday, June 22, 2011 by The Guardian/UK

by Jill Treanor 

 

We are not all in this together. The UK economy is flat, the US is weak and the Greek debt crisis, according to some commentators, is threatening another Lehman Brothers-style meltdown. But a new report shows the world's wealthiest people are getting more prosperous – and more numerous – by the day.
 
 The globe's richest have now recouped the losses they suffered after the 2008 banking crisis. They are richer than ever, and there are more of them – nearly 11 million – than before the recession struck.

In the world of the well-heeled, the rich are referred to as "high net worth individuals" (HNWIs) and defined as people who have more than $1m (£620,000) of free cash.

According to the annual world wealth report by Merrill Lynch and Capgemini, the wealth of HNWIs around the world reached $42.7tn (£26.5tn) in 2010, rising nearly 10% in a year and surpassing the peak of $40.7tn reached in 2007, even as austerity budgets were implemented by many governments in the developed world.

The report also measures a category of "ultra-high net worth individuals" – those with at least $30m rattling around, looking for a home. The number of individuals in this super-rich bracket climbed 10% to a total of 103,000, and the total value of their investments jumped by 11.5% to $15tn, demonstrating that even among the rich, the richest get richer quicker. Altogether they represent less than 1% of the world's HNWIs – but they speak for 36% of HNWI's total wealth.

Age also helps: more than eight out of 10 of the world's wealthiest people are aged over 45. So does being male: women account for just over a quarter of the total – though this is slightly higher than in 2008. The highest proportion of wealthy women is in North America – 37% of HNWIs – while the lowest is in the Middle East, which has 14%.

Generally, HNWIs are most concentrated in the US, Japan and Germany: 53% of the world's most wealthy live in one of those three countries, but it is Asian-Pacific countries where the ranks of the rich are swelling fastest. For the first time last year the region surpassed Europe in terms of HNWI individuals.

This scale of wealth of the richest people in Asia Pacific – fueled by the fast-growing economies in China and India – is now threatening to overtake North America, where the value of the wealth rose more slowly – 9% – to reach $11.6tn.

The richest people in the Asia-Pacific region have also fared better since the crisis. Their wealth is now up 14.1% since 2007 while individuals in North America and Europe are yet to recoup the losses they suffered during the banking crisis.

Britain is lagging behind in the league of affluence – it has not yet enjoyed a return to pre-crisis levels of wealth as sluggish economic growth holds back prospects. The growth in the number of rich individuals in the UK was among the slowest in the top 10 nations, showing a 1.4% rise to 454,000 and remaining below the 495,000 recorded in 2007.

The report said that while the UK stock market rose almost 30% and GDP grew 1.3% – after contracting by 4.9% in 2009 – the fortunes of the rich were held back by falling house prices and the rise in unemployment.

Their prospects might improve next year, however. "Construction spending for the 2012 London Olympics is expected to help propel the economy and the housing market recovery," the report said.

The 1.4% rise in the number of rich people in Britain compares with a 7.2% rise in Germany and 8.3% in the US – where there are 3.1m HNWIs – and the 3.4% rise in France.

India moved into the top 12, with a 20.8% rise to 153,000, for the first time, while Italy, 10th in the table, endured a contraction in the number of wealthy people from 190,000 to 170,000.

The performance of investments made by wealthy individuals in shares and commodities, and their willingness to take more risks, helps drive their wealth, which in turn fuels "passion" purchases of multimillionaire must-haves, ranging from Ferraris to diamonds, art and fine wines. Demand for such luxuries is especially high among the growing number of wealthy individuals in the emerging markets.

The report warns of problems for this year, saying "the path to global recovery will likely be uneven and various risks remain".

It added: "The global effects of the financial crisis receded in 2010 but aftershocks still materialized in many forms, including the sovereign debt crisis in Europe and the growing burden of a gaping fiscal deficit in the US. These types of shocks showed the fragility of the economic recovery and could still pose an obstacle to growth in 2011".

Will Only Another Great Depression Save America?

The economic crisis is really a political struggle between the rich and the rest of us.
By David Rosen, AlterNet  on January 20, 2011

Americans are increasingly aware that the Great American Century is over. A November 2010 Rasmussen poll found that just over one-third (37 percent) of respondents believe America's best days are still ahead. Sadly, nearly half (47 percent) say the nation's best days are in the past. They wonder what will come next.

Officially, the Great Recession started in December 2007 and ended in June 2009. Unofficially, the living recession grinds on with millions of Americans remaining unemployed and underemployed, millions continuing to lose their homes due to foreclosure, and millions more joining the legion of the homeless, hungry and those without health care. The U.S. is today marked by second-rate health care, educational and telecommunication systems.

The question haunting America is simple: if the American Century is over, what comes next? Will only another Great Depression save America?

* * *

The American Century was, symbolically, predicated on the Ozzie and Harriet myth of suburban home ownership; the popping of the housing bubble precipitated the Great Recession. As the myth of home ownership evaporates, the American Century ends.

In their important new book, Winner-Take-All Politics: How Washington Made the Rich Richer -- and Turned Its Back on the Middle Class, Jacob Hacker and Paul Pierson paint a grim picture of the nation's present state of affairs.

The authors, political science professors from Yale and Berkeley, respectively, critically assess the current situation. "The Wall Street of well-heeled bankers are thriving," they note, "while the Main Street of ordinary workers struggled amid the worst economic downturn since the Great Depression." They detail how, since the early '80s, the U.S. has "drifted away from a mixed-economy cluster and traveled a considerable distance toward another: the capitalist oligarchies" of Latin America.

They provide four valuable insights.

First, the current crisis is the result of four decades of economic and social restructuring driven by the demands of the rich and super-rich, especially the financial services sector, to capture more of the nation's wealth.

Second, this capitalist class has effectively taken control of the political process, capturing the Republican party and the leadership of the Democrats as well.

Third, they have built a well-financed operation of think-tanks, lobbyists, astroturf shills, co-opted consumer groups, obsequious religious leaders, media bloviators and regulatory bureaucrats to make their message America's shared, self-evident truth.

And fourth, as a result of the first three factors, ordinary Americans, who they identify as the middle class, have not only lost their economic shirts, but their political influence and interest in politics as well.

Corporate capitalism has, over the last three decades, transformed America. Finance capital has come to dominate and manufacturing has been relocated from America's heartland to the lowest-paid machilador zones scattered across the globe. Corporatist policies, facilitated through federal tax, subsidy, trade and other programs, have left Detroit and other once-proud urban centers sinkholes of 21st-century underdevelopment.

Hacker and Pierson argue that the current economic crisis is really a political struggle between the rich and the rest of us. They document the process by which social wealth has been systematically expropriated by the rich from the American multitude. Ever so tasteful, the authors refuse to call this process "class war." However, the wealth of information they muster and their careful analysis makes it impossible to draw any other conclusion. America is in the grips of a bitter class war and the American people are losing.

At the heart of this intensifying class war is growing income inequality.

One example the authors offer is most illuminating: "The share of [national] income earned by the top 1 percent of Americans has increased from around 8 percent in 1974 to more than 18 percent in 2007." Going further, they add, "the only time since 1913 … that this share has been higher was 1928." More alarming, they note that the average annual income of the nation's top 1/10th of 1 percent (some 10,000 households) jumped from $4 million in 1974 to $35 million in 2007.

Other analyses, like those at the Economic Policy Institute, push the statistical data even further. The EPI argues that in 2006, the top 1 percent controlled 23 percent of all income and that today's super-rich have regained the position they held just prior to the 1929 stock market crash when they controlled 24 percent of all income. As the Great Recession grinds on, few can anticipate that the share controlled by the top 1 percent has not increased.

The great post-WWII income normalizer was the progressive income tax and, in the intervening decades, is disappearing. Between 1963 and 2003, the top bracket saw their tax rate decline to 35 percent from 91 percent.

Reagan's counter-revolution cut the tax rate for the richest from 70 percent to 28 percent. Under George H.W. Bush, the rate nosed up to 31 percent and increased further to 39.6 percent under President Clinton; it decreased to 35 percent under George W. Bush, where it stands today and -- with the new "bipartisan" financial agreement -- for the immediate future.

* * *

In the wake of the 2010 elections, there is even less likelihood that the issues that caused the erosion of the American Century will be addressed. Rather, we are likely to see a deepening -- and increasingly vitriolic -- gridlock in Washington as the 2012 presidential election approaches. Unless there is a remarkable turnaround, Obama will likely fail in his reelection bid and the Democrats will suffer a further shellacking.

This could catapult a viciously right-wing corporatist clique into power, fueling ever-greater economic inequality, evangelical moral intolerance, neo-fascist and racist immigration policies, and a growing surveillance state. The worst tendencies in the American character will dominate and all will suffer.

In the short-term, over the coming two to five years, a meaningful, if modest, recovery may well take place. The jobless rate could decline to 6 to 7 percent, consumer-spending increase modestly, home purchases pick up and the stock market continue its upward tilt. However, the quality of life for the vast majority of Americans is likely to further deteriorate, with more people chasing minimum-wage jobs, unions further eviscerated and non-documented immigrants rounded up. Some are calling this possible short-term recovery the "new normal," a darker time marked by significantly lowered expectations signally the end to the American Century.

While relatively tolerable, the new normal gives us little faith in America's long-term prospects. There has been much blather from politicians and their paid talking-head pundits about a "new" or "green" economy. It sounds great and, in truth, it is the only way forward. Sadly, there has been little commitment to transform the national economy.

America's long-term future seems pretty bleak for the vast majority of the people. The legacy of a half-century of restructuring social wealth will likely buffer the baby-boomer generation and its children. But what happens to the following generation, the grandchildren of baby boomers, and their offspring? The nation's long-term prospects looks dismal.

* * *

If the great American prosperity party is over and the new normal really becomes the new normal, what lies ahead? If, as can be realistically anticipated, America slowly devolves into a second-tier country, will it come to resemble France, Netherlands or Finland (which would not be bad) or is something far worse likely? In either case, what can be expected in terms of the quality of life for the average American?

The contours of America's future are visible. Prosperity is being replaced by a frayed social safety net; crime and incarceration rates increase; and ceaseless and costly foreign military misadventures will continue in replace of a meaningful internationalist policy suited for the 21st century. Making matters worse, the extraction industries will continue to drive up carbon levels, thus upping the chances of a global environmental catastrophe.

Sadly, the American ruling elite will likely continue to pursue their single-minded objectives of gobbling up more of the social wealth and maintaining global imperial hegemony. One can only wonder if the forces of reaction have set the stage for another Depression? Is the recent banking crisis a precursor to what is just around the corner?

Does today's capitalist class share the same shortsighted, self-interested blindness that marked their forefathers, those who facilitated the 1929 stock market crash and cataclysmic Great Depression?

Unbeknownst to these class warriors, a second Great Depression might be the only way class tyranny can be broken. Is there another way by which the interests of the many can reassert themselves over the gluttony of the few?

Structural changes in capitalist development make this prognosis all the more disturbing. Walter Benjamin famously proclaimed Paris the capital of the 19th century. New York, embodying America's glory days, was surely the capital of the 20th century. Who doubts that Shanghai will be the capital of the 21st century?

Today, the U.S. economy is in free fall, returning to the worst of Gilded Age obscenities. America's post-WWII prosperity developed out of nearly two decades of Depression and world war. Luce's American Century took root when private corporations were weak, still vestigial organs of war-capitalism, ultimately rejuvenated through massive federal financing.

Is America poised to enter an era that can only be conceived as post-modern feudalism? Are we witnessing the nation state and the private corporation being replaced by a global oligarchy that rules as malevolently as the nobility of old?

Offshoring Jobs is the Reason Ford Is Making Record Profits

Michael Snyder | Oct. 27, 2010

On Tuesday, Ford Motor Company reported a record breaking profit for the third quarter. Ford earned 1.7 billion dollars during the quarter, which was way up from a profit of $997 million a year ago during the same time period. Ford CEO Alan Mulally is being hailed as a miracle worker, and investors are giddy about the future of the company.

So is all of this success by Ford translating into good jobs for American workers? No.

As described in a recent article on MSNBC, Mulally has been "revamping Ford’s U.S. and global manufacturing operation to be cheaper, more efficient and more flexible". In other words, Mulally has been getting rid of American workers in droves.

Since Mulally took over as CEO, Ford has slashed its North American work force by nearly half. Ford has shut down or plans to shut down a dozen U.S. manufacturing facilities. Today, only about 40 percent of Ford's 178,000 workers are employed in North America, and a lot of those jobs are in Canada and Mexico.

In fact, the number of Ford cars produced in Mexico continues to grow rapidly. The truth is that this is yet another example that proves that what is good for Wall Street is not necessarily good for average American workers.

Today, the average Mexican auto worker makes less than a tenth of what a U.S. auto worker makes in total compensation. In the new global economy, good jobs are going to where the labor is the cheapest, and that means going away from American workers.

Even the unionized workers that remained at the manufacturing facilities that Ford kept open were forced to agree to very substantial concessions to their labor contracts just to keep their jobs.

Meanwhile, literally hundreds of Ford dealerships have been shut down from coast to coast. All of this "dealership downsizing" has also come at a very high price - thousands of good American jobs.

So should we be celebrating record profits at Ford?

Not really.

The truth is that in the pursuit of profits, Ford has devastated quite a few local communities.

For example, Ford recently announced the closure of a facility that produces the Ford Ranger in St. Paul, Minnesota.

Closing that plant eliminates 750 U.S. jobs.

But don't people still want to buy Ford Rangers?

Yes, of course Ford Rangers are still quite popular, and Minnesota desperately wanted to keep that factory open.

In fact, Minnesota Governor Tim Pawlenty offered Ford a very generous multi-million dollar incentive package full of tax cuts and job creation incentives to keep the factory open.

But it didn't work.

Ford closed the factory anyway.

So where are all of those Ford Rangers going to be manufactured now?

Well, the statement about the plant closing issued by Ford did not reveal that tidbit, but it did offer some clues....

"Ford continues to concentrate on implementing the plan we initiated four years ago to streamline our plant operations and better leverage our global platforms. At this time, the Twin Cities Assembly Plant does not fit into our global manufacturing strategy."

When you see big corporations like Ford use the word "global", what it really means is some place other than America.

So don't be too quick to applaud Ford for record breaking profits.

The truth is that if current trends continue, we are going to end up with literally tens of millions of unemployed American workers.

We are shipping factories, jobs and wealth overseas so rapidly that it is hard to even comprehend what is going on.

In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year. In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.

Just think about that for a minute.

World trade has been completely and totally revolutionized over the past 25 years, and America is losing.

The United States has lost approximately 42,400 factories since 2001.

So how many more are we going to lose before our "leaders" do something about it?

As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.

The sad truth is that the United States is being deindustrialized. The big global corporations have figured out that they don't really need American workers anymore, and that is really, really bad news for the American middle class.

Without good paying jobs, the future of the middle class is incredibly bleak.

The Middle Class is Being Wiped Out

As wealth continues to leave the United States and as the U.S. gets even deeper into debt, more Americans are going to become poor.
By Michael Snyder, The Economic Collapse
Posted on September 22, 2010

The "America" that so many of us have taken for granted for so many decades is literally disintegrating right in front of our eyes. Most Americans are still operating under the delusion that the United States will always be "the wealthiest nation" in the world and that our economy will always produce large numbers of high paying jobs and that the U.S. will always have a very large middle class. But that is not what is happening. The very foundations of the U.S. economy have rotted away and we now find ourselves on the verge of an economic collapse. Already, millions upon millions of Americans are slipping out of the middle class and into the devastating grip of poverty. Statistic after statistic proves that the middle class in the United States is shrinking month after month after month. Meanwhile, millions of Americans are starting to wake up and are beginning to realize that we have very serious problems on our hands, but they have no idea what is causing our economic distress and they are unaware that most of our politicians have absolutely no idea how to fix the economic disaster that we have created.

On the mainstream news, the American people are treated to endless footage of leaders from both political parties proclaiming that the primary reason that we are in the midst of such an economic mess is because of what the other political party has done.

Republicans proclaim that we are experiencing all of this economic chaos because of the Democrats.

Democrats proclaim that we are experiencing all of this economic chaos because of the Republicans.

Even many readers of this column (who are generally more educated and more informed than most average Americans) leave comment after comment blaming either the Democrats of the Republicans for our current economic mess.

But do you really want to know who is to blame for our economic problems?

Both of them.

This economic nightmare has taken literally decades to develop, and both Democrats and Republicans have contributed greatly to this disaster.

Both parties have absolutely refused to stand up to the Federal Reserve and the horrific economic policies that they have been shoving down our throats for decades.

Both parties have stood idly by as the U.S. trade deficit has absolutely exploded in size and the United States has become significantly poorer month after month after month.

Both parties have refused to do anything as month after month after month large numbers of factories and good paying jobs leave the United States.

Both parties have shoved the spending accelerator to the floor when they have been in power and now we have the largest national debt in the history of the world.

Both parties have done essentially nothing as the health care industry, which was once the envy of the world, has degenerated into a cesspool of corruption and greed and now seems designed to do little more than to provide pharmaceutical companies and health insurance crooks with obscene profits.

If factories keep leaving the United States and jobs keep leaving the United States and the federal government keeps going into more debt and state governments keep going into more debt and local governments keep going into more debt, then things are going to keep getting worse.

It does not take a genius to figure that out.

The United States is continually getting poorer and is continually going into more debt.

Can anyone out there explain how that is a formula for economic prosperity?

Seriously.

Can anyone explain how that would work?

Please leave a comment and explain that to all of us if you can.

The truth is that as wealth continues to leave the United States and as the U.S. gets even deeper into debt, more Americans are going to become poor.

It really is that simple.

The following are 15 shocking poverty statistics that are skyrocketing as the American middle class continues to be slowly wiped out....

#1 Approximately 45 million Americans were living in poverty in 2009.

#2 According to the Associated Press, experts believe that 2009 saw the largest single year increase in the U.S. poverty rate since the U.S. government began calculating poverty figures back in 1959.

#3 The U.S. poverty rate is now the third worst among the developed nations tracked by the Organization for Economic Cooperation and Development.

#4 According to the U.S. Department of Agriculture, on a year-over-year basis, household participation in the food stamp program has increased 20.28%.

#5 The number of Americans on food stamps surpassed 41 million for the first time ever in June.

#6 As of June, the number of Americans on food stamps had set a new all-time record for 19 consecutive months.

#7 One out of every six Americans is now being served by at least one government anti-poverty program.

#8 More than 50 million Americans are now on Medicaid, the U.S. government health care program designed principally to help the poor.

#9 One out of every seven mortgages in the United States was either delinquent or in foreclosure during the first quarter of 2010.

#10 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many as were receiving it in 2007.

#11 The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.

#12 According to one recent survey, 28% of all U.S. households have at least one member that is looking for a full-time job.

#13 Nationwide, bankruptcy filings rose 20 percent in the 12 month period ending June 30th.

#14 More than 25 percent of all Americans now have a credit score below 599.

#15 One out of every five children in the United States is now living in poverty.

As millions more Americans continue to climb on to the "safety net", how long is it going to be before it breaks?

The reality is that the system can only support so many people. We are now at a point where our anti-poverty programs are clearly unsustainable in the long-term, but nobody has a solution for how we are going to get all of these people off of these programs or how we are going to provide good jobs for all of them.

The cost of every U.S. government anti-poverty program is absolutely soaring. Meanwhile, the U.S. government is already running a budget deficit that is approaching 1.5 trillion dollars every year. If you cannot understand that we have a very serious problem on our hands then you are probably not awake.

The U.S. economic system is dying. Blaming the other political party is not a solution. Running around the country offering "hope" and "change" and giving people a vague sense that things will get "better" soon is not going to cut it either.

The American people need very real economic solutions to very real economic problems.

But nearly all of our politicians are way too busy either trying to get elected or trying to stay in office to tackle the very serious problems which are destroying our economy.

Unfortunately, the American people love to watch our politicians play politics. They love to watch the little ping-pong ball of blame go back and forth. They love to pick sides and to cheer for their "team".

None of that is doing any good. Right now millions of Americans are getting sucked into poverty each year and neither major political party is doing anything real to address the very real economic problems that are causing that to happen.

But most Americans have become so "dumbed down" that they don't even understand what the real problems are anymore.

All most Americans seem to want these days is to watch a good show.

So send in the clowns.

There are certainly enough of them in Washington D.C. to keep Americans entertained for quite a long time.

DNC: GOP willingness to kill middle-class tax cuts ‘an affront to all Americans’

By Sahil Kapur - Monday, September 13th, 2010

WASHINGTON – If you’re searching for fighting spirit from Democrats ahead of November, look no further.

Senate Republican leader Mitch McConnell (R-KY) on Monday said through a spokesman that he and his caucus would be willing to vote against continuing middle class tax cuts if Democrats don’t extend them for the richest few percent as well – prompting a piercing response from the Democratic National Committee.

“The idea that Mitch McConnell and Republicans would hold tax cuts for the middle class hostage to tax breaks for their super rich lobbyist and CEO friends should be an affront to all Americans,” DNC spokesman Brad Woodhouse told Raw Story in an e-mail, “and should tell voters this Fall all they need to know about the difference in priorities between Democrats and Republicans.”

As Congress heads for a showdown on the issue, Woodhouse’s remarks echo President Barack Obama’s insistence that the middle class tax cuts should be continued while the tax breaks for the wealthiest must expire to help cut the deficit. They also suggest that Democrats aren’t hesitating to stand their ground on what has become a major campaign issue for the November midterms.

The tax cuts in debate would affect the top 2 to 3 percent of income-earners in America and cost roughly $700 billion to extend. The GOP supports an extension of all the tax cuts, and McConnell claimed Senate Republicans would block the extension of middle class tax breaks if the wealthy don’t get theirs, too.

“That's a debate we're happy to have,” McConnell said to the Washington Post. "That's the kind of debate that unifies my caucus."

“Well, it’s not just McConnell,” Woodhouse said in the e-mail, “it seems to be the prevailing view among Republicans that if millionaires and billionaires can’t get tax cuts then neither can a convenience store clerk or a single mom working two jobs. This of course is coming from Republican Senators whose families and themselves don’t want for anything in life.”

House Republican leader John Boehner (R-OH), who is hoping to become Speaker in January, created some discomfort within the GOP when he said he would not block the tax cuts package if the wealthiest were to be excluded. No Republicans appear to have backed him.

Republicans claim the high-end tax cuts are necessary to boost the economy, a point disputed by Democrats and Congressional Budget Office estimates, which say they would affect few small businesses and have a minimal stimulative effect.

Even for Middle Class, Tax Cuts Dig Deficit Deeper

by Derrick Z. Jackson - Tuesday, September 14, 2010 by The Boston Globe

Those attacks went nowhere in recent polls, with barely more than a third of Americans supporting tax cuts for the super rich. CBS and Newsweek respectively found 56 and 52 percent of Americans supporting eliminating tax cuts for households making above $250,000. Gallup found that 44 percent supported expiration of the cuts for the top 3 percent and 15 percent more wanted the tax cuts to expire across the board.

That left a defensive Boehner telling CBS’s “Face the Nation’’ on Sunday, “If the only option I have is to vote for some of those tax reductions, I’ll vote for them . . . But I think that’s bad policy . . . we’ve got to cut spending.’’

But lest you think Obama is “winning’’ and Boehner is “losing,’’ the context of all this must not be forgotten. America will lose no matter what. Obama is still upholding one of the most regressive Republican fiscal policies in modern times. Boehner complained Sunday that the Democrats “haven’t reached out to us for the last 20 months.’’ But Obama more than reached out as a candidate. Looking for that sweet center of middle-class appeal, he promised, “If you make $250,000 or less, we will not raise your taxes. We will cut your taxes.’’

The cost of the 2001 and 2003 Bush tax cuts has been enormous and will continue to corrode the American economy.

In 2008, in the middle of the presidential campaign, the Center on Budget and Policy Priorities said that the Bush tax cuts “have been the single largest contributor to the emergence of substantial budget deficits in recent years.’’ The center said the tax cuts added about $3 trillion to deficits between 2001 and 2007.

Making them all permanent, as the likes of Boehner would prefer, would cost the Treasury $4.4 trillion over the decade, including interest on the federal debt, the center said. The Tax Policy Center of the Brookings Institution and the Urban Institute said that while Obama’s pledge to cut taxes was less than presidential rival John McCain’s, Obama’s plans would still boost the federal deficit by $3.6 trillion by 2018 (McCain’s would have increased the debt by $5.1 trillion).

While Obama is saying that repealing the tax cuts for the most wealthy Americans will add $700 billion back to the Treasury, that only begins to whittle away at the $4 trillion value of the cuts. Moreover, there is no evidence that tax cuts did anything to boost either the economy or personal wealth. According to the Center on Budget and Policy Priorities, median income in 2006 was $1,300 below its level before the 2001 cuts.

Yet, taxes are such a third rail in American politics that Obama felt he had no choice but to act Republican even as he was wooing liberals with his stances on Iraq and the environment. There has never been an honest discussion about what the tax cuts, even for the middle class, will cost us in the long run.

Last week, the new World Economic Forum’s global competitiveness index found the United States to be slipping in global competitiveness, with a major reason being our huge deficits. Ending the tax cuts for the wealthy now is only a first step. Ending the notion that tax cuts are good at all is the next.

Economic forecaster: "Greatest Depression" coming

(Some people criticize Celente for being so doom and gloom, but he was one of those who predicted our current financial predicament 6 or more years ago. So, I take what he says seriously.--jef)

***

Collapse of middle class means there's no fuel for recovery, Gerald Celente argues

By Daniel Tencer | Friday, August 20th, 2010

The US economic recovery in recent quarters is little more than a "cover-up" and the world is headed for a "Greatest Depression," complete with social unrest and class warfare, says a renowned economic forecaster.

Gerald Celente, head of the Trends Research Institute, told Yahoo!News' Tech Ticker that there's no risk of a "double-dip recession" because the first "dip" never ended.

"We're saying there's no double dip, it never ended," Celente said. "We're looking at the Greatest Depression. There's no way out of this without [rebuilding] productive capacity. You can't print [money to get] out of it."

Celente, who has been credited with predicting the 1987 stock market crash, the collapse of the Soviet Union and the subprime mortgage crisis of recent years, said the US and other developed countries can expect to see the sort of social unrest the world witnessed in Greece this year once government attempts to shore up the economy fail and lawmakers turn to "austerity measures" to plug gaping budget holes.

"You're going to see it all over the world," Celente said. "What they call austerity programs ... What are they doing? They're bailing out the banks and they're making the people pay for it. And the people don't like that."

Celente pointed to a near-riot that took place last week in Atlanta when 30,000 people showed up to be put on a housing waiting list, saying that the event is a harbinger of what's to come.

He also argued that the way unemployment is measured today masks a much larger joblessness crisis because "once you're off the unemployment rolls, you're no longer unemployed."

Celente said the current unemployment rate, if it were measured as it was measured during the Great Depression, would be around 17.5 percent. And he expects that number to rise to around 22 percent in the coming years.

"One of the good businesses to get in to may be guillotines," Celente quipped. "Because there's a real off-with-their-heads fever going on. People are really fed up."

Celente argued that the conditions needed for an economic recovery simply don't exist. "Let's go back to the 1990s. We're in a recession. What got us out of it? The Internet. It wasn't a government policy, and Al Gore didn't invent it."

But today, Celente argued, there are no new booming industries pushing towards economic expansion. And the US middle class may not have the right skills to take up the challenge.

"We went from a country that used to be merchants, craftspeople, manufacturers, to clerks and cashiers," Celente said. "We have to bring manufacturing back to America."

Celente agreed with his Tech Ticker interviewers that the green economy, which seeks to replace fossil fuels with alternative and renewable energy sources, is a good place to start on an economic recovery, but he said the Obama administration's handling of the issue was misguided.

Celente pointed out the US has committed $54 billion for nuclear power expansion, and has also committed to "clean coal" -- neither of which he sees as being large drivers of the green economy.

The government is "not putting money where it should go," he said.

Whacking the Middle Class

When Wall Street Rules, We Get Wall Street Rules
By DEAN BAKER

The middle class is getting whacked by the Great Recession. Fifteen million people are out of work, another 9 million workers can only find part-time jobs, and millions more have given up looking for work altogether. Those lucky enough to be employed are unlikely to see any substantial wage gains for years to come.

Millions of homeowners are facing the loss of their home and more than 10 million are underwater in their mortgage. Most of the huge baby boom cohort is approaching retirement with little other than Social Security to support them, now that the collapse of the housing bubble has destroyed their home equity and much of the rest of their savings.

This pain is infuriating for two reasons. First, this was an entirely preventable disaster. The housing bubble was easy to see. Competent economists had long warned of its dangers.

The second reason why the current situation is infuriating is that we know how to get the economy out of this mess. We just need to boost demand. This can be done either with much more government stimulus, more aggressive monetary policy from the Fed, or pushing the dollar down to boost exports.

If this disaster were preventable and we knew how to get out of it, why didn't our leaders try to stop it before it happened? Why don't they take the steps necessary now to get the economy moving again?

The answer to both these questions is simple: The politicians work for someone else. On Election Day, the politicians might need our votes, but they won't get to be serious contenders unless they've gotten the campaign contributions of the big money crew. And the moneyed elite has been using its control of the political process to ensure that an ever larger share of the economy's output is redistributed upward in their direction.

The reason that there was little interest in cracking down on the housing bubble is that Goldman Sachs, Citigroup and the rest were making a fortune from the financial shenanigans that fueled the bubble. Former Treasury Secretary Robert Rubin personally pocketed over $100 million from this fun. Why would they want the government to rein it in?

Of course, when the bubble did finally blow and threaten their banks with bankruptcy, the Wall Street crew just ran to the government for help. And they got trillions of dollars in loans and loan guarantees to ensure that they would not be victims of the crisis they had created. Now that they are back on their feet, with Wall Street profits and bonuses both again at near record levels, they see little reason to concern themselves with the measures that might set the economy right for the rest of us.

After all, the steps necessary to revitalize the economy could mean some inflation. This would reduce the value of the debt owned by the wealthy. And the wealthy don't see any reason that they should risk any of their wealth just for the good of the economy.

We have enormous ground to cover to restore an economy that works for the vast majority, but the first step is to know where we are. The upward redistribution of the last three decades has nothing to do with the market and a belief in "market fundamentalism." This is about a process where the rich and powerful have rewritten the rules to make themselves richer and more powerful.

For example, they wrote trade rules that were designed to put downward pressure on the wages of the bulk of the U.S. workforce by placing manufacturing workers in direct competition with low-paid workers in China and other developing countries. This had nothing to do with a belief in "free trade." They did not try to subject lawyers, doctors or other highly paid workers to the same sort of international competition. They only wanted international competition to put downward pressure on the wages of workers in the middle and bottom, not those at the top.

This elite has instituted a system of corporate governance that allows top executives to pilfer companies at the expense of their shareholders and its workers. Top executives are overseen only by a board of directors who owe their hugely overpaid sinecures to the executives they supervise. And of course the Wall Street barons themselves are given a license to gamble with the implicit promise that government picks up their tab when they lose.

No progressive movement will make any progress until we understand the battle we are fighting. Our income is a cost to the rich. They will look to cut it wherever they can, whether this is wages for private sector workers, pensions for public employees, or Social Security for retirees. That is their target.

We have to fight back using the same logic. Their income is our cost -- the multimillion dollar bonuses for the Wall Street wizards is a direct drain on the economy. So are the bloated paychecks of top executives and their lackey boards. Progressives must be prepared to use all the same tactics to bring down the income of the rich and powerful that they have used to reduce the income of everyone else.

This means restructuring the rules of corporate governance to put serious downward pressure on the pay of top executives. The highest paid workers (doctors, lawyers, and economists) must be subjected to international competition in the same way as manufacturing workers have been subjected to international competition. And, we should sharply limit the extent of the patent or copyright protections that are exploited by the drug industry and the entertainment and software industries.

We have to put the focus on the ways the rich have rigged the rules and place this at the center of political debate. The three decade-long battle over tax cuts for the rich is important, but at the end of the day it is a side show. If we let them steal all the money at the onset, it really doesn't make much difference if they end up letting us tax a little of it back.

Controlling the wealth of America

Top 1 percent control 83 percent of U.S. stocks. As a share of personal income mortgage debt ate up 19 percent in 1949. In 2003 it went up to 85 percent. 80 percent of Americans 65 years and older depend on Social Security for half of their income.

Mayer Rothschild was quoted as saying “give me the power of the money and it will not matter any more who is commanding.”  Today Wall Street is in full command of our government.  The impact of massive lobbying has guaranteed that many of our politicians are bought off and are serving as serfs to their feudal lords on Wall Street.  How else can we explain the lack of reform in the financial industry after the biggest economic crisis since the Great Depression?  Wealth is massively concentrated in a few hands in America.  Just because you have access to debt does not make you wealthy.  83 percent of all U.S. stocks are in the hands of the top 1 percent.

Let us look at the data:

Source:  ACS, Lending Tree Report

The above is a clear example of why the recent Bull Run in the stock market made very little impact in the real economy.  Unemployment is still extremely high and most Americans still live with the effects of a recession.  The housing market is still in disarray yet the boom in stock values has benefitted those that least need it in the market.  The notion that stock wealth is evenly disbursed is nothing more than Wall Street propaganda.  Look at the above data and you can see why.

Many Americans have been under a spell thinking that they have been getting richer merely because they have more access to debt. Wealth is measured by net worth, not how much debt you have. And Americans are drowning in mountains of debt. The share of debt that now goes to housing and consumer credit is off the charts:

The above chart highlights a clear reflection of the decade long housing bubble.  Even though the housing bubble only ramped up in the last decade, the pattern was already taking place for well over 50 years.  Back in 1949 the mortgage as a share of personal income only ate at 19.6 percent of income.  In 2003 it had shot up to 85 percent.  Is it any wonder why so many people were taking on massive amounts of mortgage debt in the last decade?  Someone during the housing boom was quoted as saying:

“[It is] weird to be a young person living in Washington, [D.C.] with this sort of housing bonanza, a psycho-frenzy thing going on. It’s just so very tiring. Sometimes I feel like for me, yeah, having a house would be great but it’s almost become something that I feel like we’re being programmed to do, that it is [an unquestioned] part of the American Dream.”

Most bought into this programming and went ahead and took on massive amounts of debt from the banking giants that turned many into debt slaves.  No one forced these people to sign but neither did anyone force the banks to make these toxic loans.  Yet today, the only group actually getting a bailout is the banking sector.  Those that took on those massively bad loans are destined to lose their homes through foreclosure and have ruined credit.  What consequence do banks face?  They serve the needs of a very small cohort in our population and our government is at their service.

Just look above one more time and look at how much money now goes to home equity debt.  This was unheard up until the 1990s.  In the last decade mortgage equity withdrawals financed a large part of our economy from vacations, to upgrades, to new automobiles.  It was largely one giant façade.  The only group that saw their status increase was the top 1 percent.  Everyone else saw their quality of financial stability decline:

I’m sure when data is released in September by the Census, the numbers will look even worse.  Income on an inflation adjusted level has been falling for well over a decade.  Most Americans were deluded into thinking that debt was equal to wealth.  Or to be more specific, what they were able to finance with debt.  Just because you have a leased foreign car and a large McMansion does not make you wealthy.  All it does is makes you a slave to the objects but also the banks that finance the deal.  Unlike the banks, you do not have a lobbyist looking out for your interest.

The way out for many is through getting an education but the banking system has now inflated the cost of education.  We have for profit schools that provide very little benefit as shown through data but their costs keep going up because they have mastered the ability to take taxpayer loans and push people into their system like a paper mill.  The cost of college keeps going up as income keeps going down:

The only way to understand finance is to get educated but the cost of that is going up.  So you have an enormous serfdom of those who have very little understanding of finance being subjected to the whims of the banking sector.  In the end, the banks have managed to calm the masses and numb their ability to reason because what has occurred over the last few years is the greatest wealth transfer in the history of our nation.  It didn’t take a war or coup but simply happened by pure momentum and sheer inactivity.  They system is in a deep capture.

Even being in the industry does not keep you from buying into the delusional propaganda of Wall Street:

“I studied finance… I learned about stock investments when I was 18 or 19. I took money that I saved since I was a kid and invested in stocks. It was $10,000. I made it into $80,000 in 2 years in stocks. But I had $150,000 invested because of margin and I lost all of it. Now I’m looking at the real estate market. I’m like, huh. I learned my lesson in the stock market. Should I sell my real estate that has gone up in value by 80 percent?”

This quote was taken at the height of the housing bubble.  How many people do you think lost money in the stock market and the real estate bubble?  Trillions of dollars were lost yet somehow, the top 1 percent came out ahead.  They will argue that they are not as wealthy as before but keep in mind even if you lost money, the cost of other items has also fallen.  Money is only as valuable as what you can buy with it.  And this tiny group has become all the richer in this crisis.  You can now by the yacht for half off while your stock portfolio fell by 15 percent.

For all the back and forth with Social Security, an enormous part of our country depends on it for its income:

A stunning 40 percent of those 65 and older depend on Social Security for over 80 percent of their income.  60 percent of this group depends on it for at least 65 percent of their income.  If we look at 8 out of 10 in this group, at the very low end they depend on Social Security for 45 percent of their income!  And this makes total sense because stock wealth is concentrated so heavily in the hands of a few.  And they want people to put money into the stock market casino?  Wall Street is simply looking at eliminating another line item here.  Controlling wealth is more important than who controls the government. Rothschild had it right.

The new two income trap.

The financial raid against the middle class – 9 of the 10 largest occupations in the U.S. have median wages between $8 per hour and $14per hour. The middle class is inheriting a new serfdom drowning in mountains of debt.

The war against the  middle class is silent and has grown since the recession started.  We don’t hear much about this because in large part, those falling out of the middle class don’t have the funds to purchase airtime with the media who is wedded to Wall Street.  40 million Americans now receive food assistance.  How often do we hear about this?  Each month we add tens of thousands to this number yet we are somehow in a recovery?  A recovery for which group of people is the question we should be asking.  Clearly the middle class isn’t feeling this recovery.  Nearly 17 percent of our population is underemployed.  But then we add 20 percent of those who are employed who are part of the working poor.  If we look at the top 10 occupational sectors in the U.S. we start to realize that many in the middle class are giving up higher paying jobs to service the needs of a tiny elite class.

Take a look at the top 10 occupational sectors in the U.S.:

Source:  BLS

Keep in mind this group is part of the “fully employed” class.  When we think of those who are employed we tend to think that most work in sectors that offer them a decent wage.  That is not the case at all.  In fact, when we look at the median household income of $52,000 we realize that most people are working in the service sector with lower wages and only boost the stat higher because of the two income trap.  9 out of 10 of the above jobs from cashiers to janitors make median wages from $8 to $14.

“To even reach the middle class median income, someone would need to make $25 an hour.  So even looking at the higher end of the above pay scale for these jobs, you would need to have two people making the top $14 to squeak out the necessary $25 per hour to make the $52,000 median income figure.  Keep in mind the above is the top employment sectors in our economy.  In the past where we had a bulk of our population working in manufacturing making the median income wage with one job, now we have given that up for two jobs in service sector work.  I’m not sure many in the middle class wanted to make that trade off.”

Wall Street wouldn’t mind if most Americans were part of the working poor so long as they can keep their exploiting ways going.  In fact, these banks want to sink these people even further by creating this large class of middle class debt serfdom.  Enormous mortgages, student loan debt, and credit cards are the new chains to keep the working and middle class stuck in financial purgatory.  Keep in mind the money the banking industry funnels out is largely taxpayer dollars so the prison we are creating is largely with our own money.  Wall Street investment banks and the too big to fail financial sector is broke.  They would be nonexistent if it weren’t for the complete and generous handout from the U.S. Treasury and Federal Reserve.  How do they repay the people for this?  They begin by squeezing every ounce of productivity of those still working:

Now this is a fascinating chart.  Even in the worst economic crisis since the Great Depression somehow, we are able to become more productive.  Interestingly enough labor costs have fallen at the same time.  Of course the above translates to middle class workers having to put up with stagnant or falling wages while the bottom line keeps getting better.  But better for who?  The banking industry is juicing this game by gambling on Wall Street and not lending money out to the public.  This money was given to them under the pretense of keeping the loan channels alive for American workers.  So we have record foreclosures and bankruptcies while banks keep making billion dollar profits.  The raid on the middle class is like pirates taking the loot in broad daylight.

Yet the spin is out in full force.  Last month the rise in employment was largely from the government sector:

In fact, we can say that the entire rise in employment last month came because of temporary government work.  These Census jobs fall into the trend that we are seeing.  The middle class has to deal with transient work with no security and in order to have access to any semblance of a middle class lifestyle, must enter into a deal of debt serfdom with the banking elite.  We can see that we have hit an absolute structural tipping point in our society with the amount of long-term unemployed:

This is the largest percent of long-term unemployed in modern record keeping history.  What has happened is essentially the last hit against the middle class.  Without any security whatsoever, many are now unable to find work in a highly service oriented world.  The playing field is not level.  The banking sector fills the air with propaganda of the “free market” yet received trillions of dollars in handouts.  The hypocrisy is incredible and many Americans realize this.  This is why satisfaction with both Democrats and Republicans are at all time lows.  Both parties are beholden to the banking and Wall Street elite that work as a leech and are siphoning off every ounce of productivity from the American working and middle class.

The youth of our country are feeling this deeply:

The above chart would seem positive.  More students are taking summer school as opposed to working.  Yet this trend isn’t happening by choice.  It is happening by force.  There are little jobs for teens since they are competing with adults for low pay service sector jobs!  This is the idea of recovery in the new America.  A banking sector that is swimming in gold coins like Scrooge McDuck while middle class Americans find themselves competing with their own children for lower paying service sector jobs.

So what is the solution then?  How the argument is framed is completely false and the Federal Reserve is merely a protector of the banks.  They want to force austerity on the majority of Americans while banks and their predator executives still manage to keep their taxpayer subsidized yachts.  There is money but it went to the banking sector.  The game is fixed for most in the  middle class.  Until we break up the too big to fail banks and have a government that truly represents the people’s best interest, there is little reason to believe that the overall trend will reverse.  The fact that 9 out of our top 10 job sectors are from the low paying service sector is not good news.