Aug 28 2009

Going Broke on $50,000: The Story of the Struggling American Middle Class. The $50,000 Median Household Budget.

The recent recession is exposing how many American families have been treading on the edge.  Problems were already in the system before the recession began but the downturn in the economy was the ultimate catalyst.  Many families were using credit cards as a means of supplementing a decade of stagnant wages.  The median household income [...]

Aug 27 2009

Demand Destruction Price Deflation: Earnings up when you Fire Employees. California Lowering Tax Brackets. Social Security no Cost of Living Adjustments.

The Consumer Price Index has shown a year over year decline for the first time since the 1950s.  This in itself has added fuel to the growing flame of the menace of deflation.  Yet what we are seeing in the psychical world in the form of price declines is directly linked to demand destruction and [...]

Aug 24 2009

Federal Reserve Paying Interest on Excess Reserves: Why Lend when you can Earn Interest for Holding on to Funds with Low Risk? The U.S. Treasury and Federal Reserve Walking a Tight Rope.

One tiny announcement made by the Federal Reserve back in October of 2008 is finally making some noise in the dark corners of the internet.  What the Federal Reserve announced at the time was that it would begin paying interest on depository institutions’ excess reserve balances.  Now why this is important is that it offers [...]

Aug 22 2009

S&P 500 Over Priced: With 97% of Companies Reporting Q2 Earnings the PE Ratio is Now at 129. The Most Over Hyped Market Rally Ever.

There is probably no better indicator of market volatility than the current price to earnings ratio of the S&P 500.  The market volatility is spectacular and we are seeing more gyrations in this recession than we did during the Great Depression.  Since March when the S&P 500 touched the 666 mark, the rally has boosted [...]

Aug 20 2009

Home Equity Loans: $674 Billion in Total Loans. When The Household ATM Goes Out of Order. First, Second, Third, Fourth, and Even Fifth Mortgages.

Home equity was once seen as a cushion for a rainy day.  People built up home equity as a means of paying off their home loan and saw it as a source of security.  The days of the mortgage burning parties were all but lost in this housing bubble.  The roots of the housing bubble [...]

Aug 18 2009

34 Million Americans Receiving Food Assistance – 6 Million Increase in One Year: Five Charts Showing the Status of U.S. Employment: Manufacturing Pounded, Participation Rate at Multi-Decade Lows, Part-time Employment at Record Levels, and Less Layoffs with few Hires.

There is something troubling when the theme of recovery is never tied to U.S employment.  The American worker is suffering.  This has not changed.  The solace being offered is that less people are being fired.  I suppose the 26 million American workers who are unemployed or underemployed might find some comfort in the jobless recovery [...]

Aug 16 2009

Why Budget Deficits Matter: Government at a $1.26 Trillion Budget Deficit for the 2009 Fiscal Year. Three Times as Large as Last Year and we still have Two More Months of Data.

The notion that deficits do not matter is a widely held and deeply ingrained economic philosophy.  This line of thought took a stronghold in the 1980s and has seemed to stick to our ever-growing dismay.  Yet budget deficits do matter if we are looking at an economic horizon that is longer than one fiscal year.  [...]

Aug 13 2009

Stock Market Dollar Store: U.S. Dollar Down 12.5 Percent and S&P 500 Up 50 Percent since March. How the U.S. Treasury and Federal Reserve Juice the Stock Market.

Americans have missed one serious correction since the manic stock market took off in March.  Since that time the value of the U.S. dollar, the bedrock of our economic system has fallen a stunning 12.5 percent.  Currencies should not fluctuate this much especially the world’s reserve currency.  Back in December, I talked about how the [...]

Aug 12 2009

Commercial Real Estate, Construction and Finance Employment: How Commercial Real Estate will drag the California Economy Deeper into Recession. 32 Percent of California Construction Jobs Gone.

California is heavily dependent on real estate.  That should be of little surprise to you but many have a hard time understanding how devastating the housing crash is to employment in various sectors.  California for 30 years relied on housing even though in many years, it was in a bubble.  That is why in 2009 [...]

Aug 11 2009

Financial Brinkmanship: Forcing Americans to Spend and Discouraging Savings. Americans Decide to Save Forced by a New Austerity. Banks Offering Zero Percent on Your Savings Account.

Spending more than you earn is a financially devastating recipe for individuals and nations.  I’ve read countless pop financial books on how to gain and sustain wealth and those that have any substance always emphasize saving your money, spending less than you earn, and being prudent with your funds.  In no book did I ever [...]

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