Lining up at Midnight at Wal-Mart to buy Food is part of the new Recovery. Banks offering Mattress Interest Rates. The Invisible Recovery Outside of Wall Street.

There seems to be a growing divide in the current U.S. economy.  On the one hand, you have the financial sector swimming in their bailout-induced profits like a modern day Scrooge Mcduck.  In their circles, it appears as if the recession is over.  On the other hand, you have average Americans seeing access to credit cards shut down, equity in their homes vanishing, and their stock portfolios looking a little too much like 1999.  Then you have 35.8 million Americans, roughly 11 percent of our population, on food stamps.  To this group the recession is still very much alive.

At a recent Alliance for Family Entertainment of the Association of National Advertisers, Wal-Mart gave a sobering look at the current economy:

“(NY Times) There are families not eating at the end of the month,” said Stephen Quinn, executive vice president and chief marketing officer at Wal-Mart Stores, and “literally lining up at midnight” at Wal-Mart stores waiting to buy food when paychecks or government checks land in their accounts.”

Now this is important since Wal-Mart is in every corner of every American metro area:

walmart-stores

The fact that you have people lining up at midnight just waiting to have their paychecks or government checks clear for food is probably something you are not going to see on CNBC but it is happening.  This recession is really creating a split and is also flaming the fires of class warfare.  Average Americans and working class Americans are still dealing with what is known as the Great Recession.

Wal-Mart is looking to meet the new market reality by offering items that meet the new austerity demanded by millions of American families:

“Among the steps Wal-Mart is taking to address the changes in shopping habits, Mr. Quinn listed an overhaul of the retailer’s private-label brand, Great Value, which is promoted in commercials describing how families can fix dinners with Great Value products “for less than $2 a serving.”

For less than $2 a serving means millions of families are now needing to stretch their dollar.  So as you might have guessed, having the U.S. Treasury and Federal Reserve go on a path of dollar weakness actually hurts those at the bottom and middle class the most.  Yet they are concerned more about the financial sector and the chips may fall where they may for the remaining group of Americans.

Punishing the Prudent Saver

Those that save and are cautious with their money, are now being forced to make difficult decisions.  Even holding on to U.S. dollars is not a good move with the way the Fed is systematically devaluing the dollar. The Fed is artificially keeping rates at record lows so putting your money in a savings account amounts to stuffing it into your mattress.  Take a look at three of the too big to fail (TBTF) banks and their savings rates:

bofa

wells-fargo

chase

All you are doing is giving them your money to hold.  That is it.  A 0.1 or 0.05 annual interest rate is laughable.  Even if we have 0 percent inflation, the U.S. dollar is now down by nearly 20 percent since the March levels.  You have lost money.  Unless, you placed your money into the casino known as Wall Street.  The stock markets are now up by 60 percent since the March lows even though P/E ratios are at historic levels and unemployment is now up to 17.5 percent using the U-6 rate.  Most of the recent gains are based on cost cutting (aka layoffs) and restocking of inventory.  Basically we are seeing companies slim down and using one time gains to capitalize in the current marketplace.

If you doubt this, just take a look at the stunning 9.5 percent growth in worker productivity in Q3:

productivity-gains

The above can be summarized as doing more with less.  Yet this is somehow good news for the average American?  Those that are prudent are left with very few places to protect their money.  Do they invest in the stock market even though earnings do not justify current lofty prices?  Do they put their money in the bank and allow the devaluation of the U.S. dollar eat their purchasing power away?  There are few places to go.

But even with these pathetically low rates at banks, deposit accounts are the only sector that has seen steady growth in the last few years:

us-household-assets

Every other major asset class from real estate, equities, to pension reserves has fallen.  Yet savings deposits have steadily increased.  A largely unspoken trend is out there and many people are basically protecting their money at all cost and believe cash is king, even if the cash is slowly being devalued by the U.S. Treasury and Federal Reserve.

There is little reason to believe that the dollar is going to spike significantly over the long run.  We simply have too much debt:

total-us-debt-outstanding

Add up the above and you arrive at $52 trillion in debt.  Home mortgages are $10.3 trillion of this amount.  State and local governments struggling with tax revenues have $2.3 trillion in debt.  Add in unfunded Social Security and Medicare liabilities and you can see why we are entering a perfect storm.

Summary

The financially prudent have taken it on the chin with the current bailouts.  The working and middle class Americans are largely caught bailing out the wealthy financial class while confronting the realities that the bailouts were largely designed to protect the banking sector.  Corporate equities and mutual funds have taken major hits in this crisis but the wealthier bond holders have faced minimal cuts.  Examples like AIG paying out to Goldman Sachs only reinforce this horrendous transfer of wealth.  Until the majority of Americans demand action and take to the streets, this pseudo-recovery is going to go on for years until finally Americans wake up and realize that they have given all their wealth to the banks.

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21 Comments on this post

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  1. ann rand said:

    No need to despair. Buy physical gold bullion and store in a home safe. You accomplish a number of worthy goals:

    i. Protect yourself against the ongoing depreciation of the dollar
    ii. Deprive the Federal Reserve banking cartel and the Politicians an easy way to renege on their various promises.
    iii. Maintain purchasing power when the inevitable hyperinflation hits the dollar.

    November 12th, 2009 at 2:56 pm
  2. GardenSERF said:

    This is a very good article and the charts don’t overwhelm eye. After watching my own savings account rates approach ZERO, I’m glad to see other people are noticing this too. Sad that we who supposedly have “real” money saved in the banking system and are not rewarded for it while those who stole TRILLIONS from America’s value are given BILLIONS more to squander.

    November 13th, 2009 at 5:51 pm
  3. Insanity said:

    Be careful if you purchase physical gold!

    Gld ETF Warning, Tungsten Filled Fake Gold Bars
    http://www.marketoracle.co.uk/Article14996.html

    November 13th, 2009 at 9:54 pm
  4. Robert Witting said:

    Very well written article! You should be aware that this wealth transfer/destruction against all people, except the wealthy elite has been the plan all along. There are no government controls on the central banks, of which the Federal Reserve is a part of. The U.S. government is a puppet of this wealthy elite class and unless they follow orders, they will be taken out, much like JFK was.
    We need the American people to stand up for their Republic and take it back from those who are working to destroy this country. JFK knew this, and gave speeches that indicated that he was going to remove the Fed and take our country back from the wealthy elite. Look back over his speeches and you can see what his plans were.
    Enough said, let me know if you want further elaboration on the historical evidence that proves this and more.
    Have a happy day!
    Bob

    November 14th, 2009 at 7:52 am
  5. salome said:

    I’m here in a working class /yuptard section of nyc and nobody’s lining up praying their checks/WIC/foodstamp allotment clears.
    we don’t have walmart here either.
    Still plenty of rice,flour,cooking oils,dairy,meat,junk food etc at decent prices in our supermarkets. No fighting,no lines outsidethe doors, no shortages–nothin-

    as for the banking industry,go back to the carter years and refresh your memory for those rates :savings,cd and loans–LOL–and remember the gas RATIONING and carter’s solution to a cold home was to put on a sweater.

    1979–gold was 850/ounce and the minimum wage was what ???
    2-two fifity/hour ?
    so,today it’s 1100/ounce–minimum wage is more than 3 times what it was back then.

    yeah,we’re in for one helluva ride and those in the know WILL survive ……and some will thrive.

    November 14th, 2009 at 11:35 pm
  6. Josh said:

    Go on to google video and watch these videos to learn what is going on with our monetary system: Money as Debt. Fall of the Republic. Freedom to Fascism. Zeitgeist: Addendum

    November 15th, 2009 at 9:22 pm
  7. Toodles said:

    What about investing in tangibles? Not so much gold, necessarily, but how ’bout real stuff — like food, a good water system, fixing your house for years to come, outright buying of items to feed and clothe you in years to come….or items that you can use to “not purchase” in the coming storm?? I would like to see you address this in a future article….

    November 16th, 2009 at 10:49 am
  8. Ted Greene said:

    Obamanomics, the “Change you can believe in and now feel” Obama’s Marxists mentors provided the plan years ago.First collapse the U.S. economy then let it rise as the Phoenix as a Socialist-Marxist government.
    With the annoited one and his cronies on top of course, with all the assets of America. Of yes, in Japan Obama announced he was now “President of the Pacific”- his first promotion from “Citizen of the World”.
    Nobels and serfs again, world wide, with Obama as emperior of course.

    November 16th, 2009 at 11:28 am
  9. J. L. Stodgel said:

    With Thanksgiving quickly apporaaching I am soooo grateful that I live in a small W/Central IL community where friends, family & nieghbors look out for one another!! I would likely be in despair if I lived on the east coast or the west coast or even in Chicago.

    Sure everyone here knows everbody else’s business, BUT, when you have troubles there will be someone there to give you a hand up.

    shouldn’t we all try to “do unto others as we would like them to do unto us”?

    November 16th, 2009 at 1:49 pm
  10. surviveTHEtimes said:

    1st – earn less = pay less taxes
    2nd – own less = pay less taxes
    3rd – store majority of your cash in gold/silver
    4th – invest only in yourself
    5th – become more self sufficient
    6th – try to live a more Christ like life.

    If Caser wants it, let him have it!

    November 16th, 2009 at 11:55 pm
  11. Doug Ward said:

    Within 18 months these will be referred to as ‘the good old daze”

    November 17th, 2009 at 12:34 am
  12. Anon E. Mouse said:

    Unfortunately, I happen to be on food stamps… that was after several years of living off $40-$70 a month for my food budget. Things just went downhill from there, and our main goals every month are to pay for our rent and our car payment. My husband works four jobs and goes to school full time, I have two jobs and am starting my own company as a writer. We work hard, but the money just isn’t coming in yet. When my husband graduates from law school I expect things will turn around.

    We don’t line up for groceries at the beginning of the month. Where I live, at least, it’s possible to get good deals on groceries, especially if you use coupons and buy everything when it’s on sale. We usually carry a balance because we try to save.

    November 17th, 2009 at 11:56 am
  13. Anon E. Mouse said:

    I meant $40-$70 a week, not month. That included diapers. The cost of groceries went up like crazy between 2003 and 2007; my costs nearly doubled.

    November 17th, 2009 at 11:58 am
  14. Mark said:

    The fall of the dollar is really linked to the decade long unsustainable trade deficits the nation ran. One of the ways companies were able to hold wages flat (or actually have them fall in real terms) without too much class dissension was the large scale substitution of cheap imports for more expensive domestic products over the past 20 years. A strong dollar facilitated that process by making those imports even cheaper. Oh, it also destroyed the manufacturing base since it kept foreign labor comparitively cheaper as well. The fact of the matter is the monetary authorities don’t have the means to sterilize the flight from dollars.

    Now all the pigeons are coming home to roost – and it’s pretty ugly.

    November 17th, 2009 at 2:11 pm
  15. JP Merzetti said:

    Maybe the fact that it’s still being referred to as a great recession, and not depression points more toward the disconnect between the upper 50% and the lower 50%.
    The upper, although hurting, have a lot more discretionary spending that falls into superfluous categories….though many of those categories may seem essential to them – they’re not.

    Whereas, the lower half have witnessed earnings erosion that has deeply affected the ability to cover the costs of absolute essentials.
    I think for the upper half, it’s a recession. For the lower half, it’s something more than that.

    We can’t ever look back in history without knowing what came after the previous depression. Those conditions won’t be repeated. They can’t. Our resources have been squandered.

    And Bob – I’d love to read more on what you uncovered about JFK. Where to look? (most of the stuff I’ve found wallows around in the same old typical conspiracy theories…without going into a whole lot of background detail.)

    March 12th, 2010 at 4:34 pm
  16. jay said:

    we are not in a recession /depression [ they eventually end] but rather a currency collapse totally different soon 1-3 years max usa will be a 3rd world country we have shot ourselves in the heart when we let real primary manufacturing jobs leave who to blame look in the mirror we must remonitise we will do that with a revolution or without but either way it must be done there will be a tax revolt large commercial properties will be abadoned as they become worthless the cost to tear down more then the land value home values dissapate towards “0″ the american dream is fleeting liken it to monoploy game but now when you go past “go”you have to give $200 soon the game runs out of money as the money came from the air it shall return to the air it will not be fun enjoy the day

    April 14th, 2010 at 5:36 am
  17. Donnie said:

    It is sobering, but I remember a movie and book a few years ago where the protagonist was a dude called “El Voce.”

    America, it appears to many, is a tribe of brutish suppressors – aliens bent on imposing their will on the weaker denizens of the globe. But there is a message here…

    Not all Americans are dullards, proles, and knuckle dragging bigots. WE will find a voice – and once found, “the Voice” will be heard.

    Stay tuned.

    July 20th, 2010 at 4:59 am
  18. Book said:

    They shipped all our factories to China. There will be no “new” jobs in America. They planned this and called it Free Trade.

    October 21st, 2010 at 6:40 am
  19. Kaweah said:

    There will never be a revolution, or marching in the streets, that so many people call for. First of all 95% of Americans don’t realize what’s being done to this country by corporations & elites with the full cooperation of the government.( This is a dictionary definition of fascism by the way.) Secondly, the moment that there is any perceived threat to the status quo, it will be labeled a terrorist threat, & treated as such, using as much force, ( including deadly), to quell it.

    December 4th, 2010 at 10:04 pm
  20. Richard Suislaw said:

    It is refreshing to read intelligent comments that have been written by people who by my inductive reasoning have been doing their reading homework and have an overall grasp of what is taking place right under our public noses. When I repeatedly ponder why the many are so silent, and whimper if only in a whisper and believe in “change”, I reflect upon a quote from my dear uncle, “The masses are asses”.

    But Ted Greene and Kaweah have stated the problem succinctly. We will be looking back, namely those of us with a brain, and be angry with ourselves for not being more vocal much sooner or perhaps more physical, in our resistance against the progression of a welfare state to socialism, to facism, to communism and the completed circle to serfdom.

    Oh! I must ask, if I am the only reader that was a might concerned at the tone of the last paragraph or two? I am referring to the comments that the blame of our misfortunes lay with the “wealthy class”. I am sorry but I can not accept that tone that incites class division. I agree that the baks and the banisters are the culprits. But the age old problem of determining who is wealthy is the same one as determining who should pay taxes. Unfortunately everyone points to the next guy who makes slightly more money than he does.

    November 24th, 2012 at 1:35 pm
  21. Buck Buchanan said:

    You can blame Wall Street and the banks, however, they just took advantage of the laws that Congress passes (or doesn’t pass.) Congress demolished the Volker Act that kept separate, savings banks and investment banks. Congress pushed to insure everyone had a house even though they could not afford it, allowing loans with nothing down, and liar loans. (Thanks to Barney Frank et.al.) No one give a damn about what used to be a moral hazard–letting people walk away from their homes with little or no consequence. And, if you are old and saved for retirement thinking that you would get a return on your savings, forget it. The Federal Reserve had blasted away with a near 0% return on your investment. And look at what the cities that are going bankrupt are doing. Sticking it to the bondholders so they can continue to pay the outlandish pensions of the public sector. Will anyone want to buy a California bond. No thanks. You voted them in, now live with it.

    January 2nd, 2013 at 5:25 pm

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