Living paycheck to paycheck with the housing albatross – Survey finds one in three Americans unable to make their mortgage or rent payment beyond one month if they lost their job. 61 percent unable to make payments beyond five months.
One of the unnerving revelations brought about by the current recession is how many Americans are living precariously close to the economic edge. The Band-Aid of credit cards, home equity loans, and other vehicles of debt masked the problem for many years. Debt was rolled over on a continuous basis and as long as the debt bubble expanded the process seemed limitless. Yet the bursting of the debt bubble largely brought on by the collapse of the housing market is revealing the true state of the economy. A sobering new survey finds that one in three Americans would not be able to make their mortgage or rent payment beyond one month if they lost their job. For most Americans this means $1,000 to $1,500 a month. This also ties in to the grim reality that one in three Americans has no savings to their name. The housing market has been mired with problems for nearly half a decade now. This clouds the perception of future home buyers going forward. Because of this buffet of problems the U.S. housing market will forever be changed.
The punishment of the American saver – JP Morgan Chase CEO makes 843 times the median household income and pays his Chase customers 0.01 percent on their savings.
The current financial system is designed to punish old school savers. By definition in our debt based economy those who save are actually taking fuel out of the consumption based economy. Spendthrifts are the high octane that keeps things spinning even if it comes with a high debt price tag. You see this occurring in the world for example with countries with high surpluses bailing out countries with big debt problems in particular in Europe. We are different but not so much. The Federal Reserve has made savers a pariah in the last decade. If you were to put your money in an old time savings account you would earn virtually no interest. And when we say no interest, we mean you would make the same amount by stuffing your hard earned dollars into your mattress. Why is this occurring? Is a system so dependent on debt sustainable? The Fed realizes that in order to keep the too big to fail banks standing people will need to continue to spend even if they are getting poorer as the statistics show.
The Big Change: Massive financial volatility and the occupation of Wall Street – when the middle class breaks protests will hit the financial streets. Poverty in the suburbs and rising food costs.
When the basic costs of living move up there is bound to be shocks deep in the economy. As we mull over the humbling Census data, it is clear that many Americans are struggling in this modern day economy that protects the banks at the cost of the majority. Let us call a spade a spade. We are in the epicenter of the biggest financial disaster in history spurred on by the investment banks and their purchased colleagues in Washington D.C. How do we know this? Because no real reform has been enacted on Wall Street and we enter a decade of lost wages. The middle class is disappearing because bankers have used corporate welfare to shield themselves from the brutal corrections of the markets while the rest of Americans need to get by on an average of $25,000 per capita. Oscillating votes from Democrats to Republicans has done absolutely nothing. Many are now taking to the streets and protestors are now marching to Wall Street taking action. If you look at those who are protesting many are young, in their twenties and thirties, protesting what the media has failed to cover for years. If we look at the last decade we realize that our current financial system has captured our political system and things are starting to get volatile, just like the stock markets.
The coming failure of Operation Twist – The Federal Reserve resurrects a program from the 1960s named after the Twist Dance. Appropriate timing for a Dancing with the Stars nation.
The Federal Reserve has literally run out of ideas. Operation Twist, a throwback to the 1961 action taken by the Fed named after the Twist Dance fad at the time, is now back in 2011. This time the Fed plans to purchase $400 billion of bonds with 6 to 30 year maturities while selling bonds with shorter term maturities. The Federal Reserve continues to deal with a debt crisis with more debt. The market has quickly spoken shaving off 700 points in two days and many global markets are now solidly back in bear market territory. The problem with this program is that it assumes that the only problem with the economy is that not enough people are borrowing and spending. The Fed goes after interest rates like a lion after a zebra. Interest rates are not a problem. Rates are at historical lows. The problem of course is that household income has gone south for well over a decade. The only true winners with these low rates are the banks who can access cheap money to wildly speculate in the stock market casino.