Sep 22 2013

How the stock market is a sham for the working and middle class. 53 percent of Americans have no money in the stock market, including retirement accounts. 62 percent of all US wealth owned by top 5 percent.

The growing wealth divide in this country is devouring every piece of the middle class that is currently left.  The stock market is largely a sham for most Americans.  Why?  Many hedge funds and other large Wall Street firms are in the business of making quick profits even if it means destabilizing the underlying economy.  Many large companies have made larger profits since the recession ended by slashing wages and benefits.  More importantly however, is that this dramatic bull market in stocks since 2009 has been one big sideshow for most Americans.  A Pew Research survey found that 53 percent of Americans own no stocks, including in their retirement accounts.  And the fact that only 10 percent of Americans have pensions, many (most) are going to rely on Social Security as they enter old age.  Why is the stock market a sham for working and middle class Americans?

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Sep 19 2013

Going for broke: The multiple lost decades of US household income. Is it possible to have a recovery while the standard of living collapses?

The recent Census data highlights a stark difference between the stock market and what families are facing across the United States.  Households are struggling to keep ahead while the standard of living slowly erodes with the juggernaut that is the banking tide.  There will be repercussions for what the Fed has done in terms of bailing out the banks.  One longer term problem is the decline in household incomes.  Adjusting for inflation, American families are making what they did in 1989.  How long ago was this?  The most popular shows on TV were The Cosby Show and Roseanne.  In other words, this was a generation ago.  The standard of living continues to decline for many but for others the bailouts are working out magnificently like rubbing on a central bank genie lamp.  The Fed is going for broke here but only a small portion of our population is really coming out ahead.

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Sep 17 2013

A road to unsustainable debt: CBO reports that US is on unsustainable budget course as spending exceeds revenues.

A recent CBO report came out with a rather sobering outlook of our governmental spending habits.  The word “unsustainable” is probably not something you want uttered in a report about meeting a budget.  Yet that has been our recent trajectory when it comes to spending.  The massive financial crisis and subsequent bailouts have resulted in a titled economy favoring a small group of people.  The same engine that led us into this problem is still humming along and the too big to fail have now become the way too big to fail banks.  So unsustainability is the spine fueling the current recovery.  Debt upon debt only works until you reach tipping points.  US households hit that point a few years ago as the housing bubble imploded.  To think that this path of acquiring debt upon debt to pay for expenditures is sustainable is going to cause deeper instability into an already shaky system.

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Sep 14 2013

Pension disaster looms over the horizon: In 1980 60 percent of Americas participated in a pension program. Today it is less than 10 percent and the amount saved for retirement is startling.

Americans are on the verge of a retirement disaster.  As pension plans slowly go extinct Americans are not saving enough for retirement.  The figures point to a looming pension and retirement disaster.  Retirement for most Americans is largely a mirage.  As organizations switched from pensions to 401ks it was expected that most Americans would save money.  This trend started in 1980 and over 30 years have now passed.  We now have enough data to see if this transition has been beneficial to most Americans.  Unfortunately the answer highlights an American population that has not saved enough for retirement.  Most Americans will make Social Security their default retirement plan.  Pension issues also loom as many state governments contend with deep underfunding for retirement benefits.  In the end, there is a disaster looming.

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Sep 12 2013

Modern day financial repression and disinformation: Financialization of America creates incentives for massive income inequality.

America in the last couple of decades has undergone a massive reformation when it comes to the financial system.  The ability to convert everything and anything into a tradable security has been the biggest goal of Wall Street and has captured our entire economy like a starving grizzly bear chowing down on Alaskan salmon.  Even once stale real estate, once thought of as the cornerstone of wealth for most Americans is now a volatile and speculative commodity where large hedge funds dive in and out like bombers for quick profits.  The end result is that more Americans are finding it harder to keep up while most of the wealth aggregates in fewer and fewer hands.  Since the recession ended, most of the new jobs are being added in low wage segments of the economy.  An easy way to boost profits is to slash benefits and cut wages.  Good for the stock market but not necessarily for working Americans.  Sadly, that is the rub of this modern day system.  The stock market is benefitting companies that may not have the best interest of the overall economy at heart.  If that is the case, is this system truly functioning well?

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Sep 10 2013

United States sets another food stamp record: Households on food stamps at new peak and more Americans live in poverty compared to the entire population of Spain.

The gap between rich and poor in the United States continues to grow in-line with food stamp usage.  Many Americans watch in dismay as they view countries like Spain rip its self apart by a massively discontent and unemployed youth movement.  Many probably watch thinking that somehow, our problems can never come close to what is being experienced abroad.  The irony is that we now have more Americans on food stamps than the entire population of Spain.  That is right, more Americans are living food stamp payment to food stamp payment versus the entire population of a county literally suffering in depression.  Yet somehow, the narrative playing out in the economy is all around a booming real estate market (profits to investors) and the peaking stock market (most Americans don’t even own stock) are big windfalls for all.  Yet the gains are being captured by a small portion of the population.  This is how we can reach these seemingly dichotomous situations where poverty rises in the shadow of a booming stock market.

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Sep 6 2013

The day of reckoning for student debt has arrived and the bubble begins to deflate: JP Morgan exits the student debt market. Similar trends occurred with the subprime market in 2007.

The student debt bubble begins its inevitable decline from unparalleled heights.  This week too big to fail bank JP Morgan issued a memorandum that it is exiting the student loan business.  What is interesting in this move is that it is eerily similar to banking moves made back in 2007 as some banks started to back away from the subprime mortgage market.  At that point, it was too late and the most toxic of the toxic loans were already collapsing ushering an era of over 5,000,000 foreclosures with another 2,000,000 likely to happen in the next few years.  Student debt has surpassed the $1 trillion mark and delinquencies in student debt are now the highest of any debt class.  With the announcement by JP Morgan, we are now getting a taste of what is to come.  The day of reckoning for student debt has arrived.

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