Feb 28 2016

Get used to an America where owning a home is not part of the dream: You cannot afford a home on that income!

Well congratulations America.  Signs of another housing bubble are as clear as day.  Loans with nothing down are back in the market.  Incomes are stagnant so creative financing is necessary to buy more expensive homes.  And homes are more expensive.  The current home price data shows that across the country we have now surpassed the last bubble peak.  Yet incomes are not keeping up with wild movements in prices.  The end result is that the homeownership rate has collapsed yet somehow home prices went up.  How can prices go up with fewer families buying homes?  Easy, since the bailout funds allowed banks, hedge funds, and investors to pickup foreclosed homes from families and then turned them into rentals.  Now we have many more people living in rental homes accumulating no equity and barely scraping by.  Yet somehow with housing prices soaring, college tuition at crazy levels, and stagnant incomes we are led to believe that somehow we have no inflation.  The current model of the American Dream involves no homeownership for the already shrinking middle class.

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Feb 23 2016

Student debt apocalypse: Median wages up 1.6% over last 25 years while median student debt is up 163.8%.

Student debt is out of control.  Over $1.3 trillion in student debt is floating out in the current economic system.  Most of this debt is saddled firmly on the backs of younger Americans who coincidentally are also entering into a job market with incredibly low wages.  This idea of high tuition with low wages isn’t some made up propaganda to distract you.  This is reality.  The math behind this is all clear cut because inflation has eroded the standard of living of Americans to the point that the middle class is now a minority.  Student debt carries larger implications than merely paying for a college education.  Many younger Americans are unable to buy homes because of the amount of student debt they carry.  Many are also delaying bigger purchases because of the large debt they already carry.  This path is clearly unsustainable.  Just take a look at wage growth and total student debt growth over the last 25 years.

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Feb 17 2016

Percent of Total Wealth Owned in the United States: Bottom 40% control -0.9% Meaning Close to Half the Country has a Negative Net Worth.

Wealth is an important measure of financial stability and success.  Being able to have enough set aside for a rainy day can make the difference between weathering a minor storm to being in full upheaval because of an unexpected expense.  Most Americans however live paycheck to paycheck.  There is no emergency fund.  It is troubling to see new data looking at the distribution of wealth in the United States because many Americans actually have a negative net worth.  New data looking at wealth distribution highlights a growing gulf between Americans.  Wealth inequality like that seen during the Gilded Age and the Roaring 20s led to massive disequilibrium that ended up in deep financial corrections.  We are very much in a situation that rivals that period only this time the public is able to go into negative net worth territory through items like college loans, auto debt, and credit cards.  The percent of total wealth owned in the United States might surprise you.

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Feb 12 2016

Importing lower wages as 75% of Silicon Valley’s tech workers are foreign-born: How tech manipulates the H-1B visa program for cheap labor.

We tend to believe that the tech industry operates in a very progressive atmosphere as far as how they vote.  This might be the case for workers but for owners, they are ultra-bottom line and this is seen in the way they hire lower wage workers.  We tend to get things mixed up in regards to foreign workers “stealing jobs” when the rhetoric is thrown out in the media.  In reality, most of the H-1B visas, a visa to allow employers to recruit and employ foreign professionals in specialty occupations, is largely dominated by the tech industry.  In fact there are industries in China and India that cater to this market entirely like Tata Consultancy Services.  Yet this pushes wages lower at a high level since these are skilled workers.  For other Americans, the low wage employment train continues to chug along.  Which companies sponsor the highest numbers of H-1B workers?

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Feb 7 2016

Low wage recovery highlighted by 7 out of 10 jobs added in January coming from minimum wage waiters and temporary retail workers.

The unemployment rate fell below the 5 percent mark for the first time since the Great Recession wrecked havoc on the economy.  This is good news right?  Well the stock market didn’t think so for a couple of reasons.  First, this adds more fuel to pushing interest rates higher (a big expense on the $19 trillion we already owe).  Second and probably more importantly, it highlights the growing trend of low wage employment.  7 out of 10 jobs added in January came in the form of low wage jobs.  We added 58,000 in retail and trade (i.e., Wal-Mart and Target work), and 47,000 in the food trades (i.e., waiters and bartenders).  With states pushing minimum wages up, this is where the income gains came from but we are talking about a weak jump brought on by the low range of the curve.  This is why the casino known as the stock market took a dive despite this seemingly good news.  Is this a problem that most of our job growth came in the form of low wage work?

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Feb 3 2016

Total U.S. debt breaks $19 trillion mark: Total debt rises by $8.4 trillion in last 8 years and is on pace to hit $22 trillion by 2020.

When the party is getting ready to end, you might as well ramp up the spending and put it on the nationwide credit card.  Total U.S. debt blew right through the $19 trillion mark and has expanded by $8.4 trillion only in the last 8 years.  There are countless obligations in the form of Social Security, Medicare, military, education, and other expenses that almost guarantee that total U.S. debt is going to expand further.  This brings up an interesting situation in the respect that we will never pay this debt off.  I think people get this, right?  In fact, the entire debt foundation is built merely on the servicing of debt, not the actual payoff.  Yet the amount of interest we owe is now also ridiculous. In December alone we paid $86 billion in interest for one month.  The pace of debt growth is unsustainable and has created a world where central banks are chasing negative interest rates just to keep servicing costs low assuming they can find a borrower.

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Jan 29 2016

Unsocial Insecurity: Social Security Fund loses money for the first time since 1983. The new retirement model will have you working until you fall over from a heart attack.

Social Security was never designed as a long-term pension.  It was implemented in 1935 during the Great Depression to assist families from falling into absolute poverty.  The large work force dominated by men usually meant that many would die and leave a large family behind with no financial resources.  Social Security was there to protect this group.  But over the generations, Social Security is now seen as a retirement fund and many depend on it for their livelihood.  Recent figures highlight that 44 percent of retirees on Social Security would be in abject poverty without this support.  More to the point, the number one source of income for retirees in America is Social Security funds.  So it might come as a troubling surprise that the Social Security fund ran a deficit last year for the first time since 1983.

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