Stock Market Hustle – Three Ways Wall Street has Created a New American Serfdom. The Overly Expensive Mortgage Deduction, Wall Street Pseudo-Rally, and Attacking the Poor.
Last week the S&P 500 almost reached an impressive 80 percent gain from the red abyss seen in March of 2009. This puts this stock market rally up in the ranks of the strongest and fastest market turnarounds in history. Yet on Friday news of Goldman Sachs betting on toxic mortgages sold to clients brought the market down as the SEC has finally decided to bring a civil suit forward. Only took a full 27 months of the obvious. The case against Goldman Sachs is a good representation of what our stock market has become especially when it comes to financial institutions and their gaming of the system. Here you have a firm pushing toxic mortgage securities to their own clients yet at the same time, another division of the institutions is betting against the pool of securities because they know that it is junk. This is the story of the current financial system. What use is this really providing the market except enriching the most corrupt and elite financial institutions in the world?
The Great American Bank Heist – On the Day we Reach a Monthly Foreclosure Filing Record Banks Announce Record Profits and the Stock Market is up 80 Percent.
It is rather fitting that on the day we hear about banks reaching record profits once again, because after all it is so difficult to borrow at zero percent and gamble in the stock market and make a gain, that we also find out that March was the highest month of foreclosure filings ever (and we’ve had some bad months). If there was ever a more clear indication between the split from Main Street and Wall Street this is probably the strongest indicator so far. I’ll include the charts below but being blunt about the situation, the bailouts worked. If we define “worked” as boosting banking profits once again while 40,000,000 Americans are on food stamps and 17 percent remain underemployed then all is well again in the economy. Yet this isn’t what the American people bargained for in the bailouts. In fact, they didn’t want the bailouts if you remember the massive anger from both aisles calling their representatives. But the cronies didn’t listen since they receive millions in lobbying dollars and $13 trillion went to Wall Street in the biggest wealth transfer witnessed by the disgruntled American public.
The Invisible Recovery – 40,000,000 Americans Receiving Food Stamp Assistance – Since 2000 23 Million Americans have been added to the Food Assistance Program.
The latest food stamp data for January of 2010 shows that 39,430,724 Americans are receiving food stamps or are part of the supplemental nutritional assistance program (SNAP). If you make the acronym and name long enough and with a neutral undertone average Americans won’t fret that 40 million of their fellow neighbors are one government debit card away from being unable to eat. Yet this is the new corporate funded recovery and somehow things don’t seem to be improving for the middle class and definitely not for those at the lower rung of the socio-economic ladder. In fact, we may have more than 40 million on food assistance today. Since the start of the recession in December of 2007, we’ve added on average 474,000 people each month to SNAP. Since the data lags a bit and we only have January 2010 data, it is likely we now have between 40 million and 41 million Americans on food assistance.
The $2.3 Trillion State and Local Government Debt Monster – California Pension Systems on Unsupportable Path with $500 Billion Projected Shortfall. CalPERS, CalSTRS, and UCRS.
Much of the focus on government debt over the past few years has revolved around the federal government. No doubt, this is a stunningly large amount. Yet the government has the ability to finance this debt through the U.S. Treasury and Federal Reserve with a buffet of choices. You have direct bailouts to Wall Street, quantitative easing, and systematically dismantling the U.S. dollar. But one issue that is rising to the top is that of state and local government debt. States do not have the ability to print money at the whim of any central banker. And the state and local government debt market is up to a whopping $2.3 trillion. At this point, trillion is the new billion.
State and Local Budget Crisis Black Swan – California paying out $100 Million per Day in Unemployment Insurance. Detroit’s Shrinking Population Crushes Revenues. The Employment Situation at a Micro Level.
One stunning statistic that hit this week regards California’s unemployment insurance claims being paid out. California is paying out some $100 million per day in unemployment benefits. I’m not sure if I would call it a “benefit” but more as a buffer to get by. In reality if we really want to get a pulse on what Americans are facing in terms of the recession unemployment claims and benefits are a good place to start. The unemployment rate as we all know can be fudged in many ways. If you work 10 hours at Wal-Mart but want full-time work then you are counted as employed in terms of the headline rate. This isn’t a big deal when a small part of the country is working part-time for economic reasons but this group is enormous (9 million to be exact). The headline rate is 9.7 percent but add in this group and we are up to 16.9 percent. And people seeking unemployment rarely fudge numbers because they need the money and they have to report their status every two weeks to continue receiving claims.
What does it mean to be Middle Class in 2010? – No College Degree, Massive Amounts of Debt, One Health Crisis from Bankruptcy, and Beholden to the Banking Elite.
Being middle class today does not carry the financial security that it once carried in the 1950s and 1960s. Interestingly enough, many Americans at that time did not own stocks yet somehow they managed well because they had access to affordable housing without toxic mortgages and many had the ability to work with one company and have some kind of security from their company. It was a mutual relationship as even Henry Ford shook the auto manufacturing world by upping wages for his workers. Yet today, we are being fed distorted information from Wall Street that we need to have this system where workers are disposable entities only to increase the profits of the corporate class. If people are hurting so much why are we paying billions in bonuses to a small group of people that really haven’t helped the country? In fact, many of these are directly responsible for our current economic problems. At the root, this has been the cancer that has eaten away at what it means to be middle class. Social government welfare for Wall Street and Darwinian capitalism for the rest of us.
The Big Change and Four Rules not learned from the Great Depression – Break up the Banks, Protect Workers, Use Stimulus Funds for Jobs and not Banks, and a Government Protecting the People.
As we drift further and further from the abyss of March of 2009, there is a slow acceptance that things are getting better even though average Americans need only look at their individual household balance sheet to know this isn’t the case. How can things not be better they ask? The S&P 500 is now up 74 percent in one year, the strongest run up since the Great Depression. Yet Wall Street gets it that the longer they can stall and water down reform the more chance they have at getting away with the biggest wealth transfer in American history. Even during the Great Depression, we actually learned lessons and enforced new rules to curb the gambling that led to the collapse. This has yet to occur. Let us look at some changes that occurred during the 1930s that certainly have not happened this time.