Apr 25 2012

The young and the jobless – Half of bachelor’s degree-holders under the age of 25 are unemployed or underemployed, in the US. Social Security short fall highlights deeper reality of economy.

The news for young Americans doesn’t seem to be getting any better.  Earlier this week it was announced that Social Security will be running out of funds by 2033, three years earlier than expected.  What this means if nothing is changed is that future retirees will receive only 75 percent of expected payouts.  Not a good item of news considering inflation in daily goods is high thanks to the bailout policies and quantitative digital printing taken on by the Federal Reserve.  The full retirement age of Social Security for those impacted will be 66 or 67 by 2033 for everyone born after 1954 or 1960 and 21 years from now will come up a lot quicker than most realize.  Yet many recent graduates, those under 25 with a bachelor’s degree are either unemployed or severely underemployed.  What is worse, the young generation is shouldering most of the massive debt in the student loan market.  Older generations are being impacted since many are moving back home or are requiring resources merely to stay afloat.  Hard to imagine a future generation with lower financial living standards but this is simply the continuing trend of breaking apart the middle class.

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Apr 22 2012

The big swindle and a fog of debt – hiding the unemployed in the higher education bubble and three years of economic recovery equates to 11.5 million more Americans on food stamps.

A large part of our recovery is running on public relations trickery and smoke and mirrors debt machinery.  Let me explain what I mean by this since on the surface we have been out of a recession since the summer of 2009.  Government debt is soaring and public debt in certain sectors is flying off the charts.  Take for example food stamp usage and student loan debt.  These payments typically rise during tough times as would be expected.  So you would conclude that being in year three of this so-called recovery that costs for both of these sectors would be retreating.  You would be absolutely wrong in this Alice and Wonderland debt world.  The student debt market has become a predatory landmine for prospective students and continues to grow like a wild fungus.  Food stamp usage is expected to be high deep into 2014.  Can you call it a recovery by using accounting magic that actually hides the continuing deterioration of the middle class?

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Apr 17 2012

The long debt emergency has arrived – From 1950 to 1980 total US credit market debt to GDP held a ratio of 1.5. Today that figure is above 3.5 with total US credit market debt at $54 trillion.

We are reaching a point of no return with global debt.  The US will be running deficits for as far as the indebted eye can see.  This isn’t a new or novel trend but the magnitude certainly is.  Since we stepped on the deficits do not matter accelerator in the 1980s the US dollar has been losing its purchasing power year after year.  This might not be a big deal for you if you have a large share of international currencies and major investments overseas but the results for the working and middle class are financially disastrous.  Most American workers are paid with US dollars and not with foreign currencies.  The troubling aspect of our economy is that we are starting to move backwards and for younger Americans and their parents, it is hard to imagine a world where the subsequent generation will be in worse shape but that is the plate we are being served.  We need to look at some data very carefully to see how incredibly indebted we are as a nation.

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Apr 14 2012

Low wage America and the working poor – US has one of the highest number of employees working in low wage jobs of high paying industrialized nations. 1 out of 4 Americans employed work in jobs that pay less than $10 per hour.

Low wage jobs have been a big part of the so-called recovery.  What they also signify is a more troublesome trend that continues to eat away at the middle class in this country.  I’ve noted that the per capita average income for Americans is $25,000 and many seem to be shocked when they hear how low this figure is.  A recent presentation only reinforces this figure by discussing the number of working Americans in low wage fields.  The problem with having such a large portion of our population in low wage work is that as the cost of living goes up many of these people have a harder time providing for necessities like food, education, and also healthcare.  Surprising or not, the nation has been seeing a massive divide between the working class and those at the top.  The low wage employment growth signifies a continuation of this trend.

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Apr 12 2012

Educating students to debt – Student loan debt now second largest sector of household debt approaching $1 trillion. 14 percent of consumers have one account in collections.

College debt is fueling the out of control higher education bubble.  The Federal Reserve tracks most household debt sectors very carefully including mortgage debt, auto debt, and credit card debt.  You would think that they would follow student loan debt carefully.  That was not the case until recently.  More disturbing however is that student debt is now the second biggest debt sector for US households nearly reaching $1 trillion.  Most of this debt has been taken on since 2000.  Those who argue how valuable college is look at the aggregate figures of those working with college degrees that likely went to school when there was no higher education bubble.  Those figures no longer hold true especially when we examine the figures of younger Americans who are facing crushing blows when it comes to employment but also wealth accumulation.  One thing is certain and that is the student loan market is in one giant bubble.

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Apr 8 2012

The suffocation of unsustainable global debt – Total global debt is now over $190 trillion and more than three times global GDP. Contagion with European Union.

The biggest market in the world is the European Union and debt problems are still rippling through the global markets.  It is apparent with the financial crisis that the global markets are tied together by large banks and interconnected trade.  A problem in the largest market should be unsettling and the unemployment rate in the European Union is now at a 15 year high.  The global debt problem was never really solved but papered over with extensions and banking trickery.  The US has dealt with much of the debt issues by suspending major accounting rules and stuffing bad loans into the Federal Reserve like a Christmas stocking.  The European Union is facing some challenges ahead and all eyes will be watching given the impact of contagion impacts.  Greece was only a tiny sliver of the debt issues compared to the major debt restructuring that will be necessary for a large economy like Spain.

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Apr 5 2012

The phony economic deception machine – JP Morgan Chase CEO earns $23 million in 2011 while 2.7 million foreclosures are filed in the US. GDP at record levels but employment figures down by 5.3 million from their peak.

The US economic and political system is doing an excellent job sealing off opportunities for millions that aspire to be part of the middle class.  Many are starting to realize that the system is rigged in favor of large financial institutions and those with political connections.  The idea of raw success based on talent can be thrown out the window with the corporate welfare generosity leveled at the too big to fail financial institutions.  Many Americans are being told that forced austerity is a necessary part of rebalancing yet the CEO of JP Morgan Chase just received $23 million in 2011 while tens of thousands of foreclosures riddled Chase’s balance sheet.  Earned success?  If we examine real GDP the facts show the US economy is as large as it has ever been but we are running it with over 5,300,000+ fewer workers.  The system is designed to extract economic rents from the public and drive them into a few select sectors.  The working and middle class are feeling this change deeply as noted by the over 5 million fewer workers that we have.

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