Mar 12 2012

The old get wealthier and the young get poorer.

This recession has been unmercifully brutal on younger Americans.  Many are entering the most difficult employment market in generations with a flood of low wage jobs saddled with record levels of student debt.  Many have never even witnessed how it is to live in a bull stock market.    Of course this is assuming they had money to invest since 37 percent have no net worth or even worse, a negative net worth.  Even for the cautious minded, they are only able to garner a 0 percent savings rate as the Federal Reserve continues to implement a quantitative easing policy to rescue the banking sector.  The data on net worth for US households is disturbing since it highlights a deterioration of the middle class.  It is no surprise that this recession has caused many younger Americans to move back home with parents primarily because of the inability to find work and many that do find work find that it is part of the low wage growth sectors.

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Mar 8 2012

How does an America with no middle class look like? Bureau of Labor and Statistics projects top two jobs for the next decade will pay roughly $20,000 a year. Approval rating of Congress at 10 percent. In comparison, Americans approved of BP’s handling of the Gulf oil crisis at a 16 percent rate.

A strong middle class has been at the core of what has been promoted as the American Dream.  How would America look like if the middle class simply vanished?  We may not need to wait too long at the current rate since we are quickly siphoning people off the middle class and throwing them into lower income brackets.  The vast majority of Americans do not buy into the propaganda promoted on the tightly controlled media outlets.  In fact, the latest Congressional job approval numbers are at a record low of 10 percent according to Gallup.  To put this low figure in perspective 16 percent of Americans approved of how BP handled the catastrophic Gulf oil spill at the peak of the blowout.  This low Congressional approval is all coming during a supposed economic recovery where 46,000,000 Americans receive a monthly charge to their debit card for food assistance.  Even government figures show the big job growth sectors of the next decade to be in low paying fields.  What would America look like without a middle class?

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Mar 6 2012

The crisis of solvency – peak debt, peak food stamp usage, and massive financial deception by media. The faux economy of solving a solvency issue with more debt. Job postings up but hiring flat.

The economy is largely running on a solid amount of debt, Orwellian news, and selective perception.  Take for example the absolute lack of coverage on our peak debt situation.  The media simply assumes that going over the $15 trillion mark on national debt was somehow a story not worth reporting.  The total amount we have taken on in borrowing is larger than our annual GDP yet countries around the world are being chastised for this exact problem.  Or what about the peak number of Americans now on food stamps?  One out of every seven men, women, and children is now on food assistance at well over 46,000,000.  You get food assistance when you are economically scraping by.  Yet the media is largely absent on this story.  We are living in a crisis of solvency and much of the recent recovery is simply a choice of ignoring glaring issues of solvency.

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Mar 2 2012

Hitting the credit card wall – Credit card debt contracts 17 percent as the grand American household deleveraging continues. Average household with credit card debt carries $16,000 at an average rate of 15% – Real broke housewives. Orange County California witnesses a 600 percent jump in bankruptcies.

Credit card debt has become a big financial albatross for many American families.  According to the Federal Reserve Survey on Consumer Finance over 176 million credit cardholders exist in the United States.  This is an amazing figure when you actually think about what a credit card is.  A credit card essentially allows you to spend money you do not have today on the promise you will pay it off tomorrow.  We constantly hear how great it is to have credit cards to build credit as long as you pay off your balance each month.  The data tells us something very different from this ideal utopia vision of credit card debt.  The average credit card debt per household with a credit card balance is close to $16,000.  Given that some households have little credit card debt, you can imagine how high the debt is for others.  A big part of our economy was built on the back of credit card debt.  Because of the massive deleveraging experienced by Americans, credit card debt has now contracted by $171 billion since the recession began.  What happens when the credit card bill comes home?

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Feb 27 2012

The kamikaze debt market deleveraging– Total credit market debt balloons to $53 trillion while US households pushed to deleverage. While American household debt has fallen by $569 billion total credit market debt is up $3 trillion.

When it comes to taking the bitter austerity medicine not all participants are shouldering the burden when it comes to the financial market bailouts.  The American worker and family have largely been in a massive round of deleveraging from an overhang of debt.  The data shows us this with household market debt falling by $569 billion from October of 2007.  However, if we are to look at the total credit market we will see that it has roughly increased by $3 trillion over this period.  Where is the money (aka debt) going?  It certainly isn’t more debt for your average household.  Much of this has gone to bailout large banks and government spending.  The issue at hand is too much debt relative to income and production yet we continue with more bailouts like the recent action in Greece for example.  The reality with the $53 trillion in total credit market debt outstanding is that it will never be paid back.  When we chart the trajectory of this we get a rather sobering picture.

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Feb 23 2012

The compression of generations – 25 million adults live at home with parents because they’re unemployed or underemployed. The crushing cost of a college education today.

The thought of moving out on your own and making your individual way in the world is very much an American trait.  Certainly movies and television shows almost always assume every American has moved out on their own once adulthood is reached.  What this recession has taught us is never take anything for what is shown on the surface.  Many young adults, many times to the chagrin of baby boomer parents, have moved back home because of the employment market conditions brought on by the recession.  Roughly 25 million adults live at home with their parents for a variety of reasons but mostly economic.  For many the debilitating cost of student debt is hindering their progression into the independent marketplace.  For others it is the lack of solid wages that actually provide enough to support a person living on their own.  And for many others the inability to find a job is still a very common experience.

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Feb 20 2012

Cascading risk and economic headwinds – 5 charts examining the coming financial challenges for the American economy. Inflation is much higher than you would expect but Federal Reserve orchestrating greatest banking bailout in history.

The American economy appears on the rugged surface to be stabilizing but only if you fail to look under the hood.  Today, we have a record 46,000,000 Americans on food stamps.  Many of these people were once moving into the middle class but were launched off the economic treadmill.  The banking syndicate that caused the greatest financial crisis since the Great Depression has largely blocked any substantive financial reform.  So all the risks that led to the crash are not only pervasive in the system but are now much larger since governments are largely backing these giant irresponsible bets.  The data for the typical American shows a gloomy economy largely disconnected from the news pushed out by Wall Street investment banks.  Today we examine five charts and the implication they contain for the future of the American economy.

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