Tag Archives: Housing Crisis

The Economic Crash So Far: A Look At The Real Numbers

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By Brandon Smith

Source: Alt-Market.com

There are many problems when attempting to track a faltering economy. For one, the people in government generally do not want the public to know when the system is in decline because this looks bad for them. They prefer to rig statistical indicators as much as possible and hope that no one notices. When the crash occurs, they then claim that “no one saw it coming” and the disaster “came out of nowhere”, so how could they be to blame?

I have even heard it argued that political leaders, including the president, have a “duty” to lie about the state of the economy because once they admit to the decline they will cause a panic and perpetuate the crisis. This is stupidity. If an economic system is in disrepair and is built on a faulty foundation, then the problems should be identified and fixed immediately. The weak businesses should be culled, not bailed out. The wasteful government spending should be cut, not increased. The downturn should not be hidden and prolonged for years or decades. In most cases, this only makes the inevitable crash far worse and more damaging.

Another factor, which some people might call “conspiracy theory” – but it has been proven time and time again in history – is that the money elites have a tendency to engineer economic disasters while deliberately hiding the real statistics from the public. Why? Well, if the real data was widely disseminated, then a crash would not be much of a surprise and the populace could be prepared for it. I suspect the elites hide the data because they WANT the crash to be a surprise. The bigger the shock, the bigger the psychological effect on the masses. This fear and confusion allows them to make changes in the power structure of a nation or of the entire world that they would not be able to accomplish otherwise.

The most rigged statistics tend to be the least important overall in analysis, but this does not stop the mainstream media and investors from hyper focusing on them. How many times have you told friends and family about the collapse in manufacturing or the explosion in consumer and corporate debt, only to hear them say, “But the stock market is at all-time highs!” Yes, even though stock markets are a meaningless trailing indicator, even though GDP stats are a complete fallacy, and even though jobless numbers do not include tens of millions of people out of work, these are the stats that the average person takes mental note of when consuming their standard 15 minutes of news per day.

While the issue of rigged statistics makes analysis of a crash difficult, a willfully ignorant citizenry makes reporting on the real data almost impossible. It’s sad to say, but a large number of people do not want to hear about negative information. They want to believe that all is well, and will delude themselves with fantasies of blind optimism and endless summers. Like the tale of “The Ant And The Grasshopper”, they are grasshoppers and they see anyone who focuses on the negative as “chicken littles” and “doom mongers”. In their minds they have all the time in the world, until they freeze and starve when winter comes.

When I encounter people who actually believe the manipulated numbers or buy into the stock market farce or simply don’t want to accept that a crash could happen in their lifetime, I always ask them to consider these questions: If the global economy is not on the verge of collapse, then why did central banks keep propping it up for the past ten years? And if central banks have been propping up the system, how much longer do you think they can do this? How much longer do you think they want to do it? What if one day they decide to let the entire house of cards tumble? What if such an event actually benefits them?

We’ve seen that a broken economy can be technically held together for a decade, but under the surface, the structure continues to rot. The bottom line is that even if the elites wanted to keep the system going for another ten years, and even if politicians continued to help them by pumping out false statistics, there is no way to hide the effects of crumbling fundamentals. We saw this during the crash of 2008, and now we’re seeing it again.

After nearly ten years of stimulus inflated the largest financial bubble in history (the Everything Bubble), the Federal Reserve and other central banks halted stimulus measures and tightened global liquidity. By the end of 2018, a new crash began, the implosion of the Everything Bubble had been triggered. All of this is still just an extension of the crash of 2008, which never really subsided; it was only slowed down through tens of trillions of dollars in central bank intervention. Now, the central banks have started an avalanche that cannot be stopped. But the fact of the matter is, they don’t really want to stop it.

Here are the indicators so far that prove a crash is happening in the U.S. while a majority of the public is oblivious:

GDP numbers are completely manipulated. Government spending of taxpayer dollars on a number of inflated programs, including continued spending on Obamacare, is added to GDP calculations. Without this fancy accounting, U.S. GDP growth would actually be negative, according to ShadowStats. But even with the juiced data, official GDP growth is still in decline, falling to 1.9% and well below the 3% growth we were supposed to see this year.

Official unemployment stats remain at all-time lows, which is commonly cited by the mainstream media, Donald Trump (he used to argue the opposite three years ago), and even the Federal Reserve in reference to the health and stability of the economy. What they do not mention much is the 95 million people not in the labor force and not counted because they have been unemployed for so long. When the media does mention this fact, they claim the number is “misleading”, that most of these people are students or retired, that the retirement age is decreasing and Baby Boomers are leaving the workforce sooner, and that the people who don’t have jobs are simply “not interested” in working. None of this is true.

The retirement age is increasing in the U.S., not decreasing, according the SS Administration. Current average retirement age is now 67, up from 65, almost the same as it was during the Great Depression.

Baby Boomers are not retiring at rates similar to ten years ago, and are in fact attempting to stay in the workforce due to the poor economy. Many of them are trying to come OUT of retirement just to make ends meet.

The labor participation rate remains near record lows.

Interestingly, the Bureau of Labor Statistics (BLS) house survey that is used to determine if people “want a job” assumes that if you are near retirement age and do not have a job, you are simply not interested in a job, and they count you as “non-participating”. However, if you DO have a job and you are near retirement age, they count you as participating. It’s a rather convenient assumption on the government’s part to claim that just because an unemployed person is near retirement age, that means they “don’t want a job”.

While there is surely a small percentage of the 95 million people not counted in the labor force that do not want a job, if unemployment stats counted U-6 measurements as they used to, the unemployment rate would be closer to 20%.

Another problem is the quality of jobs being created. U.S. manufacturing jobs, as well as higher wage jobs, are in steep decline. They have been replaced with low paying jobs in the service sector.

Real wages in the U.S. have not kept up with inflation. The average worker is now losing money overall as prices rise beyond the pace of their incomes.

As more and more Millennials say they cannot afford to buy a home, rental prices have skyrocketed in the past several years. The home ownership rate plunged starting in 2006 and has not recovered since.

U.S. manufacturing has fallen to levels not seen since the crash of 2008. U.S. factory orders have slumped in 2019.

U.S. Services PMI continues to falter since spring of this year. Job growth is now slowing and over 8,500 retail stores have been closed down already in 2019. Web-based retail is not picking up the slack, as online sellers like Amazon are suffering from falling profits.

Corporate profits overall have tumbled this year and projected future profits have been drastically adjusted to the downside.

Corporate debt, consumer debt and national debt are all at historic highs. Corporate cash flow is so tight that Federal Reserve repo purchases continue to run into high demand. This debt signal is one we saw in 2007, just before the credit crisis.

U.S. trucking and railroad freight continue to log steep declines in traffic and goods. This tells us what we already know: Even though consumer spending has increased recently, this does not mean people are buying more stuff or have more disposable income. What is really happening is inflation, or stagflation. Cost of living is going up. Debt payments are going up. Consumers are spending more on the same amount of stuff, or less stuff, and have less expendable income. U.S. consumers are being bled dry.

All of these factors and more show an economy in recession or depression (depending on what historic standards you use). In the darker corners of the investment world, the great hope is that the central banks will return to pumping trillions into the banking sector ($16 trillion during the TARP bailout dwarfs the $250 billion the Fed has recently pumped out in their repo markets). They hope that this will free up even more credit. Meaning, they believe only more debt will save the system from suffering.

I say, time is up on the debt party. More stimulus will not stall the crash that is already happening, and the Fed does not appear poised to print anywhere near what it did during the credit crisis, at least not in time to change the trend. The can has been kicked for the last time. The grasshopper mentality will not save people from the clear reality. Only preparation and planning will.

Capitalism, Empire, and the Infernal Gloom Machine

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By Jason Holland

Source: Dissident Voice

Depression is built into this machine and the evidence is plastered on the morose faces of people caught in the clutches of its business as usual activities. Depression is found in the insurmountable debts we owe for spending a lifetime of preparation and labor to serve the machine. In addition to debt, the machine awards us for our servitude with trinkets, gadgets, doodads and gizmos that provide a moment of hollow amusement and then sit on shelves in garages and decay. They represent the planned obsolescence of the human heart. The sacrifice paid for our fetish with materialism is the actual quality of our lives.

The gloom machine tells us the quality of our lives is defined by the machine in the driveway, and the machine that flushes away our excrement, and the machine that chills the tortured slaughtered animal flesh for later consumption, and the machine that flashes pornographic images and supplies numbers detailing how much we are liked by our so called friends. But to us humans it seems that quality of life is more appropriately measured in the amount of disposable time we have to pursue that which we want, and the quality of the community around us, and living without being chronically stressed with threats of being displaced from the land upon which we live for not working hard enough for the machine.

Depression is waking up at 6 in the morning in darkness to sit in traffic for an hour to arrive at a job that we don’t want to be at, only to serve the machinations of people with nothing but greed in their overstuffed bellies. And we go to these jobs so that we can pay rents that are unaffordable, and to service debt we’ll never escape, and we go home in darkness to our lonely lives in places where community is absent with a view of an equally lonely tree or a man-made retention pond which is an upgrade over the view of staring directly at your neighbor’s domicile. Depression is the realization there is no vacation on the horizon, no respite, just more of the same. Depression is knowing that such a life is better than many others have it.

Depression is recognizing the cynics were right about this society, that Cohen spoke truth when he sullenly moaned:

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows

Depression is watching art die. The surrealist, the bohemian, the rock ’n roll, and the anti-authoritarian soul has lain down and pledged fealty to the dollar. For money, they’re now all willing to become ready made predictable cubes to be packaged and sold in plastic wrap placed in cleverly designed boxes which deliver to the depressed public what they want, more of something that’s pretty on the outside and vacant within. We are left with monthly subscriptions of more tales of self aggrandizement for the throngs of temporarily embarrassed millionaires.

Depression is watching the worst of us rise to legitimacy and awarded iniquitous riches for it. The popular is depressive, musical hack Cardi B sings about her money money money and she is loved. Jordan Peterson sells cheap self help stolen from better written material decades ago amalgamated with misogyny and dictates of hierarchal subjugation and becomes wildly popular. Trump purveys hatred of people of color and a love of authoritarianism and the depressive people, oh do they eat it up. This is sickness, depressive sickness.

Depression is acceptance of the violent now. The grossly unhappy men with their armaments spread their gloom and horror across the planet and claim righteousness for doing so. Depression is watching society applaud murderous hearts for their crimes who don badges and camouflage and have holidays to celebrate their violent history, while villains are made of those who simply don’t want to stand up for songs of oppression. Thank you for your service to the machine.

Depression is watching notions of resistance and revolution take form in slightly altered subservience. The great reformation desired now is for a “green new deal” that doesn’t come close to mitigating the impending culling of humanity from soon to be ecological catastrophes. Their plans offer only more endless work at the behest of the gloom machine while promising healthcare that will never happen, less debt it will also never deliver, and affordable housing that still won’t solve homelessness. They don’t want to break the machine, just tweak it, and they lack the ability to do that even. Never have I borne witness to such eager slaves and such depressive aspirations. The people seem to adore their cubicle lives, their environmental destruction, their corporations, their debts, their corrupt leaders, their prisons, their banks, and their taxes.

They want to continue to be put to work under the thumb of the status quo western civilization authoritarian mind and this is all the depressed mentally dominated masses can think of as a possible improvement. Instead of wanting to taste real liberty and be actual equals, their dreams are limited to being better treated servants. The gloom machine chugs along fueled with dimwitted ideas sold by boxed-in thinkers without any possibility of escaping the darkness, rather simply offering a more cushy seat for viewing the end of everything.

The machine bellows out demanding more, more, you owe me more, and somehow those wearing red, white, and blue agree and celebrate the demands of the machine. These debts we owe are servitude. The numbers held in digital machines are immoral which demand one must wake up to a dreary existence to do more of what is killing our souls along with the flora and fauna around us.

Depression is the downtrodden plebs who celebrate their corrupt democracy, which is in reality a thinly veiled oligarchy that should be obvious to all. They prop up a system of voting that allows the election of the presidency, a position that shouldn’t exist in the first place in an egalitarian society, to be awarded to candidates who don’t capture the most votes. What little democracy there is in a representative system is lost in totality when the winner of elections need not win the majority of votes. The gloom machine is straight up tyranny.

A non-depressed society would reject being served faux democracy. They’d reject a system absent of reason or compassion and disdain would be for ideas of continuing to support such a destructive way of being. But instead, within the gloom machine shame is reserved for those who don’t want to take part in the busted system, and it venerates those who cast votes for imperialist conquerers and planet destroyers, and those voters are lauded as doing their civic duty for taking part in open public corruption.

Depression is the insincere know it all crowd who are incapable of honest debate and have rarely endeavored to open a book of substance or engage in critical thought, but they know trivialities which they mistake as facts and wisdom. They know arrogance well and emanate it with aplomb. They know how to believe all they see in the corporatized media, but thinking without boundaries or limitations is beyond their capacity. This is not even depression, this is tragedy.

Depression is watching the trees be plowed down for more tract housing, a portion of which will sit empty for years because no one can afford to move there, and even if they could it’s a heinous boring life that awaits which is only significantly better compared to being homeless. Depression is knowing this is the reason why we are rapidly destroying our habitable environment and commencing a 6th mass extinction event which is now accelerating.

Depression is to know there is nothing we can do to stop the country we live in from mercilessly killing innocent people all over the world for no reason other than more economic expansion and our sadistic ideas of exceptionalism that entail spreading pain and hardship so a few elites can have more of what they already have more than enough of.

Depression is the powerlessness to change anything of significance. There is no other way they say other than the desolate gloom machine, they say this is how it must be. And so we remain here waiting for the horror that is soon to approach us all as the gloom descends in ever quickening waves.

A zombified indoctrinated populace can see no other way than capitalism and beating each other over the heads to satiate egos in needless competition that is unnecessary for survival and deleterious to the common good. Capitalism is the primary tool of empire, and a word that should be synonymous with depression. It’s the accumulation of resources in an effort to gain more power in man-made markets to leverage that power over other people and get them to do what the person with the most power desires. Capitalism’s depressing ideology is defined by the lecherous desire for more for the sake of it so the winner can pound their simian chest in victorious celebration of the devastation they’ve created.

Capitalism is inherently unsustainable due the way it allows power to coalesce via the leveraging abilities given to money to buy land, the means of production, elections, and advertising. It allows the whims of the few to overrun the needs of the many where those with the worst intentions aspire to gain more than others because they will attempt to fill the void in their hearts with self importance expressed via power over others. This is why it cannot be used.

If there is no central currency or advantage to collecting huge amounts of resources then the motivation to hoard would evaporate, as those resources would simply rot or become a burden to maintain. There’s no fun in that kind of hoarding. The “fun” comes to the simpleton power seeker when they acquire power to make others do what they want and thus gain the ephemeral validation they so desperately seek.

If one runs the math on players competing for money at different rates of gain over a certain amount of time, there will be a doubling effect which becomes exponential. And this effect will accelerate as it plunders along due to gains in leverage which allows for ever greater amounts of money to be made at faster rates. Eventually it always ends the way a game of monopoly ends, someone has all the power and everyone else is subservient to that entity/person.

These dour thoughts manifest from the recognition of the stranglehold empire has over our lives. The depression is the result of the myriad of expectations I can’t let go of that wants to see a kinder more egalitarian and sustainable world emerge while knowing how unlikely it is. Our collective depression is rooted in the foundations of social hierarchy and its economic tools of control, and understanding what a perfect trap it is, and so it goes, and everyone doesn’t know, but they feel it, though.

Why Are so Few Americans Able to Get Ahead?

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By Charles Hugh Smith

Source: Of Two Minds

Our entire economy is characterized by cartel rentier skims, central-bank goosed asset bubbles and stagnating earned income for the bottom 90%.

Despite the rah-rah about the “ownership society” and the best economy ever, the sobering reality is very few Americans are able to get ahead, i.e. build real financial security via meaningful, secure assets which can be passed on to their children.

As I’ve often discussed here, only the top 10% of American households are getting ahead in both income and wealth, and most of the gains of these 12 million households are concentrated in the top 1% (1.2 million households). (see wealth chart below).

Why are so few Americans able to get ahead? there are three core reasons:

1. Earnings (wages and salaries) have not kept up with the rising cost of living.

2. The gains have flowed to capital, which is mostly owned by the top 10%, rather than to labor ((wages and salaries).

3. Our financialized economy incentivizes cartels and other rentier skims, i.e. structures that raise costs but don’t provide any additional value for the additional costs.

It’s instructive to compare today’s household with households a few generations ago. As recently as the early 1970s, 45 years ago, it was still possible for a single fulltime-earner to support the household and buy a home, which in 1973 cost around $30,000 (median house price, as per the St. Louis FRED database).

As recently as 20 years ago, in 1998, the median house price in the U.S. was about $150,000— still within reach of many two-earner households, even those with average jobs.

As the chart below shows, real median household income has only recently exceeded the 1998 level— and only by a meager $1,000 annually. If we use real-world inflation rather than the under-estimated official inflation, real income has plummeted by 10% or more in the past 20 years.

This reality is reflected in a new study of wages in Silicon Valley, which we might assume would keep up due to the higher value of the region’s output. The study found the wages of the bottom 90% declined when adjusted for inflation by as much as 14% over the past 20 years:

“The just-released report showed that wages for 90 percent of Silicon Valley workers (all levels of workers except for the top 10 percent)are lower now than they were 20 years ago, after adjusting for inflation. That’s in stark contrast to the 74 percent increase in overall per capita economic output in the Valley from 2001 to 2017.”

source: Why Silicon Valley Income Inequality Is Just a Preview of What’s to Come for the Rest of the U.S.

Meanwhile, the median house price has more than doubled to $325,000 while median household income has stagnated. Please note this price is not adjusted for inflation, like the median income chart. But if we take nominal household income in 1998 (around $40,000 annually) and compare it to nominal household income now in 2018 (around $60,000), that’s a 50% increase–far below the more than doubling of house prices.

To raise stagnant incomes, the Federal Reserve and other central banks have attempted to generate a wealth effect by boosting the valuations of risk-on assets such as stocks, bonds and commercial real estate. But the Fed et al. overlooked the fact that the vast majority of these assets are owned by the top 10%–and as noted above, the ownership of the top 10% is concentrated in the top 1% and .1%.

As a result, the vast majority of the wealth effect capital gains have flowed to the top 1%:

Lastly, the cartel structure of the U.S. economy has raised costs while providing no additional value. One example is higher education, a cartel that issues diplomas with diminishing economic value that now cost a fortune, a reality reflected in this chart of student loan debt, which simply didn’t exist a generation ago:

Our entire economy is characterized by cartel rentier skims, central-bank goosed asset bubbles and stagnating earned income for the bottom 90%. Given these realities, the bottom 90% are left with few pathways to get ahead in terms of financial security and building secure family wealth.

 

The Wealth Hiding in Your Neighborhood

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From country farmland to big city skyscrapers, absentee billionaires may be hiding wealth in your town — and driving up your cost of living.

By Chuck Collins

Source: OtherWords

The rich are hiding trillions in wealth.

You’ve probably heard about their offshore bank accounts, shell corporations, and fancy trusts. But this wealth isn’t all sitting in the Cayman Islands or Panama. Much of it’s hiding in plain view: maybe even in your town.

America’s big cities are increasingly dotted with luxury skyscrapers and mansions. These multi-million dollar condos are wealth storage lockers, with the ownership often obscured by shell companies.

In Boston, where I live, there’s a luxury building boom. According to a study I just co-authored, out of 1,805 luxury units — with an average price of over $3 million — more than two-thirds are owned by people who don’t live here.

One-third are owned by shell companies and trusts that mask their ownership. And of these units, 40 percent are limited liability companies (LLCs) organized in Delaware.

Why Delaware?

Criminals around the world set up their shell companies in Delaware, the premiere secrecy jurisdiction in the United States — where you don’t have to disclose who the real owners are. As a result, human traffickers, drug smugglers, and tax evaders all enjoy the anonymous cover of a Delaware company.

Many of these companies use illicit funds to purchase real estate in North American cities to launder their ill-gotten money.

In New York City, dozens of luxury towers have been connected to global money laundering. In Vancouver, Chinese investors disrupted the city’s housing market so badly that the province of British Columbia established a foreign investor tax and a tax on vacant properties.

With European countries now insisting on more transparency, illicit cash is now cascading into the United States. In fact, the U.S. is now the world’s second-biggest tax haven and secrecy jurisdiction, after Switzerland.

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has increased its scrutiny over real estate markets in Miami, New York, and parts of California, Texas, and Hawaii.

But that just makes the rest of the country more attractive for secret cash — even far from big cities. In a small Vermont town, I met a Russian investor who lives in Dubai. He was buying up thousands of acres of Green Mountain farmland.

Our communities are being fundamentally transformed by land grabs and luxury building booms. These drive up the cost of land in central neighborhoods, with ripple impacts throughout a community. And this worsens the already grotesque inequalities of income, wealth, and opportunity.

Our communities should defend themselves.

Property ownership should have to pass the “fishing license” or “library card” test. In most communities, to get a library card or a fishing license, you need to prove who you are and where you actually live.

In Boston, they’re pretty strict — you need to show a utility bill with your name on it. Cities should require the same for real estate purchases.

At a national level, bi-partisan legislation from Senators Marco Rubio and Sheldon Whitehouse would require real estate owners to be disclosed when buyers use shell corporations and pay millions in cash. That would be a welcome development.

Better still, cities should tax luxury real estate transactions on properties selling for over $2 million to fund local services. Such a tax in San Francisco generated $44 million last year that’s been used to fund free community college and help the city’s neglected trees.

Communities could discourage high-end vacant properties by taxing buildings that sit empty for more than six months a year. Cities like Vancouver have created incentives to house people, not wealth.

We need to defend our communities for the people who live in them, not just store their wealth there.

National (In)Security In the United States of Inequality

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By Rajan Menon

Source: Unz Review

So effectively has the Beltway establishment captured the concept of national security that, for most of us, it automatically conjures up images of terrorist groups, cyber warriors, or “rogue states.” To ward off such foes, the United States maintains a historically unprecedented constellation of military bases abroad and, since 9/11, has waged wars in Afghanistan, Iraq, Syria, Libya, and elsewhere that have gobbled up nearly $4.8 trillion. The 2018 Pentagon budget already totals $647 billion — four times what China, second in global military spending, shells out and more than the next 12 countries combined, seven of them American allies. For good measure, Donald Trump has added an additional $200 billion to projected defense expenditures through 2019.

Yet to hear the hawks tell it, the United States has never been less secure. So much for bang for the buck.

For millions of Americans, however, the greatest threat to their day-to-day security isn’t terrorism or North Korea, Iran, Russia, or China. It’s internal — and economic. That’s particularly true for the 12.7% of Americans (43.1 million of them) classified as poor by the government’s criteria: an income below $12,140 for a one-person household, $16,460 for a family of two, and so on… until you get to the princely sum of $42,380 for a family of eight.

Savings aren’t much help either: a third of Americans have no savings at all and another third have less than $1,000 in the bank. Little wonder that families struggling to cover the cost of food alone increased from 11% (36 million) in 2007 to 14% (48 million) in 2014.

The Working Poor

Unemployment can certainly contribute to being poor, but millions of Americans endure poverty when they have full-time jobs or even hold down more than one job. The latest figures from the Bureau of Labor Statistics show that there are 8.6 million“working poor,” defined by the government as people who live below the poverty line despite being employed at least 27 weeks a year. Their economic insecurity doesn’t register in our society, partly because working and being poor don’t seem to go together in the minds of many Americans — and unemployment has fallen reasonably steadily. After approaching 10% in 2009, it’s now at only 4%.

Help from the government? Bill Clinton’s 1996 welfare “reform” program , concocted in partnership with congressional Republicans, imposed time limits on government assistance, while tightening eligibility criteria for it. So, as Kathryn Edin and Luke Shaefer show in their disturbing book, $2.00 a Day: Living on Almost Nothing in America, many who desperately need help don’t even bother to apply. And things will only get worse in the age of Trump. His 2019 budget includes deep cuts in a raftof anti-poverty programs.

Anyone seeking a visceral sense of the hardships such Americans endure should read Barbara Ehrenreich’s 2001 book Nickel and Dimed: On (Not) Getting By in America. It’s a gripping account of what she learned when, posing as a “homemaker” with no special skills, she worked for two years in various low-wage jobs, relying solely on her earnings to support herself. The book brims with stories about people who had jobs but, out of necessity, slept in rent-by-the-week fleabag motels, flophouses, or even in their cars, subsisting on vending machine snacks for lunch, hot dogs and instant noodles for dinner , and forgoing basic dental care or health checkups. Those who managed to get permanent housing would choose poor, low-rent neighborhoods close to work because they often couldn’t afford a car. To maintain even such a barebones lifestyle, many worked more than one job.

Though politicians prattle on about how times have changed for the better, Ehrenreich’s book still provides a remarkably accurate picture of America’s working poor. Over the past decade the proportion of people who exhausted their monthly paychecks just to pay for life’s essentials actually increased from 31% to 38%. In 2013, 71% of the families that had children and used food pantries run by Feeding America, the largest private organization helping the hungry, included at least one person who had worked during the previous year. And in America’s big cities, chiefly because of a widening gap between rent and wages, thousands of working poor remain homeless, sleeping in shelters, on the streets, or in their vehicles, sometimes along with their families. In New York City, no outlier when it comes to homelessness among the working poor, in a third of the families with children that use homeless shelters at least one adult held a job.

The Wages of Poverty

The working poor cluster in certain occupations. They are salespeople in retail stores, servers or preparers of fast food, custodial staff, hotel workers, and caregivers for children or the elderly. Many make less than $10 an hour and lack any leverage, union or otherwise, to press for raises. In fact, the percentage of unionized workers in such jobs remains in the single digits — and in retail and food preparation, it’s under 4.5%. That’s hardly surprising, given that private sector union membership has fallen by 50% since 1983 to only 6.7% of the workforce.

Low-wage employers like it that way and — Walmart being the poster child for this — work diligently to make it ever harder for employees to join unions. As a result, they rarely find themselves under any real pressure to increase wages, which, adjusted for inflation, have stood still or even decreased since the late 1970s. When employment is “at-will,” workers may be fired or the terms of their work amended on the whim of a company and without the slightest explanation. Walmart announced this year that it would hike its hourly wage to $11 and that’s welcome news. But this had nothing to do with collective bargaining; it was a response to the drop in the unemployment rate, cash flows from the Trump tax cut for corporations (which saved Walmart as much as $2 billion), an increase in minimum wages in a number of states, and pay increases by an arch competitor, Target. It was also accompanied by the shutdown of 63 of Walmart’s Sam’s Club stores, which meant layoffs for 10,000 workers. In short, the balance of power almost always favors the employer, seldom the employee.

As a result, though the United States has a per-capita income of $59,500 and is among the wealthiest countries in the world, 12.7% of Americans (that’s 43.1 million people), officially are impoverished. And that’s generally considered a significant undercount. The Census Bureau establishes the poverty rate by figuring out an annual no-frills family food budget, multiplying it by three, adjusting it for household size, and pegging it to the Consumer Price Index. That, many economists believe, is a woefully inadequate way of estimating poverty. Food prices haven’t risen dramatically over the past 20 years, but the cost of other necessities like medical care (especially if you lack insurance) and housing have: 10.5% and 11.8% respectively between 2013 and 2017 compared to an only 5.5% increase for food.

Include housing and medical expenses in the equation and you get the Supplementary Poverty Measure (SPM), published by the Census Bureau since 2011. It reveals that a larger number of Americans are poor: 14% or 45 million in 2016.

Dismal Data

For a fuller picture of American (in)security, however, it’s necessary to delve deeper into the relevant data, starting with hourly wages, which are the way more than 58%of adult workers are paid. The good news: only 1.8 million, or 2.3% of them, subsist at or below minimum wage. The not-so-good news: one-third of all workers earn less than $12 an hour and 42% earn less than $15. That’s $24,960 and $31,200 a year. Imagine raising a family on such incomes, figuring in the cost of food, rent, childcare, car payments (since a car is often a necessity simply to get to a job in a country with inadequate public transportation), and medical costs.

The problem facing the working poor isn’t just low wages, but the widening gap between wages and rising prices. The government has increased the hourly federal minimum wage more than 20 times since it was set at 25 cents under the 1938 Fair Labor Standards Act. Between 2007 and 2009 it rose to $7.25, but over the past decade that sum lost nearly 10% of its purchasing power to inflation, which means that, in 2018, someone would have to work 41 additional days to make the equivalent of the 2009 minimum wage.

Workers in the lowest 20% have lost the most ground, their inflation-adjusted wages falling by nearly 1% between 1979 and 2016, compared to a 24.7% increase for the top 20%. This can’t be explained by lackluster productivity since, between 1985 and 2015, it outstripped pay raises, often substantially, in every economic sector except mining.

Yes, states can mandate higher minimum wages and 29 have, but 21 have not, leaving many low-wage workers struggling to cover the costs of two essentials in particular: health care and housing.

Even when it comes to jobs that offer health insurance, employers have been shifting ever more of its cost onto their workers through higher deductibles and out-of-pocket expenses, as well as by requiring them to cover more of the premiums. The percentage of workers who paid at least 10% of their earnings to cover such costs — not counting premiums — doubled between 2003 and 2014.

This helps explain why, according to the Bureau of Labor Statistics, only 11% of workers in the bottom 10% of wage earners even enrolled in workplace healthcare plans in 2016 (compared to 72% in the top 10%). As a restaurant server who makes $2.13 an hour before tips — and whose husband earns $9 an hour at Walmart — put it, after paying the rent, “it’s either put food in the house or buy insurance.”

The Affordable Care Act, or ACA (aka Obamacare), provided subsidies to help people with low incomes cover the cost of insurance premiums, but workers with employer-supplied healthcare, no matter how low their wages, weren’t covered by it. Now, of course, President Trump, congressional Republicans, and a Supreme Court in which right-wing justices are going to be even more influential will be intent on poleaxing the ACA.

It’s housing, though, that takes the biggest bite out of the paychecks of low-wage workers. The majority of them are renters. Ownership remains for many a pipe dream. According to a Harvard study, between 2001 and 2016, renters who made $30,000-$50,000 a year and paid more than a third of their earnings to landlords (the threshold for qualifying as “rent burdened”) increased from 37% to 50%. For those making only $15,000, that figure rose to 83%.

In other words, in an ever more unequal America, the number of low-income workers struggling to pay their rent has surged. As the Harvard analysis shows, this is, in part, because the number of affluent renters (with incomes of $100,000 or more) has leapt and, in city after city, they’re driving the demand for, and building of, new rental units. As a result, the high-end share of new rental construction soared from a third to nearly two-thirds of all units between 2001 and 2016. Not surprisingly, new low-income rental units dropped from two-fifths to one-fifth of the total and, as the pressure on renters rose, so did rents for even those modest dwellings. On top of that, in places like New York City, where demand from the wealthy shapes the housing market, landlords have found ways — some within the law, others not — to get rid of low-income tenants.

Public housing and housing vouchers are supposed to make housing affordable to low-income households, but the supply of public housing hasn’t remotely matched demand. Consequently, waiting lists are long and people in need languish for years before getting a shot — if they ever do. Only a quarter of those who qualify for such assistance receive it. As for those vouchers, getting them is hard to begin with because of the massive mismatch between available funding for the program and the demand for the help it provides. And then come the other challenges: finding landlords willing to accept vouchers or rentals that are reasonably close to work and not in neighborhoods euphemistically labelled “distressed.”

The bottom line: more than 75% of “at-risk” renters (those for whom the cost of rent exceeds 30% or more of their earnings) do not receive assistance from the government. The real “risk” for them is becoming homeless, which means relying on shelters or family and friends willing to take them in.

President Trump’s proposed budget cuts will make life even harder for low-income workers seeking affordable housing. His 2019 budget proposal slashes $6.8 billion(14.2%) from the resources of the Department of Housing and Urban Development’s (HUD) by, among other things, scrapping housing vouchers and assistance to low-income families struggling to pay heating bills. The president also seeks to slash funds for the upkeep of public housing by nearly 50%. In addition, the deficits that his rich-come-first tax “reform” bill is virtually guaranteed to produce will undoubtedly set the stage for yet more cuts in the future. In other words, in what’s becoming the United States of Inequality, the very phrases “low-income workers” and “affordable housing” have ceased to go together.

None of this seems to have troubled HUD Secretary Ben Carson who happily ordered a $31,000 dining room set for his office suite at the taxpayers’ expense, even as he visited new public housing units to make sure that they weren’t too comfortable (lest the poor settle in for long stays). Carson has declared that it’s time to stop believing the problems of this society can be fixed merely by having the government throw extra money at them — unless, apparently, the dining room accoutrements of superbureaucrats aren’t up to snuff.

Money Talks

The levels of poverty and economic inequality that prevail in America are not intrinsic to either capitalism or globalization. Most other wealthy market economies in the 36-nation Organization for Economic Cooperation and Development (OECD) have done far better than the United States in reducing them without sacrificing innovation or creating government-run economies.

Take the poverty gap, which the OECD defines as the difference between a country’s official poverty line and the average income of those who fall below it. The United States has the second largest poverty gap among wealthy countries; only Italy does worse.

Child poverty? In the World Economic Forum’s ranking of 41 countries — from best to worst — the U.S. placed 35th. Child poverty has declined in the United States since 2010, but a Columbia University report estimates that 19% of American kids (13.7 million) nevertheless lived in families with incomes below the official poverty line in 2016. If you add in the number of kids in low-income households, that number increases to 41%.

As for infant mortality, according to the government’s own Centers for Disease Control, the U.S., with 6.1 deaths per 1,000 live births, has the absolute worst record among wealthy countries. (Finland and Japan do best with 2.3.)

And when it comes to the distribution of wealth, among the OECD countries only Turkey, Chile, and Mexico do worse than the U.S.

It’s time to rethink the American national security state with its annual trillion-dollar budget. For tens of millions of Americans, the source of deep workaday insecurity isn’t the standard roster of foreign enemies, but an ever-more entrenched system of inequality, still growing, that stacks the political deck against the least well-off Americans. They lack the bucks to hire big-time lobbyists. They can’t write lavish checks to candidates running for public office or fund PACs. They have no way of manipulating the myriad influence-generating networks that the elite uses to shape taxation and spending policies. They are up against a system in which money truly does talk — and that’s the voice they don’t have. Welcome to the United States of Inequality.

 

Rajan Menon, a TomDispatch regular, is the Anne and Bernard Spitzer Professor of International Relations at the Powell School, City College of New York, and Senior Research Fellow at Columbia University’s Saltzman Institute of War and Peace Studies. He is the author, most recently, of The Conceit of Humanitarian Intervention 

Convenient Tales About Riches Within Reach

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By Sam Pizzigati

Source: OpEdNews.com

The world at large knew virtually nada about Sylvia Bloom for 96 years. Then she died in 2016. Now, just a little too late, Sylvia Bloom is getting her belated — yet richly deserved — 15 minutes of worldwide fame.

The New York Times has just published a heart-warming story of the caring, upright life Sylvia Bloom lived, and the remarkable — and hidden — fortune she quietly accumulated over the course of her 67-year career as a Manhattan legal secretary.

That fortune totaled, in the end, over $9 million. The bulk of that wealth, the Times account reveals, is going — per Bloom’s wishes — to help students from poor families advance their educations.

None of Bloom’s surviving relatives or law firm colleagues or fellow volunteers at the Henry Street Settlement, the social services agency set to get $6.24 million from her bequest, had any idea that their unassuming loved one and friend had saved anything remotely close to multiple millions.

Counting Pennies

Bloom lived frugally all her life in Brooklyn and commuted, by subway, to her job. The “high life” never interested her in the least. She led a simple existence. She counted her pennies. In the end, she put them all to good use.

Stories like Bloom’s have been popping up regularly over recent years. Leonard Gigowski, a Wisconsin shopkeeper, died three years ago at age 90, and left behind a “secret $13 million fortune” that’s currently funding scholarships. Grace Groner passed away in 2010 at age 100. She spent most of her life in a one-bedroom Illinois home, shopped at thrift stores, and left $9 million for her alma mater.

Convenient Tales

Our popular culture can’t seem to get enough of these life-affirming tales of modest multi-millionaire seniors. These stories make us feel good. They also, unfortunately, reinforce a message that our society’s richest — and their cheerleaders — find enormously convenient.

You don’t have to be money-hungry, commit vile acts or have remarkable talents to become wealthy, the tellers of all these stories of hidden millions suggest. You just have to be frugal; almost anybody, in other words, can become rich.

And if you don’t happen to become rich, the media coverage of these stories not so subtly hints, just look in the mirror for the reason why. You, too, could have resisted temptation and counted your pennies.

You, too, could have built a huge personal fortune. Shame on you. You chose not to.

The Millionaire Next Door

A couple of decades ago, two academic researchers — Thomas Stanley and William Danko — made themselves not insignificant personal fortunes by wrapping up that same theme in reams of statistics. Their 1996 book, The Millionaire Next Door, has so far sold over 4 million copies.

That thrifty fellow down the block with a six-year-old Ford, The Millionaire Next Door related, could well be worth millions. And those millions, the book stressed, all begin with frugality.

Conservative pundits have always loved this basic frugality-pays thesis. Stanley and Danko, the argument goes, have served up the ultimate secret to getting rich. “Hardly any” of the self-made rich the pair profiled in The Millionaire Next Door, as one commentator noted a few years ago, “had expensive tastes.” Instead, these millionaires avoided “new homes and expensive clothes” and “often invested 15 to 20 percent of their net income.”

Any of us could follow that lead, this analyst would add, so long as we understand “that building wealth takes discipline, sacrifice, and hard work.”

Reaping Rewards

But if “discipline, sacrifice, and hard work” build wealth, why do so many millions of disciplined, sacrificing, and hard-working Americans today have so little of it? Why is the “millionaire next door” — especially for our millennial generation — becoming a vanishing species?

Sylvia Bloom’s life offers some clues. Yes, Bloom lived frugally, sacrificed, and worked hard. But she also matured in a society — mid-20th century America — that endeavored to help disciplined, sacrificing, and hard-working people.

That help came in many different forms. Sylvia Bloom attended Hunter College, part of a system of free public higher education in New York City. She and her husband, a firefighter and later teacher, lived in a rent-controlled apartment. She commuted, for just a few dimes per day, on the world’s most extensive public transit system.

Sylvia Bloom’s young adult counterparts today? They confront a totally different reality. The sky-high costs of attending college have turned 21st-century young adults into life-long debtors. To find an affordable place to live, they squeeze into tiny apartments close to their jobs or plop themselves in distant exurbs, fighting traffic jams all the way to work — if not paying big bucks daily for scarce transit options.

Austerity Trumps Frugality

These millennials aren’t living the frugal life. They’re living the austere life — and not by choice. Our elected leaders have thrust this austerity upon them, with decades of public policies that have rewarded the rich with tax cuts at every turn and whittled away public services at every opportunity.

If Sylvia Bloom had been born a millennial, she’d be pinching pennies today to pay off her college debts. She’d be looking forward to years of hard work and sacrifice, with no hope of ever saving up enough to become a significant invester.

In her actual life, Sylvia Bloom had the good fortune to live her early adult years in a society much more caring than ours. She cared back — and chose to devote her own financial good fortune to helping others to the same support that so helped her.

Sylvia Bloom’s life does indeed offer up inspiration. Let’s not let our rich turn that life into a rationalization for their riches.

It’s time to call the housing crisis what it really is: the largest transfer of wealth in living memory

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By Laurie Macfarlane

Source: OpenDemocracy.net

One of the basic claims of capitalism is that people are rewarded in line with their effort and productivity. Another is that the economy is not a zero sum game. The beauty of a capitalist economy, we are told, is that people who work hard can get rich without making others poorer.

But how does this stack up in modern Britain, the birthplace of capitalism and many of its early theorists? Last week, the Office for National Statistics (ONS) released new data tracking how wealth has evolved over time. On paper, the UK has indeed become much wealthier in recent decades. Net wealth has more than tripled since 1995, increasing by over £7 trillion. This is equivalent to an average increase of nearly £100,000 per person. Impressive stuff. But where has all this wealth come from, and who has it benefitted?

Just over £5 trillion, or three quarters of the total increase, is accounted for by increase in the value of dwellings – another name for the UK housing stock. The Office for National Statistics explains that this is “largely due to increases in house prices rather than a change in the volume of dwellings.” This alone is not particularly surprising. We are forever told about the importance of ‘getting a foot on the property ladder’. The housing market has long been viewed as a perennial source of wealth.

But the price of a property is made up of two distinct components: the price of the building itself, and the price of the land that the structure is built upon. This year the ONS has separated out these two components for the first time, and the results are quite astounding.

In just two decades the market value of land has quadrupled, increasing recorded wealth by over £4 trillion. The driving force behind rising house prices — and the UK’s growing wealth — has been rapidly escalating land prices.

For those who own property, this has provided enormous benefits. According to the Resolution Foundation, homeowners born in the 1940s and 1950s gained an unearned windfall of £80,000 between 1993 and 2014 alone. In the early 2000s, house price growth was so great that 17% of working-age adults earned more from their house than from their job.

Last week The Times reported that during the past three months alone, baby boomers converted £850 million of housing wealth into cash using equity release products – the highest number since records began. A third used the money to buy cars, while more than a quarter used it to fund holidays. Others are choosing to buy more property: the Chartered Institute of Housing has described how the buy-to-let market is being fuelled by older households using their housing wealth to buy more property, renting it out to those who are unable to get a foot on the property ladder. And it is here that we find the dark side of the housing boom.

As house prices have continued to increase and the gap between house prices and earnings has grown larger, the cost of homeownership has become increasingly prohibitive. Whereas in the mid-1990s low and middle income households could afford a first time buyer deposit after saving for around 3 years, today it takes the same households 20 years to save for a deposit. Many have increasingly found themselves with little choice but to rent privately. For those stuck in the private rental market, the proportion of income spent on housing costs has risen from around 10% in 1980 to 36% today. Unlike homeowners, there is no asset wealth to draw on to fund new cars or holidays.

In Britain, we have yet to confront the truth about the trillions of pounds of wealth amassed through the housing market in recent decades: this wealth has come straight out of the pockets of those who don’t own property.

When the value of a house goes up, the total productive capacity of the economy is unchanged because nothing new has been produced: it merely constitutes an increase in the value of the land underneath. We have known since the days of Adam Smith and David Ricardo that land is not a source of wealth but of economic rent — a means of extracting wealth from others. Or as Joseph Stiglitz puts it “getting a larger share of the pie rather than increasing the size of the pie”. The truth is that much of the wealth accumulated in recent decades has been gained at the expense of those who will see more of their incomes eaten up by higher rents and larger mortgage payments. This wealth hasn’t been ‘created’ – it has been stolen from future generations.

House prices are now on average nearly eight times that of incomes, more than double the figure of 20 years ago. It’s unlikely that house prices will be able to outpace incomes at the same rate for the next 20 years. The past few decades have spawned a one-off transfer of wealth that is unlikely to be repeated. While the main beneficiaries of this have been the older generations, eventually this will be passed on to the next generation via inheritance or transfer. Already the ‘Bank of Mum and Dad’ has become the ninth biggest mortgage lender. The ultimate result is not just a growing intergenerational divide, but an entrenched class divide between those who own property (or have a claim to it), and those who do not.

Misleading accounting and irresponsible economics have provided cover for this heist. The government’s national accounts record house price growth as new wealth, ignoring the cost it imposes on others in society – particularly young people and those yet to be born. Economists still hail house price inflation as a sign of economic strength.

The result is a world which is rather different to that described in economics textbooks. Most of today’s ‘wealth’ isn’t the result of entrepreneurialism and hard work – it has been accumulated by being idle and unproductive. Far from the positive sum game capitalism is supposed to be, we have a system where most wealth is gained at the expense of others. As John Stuart Mill wrote back in 1848:

“If some of us grow rich in our sleep, where do we think this wealth is coming from?  It doesn’t materialise out of thin air. It doesn’t come without costing someone, another human being. It comes from the fruits of others’ labours, which they don’t receive.”

Britain’s housing crisis is complicated mess. Fixing it requires a long-term plan and a bold new approach to policy. But in the meantime let’s start calling it what it really is: the largest transfer of wealth in living memory.

What Happened to All Those Foreclosed Houses?

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Wall Street bought them — and is now leasing them out and driving up rents.

By Jim Hightower

Source: OpEdNews.com

We know that millions of American families lost their homes after Wall Street’s 2007 financial crash. But where did all those houses go?

It turns out that Wall Streeters themselves formed profiteering investment groups that rushed out to scoop up tens of thousands of those foreclosed properties, usually grabbing them on the cheap at courthouse auctions in suburban metro areas that were hard-hit by the crash.

These moneyed syndicates have deep, deep pockets, so they easily outbid local buyers to take possession of the majority of the single-family homes being sold off in many distressed places.

Why are they buying? To turn the homes into rental properties and become the dominant suburban landlord, controlling the local market and constantly jacking up rents.

For example, the Wall Street Journal found that in Nashville’s suburb of Spring Hill, just four of these predatory giants own 700 houses — giving this oligopoly of absentee investors ownership of three-fourths of all rental houses in town.

One of these bulk buyers is an arm of Blackstone, the world’s largest private equity firm. Another is an equity outfit that was spun out of the housing speculation department of Goldman Sachs. And still another is a billionaire whose investors include the Alaska state oil fund.

Not only do rents jump dramatically when such outfits seize a market, but Wall Street’s intention is to impose “a new way” on housing America: They’re pushing a cultural shift in which homeownership is no longer part of the American Dream, and tenants are taught to accept annual rent increases as the price of having a home.

So the banksters crash the economy, you lose income and your home, they buy your house at auction, then they rent it to you at an ever-increasing price. The “new way” is the same old story: The rich robbing the rest of us.