Americans Fall Behind in Credit Card Payments

The Economy is fine, it really really is. The President told me so.

Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

"Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."

The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart.

At the same time, defaults — when lenders essentially give up hope of ever being repaid and write off the debt — rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.

Serious delinquencies also are up sharply: Some of the nation's biggest lenders — including Advanta, GE Money Bank and HSBC — reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.

With the new bankruptcy laws, getting out from under the crushing debt will become even more elusive.

This is once again the result of bad economic policy. How can you sustain economic growth when so much of this nation is swimming in debt? The simple answer is that you can not and this will ripple through the entire economy.

The United States has become that family everyone knows that drives the big car and lives in the big house but actually has nothing. It is all borrowed or leased. We are now the world's biggest debtor nation. Our middle class is actually the working poor with a credit line.

We are in for a world of pain now that the smoke has cleared.

Class and Labor: Home Ownership, Education, and Race

A great post from the Daily Kos

Middle Class Feels The Squeeze

As I was reading this article it reminded me of exactly why I started this site.

Middle-class households in America have to work harder than ever to maintain their standard of living, according to a report released Wednesday.

Sixty nine percent of middle-class households are at risk of losing their standard of living in the long term, says Demos, an advocacy group for lower and middle-class Americans.

And the rising costs of health care, housing, and education are forcing middle-class families to work harder to maintain that standard, said Jennifer Wheary, the report's co-author in an interview with CNNMoney.com.

"The way that they have stayed secure is by tightening belts," said Wheary. "People now have to work more hours to be at that same level."

Where is the family values crowd as parents are forced to work longer and longer hours just to maintain the lifestyle they currently enjoy? When will people finally realize that it is this unholy alliance between big business and the religious right called the modern Republican party that is destroying the middle class?

The Demos report is designed to measure the financial health of the American middle class by measuring certain key variables.

If their main source of income dries up, only 13 percent of middle class households can live off their assets for nine months, after reducing basic living expenses by one quarter, estimates Demos.

52 percent have no net financial assets at all after debt (excluding home equity), and live paycheck to paycheck.

When you live paycheck to paycheck are you really middle class or are you actually the working poor? I would argue that the working poor is a much more accurate description.

I remember my childhood when almost all the mothers on my middle class street in Yonkers, NY were stay at home moms. That is a pipe dream for the families of today. The question now becomes how do we fix this before the middle class is gone and we have a nation of just rich and poor. The answers to that question are complex but the first two solutions I think are absolutely necessary are the public financing of campaigns and universal health care. Unfortunately I think you will never get the second solution until you institute the first.

The political process in this nation has been completely corrupted by big money. Our Presidential race has become about fund raising not ideas and our media is owned by just a handful of big corporations whose main goal is profit not the truthful dissemination of information.

It will take a middle class movement to reverse this trend but who will have the time when work consumes more and more of your day. Maybe that's the goal. There is a reason that the poor do not vote in the same numbers as the rich. They are normally consumed with what they think are more important priorities. As the middle class is more and more consumed with the problems of making ends meet they too will find voting not as big a priority and the destruction of the middle class will be complete. It is time to fight back.

Citigroup Will Soon Shed Jobs

Once again the middle class will pay for the mistakes of those making millions.

Citigroup Inc., bracing for big credit-related losses in the fourth quarter, is looking to lower costs -- which could mean another round of job cuts at the nation's largest bank.

"We are engaged in a planning process in anticipation of our new CEO, and our business heads are planning ways in which we can be more efficient and cost-effective to position our businesses in line with economic realities," said Citi spokeswoman Shannon Bell.

She was responding to a report on CNBC that "massive" layoffs were planned.

Do you think these workers will be afforded severance packages like the executives that have driven Citigroup into the ground? The Citigroup example is just another in a long line that says failure at the upper levels of big business are meaningless to those that caused the failure.

Every day we hear more and more about the subprime crisis and its announced that those at the top are "Resigning". With every announcement comes word of their multi-million dollar golden parachute and word of layoffs.

Where can I get a job that would pay me millions to screw up? What do we tell the children? Do we tell them that the rules are different for those at the top? What kind of a message are we sending when incompetence is rewarded and those who worked hard and played by the rules are penalized for the actions of those multi-millionaires at the top? Isn't it time that we demand equal treatment for all?

Rich Getting Richer

Is this supposed to be a surprise?

The richest one percent of Americans earned a postwar record of 21.2 percent of all income in 2005, up from 19 percent a year earlier, reflecting a widening income disparity among different classes in the nation, the Wall Street Journal reported, citing new Internal Revenue Service data.

The data showed that the fortunes of the bottom 50 percent of Americans are worsening, with that group earning 12.8 percent of all income in 2005, down from 13.4 percent the year before, the paper said.

It said that while the IRS data goes back only to 1986, academic research suggests that the last time wealthy Americans had such a high percentage of the national income pie was in the 1920s.

Is history about to repeat itself? The 1920's was referred to as the roaring 20's and it was the era of the Robber Barons. This era ushered in the great depression. Whether we are seeing history repeat itself isn't clear but what is clear is that the rich are getting richer and the poor poorer with the middle class being killed in the process.

Is this the type of society you want to live in? If you are not sure you should arrange a trip to Brazil and see what income inequality looks like in real time. It is time for the middle and lower classes to stand up and say enough is enough. The only way to fight back is to elect those that understand that a large and stable middle class is essential to protecting democracy. What we have right now is a government that is bordering on fascism. If you don't believe me then look at this list of the warning signs of fascism:

1. Powerful and continuing expressions of nationalism. It was usually coupled with a suspicion of things foreign that often bordered on xenophobia.

2. Disdain for the importance of human rights. Through clever use of propaganda, the population was brought to accept human rights abuses by marginalizing, even demonizing, those being targeted.

3. Identification of enemies/scapegoats as a unifying cause. The most significant common thread among these regimes was the use of scapegoating as a means to divert the people's attention from other problems, to shift blame for failures, and to channel frustration in controlled directions.

4. The supremacy of the military/avid militarism. A disproportionate share of national resources was allocated to the military, even when domestic needs were acute.

5. Domestic spying. Secret surveillance of and gathering dossiers on its own citizens.

6. A controlled mass media. Whether directly or indirectly, these regimes exercised power to ensure media orthodoxy. Methods included the control of licensing and access to resources, economic pressure, appeals to patriotism, and implied threats. The leaders of the mass media were often politically compatible with the power elite.

7. Obsession with national security. National security apparatus was under direct control of the ruling elite. It was usually an instrument of oppression, operating in secret and beyond any constraints. Its actions were justified under the rubric of protecting "national security," and questioning its activities was portrayed as unpatriotic or even treasonous.

8. Religion and ruling elite tied together. Most of the regimes attached themselves to the predominant religion of the country and chose to portray themselves as militant defenders of that religion. Propaganda kept up the illusion that the ruling elites were defenders of the faith and opponents of the "godless."

9. Power of corporations protected. The corporate structure was a way to not only ensure military production, but also as an additional means of social control. Members of the economic elite were often pampered by the political elite to ensure a continued mutuality of interests, especially in the repression of "have-not" citizens.

10. Power of labor suppressed or eliminated. Since organized labor was seen as the one power center that could challenge the political hegemony of the ruling elite and its corporate allies, it was inevitably crushed or made powerless.

11. Disdain and suppression of intellectuals and the arts. Intellectuals and the inherent freedom of ideas and expression associated with them were anathema to these regimes. Intellectual and academic freedom were considered subversive to national security and the patriotic ideal.

12. "Normal" and political crime were often merged into trumped-up criminal charges and sometimes used against political opponents of the regime. Fear, and hatred, of criminals or "traitors" was often promoted among the population as an excuse for more police power.

13. Rampant cronyism and corruption. This corruption worked both ways; the power elite would receive financial gifts and property from the economic elite, who in turn would gain the benefit of government favoritism.

14. Fraudulent elections. Common methods included maintaining control of the election machinery, intimidating and disenfranchising opposition voters, destroying or disallowing legal votes, and, as a last resort, turning to a judiciary beholden to the power elite.

If you can't see parallels to today's America then you simply are not paying attention.

12,000 fewer jobless claims last week

The number of newly laid off workers filing claims for unemployment benefits dropped last week, a better showing than had been expected.

The Labor Department reported Thursday that applications for jobless benefits dropped by 12,000 to 308,000 last week. Analysts had been expecting no change.

The four-week average for claims also dropped, falling by 3,000 to 310,250, indicating that the labor market is so far withstanding the adverse impacts of a severe slump in housing and a credit crunch which roiled financial markets in August.

How long can the economy withstand the turmoil in the housing market? My guess is soon you will see a real uptick in unemployment as the housing crisis spreads to other areas. What I really want to see is the type of jobs that are being created. Are they middle class jobs with middle class wages or are they service jobs at low wages and poor if any benefits?

UAW Strikes Chrysler

Thousands of Chrysler LLC autoworkers walked off the job Wednesday after the automaker and the United Auto Workers union failed to reach a tentative contract agreement before a union-imposed deadline.

It is the first UAW strike against Chrysler since 1997, when one plant was shut down for a month, and the first strike against Chrysler during contract talks since 1985. Negotiators stopped talking after the strike began, according to a person briefed on the talks who requested anonymity because the talks are private.

Bargaining between the UAW and the newly private automaker has been slowed by several major issues. The UAW's tentative contract with General Motors Corp. included job security pledges that it was likely to seek from Chrysler, while Chrysler wanted the same health care concessions that the union granted to GM and Ford Motor Co. in 2005. Also at issue was how much Chrysler would pay into a company-funded, UAW-run trust that would take on its roughly $18 billion in retiree health care debt. GM formed that trust as part of its tentative contract.

Our auto industry which was once the envy of the world is now in a very diminished position. One of the main reasons is the ever growing costs of health care. The auto industry supports universal health care because they realize that without it they will continue to operate at a serious disadvantage to foreign auto companies.

The middle class of America can not survive without both strong labor laws and universal health care. As the cost of health care continues to grow workers in all industries are paying an ever greater portion of the health care costs. In many industries the growth in health care costs for the employee has eclipsed the annual raise, which by any standard would mean a decrease in annual take home pay. How can the middle class survive under those circumstances?

Home Ownership Declines Under Bush

This is what you call a successful Presidency.

For the first time since the Carter administration, homeownership in the United States is set to decline over a president's tenure. When President Bush took office in 2001, homeownership stood at 67.6 percent. It rose as the mortgage bubble inflated but is projected to fall to 67 percent by early 2009, which would come to 700,000 fewer homeowners than when Mr. Bush started. The decline, calculated by Moody's Economy.com, is inexorable unless the government launches a heroic effort to help hundreds of thousands of defaulting borrowers stay in their homes.

The foreclosure crisis is rooted in reckless and shamefully underregulated mortgage lending. Many homeowners, mainly subprime borrowers with low incomes and poor credit, are now stuck in adjustable-rate loans that have become unaffordable as monthly payments have spiked upward. Their predicament is not entirely of their own making, and even if it were they would need to be bailed out because mass foreclosures would wreak unacceptable damage on the economic and social life of the nation.

The relief efforts so far have been too little, too late. In August, the White House established a program to allow an additional 80,000 borrowers to refinance their loans through the Federal Housing Administration, on top of 160,000 who were already eligible. That's not enough. Foreclosure filings soared to nearly 244,000 in August alone.

Federal regulators and Treasury officials are urging mortgage lenders and mortgage servicers to do their utmost to modify loan terms for at-risk borrowers, but saying "please" hasn't worked. To be effective, modifications must reduce a loan's interest rate or balance or extend its term, or some combination of the three. Gretchen Morgenson reported recently in The Times that a survey of 16 top subprime servicers by Moody's Investors Service found that in the first half of the year, modifications were made to an average of only 1 percent of loans on which monthly payments had increased.

Does anyone still think the middle class is not an endangered species? This is the most destructive administration in our history.

When The Bubble Burst

This is what happens when the bubble bursts.

Out on Phoenix's suburban fringes, where cement mixers are fast colonizing hay and cotton fields, the day is winding to a close. The home hour has arrived.

But sundown gives away a troubling secret: Behind dark windows and unanswered doors, it's clear nobody is coming home.

They're empty, left behind by a rising tide of foreclosures

This is the story of one town on the outskirts of Phoenix but it could be many towns all across America as the roaring home prices have come crashing to the ground and brought with it the financial downfall of many middle class Americans. How did this happen? Stupidity, greed and the desire to live the so called American dream combined to create one of the biggest financial disasters in our nations history. The real problem is that the pain is just beginning.

Just last week banks and investment firms all across the country started reporting staggering losses as a result of these ill advised loan programs that were a disaster waiting to happen. So far firms have reported $20 billion in losses and it is just the beginning. What this all shows is that our economy is built on smoke and mirrors and when the smoke clears the devastation that will be felt by the middle class will be just another nail in its coffin.

The American Dream is overdue for revision.

"There's been a huge shift in the way people view their houses," says John Karevoll of DataQuick Information Systems. "Your house now can basically be used as an ATM."

The problem is that the ATM is out of funds and the economy will soon show the signs of this disaster in all areas. The trickle down theory of Reagan, that was called voodoo economics by the first President Bush but was embraced by the imbecile that currently occupies 1600 Pennsylvania Ave, is one that guarantees ever greater wealth to those at the top while those at the bottom wait for their scraps. Now we are seeing that theory in action and its not pretty.
When there is no middle class in America we will cease to be the beacon of hope that has attracted those to our shores. That shining beacon that was once the world's envy is now just a flicker and unless we fight to reignite the flame we will see the further erosion of the everyday person's standard of living while the rich will get ever richer.

Is this what you want for our future? It is time for the middle class to fight back and demand policies that benefit us all not just those rich enough to be able to make large campaign contributions. It is time for public financing of campaigns. Without it there is no chance for a different outcome.

Unemployment Rate Up To 4.7%

Jobs report shows September gains in line with forecasts, while earlier job loss wiped away; unemployment rate up to 4.7%.

Job growth was back on track in September, according to a government report that showed both a solid gain in Americans with jobs in the month, and revised away the job loss reported a month earlier.

U.S. payrolls showed a net gain of 110,000 workers in the month, according to the Labor Department report. That's roughly in line with the forecast of a 100,000 gain by economists surveyed by Briefing.com.

The Labor Department also now estimates that August had a gain of 89,000 jobs, a big upward revision from the originally reported 4,000 job loss in August. That earlier reading had shaken the markets and stirred concerns of a recession as it was the first job loss in four years. The July reading was also revised higher.

Still, even with the job gains, the unemployment rate rose to 4.7 percent in September from the 4.6 percent reading in August. That increase was in line with what economists had forecast.

The weak August report had opened the door for the Federal Reserve to cut its benchmark interest rate by a half-percentage point in September, the first cut in four years, as it attempted to stave off an economic slowdown.

Friday's report could be a key to whether the central bank cuts rates again on Oct. 31, when its next meeting concludes.

What I always hate about these sunny reports is that there is no mention that the economy needs job growth of 150,000 per month to keep up with new people entering the work force. It also does not include people who have exhausted their unemployment benefits but are still not employed. It does not include the number of people who are under-employed. Those are people that are working but without full time hours but who are seeking full time employment.

Job creation under this administration has been less than stellar and the jobs that have been created in large part are low wage jobs without sufficient benefits including health care. That could be one reason that nearly 50 million people have no health care.

This administration has created a large population of working poor while the rich have gotten extremely rich and the middle class has been decimated.

Unemployment Claims Soar

Federal government says 317,000 applied for unemployment benefits in most recent week, a potential sign that labor market is slowing due to housing slump.

The number of newly laid off workers filing claims for unemployment benefits shot up last week by the biggest amount in four months.

The Labor Department reported a total of 317,000 applications for unemployment benefits last week, an increase of 16,000 from the previous week. It was the biggest gain since jobless claims rose 18,000 during the week of May 9.

The rise was bigger than analysts had expected and could be a further sign that the labor market is slowing under the impact of the worst slump in housing in 16 years and a severe credit crunch that roiled global markets in August.

The housing slump is just starting and as projects already underway are finished the unemployment numbers in the construction industry could rise.

What we are experiencing is the beginning of a recession as a result of horrible economic policies that have decimated the value of the dollar, killed our middle class and put five million additional people into poverty. The redistribution of wealth that has occurred since the 1980's has come home to roost. With negative savings rates not seen since the depression, how are people supposed to weather the storm? The answer is most can not afford any layoff and with the potential of even more in the coming months the pain being felt by many American families will only grow. It is time for sensible economic policies that benefit everyone not just those at the upper echelons of society.

Bush Gives The Middle Finger To Nations Poor Children

If you needed any further proof that this President is out of touch with reality, here it is.

President Bush on Wednesday vetoed legislation expanding a children's health insurance program by $35 billion over five years.

Bush quietly exercised the veto at 10 a.m. before leaving the White House for a trip to Lancaster, Pennsylvania, to discuss the federal budget and taxes.

Congress sent the legislation expanding the State Children's Health Insurance Program, or SCHIP, to the White House on Tuesday.

"It is our hope and the will of the American people that the president will sign the bill into law on behalf of the future. It is right for no less than 10 million reasons -- our children," Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi said in a joint statement.

The Senate voted 67-29 Thursday to expand the program. Bush has said it's a step toward universal coverage, which he opposes on philosophical grounds.

The program would double -- from 4 million to 8 million -- the number of children covered.

Eighteen Republicans joined all of the Democrats in voting to expand the program from its annual budget of $5 billion to $12 billion for the next five years.

The additional costs were to be largely paid for by additional taxes on cigarettes unlike the endless war which is borrowed funds and will have to be paid for by the same children he just refused health care.

President Bush is the worst President in United States history. 2009 can not come soon enough. Lets hope there is something left to salvage. The only silver lining is that George W. Bush is driving the Republican Party off the cliff.

The End Of Oil

A small - but growing - group of experts think world oil production will peak in the next few years, to devastating effect.

At some point in the near future, worldwide oil production will peak, then decline rapidly, causing depression-like conditions or even the starvation of billions across the globe.

That's the worst-case scenario for subscribers to the "peak oil" theory, who generally believe oil production has either topped out or will do so in the next couple of years.

With growing world demand in places such as India and China and a decrease in supply, at the very least we are looking at economic upheaval not seen on such a large scale in world history.

Richard Heinberg, a research fellow at the Post Carbon Institute and author of three books on peak oil says world production of regular crude oil actually peaked in May 2005. He also says production in 33 of the 48 largest oil producing countries is in decline, and that global oil discoveries peaked in 1964.

Most importantly, he says reserves in the Middle East, where EIA predicts the bulk of new supply will come from, have been "systematically overstated."

"Everyone just takes their figures at face value," Heinberg said. "But they are national oil companies, they can't be audited."

Instead of production ramping up to 118 million barrels per day, Heinberg sees a plateau over the next few years, then gradual declines beginning in 2010.

By 2015, he says the rate of decline will accelerate as field after field runs dry and few new supplies are found. By 2030, the world could be looking at powering its economy on 30 million barrels a day.

"It's going to be an enormous shock to the global system," said Heinberg. "We're talking something on the order of the Great Depression, perhaps much worse."

The Bush administration has done nothing to move us to alternate sources of energy in fact they have started a war to steal the resources of another nation. Alan Greenspan, the former head of the Federal Reserve has said that the prime motive for the war in Iraq was oil. Where is the leadership on this issue? As long as Big Oil has friends in high places, people will keep dying over oil and the world will move ever closer to economic devastation.

We ignore "Peak Oil" and the discovery of new energy sources at our own peril.

Consumer Confidence Tumbles

Consumer Confidence Tumbles in September.

Shaken by housing and credit woes, peoples' confidence in the economy sank to its lowest point in nearly 1 1/2 years, raising fresh worries about their appetite to spend in the months ahead.

The RBC Cash Index showed consumer confidence clocking in at 71.1 in September, a sharp drop from August's reading of 89.3. It marked the worst showing since May 2006. The index is based on the results of international polling firm Ipsos.

''Consumers are rattled to the bone, '' Richard Yamarone, economist at Argus Research, said of the latest confidence reading.

The deterioration comes as Wall Street has been suffering through a mood swing of its own, sending stock prices careering wildly. The deeper consumer angst also comes after troubling news last week that the economy lost jobs for the first time in four years.

Against this backdrop, analysts say the chance the economy might fall into a recession is growing.

Consumers are finally realizing that the debt they have accumulated and their inability to save are a very dangerous combination in an economic downturn.

I have said since I started this site that a recession was looming. I am standing by that prediction and with reports like this coming out, its a safe prediction to make. The lower and middle classes will be especially hard hit since they lack the savings that sustained them through the last recession.

The next President will inherit a mess on nearly every front. Why anyone would want the job after this moron has basically destroyed the country is beyond me.

GDP Growth Not Reaching Paychecks

The economic expansion that began six years ago has failed to benefit most workers, according to a report from the nonpartisan Economic Policy Institute, released Monday.

Productivity growth, although slower of late, has been strong since 2000. After a sluggish start in the period, employment has picked up, although at a slower pace than in past recoveries. Yet, that growth hasn't transferred to workers' paychecks, particularly for workers at the lower and middle end of the pay scale, the report found.

After rising quickly in the second half of the 1990s, most workers real wages have been stagnant in the 2000s, especially since 2003.

While productivity jumped almost 20 percent since 2000, the real median hourly wage of all workers rose just 3 percent in the same period. Since 2003, productivity has risen 5 percent, while the median hourly wage fell 1.1 percent.

Gee what a surprise!! You would think that the country's negative savings rate would have been a tipoff that things weren't so rosy for the workers while the owners reap ever larger profits.

Working longer hours for less money ---- Thanks a Republican. The proof is in this report. The disconnect in wages came after the Bush presidency.

Incomes Rise But There Is A Catch

The nation’s median household income grew modestly in 2006, the Census Bureau reported yesterday, even as the percentage of people without health insurance hit a high.

Experts said the rise in income was mainly a reflection of an increase in the number of family members entering the workplace or working longer hours. Average wages for men and women actually declined for the third consecutive year.

Of course the Republicans are using this data as proof that their economic policies are working.

Some Republicans seized on the new data as evidence that Bush administration policies had been good for people’s pocketbooks. In a statement, President Bush said the news was a sign that Congress should not raise taxes. The data, he said, confirmed “that more of our citizens are doing better in this economy, with continued rising incomes and more Americans pulling themselves out of poverty.”

Only these fools would look at these statistics and see something wonderful. Average wages down for the third straight year and they consider this progress? Economic policies like this are the reason I started this site. The middle class is being told their lives are better than ever while they are working more than ever. Just 20 years ago a one wage earner family was common. That is nearly impossible now and this is called progress? If you are working more and making less, thank a Republican.

Tony Snow To Quit - He Needs More Money

White House press secretary Tony Snow said Friday he'll leave before the end of the Bush presidency because he needs to make more money.

The 52-year-old Snow, the father of three children, earns $168,000 as an assistant to the president but made considerably more as a conservative pundit and syndicated talk-show host on Fox News Radio. He was named press secretary on April 26, 2006.

White House press secretaries in recent administrations have found the speechmaking circuit to be lucrative once they've stepped down. Snow was eagerly sought by Republican audiences before the elections last year, and in a break with tradition he made a number of fundraising speeches for GOP candidates.

Doesn't every family wish they had a $168,000.00 job that they could afford to leave for more money. This is why the Republican party is out of touch with the common man. They live on a different planet financially. Unfortunately too many middle class Americans vote based on where they hope to be and not where they actually are. What they don't realize is that voting based on where they hope to be makes it harder to actually get there.

Most families in the United States have children and struggle on much less than that. Mr. Snow has been battling cancer but that does not seem to have been a factor in his resignation. He is also privileged to have great health care. His illness would bankrupt many families. I wish him a complete recovery from his cancer. This is not a post to ridicule Tony Snow for this personal decision to leave but a post to point out the complete disconnect the current Republican party has with the middle and lower classes. If you think they can really feel your pain, you are kidding yourself.

Income Inequality In Asia Is Growing

Income inequality in emerging Asia is heading towards Latin American levels.

Brazil has long been considered the country with the greatest disparity between rich and poor. It seems they may some new competition from China. While the divide has been shrinking in Brazil for the past decade, it has been growing in China and the two countries may actually now have the same divide between rich and poor.

I decided to write about this story because the death of the middle class is not just happening in America. We must examine the role of the multi-national corporations and their endless quest for ever greater profits. It will take worldwide action to stop this growing and very dangerous trend.

The Strangehold of Big Oil

As gasoline prices have more than doubled during the administration of George W. Bush people wonder if we are being taken for a ride by the big oil companies. The answer is a resounding yes.

"On the surface, it seems that Big Oil is pumping cash rather than petrol," Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, said at a recent hearing on whether to break up the major oil companies. He said that in 1993, the five largest oil refiners controlled a third of the U.S. market; by 2005, they controlled 55 percent, and the 10 largest held more than 80 percent. And he questioned why the major oil companies were buying back shares instead of investing more in refinery additions or maintenance.

"I don't understand how an industry that makes tens of billions per year can still have rusty refining plants that constantly break down," Schumer said. "And I don't know any other industry where an equipment breakdown in one company benefits every other company by raising prices."

I completely agree with Senator Schumer but the answer is very clear. The breakdowns actually result in even larger profits. By limiting production you raise prices. It is the simple theory of supply and demand. The refiners do not need to invest anything into updating refineries. Each breakdown results in higher prices and increased profits.

It is that fact that is most troubling. Yesterday the Republicans rejected tax increases from big oil to fund renewable energy sources. Is there anyone reading this that can still claim that the Republicans are the party of family values? They are helping big oil rape the American consumer and damage the environment. Remember that when the price at the pump reaches $4.00 per gallon.

Circuit City Posts Huge Loss

Electronics retailer Circuit City Stores Inc. reported a $54.6 million first-quarter loss Wednesday and withdrew its financial guidance for fiscal 2008 as the company slashed jobs and restructured to fend of competition.

I posted this about this company back in April. I am sorry for the workers who will lose their jobs but this company was removed from my shopping list once this story was revealed.

Karma is a bitch!!

GALLUP: 7 in 10 Americans Say Economy Is 'Getting Worse'

A new Gallup Poll will only reinforce those who claim that while the rich get richer most Americans don't feel they are sharing in the growth in our economy. The stock market may be climbing and the unemployment remains relatively low, but 7 in 10 Americans believe the economy is getting worse -- the most negative reading in nearly six years.

The 70% negative rating is up 10 points since April. Also, just in the past month, there has been a significant five-point drop, from 28% to 23%, in the percentage saying conditions are getting better.

"When asked about the most pressing financial problems their family faces today, Americans mention healthcare costs, lack of money or low wages, and oil and gas prices," Gallup reports. "Healthcare costs are mentioned by 16% of Americans while 13% say low wages and 11% say oil and gas prices. These percentages are virtually unchanged from last month."

Finally the middle class is waking up to the fact that they are being screwed. Corporate executive pay is more than 400 times that of the average worker and home prices have risen beyond the reach of more and more people. The savings rate is now negative for the first time since the depression and real wages have dropped since the start of the Bush Administration.

The sleeping giant called the American middle class has finally arisen.

Health Care the Latest Red State Failure

I originally saw this posted on Americablog. and needed to comment.

It is reports like this that led me to create this site. All too often Middle Class Americans are voting against their own best interests to satisfy some prejudice or some view on social issues. This report could not highlight this more clearly.

People are being led to the slaughter due to their own willful ignorance or backwards prejudice. The problem is for the rest of us who are pulled down with them. How many would really sacrifice their health care to stop the 16 year old across the street from having an abortion or stopping the Gay couple from marrying? In the end most people will gravitate toward self interest if they know all the facts. I am hoping to bring those facts to light in a simple understandable way that changes peoples perspectives before they vote.

Why The Shrinking Dollar Is Bad For Middle Class America

I was walking through Manhattan yesterday on a hot summer day. It seemed everywhere you looked there was new apartment construction. All the signs told of exquisite bathrooms, extra large windows and other luxury features. I thought maybe this is the time I can finally move into the city from the suburbs. There was one major problem with my dream, I could not afford even the smallest units available.

For some background, I work in the financial services industry (actually I was recently laid off but that story is for another day) with an annual salary plus bonus of slightly over $100,000.00. I am single and have great savings. I am one of the lucky middle class Americans who can actually still save money (well that was until the unemployment notice came but again, another day another story). I have a Co-operative apartment in a suburb of New York City that is fully paid for and worth about $160,000.00. I know I am better off than probably 90% of all Americans and yet I still can not afford even a simple one bedroom apartment in any of these new buildings.

After seeing models for three different buildings in the Chelsea section as well as two on the Upper West Side I realized that at least for new construction that I could not find any apartment for less than $1 million dollars. For those in the Mid West that just hit the floor, I know believe me I know. If I can’t afford that and neither can almost anyone I know, who exactly is buying these apartments? Most of these buildings are actually close to being sold out. The answer is obviously rich people but not necessarily all from the United States. You see the shrinking dollar has allowed people from the upper classes of Europe to come and purchase these apartments at what are bargain prices relative to their currencies. It is that fact that has kept the prices at levels unaffordable to even very well paid Americans.

To add insult to injury many of these buildings offer a ten year tax abatement so in fact the middle class people of the city are subsidizing rich Americans and foreigners. I wrote this post about that issue about one month ago. A tax abatement is normally used to entice people to areas needing gentrification. Anyone who has been to New York City knows that Chelsea and the Upper West Side do not qualify.

A declining dollar should be good for exports but although our trade imbalance has improved it is more from diminished imports than improved exports. Our manufacturing base is nearly gone so a declining dollar does little to improve the trade imbalance without a real plan to revive the manufacturing base. Wouldn’t it be a better use of taxpayer money to provide tax incentives to bring back manufacturing jobs? Instead we are providing tax breaks to the wealthiest among us at the expense of education funding. It is time that we stand up and say enough is enough.

U.S. Trade Gap Lower Than Expected

The trade deficit narrowed in April, as American businesses exported more goods and services to meet rising demand from overseas.

Exports grew by $200 million while imports slowed by $3.6 billion, bringing the trade gap to $58.5 billion for the month. While that is still huge, it is down from the March deficit of $62.4 billion.

Wall Street welcomed this news and the market slide from the last few days seems to have leveled off. I do not see this as especially good news. Exports grew by just $200 million which is a drop in the bucket when you consider the excesive decline of the dollar in many places. One of the supposed benefits of a dropping dollar is increased exports. That would be the case but with our manufacturing base nearly gone we don't manufacture much that can be exported.

In order for the slumping dollar to help our enormous trade imbalance we need to resurrect our manufacturing base. For me the more important number in this report is the $3.6 Billion drop in imports. To me that signals the American consumer cutting back on spending and that signals lower economic growth within the United States and possibly a coming recession.

There are two Americas. The rich are doing extraordinarily well while the middle and lower classes are struggling economically. That is how I read this report.

Friday Economic News

As usual Friday is the day that the government puts out all sorts of economic reports. The big headlines for the day:

Incomes see first drop In two years.

U.S. incomes fell surprisingly by 0.1 percent in April, the first drop in almost two years, but core consumer prices - a key measure of inflation - inched up a less-than-expected 0.1 percent, a Commerce Department report showed Friday.

May job growth stronger than expected but still not very good.

There was a net gain of 157,000 jobs in the month, up from the revised 80,000-job gain in April. Economists surveyed by Briefing.com had forecast that there would be a 135,000 gain in employment in May.

The unemployment rate stayed at 4.5 percent, the same as in April and in-line with economist forecasts.

The manufacturing sector lost an additional 19,000 jobs as our manufacturing base is further decimated. The one thing to remember is that the economy needs to add 150,000 jobs per month to keep up with new people entering the job market. The unemployment rate does not include those that have stopped looking for a job or are under-employed. Under the Clinton administration the economy added 22,000,000 jobs or 229,000 per month. Under the Bush administration the economy has added 5,360,000 jobs in 77 months for an average of 69,610.00 per month. This is one of the major reasons that the middle class is in decline and savings rates are at depression era levels. Our economy is strong for companies and the shareholders that control them. For the rest of us life is not quite as rosy.

Rules Hiding Trillions In Debt

The Federal Government is using Enron like accounting practicies to hide trillions in debt.

The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows.

The loss reflects a continued deterioration in the finances of Social Security and government retirement programs for civil servants and military personnel. The loss — equal to $11,434 per household — is more than Americans paid in income taxes in 2006.

"We're on an unsustainable path and doing a great disservice to future generations," says Chris Chocola, a former Republican member of Congress from Indiana and corporate chief executive who is pushing for more accurate federal accounting.

Do you still feel like the richest country on earth? Our national debt has the capability of destroying the middle class and turning the United States into Argentina. When will the American people demand that our financial house be put in order?

Retail Sales Weak in April

Retailers, including Wal-Mart, posted weak sales in April. The results were worse than forecast and show the pressures on middle and lower class Americans. With gas prices rising daily and a housing market on the verge of collapse, consumers stopped spending.

Consumers are feeling pressured by higher gasoline prices and a sluggish housing market, particularly low and middle income consumers," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass.

Analysts had already expected last month to be weak after an early Easter motivated many consumers to do their holiday shopping in March, siphoning away part of April's business. But sales were much softer than expected, raising concerns that retailers will also see disappointing results in the months ahead.

With a negative savings rate and consumer debt at an all time high, most families simply do not have the ability to keep spending at their present rate. Consumer spending accounts for two-thirds of the economy and if that spending keeps slowing there is a very real chance that the U.S. economy will slip into recession.

Older Americans Filing Bankruptcy In Higher Numbers

The fastest growth in Chapter 7 Bankruptcy filing is among those 55 and older. Chapter 7 bankruptcy allows for the liquidation of assets to pay creditors as opposed to Chapter 13 filing which allows debtors to pay off debts over time.

Researchers John Golmant and Tom Urlich conclude that rising healthcare costs and mortgage debt are key factors.

Golmant and Urlich expect increased bankruptcy filing rates for older Americans to continue, based on the reduced income retirees face coupled with rising healthcare costs, according to the report.

Mark Weisbrot, co-director of the Center for Economic and Policy, agrees with the report's conclusions but notes the study ends at 2002 and the figures since then "have gotten worse."

This study points out the economic problems facing those later in life when there are less options available to solve the problem. The new bankruptcy laws, which were written by the credit card companies, make it much harder to just dispose of your debts and start over. It is time for both national health care and revisions to the bankruptcy laws. Do we want a nation of bankrupt seniors? Is this what we want for our parents in their golden years? Is this the reward for a lifetime of hard work? With the housing bubble about to burst and a possible recession in our future, these numbers will only grow.

Understanding the Sub Prime Mortgage Crisis

Many people have heard of the subprime mortgage crisis but have no idea exactly what that entails or how it impacts the middle and lower classes. In summary subprime mortgages are made to those with weak credit who might not otherwise qualify for the mortgage they are seeking. The reason for the crisis and the unfolding explosion of foreclosures is that these loans were often given without verification of income or assets and usually at higher interest rates.

With the explosion of home prices in many areas of the country, many families wanted to experience the American dream of home ownership. As the prices skyrocketed but wages remained flat, more and more people simply did not qualify for traditional mortgage loans. They instead turned to these so called subprime mortgage programs. Many families were allowed to secure mortgages with 100% financing and without income verification. A family making $50,000.00 per year could now get 100% financing on a $400,000 loan. Most families felt they could swing the payments and if not they would sell at a huge profit since home values were rising so quickly. Then the bottom fell out. As more and more of these type of loans went into foreclosure, the housing market slowed and values dropped. This left many families with homes worth less than the loan.

How exactly did this all happen? Some of it was fraud on the part of the lender and some on naivete on the part of the borrower. Mortgage originators are normally paid based on the size of the loan but can increase their commissions with either more origination fees (points) or higher interest rates. Many borrowers were simply not savvy enough to understand the specifics of what they were signing. The fallout from the subprime mortgage collapse will be felt throughout the economy as more and more homes go into foreclosure and buyers become skittish to purchase homes during the current downturn.

Read the NY Times article from today on this subject.