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Guest Post: It's Impossible To "Get By" In The US
Submitted by Graham Summers of Phoenix Capital Research
It’s Impossible to “Get By” In the US
While the market cheers on the fantastic job “growth” of March 2010, the more astute of us are concerned with a growing tide of personal bankruptcies. March 2010 saw 158,000 bankruptcy filings. David Rosenberg of Gluskin-Sheff notes that this is an astounding 6,900 filings per day.
This latest filing is up 19% from March 2009’s number which occurred at the absolute nadir of the economic decline, when everyone thought the world was ending. It’s also up 35% from last month’s (February 2010) number.
Given the significance of this, I thought today we’d spend some time delving into numbers for the “median” American’s experience in the US today. Regrettably, much of the data is not up to date so we’ve got to go by 2008 numbers.
In 2008, the median US household income was $50,300. Assuming that the person filing is the “head of household” and has two children (dependents), this means a 1040 tax bill of $4,100, which leaves about $45K in income after taxes (we’re not bothering with state taxes). I realize this is a simplistic calculation, but it’s a decent proxy for income in the US in 2008.
Now, $45K in income spread out over 26 pay periods (every two weeks), means a bi-weekly paycheck of $1,730 and monthly income of $3,460. This is the money “Joe America” and his family to live off of in 2008.
Now, in 2008, the median home value was roughly $225K. Assuming our “median” household put down 20% on their home (unlikely, but it used to be considered the norm), this means a $180K mortgage. Using a 5.5% fixed rate 30-year mortgage, this means Joe America’s 2008 monthly mortgage payments were roughly $1,022.
So, right off the bat, Joe’s monthly income is cut to $2,438.
According to the US Department of Agriculture, the average 2008 monthly food bill for a family of four ranged from $512-$986 depending on how “liberal” you are with your purchases. For simplicity’s sake we’ll take the mid-point of this range ($750) as a monthly food bill.
This brings Joe’s monthly income to $1,688.
Now, Joe needs light, energy, heat, and air conditioning to run his home. According to the Energy Information Administration, the average US household used about 920 kilowatt-hours per month in 2008. At a national average price of 11 cents per kilowatt-hour this comes to a monthly electrical bill of $101.20.
Joe’s now down to $1,587.
Now Joe needs to drive to work to make a living. Similarly, he needs to be able to drive to the grocery store, doctor, etc. According to AAA, the average cost per mile of driving a minivan (Joe’s a family man) in 2008 was 57 cents per mile. This cost is based on average fuel consumption, tires, maintenance, insurance, license and registration, and average loan finance charges.
Multiply this cost by 15,000 miles per year and you’ve got an annual driving bill of $8,550. Divide this into months (by 12) and you’ve got a monthly driving bill of $712.
Joe’s now down to $877 (I’m also assuming Joe’s family only has ONE car). Indeed, if Joe’s family has two cars (one minivan and one sedan) he’s already run out of money for the month.
Now, assuming Joe’s family is one of the lucky ones (depending on your perspective) they’ve got medical insurance. Trying to find an average monthly medical insurance premium for a family in the US is extremely difficult because insurance plans have a wide range in deductibles, premiums, and co-pays. But according to eHealth Insurance, the average monthly premium for family policies in February 2008 was $369.
So if Joe has medical insurance on his family, he’s now down to $508. Throw in cell phone bills, cable TV and Internet bills, and the like, and he’s maybe got $100-200 discretionary income left at the end of the month.
This analysis covers all of the basic necessities of the average American household: mortgage payments, food, energy, gas, driving expenses, and medical insurance. It also assumes that Joe:
1) Didn’t overpay for his house
2) Made a 20% down-payment of $45K on his home purchase
3) Has no debt aside from his mortgage (so no credit card debt, student loans, etc)
4) Only has one car in the family and drives 15,000 miles per year
5) Keeps his energy bill reasonable
6) Does not eat out at restaurants ever/ keeps food expenses moderate
7) Has no pets
8) Pays for health insurance but has no monthly medical expenses (unlikely with two kids)
9) Keeps his personal budget under control regarding cable TV, Internet, and the like
10) Doesn’t spoil his kids with toys, gadgets, trips to the movies, etc.
11) Doesn’t take vacations.
Suffice to say, I am assuming Joe maintains EXTREMELY conservative spending habits. Personally, I know NO ONE who meets all of the above criteria. However, even if the above assumptions applied to the average American, you’re still only looking at $100-200 in “wiggle” room for spending per month!
If Joe:
1) Overpaid on his house
2) Didn’t have a full 20% down payment
3) Owns two cars
4) Eats at restaurants
5) Splurges on heating & A/C bills
6) Has any medical expenses aside from monthly premiums…
… he is running into the red EVERY month.
I also wish to note that my analysis didn’t include real estate taxes and numerous other expenses that most folks have to pay. So even if you are extremely frugal and careful with your money, it is impossible to “get by” in the US without using credit cards, home equity lines of credit or burning through savings. The cost of living is simply TOO high relative to incomes.
This is why there simply cannot be a sustainable recovery in the US economy. Because we outsourced our jobs, incomes fell. Because incomes fell and savers were punished (thanks to abysmal returns on savings rates) we pulled future demand forward by splurging on credit. Because we splurged on credit, prices in every asset under the sun rose in value. Because prices rose while incomes fell, we had to use more credit to cover our costs, which in turn meant taking on more debt (a net drag on incomes).
And on and on.
Does this mean the market is about to tank? Not necessarily, stocks have been disconnected from reality since November if not July. Bubbles (and we ARE in a bubble) take time to pop and this time around will be no different.
Best Regards,
Graham Summers
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The saddest part? A lot of CCs started out as votechs, and many of them have shed their vocational creds, and cancelled tons of hands-on programs. Those programs aren't needed anymore due to lots of jobs going overseas. I've seen electronics programs go under, followed by machinist courses. Everything else is a matter of time. With a lot of our old timers dropping like flies, we will soon have lost a lot of vocational knowledge.
I guess we don't need people to know how to repair electronics and machine metal, but dangit, we sure do need queer studies experts!
I am pretty sure they do not offer a "queer studies" curriculum at CMC but I will check the catalog and get back to you.
What time do they usually hit you with your evening dose of Thorazine? I would like to get you an answer before then.
I guess they put Edmon down for the night already. Thorazine! the wonder drug for patient management.
colorado mountain college in my town, just got granted 4 year status, so BA - BS here we come. but a lot of cmc campus's are in the mt. ski towns, so it just seems english as a second language people, probably? or all the bored white woman thinking they need to brush up on an art course, i am sure they already have their Mrs degree. cmc is hugely subsidized by our property taxes. it is just a joke. cost of taking a class is a farce compared to what it really costs to run and pay the staff etc. i guess they will have to restructure the credential requirement upping to a 4 yr college.
CMC is a good place to do your core classes on the way to a BS. They are going 4 - year degree programs in 2 years I believe.
The credits transfer to other 4 year colleges and universities within CO and elsewhere.
yeah i actually taught ceramics at our cmc and also to the local high school kids via using cmc's facility and equipment, it was win win for all. i could teach the high school kids without the required colorado professional teacher's license employed under cmc. went back to UC and got my K-12 teacher's permit, went back into the system and said what the f*ck for this pay, gona live off of my rentals, and not pay any taxes.
voila
"CMC is not part of the state college system but is a junior college district that receives 12 percent of its funding from the state. Most of its funding comes from property taxes and tuition."
(According to the GJ Daily Sentinal) Assume most counties with any tax base eventually set up some kind of community college system.
Of course there are many that feel that only the rich should attend college and if a poor student has demonstrated high academic ability, we might let one or two of them in.
that is the ubiquitous sentiment in all halls of higher academia, don't ya think?
look where cmc is located in the mountains, all high end ski areas. it is kinda ponzi in regards to the property tax base.
i suppose in the hay days when all the latino's were working the grocery check outs the employer's would pay for the english classes @ cmc, for their employees. now BS degree people are bagging. the realtors in the mountains are going back to having to be lift attendants again, where they were in the '70s. who is going to go to cmc to get the BS? what kind of class can they take to get ahead in a 4 year setting? cmc is moving away from vocational to preppy nothing content courses.
i have followed this for sometime. cause these so called “professional” potter's would just take classes for $60 a semester and mass produce pottery to sell. no problem. well i put an end to a lot of it. these potter's had no overhead what's so ever. just sucking the system. most of them didn't pay property taxes didn't live in the district and would drive 50 miles just to do the cheap. this is what really bothers me about people.
"well i put an end to alot of it"
You might want to take an economics course and one on public finance as well.
i was willing to borrow against my future skills... was glad for the opportunity, and happier that the risk paid off...
but i wasn't too poor to be 'allowed in' in the subsidized sense, nor was i silver spooned in.
careful not to oversimplify. anyone who wants to should be allowed to try, but not necessarily given a free ride. usually those with no skin in, put no skin out.
most of our black and white lives are really pretty grey.
Australia has (had) a pretty good system. It's still got too many people doing useless degrees, but it means that most people are able to get a college education if they want one.
The way it works is that the government pays for your tertiary education (basically a loan). You then pay the loan back by paying a slightly higher marginal tax rate (once you earn over a certain threshold). So if you're in the 31% bracket, you'll pay 33%. A graduate is then not killed with debt repayments, but they still very much owe the money and still have to pay it back.I'm simplifying, but that's the basics.
The downside is that the useless degrees never earn enough money to pay it back, so you take a double hit on those (the gov basically pays someone to waste 3-5 years of their life). But it means that anyone with half a brain that wants to be educated can be, so long as they can feed themselves and put a roof over their head.
It's only possible because higher education costs are SO much cheaper, but that's another issue entirely.
(Another wonderful side effect is that if you're an Ex Pat, you don't pay AU taxes, so don't pay it back... )
How about a Masters of Liberal Arts Study.
Think about that one, and yes they do exist.
Love to be the admissions officer selling that Masters Degree for 45k per year.
You comments, Edmon Plume, are quite astutde (LOL, just joshing you, sonny!!!!).
The reason education costs sooooo much in America is due to the securitization of all those student loans, thus tranferring the costs to student tuition and fees, and interest payments forevermore.
As far as the "importance" or "value" of one's degree (and I admit to a bias of placing a greater value on engineering degrees, science and math degrees, myself), it certainly doesn't matter in today's absolute anti-meritocratic society and non-culture.
For the past twenty years, we've all heard those self-appoint "human resources" experts claim its who you know, not what you know. And further claim everyone should network as the only way anyone can get a job, unless they are already quite connected, is through someone they already are acquainted with.
Seriously, when there aren't any jobs, and as that BLS study published in the matter last summer amply demonstrated that there have effectively been ZERO jobs created in the private sector since July 1999 (they have created a boatload through FDI overseas, of course, and offshore an equal boatload), it really doesn't matter what one's major was, now does it?
So middle class people can barely get by with a single income, how is that news? In normal times most families have two income earners.
Household income includes 2 income families. Median personal income is not $50,000.
And, when households were primarily one-income ones (pre Reagan years) you usually had an extra person who could venture out into the workplace to seek additional income if needed. With the necessary two-wage households you're one job loss away from total collapse.
I personally went through the loss of a second income, and it wasn't pleasant. But, unlike many, my household's budget was in control and I was able to get by/adjust to the loss of the second income, until, that is, I lost MY income as well... at that point I figured it wasn't worth having a mortgage take me down (got another job, but decided to sell my house- at the top of the market).
Your idea of normal seems a little skewed.
Two-income families are also a product of the recent (30 years) effort to stay afloat, and many families and whole communities have suffered as a result. For something normal (not tweeked by central banking, fiat currency and crony capitalism) one might have to go back to the early 1800s.
Definitely a lot of skewed posters today, cougar_w!
Roger that, Sgt. Guess I'm not drinking enough of that kool-aid thing everyone else is getting.
Exactly. This is the REAL story. And the mainstream press is staying as far away from it as possible, as we keep on hearing the incessant "inflation vs. deflation" debate.
If the Fed keeps on printing, we're going to see more of this. If bankrupticies declince from here and wages/income makes a miraculous recovery (as Leo suggests), we get the unintended consequnce of hyperinflation-- and likely much higher taxes.
If wages remain stagnant and employment recovery is slow-- there will still be inflation in the products/services we need to sustain a living. Those who are prudent will cut the cable TV and cell phone bills, etc., those who are not will file for bankruptcy protection.
Either way, the middle class is still at risk. That's a lot of people, is it not?
And as people cut their services this will translate into more job losses. As I've been saying, this is a reinforcing negative spiral with no clear leveling off yet in sight.
Inflation in the things we do need.
Deflation in the things we don't need.
Many (most?) Americans today have jobs in economic sectors nobody needs, and America cannot produce in-country many of the things the citizenry require to feed and clothe themselves.
All these operate at the same time. There is no sensible debate, there is only the horrible grinding of the wheels as the middle-class is mechanically stripped of their valuables and then ground to dust.
It is that mix of inflation and defaltion that is going to be the most critically painful.
We'll get inflation in things that tend to be purchased with cash -- or extremely short term credit, and deflation in that which would ordinarily be bought on long term credit (houses and cars).
Unfortunately, the average citizen lacks the ability to see this coming, so they're going to be slaughtered.
Great point ... thank you. I think I will start thinking about how to create a financial/investment plan to recognize this.
This is a budgeting problem, something that many people don't do anymore. Your income determines how you can afford to live, not the other way around. Cancel your TV. That'll save $100/mo. Keep lights off when you don't need them on. Take shorter showers. Use coupons to shop. Use prepaid cell phones, which help you budget your talk time. Or, get a land line or use VOIP to save $$$. Sell your $225k house and buy something you can handle. Live in a modular if you have to. Drive an old car, or a cheaper one without the bling. Take the damn bus. Get off your fat haunches and ride your bike.
I have a hard time with people who see TV, 2 cars, cell phones, home ownership, etc. as "necessities". Necessities for what? For living beyond their means?
Let's put some blame where it lies: ~25% of your income will be used to pay all taxes for the year. Joe Sixpack's $50k is actually $38k, out of the gate. Now see how the numbers turn out.
You are right, Edmon.
But can you imagine the consequences on GDP if everyone did as you suggest?
Ironically, those in DC want us to lever up and spend, spend, spend. At least the incentives under the stimulus has pointed us in that direction.
Pure genius, I tell you.
I'm not advocating that everyone do this, only those who don't have the ability to live high on the hog. But I can imagine the consequences on GDP if people spent less and saved more. In fact, all we have to do is look back into recent history and we can see a time when our money was backed by gold and silver, and government debt wasn't extreme, and we - God forbid - financed wars by selling bonds to citizens who saved.
As an alternative, let's get back on a gold standard, and thereby make our money worth something once again. Because a good part of this equation is how much our money is worth, not how much of it we have.
I agree that our economy is based on spending. But long ago we still spent, it's just that we also saved, and what we spent was ours, and not someone else's. When we did borrow, it was for large purchases like a house, and we were able to pay it off much more quickly than today.
Too bad our fiat currency almost necessitates investing in order to get ahead, and by extension, going into debt to get ahead.
Other things you can do.
Flush your toilets once a day, even after its full of shit.
Only wash yourself once every 3 days and just wash the stinky sweaty areas daily with a litre of water.
Steal from your neighbors vegetable garden if you are lucky to have such neighbor. Just dont make it too obvious as I am sure other neighbors are doing the same thing.
If you are still employed, take things you need from the workplace. Anything you can get your hands on. If you dont take it, I am sure someone else will. Just be discreet.
You definitely dont need 2 cars. Doubling insurance makes no sense. It also helps the wifey limit her trips to the mall.
If you are still employed, take things you need from the workplace. Anything you can get your hands on. If you dont take it, I am sure someone else will. Just be discreet.
OK, and afterward can I come to YOUR place and steal from you to?
Geez, people, let's start becoming the people/society that we need to be! Religious teachings or not, it only makes good sense to not practice thievery.
I would but the banks have been robbing us and they have no incentive to stop raping our asses even after we helped them out of their mess. What goes around comes around, just in a smaller scale for us simpletons.
And on the other side of the coin the wealthy accuse the rest of us of freeloading off of them. It's a circular function. Besides, it's virtual "fiat" money, most of the "wealth" that WAS there, was only made up; and, jsut look around you at all the junk that you (well, most people) have, that's where the money/wealth really went.
Are the bankers louts? Well yes, but becoming a lout onself doesn't make the world a better place. But go ahead if you have to, steal (what will become, if not already so) worthless SUVs, granite-counter-top McMansions and widescreen TVs.
Ok, ok. I offer a compromise: Take as many deposit tickets from your bank as you can manage and use them as toilet paper.
re stealing = karma. Frugality is fine. But if i am your neighbor, you get buckshot in your hiney if you come in my garden uninvited. The dogs will tip me of
Well, since I shoot and eat the rabbits that steal from my garden, and you're just fine with civilization decaying, I guess I'll shoot and eat you if you come anywhere near my fence.
have never agreed & disagreed so much at the same time with one comment on ZH before this particular one:
1) better yet, pee in an old detergent bucket and dump in your compost...best fertilizer $ can not buy. better than that, build a composting toilet.
2) ...and Dr. Bronners.
http://forums.cannabisculture.com/forums/ubbthreads.php?ubb=showflat&Num...
3) be advised that there's a recipe going around the 'gardeners w/o guns' community for an organic pesticide spray that is toxic to humans w/o a secret antidote. so how about instead you walk over to your neighbor and ask him or her for some helpful tips on how to garden first before you go raiding the product of someone else's time & energy (see #1).
of course, this is America and you are free to be a blood-sucking parasite if you wish. just remember, mother nature is makin a list and checkin it twice.
4) been there done that. in retrospect karma's a bitch.
5) and you NEED 1 car for what exactly?
Thanks for the added does of sanity/reality.
Careful on #1! Dilute at about five parts water to one part urine, minimum (might be ten to one). But yes, nitrogen is good to have/recover! And if you're really not squeamish, look up humanure.
I have a septic, with a vegie garden on the down slope beyond the leach field. Best of both worlds... I don't have to deal with it, but I get some of its benefits :)
Septic tanks require maintenance AND land. And, in some cases people actually need pumps (ick!)...
damn good garden design ned
Budgeting problem perhaps for some but this is a gross oversimplification. People will have expenses at whatever lifestyle their income affords them. If they live above their means it will end badly, but sometimes not even budgeting can help with a sudden, drastic interruption in income. Particularly a higher income... We know why the jobs have and continue to dry up, and it's not about budgeting.
True, the article presumes the person has employment. For the unemployed, these are tough times. But for the position of this article, it is a budgeting problem, starting with a house that Joe Sixpack couldn't afford (4.5 ratio). That's a full third of his net monthly income, and likely 10.0 over the lifetime of the loan. Budgeting is about choices. You can still go out to eat sometimes, just settle for salad instead of steak. My point is simply that for any level of income, means determine your outlays, and part of anyone's outlay should be a percentage into savings, even if it earns nothing. If you are unemployed or underemployed, you may still have some amount of income. At those levels, it's really tough, and it forces you to budget. Especially if you had to move your family in with relatives, lest you show up with designer clothes when you are paying them no rent.
This is not a budget problem. A family of 4 living off of 100k a year and not being able to keep up with their bills is a budgeting problem.
Great post. I consider myself well-off (annual household gross income of around $110,000) and I still struggle to save anything. I have a reasonable mortgage (currently owe $144K with 22 years left on a 30-year term at 6%) on which I put down 20%. I have one car payement, a small HELOC ($11K) and a little bit of credit card debt at a 10% APR ($3K). Granted, I spend too much on food and gifts, but I still find it difficult to make ends meet every month, particularly when I am currently spending $300/month on gasoline alone. I have no idea how people making less than half what I do get by right now. I guess this post shows that they aren't.
I agree. Excellent post. I have less than 5 years to go and my house will be paid off. No car payments or revolving debt. Yet I can very much sympathize with Joe. It's a balancing act between putting away some emergency cash vs. some silver dollars here and there.
I have truck,tools and 30 years experience in almost anything in the house. I think i will be fine since i have prepared for this. Must be a thousand other contractors thinking the same.
I bet we work for food within 6 months.
http://www.youtube.com/watch?v=IhnUgAaea4M
perfect, and oh so true...
And a great quote from Team America:
.
Many thanks for the great chuckles!
I am posting this link to show what people with real cohones do when their government ignores them:
http://www.youtube.com/user/thaifaq#p/a/u/1/ztF6hUryt88
Good analysis. Most are struggling and there
is no light at the end of the tunnel. Higher
taxes or higher prices will break more. Only
with aggressive cost controls and proactive
belt tightening can one get by without going
into the red slightly more each month.
I only wish all would understand this ... start spending less
This main street income rundown will be a shocking analysis for the big banksters. They still insist 97 % of their $ 1 trillion secured HELOC potfolios will actually be money good some day.
$ 1 Trillion HELOC ... where did you get this figure?
For most Americans, personal assets and incomes are deflating. As are retirement assets.
But the cost of living is going up. I don't need to belabor all the reasons why here.
But the geniuses at the Fed and Treasury point to numbers like core CPI stuck near 0. That's because simultaneous deflation and inflation can cancel each other out in the numbers. Also very key consumer and small business cost inputs are not part of CPI or PCE. Consumer interest and bank fees, for instance. These are high and on the rise again this week. Insurance costs. Spiraling tuition. And taxes taxes taxes! The net result of the grand experiment we call the Recovery Act and the ongoing Fed policy choices will be a vice grip to average Americans and a corporate landscape that will be oligopolistic and anti-competitive.
Add deflating jobs to the list. With no job it's really a you-know-what to deal with ANY CPI number.
Oh, and also wait for increasing mortgage rates due to ARM resets.
But, IF you add the real estate taxes (say 1% to 2% per year on the $225K home, assuming market = assessed) and toss in the mandatory annual insurance costs (on home, car and personal assets), you've just added (up to) $458 per month in costs.
Presto, you're running monthly deficits.
If it's good enough for our government it's good enough for us right?
if you are paying much over 2% then you need to move. Even Seattle, considered to be one of the higher cost areas only has around a 1% rate with some minor variation above or below on specific area.
Watching reruns of "Lotsa Luck!"
Bye bye miss american pie...
1. Many former dual income households are now single income households.
2. ZIRP continues to cripple anyone who was lucky & smart enough to save up a nest egg.
3. Govt spending/taxing just beginning to hold taxpayers accountable for their mistakes (govt mistakes).
4. Corporate outsourcing continues unabated.
5. Corruption and fraud have been exposed but will not be prosecuted. Billions embezzled and no cops to be found anywhere.
The day the music died...
I don't know anyone who isn't trying to figure out how to protect their assets. Most corporations are doing the same thing ... but they have options (i.e. offshoring) ... individuals don't.
Well I'd say I'm middle America. I make less than 100k a year. The Unabomber became one of my favorite people once I found out he lived in a cabin in the woods and lived off either $300 or $600 a year. When you think about it, people can live very cheaply when they have to. I find great comfort reading books on the Eastern front in World War 2. Reading the hardships the Russian people had to go through first under Stalin, then under Hitler, then under Stalin again is a testament to their strength and fortitude. The average person in the United States would never survive under those conditions.
Regardless, I learned long ago that my blood pressure would go down and I would sleep a lot better if I lived within my means. Debt was going to kill me. I drive a 2002 Chrysler minivan that I work on myself (if you want to become a good shade-tree auto mechanic, buy a Chrysler, I mean a Daimler Benz, I mean a Cerberus, no I mean a Chrysler). I was jumping up and down with joy when my wife said her favorite car on the road was "one of those older jeeps, you know the boxy looking ones". 1998 Jeep Cherokee, bought for $4900 and momma is happy.
I have no idea what the point of this comment is, other than to say I'm a poor white trash hoosier, but I'm living within my means, and I sleep very well at night.
Biff
Thanks Biff. You know what you can afford and you live within it. And, you are happy, which I think a lot of people miss out on due to extreme debt.
Interesting, isn't it, that the idea of selling "bonds" has a fairly in-your-face implication: bondage, slavery, chains. If bonds are money debt and money is a claim on the work of your hands, then debt is made of chains to enslave you well into the future.
And that's why you sleep better, knowing that you aren't and won't be a slave to any man. Our ancestors weren't a bunch of rubes - they were smart with their brains and their hands, and could survive just about anything on a crust of bread a week.
PS, if your jeep has the straight six, and idles rough, it's usually the valve cover. They've engineered that thing many, many times to get rid of a vac leak, with no luck.
When you think about it, people can live very cheaply when they have to
2/3 of the world's population lives on $3/day or less, so, yes, people CAN live on a lot less (than we're seeing in the "wealthy" nations).
Ah, now we really get to the crux of the issue. Americans are competing with people around the world who work basically for nothing. This means that the $50,000 "Joe" made last year is way more than he's worth in the global labor market. So "Joe" will look back on the days when he struggled to get by on his $50,000 as the good old days.
Yup! Problem is that Joe is programmed to be entitled, he's packing guns and driving a big SUV: he's also been programmed to protect the rich so that he too can be one "someday" (though that day never happens). Divide and conquer. Joe and Co are programmed to lash out at anyone who questions their illusion that Joe can be rich: anyone preaching civility toward the poor will be viewed as a socialist and will likely be caught in Joe's cross-hairs. Derrick Jensen's book "The Culture of Make Believe" is quite apropos.
"mo money, mo problems" -- biggie smalls
Sometimes that's the best reward.
http://www.youtube.com/watch?v=E0p_W6JnFK0
Did you see that you could buy a bank building in Bicknell, Indiana for about twice the cost of your car ... you go from poor white trash to bankster ... not bad.
I used to buy a pickle; it only use to cost a nickel.
And a bus ride use to only cost a dime.
Lotsa luck!
Them days could be forgotten; the world has gotten rotten.
Lotsa luck! Lotsa luck! Lotsa luck!
Every day is getting tougher; And it keeps on getting rougher.
A dollar isn't even worth a half a buck.
So in order to survive, just to keep yourself alive,
What you really need today is lotsa luck!
Lotsa luck! Lotsa luck! Lotsa luck! Lotsa luck!
duplicate
My bills are all due and the baby needs shoes and I'm busted
Cotton is down to a quarter a pound, but I'm busted
I got a cow that went dry and a hen that won't lay
A big stack of bills that gets bigger each day
The county's gonna haul my belongings away cause I'm busted.
I went to my brother to ask for a loan cause I was busted
I hate to beg like a dog without his bone, but I'm busted
My brother said there ain't a thing I can do,
My wife and my kids are all down with the flu,
And I was just thinking about calling on you 'cause I'm busted.
http://www.google.com/url?q=http://popup.lala.com/popup/1657606168712082...
My baby left me and my mule got lame
Lost my money in a poker game
A windstorm came just the other day
Blew the house that I lived in away
I'm havin' so much trouble
So much trouble
So much trouble I'm about to lose my mind
Started sellin' whiskey, wine, and gin
They caught me last week and last night again
Now the sheriff he comes in sight
Walked into my house and caught me shootin' dice
I'm havin' so much trouble
So much trouble
So much trouble I'm about to lose my mind
Carried me away, my pajamas on
I even hate that I was born
Let me out and I'll go cross town
Couldn't find my baby, she'd put me down
I'm havin' so much trouble
So much trouble
So much trouble I'm about to lose my mind
Went to the races, placed my bet
My hard luck my horse isn't in yet
I go across town after I blows my dough
Even landlady changed the lock on the door
I'm havin' so much trouble
So much trouble
So much trouble I'm about to lose my mind
Pawned my watch, pawned my chained
I'd a pawned myself, but I was ashamed
Got a job on the city pay
Late one mornin' laid me off that day
So much trouble
So much trouble
So much trouble I'm about to lose my mind
Yeah
My baby left me and my mule got lame
Lost my money in a poker game
A windstorm came just the other day
Blew the house that I lived in away
I'm havin' so much trouble
So much trouble
So much trouble I'm about to lose my mind
Trouble, trouble, trouble
OK, enough with these I have no money ditties. Lets go for REAL despair.
Hollis Brown
He lived on the outside of town
Hollis Brown
He lived on the outside of town
With his wife and five children
And his cabin fallin' down
You looked for work and money
And you walked a rugged mile
You looked for work and money
And you walked a rugged mile
Your children are so hungry
That they don't know how to smile
Your baby's eyes look crazy
They're a-tuggin' at your sleeve
Your baby's eyes look crazy
They're a-tuggin' at your sleeve
You walk the floor and wonder why
With every breath you breathe
The rats have got your flour
Bad blood it got your mare
The rats have got your flour
Bad blood it got your mare
If there's anyone that knows
Is there anyone that cares?
You prayed to the Lord above
Oh please send you a friend
You prayed to the Lord above
Oh please send you a friend
Your empty pockets tell yuh
That you ain't a-got no friend
Your babies are crying louder
It's pounding on your brain
Your babies are crying louder now
It's pounding on your brain
Your wife's screams are stabbin' you
Like the dirty drivin' rain
Your grass it is turning black
There's no water in your well
Your grass is turning black
There's no water in your well
You spent your last lone dollar
On seven shotgun shells
Way out in the wilderness
A cold coyote calls
Way out in the wilderness
A cold coyote calls
Your eyes fix on the shotgun
That's hangin' on the wall
Your brain is a-bleedin'
And your legs can't seem to stand
Your brain is a-bleedin'
And your legs can't seem to stand
Your eyes fix on the shotgun
That you're holdin' in your hand
There's seven breezes a-blowin'
All around the cabin door
There's seven breezes a-blowin'
All around the cabin door
Seven shots ring out
Like the ocean's pounding roar
There's seven people dead
On a South Dakota farm
There's seven people dead
On a South Dakota farm
Somewhere in the distance
There's seven new people born
Bob Dylan's masterful portrayal of despair personified. Many are on the edge and anarchy lurks. Many are deceived and will be astonished when the tide turns.
Born like this
-Charles BukowskiInto this
As the chalk faces smile
As Mrs. Death laughs
As the elevators break
As political landscapes dissolve
As the supermarket bag boy holds a col lege degree
As the oily fish spit out their oily prey
As the sun is masked
We are
Born like this
Into this
Into these carefully made wars
Into the sight of broken factory windows of emptiness
Into bars where people no longer speak to each other
Into fist fights that end as shootings and knifings
Born into this
Into hospitals which are so expensive that it’s cheaper to die
Into lawyers who charge so much it’s cheaper to plead guilty
Into a country where the jails are full and the mad houses closed
Into a place where the masses elevate fools into rich heroes
Born into this
Walking and living through this
Dying because of this
Muted because of this
Castrated
Debauched
Dis in her ited
Because of this
Fooled by this
Used by this
Pissed on by this
Made crazy and sick by this
Made violent
Made inhuman
By this
The heart is blackened
The fingers reach for the throat
The gun
The knife
The bomb
The fingers reach toward an unresponsive god
The fingers reach for the bottle
The pill
The powder
We are born into this sorrowful deadliness
We are born into a government 60 years in debt
That soon will be unable to even pay the interest on that debt
And the banks will burn
Money will be useless
There will be open and unpunished murder in the streets
It will be guns and roving mobs
Land will be useless
Food will become a diminishing return
Nuclear power will be taken over by the many
Explosions will continually shake the earth
Radiated robot men will stalk each other
The rich and the chosen will watch from space platforms
Dante’s Inferno will be made to look like a children’s playground
The sun will not be seen and it will always be night
Trees will die
All vegetation will die
Radiated men will eat the flesh of radiated men
The sea will be poisoned
The lakes and rivers will vanish
Rain will be the new gold
The rotting bodies of men and animals will stink in the dark wind
The last few survivors will be overtaken by new and hideous diseases
And the space platforms will be destroyed by attrition
The peteing out of supplies
The natural effect of general decay
And there will be the most beautiful silence never heard
Born out of that.
The sun still hidden there
Awaiting the next chapter.
Looks like my hard-luck '70s refrain burst the tears of damned emotion! Try this:
Once I lived the life of a millionaire,
Spent all my money, Didn't have any cares.
Took all my friends out for jolly good times,
Bought bootleg whisky, champagne and wine.
Then I began to fall so low,
Lost all my good friends, had nowhere to go.
I get my hands on a dollar again,
I'm gonna hang on to it till that old eagle grins.
'Cause no, no, nobody knows you
When you're down and out.
In your pocket, not one penny,
And as for friends, you don't have any.
When you get back on your feet again,
Everybody wants to be your long-lost friend.
Said it's strange, without any doubt,
Nobody knows you when you're down and out.
When you get back on your feet again,
Everybody wants to be your long-lost friend.
Said it's mighty strange,
Nobody knows you,
Nobody knows you,
Nobody knows you when you're down and out.
I aint got nuthen and nuthen got me
i aint got nuthen is why i am free
I used to sing that years ago on the Hobo road
This is the best ZH thread I've read in a while. A little bleak, perhaps, but it is time to pay the piper, so what did we expect?
Reap what you sow etc, etc.
Bonds, mortgages, debt. "You don't own your stuff, your stuff owns you."
As the supermarket bag boy holds a col lege degree
updated version:
As the whole foods market bag boy holds a col lege degree
my kid just told me the nickname for 'whole foods' is 'whole paycheck'... :^)
"What matters most is how you walk through the fire." -CB
I apologize for laziness, but I wrote this a few hours ago for commentary on the "Radical Concentration of Wealth is Destroying Both Capitalism and Democracy" piece by George Washington, but it seems that I had been late in entering it as nobody responded to it (maybe no one should). It's primarily about what happened and is happening (and especially why it happned) to real wages for the average American. Anyway here it is and I think it sure applies to this discussion:
I don't buy the poker anology as having explanatory power as to what generally happened and is happening. Specifically, I find that what happened is more akin to well what actually happened than say a rigged game of poker. For me, the key is real wages not poker winnings.
From after WWII until around the early 1970s the middle class had a real nice run of good lluck at the poker table of real wages (i.e., coincidently, during Brettan Woods I). Since after Nixon effectively established the current fiat currency regime (Brettan Woods officially ending in August 1971, but taking about until 1973 to be more formalized), the concentration of wealth waxed and wanned (but, of course, of late has sped up in the direction of the few), generally with at least two, maybe three, phenomenon: (1) the growth of government (direct and indirect involvement), (2) the relative level of total debt (i.e., government and private), and maybe (3) real interest rates. There are other apparent drivers but let us just focus on those two or three and related effects.
With healthcare passing, we are now over 50% of government involvement (again, all forms of 'redistribution' and direct taxation & spending, federal, state & local). Milton Friedman may have had some questionable macroeconomic theories, but he was generally correct in that government involvement in the 'markets' doesn't make them free or fair. For example, TARP etc. massively sped up this effect (especially here the rigged poker game seems apt). As a rule in America, the greater government involvement, the less free and fair the economic system and the more concentrated the wealth, ceteris paribus.
Regarding the level of debt, people with capital/money don't generally need to borrow to consume, if they do borrow, they do so generally to invest. This is not true of people who lack capital. For the lower half of the economic ladder, debt is often used to consume. The best insulation against using debt to consume is generally to have a high wage. High wages tend to help those who rely on wages to consume and build up some capital (i.e., the middle to lower rungs of the economic ladder). Unemployment is worse for a person with no capital than one with capital. The private debt explosion of the last decade or so was impacted in large part by the exportion of American jobs abroad and reducing wages domestically by simultaneously importing people to compete with those on the lowest rungs of the economic ladder and exporting their jobs. Therefore, increasing debt tends to be more of an effect than the cause of inequality, but it is positively correlated and has causal components. Our fair government on behalf of large multinational (foreign and domestic), the Chamber of Commerce, etc., negotiated and passed such things as NAFTA, allowed China into the WTO even though it wasn't qualified (i.e., due to stealing technology, ignoring patent laws, human rights, etc.), etc.; and when these didn't bring the desired outcomes (e.g., wages in Mexico are relatively lower now than before NAFTA, and more people immigrated from there than before) or it was clear, for example, China manipulated its currency relative to the U.S. dollar, etc., choose to ignore negative effects or blatant violations in favor of the multinational or foreign country. Therefore, ceteris paribus, debt and government negoitated trade deals (which were neither free nor fair) have tended to cause income inequality in America.
A possible third factor was sustained low interest rates (also government induced via the Federal Reserve Bank). This increased the cost of such consumables as residential real estate (and it should not be viewed as an investment, but as a depreciating consumable asset). Regardless of what people at the Fed say, low interest rates were a primary cause of the housing bubble in America (arguably the greatest in our history). Therefore, one of the worst things you could do to the middle class and below was to jack up the price of the average person's/family's largest consumption item (again, largely the government's fault), export millions of jobs abroad (as well as 'outsource' other service sector jobs), and bring in low wage competitors (because the government decided not to enforce even its own pathetic immigration and related border laws). Again, ceteris paribus, f_king with interst rates screws the middle and bottom rungs of the economic ladder, as well as messing with trade that was never free or fair before the deal or after (and directly harming the average person's wage in the process).
Question: What do these things all have in common? Answer: Government involvement either directly or indirectly impoverishing one group relative to those with large gobs of capital. Strictly speaking, lowering wages and/or jacking up the price of their consumables up and above what the free market would have allowed. Yes, its the system, but the common thread here is mo govmint, mo problems.
The US started down hill in the early 70s because that's when it started to become an energy importer. Food, Shelter and Water, these are the essentials. The paradigm shifted toward more energy intensive agriculture and energy intensive shelters (HUGE ones, whose per-footage energy consumption (read "efficiency") is less than older homes, loses out here due to increase in footage (read "total energy consumption"). And water costs for many are increasing due to pressures from increasing population size and from agricultural use (refer to my above comment on "energy intensive agriculture").
Government has been the tool of the oligarchs. It's like the saying that "it's not guns that kill people, it's people who kill people [using guns]"); it's not government that's doing it, it's the people controlling government. NOTE: this is in no way an endorsement of governments (I'm not a fan); rather, it's an attempt to clarify logic so that we can actually learn from our mistakes (and not be pawns to ideologies).
I don't think there is a huge conspiracy by the 'people controlling government' beyond the natural lust for wealth and or power.
I want to have power and I want to have wealth to make my life more secure and comfortable. That being said, there are those who wish for power for its own sake ... there are those who wish for wealth for its own sake. It is these two sets of people who claw after the pinnacles of government and business and who are in collusion to control the rest of us for their own gain or perceived ideology advancement.
The failure of the Federal regime(s) comes from the collusion of money and power which acts to extend control of the lives of the citizenry for it's own gain. Congress is beholding to Money and Money is beholding to Congress in a very unholy self perpetuating symbiosis. The Administration and Congress is being bought and paid for and continues to payoff its supporters with a myriad of policies that will bankrupt our nation. Few in Washington are acting in the best interest of Americans.
Obama, Reid, and Pelosi accepted bribes from their corporate/union supporters to advance their own ideology and paid for this Power Lust by promising to repay by enacting polices that feed their supporters' Greed.
The notion of government as developed by our founders was to protect the citizenry from enemies both foreign and domestic ... the blood of many young Americans has fulfilled it's first obligation but greed and the lust for power has left the second obligation unfulfilled.
Our Nation is now imperiled by the debt (for Greed of a few) and entitlement mentality (for Power Lust of a few) that has been cast upon our people.
We will make no progress until the Power Lust and the Greed are decoupled or neutralized. How?
We will make no progress until the Power Lust and the Greed are decoupled or neutralized. How?
I think that there are many great studies and writings that comment on all of this.
It's not likely to happen, not unless there's some sort of MAD (Mutually Assured Distrcution) arrangement. Not as long as there's power to be had. The founders did NOT set up a system to avoid all this, had they done so we wouldn't be here now: the SYSTEM was still constructed with a top-down mentality (from the minds of wealthy white land owners).
Bigger levers of power mean greater incentive to get one's hands on them. That's why I advocate decentralized power (plus, big systems fail, they do so in big ways).
+10
"and not be pawns to ideologies"
i would counter that the ideologies are barely ours anymore. spoon fed, more like...
i've found a good mental tool, where i replace government entity names with 'we', in their various forms, e.g.:
instead of: "the county won't let them build on that land", you could more correctly say "we won't let them build on that land".
or instead of "congress passed healthcare" say "we passed healthcare"
odd how much more motivated i am to act when i'm held responsible... and while it may take time... we *are* responsible.
Soon we will all be compelled to join the "no-pay movement".
In otherwords, quit working for the oliligarchs and barter...
[Yes, its the system, but the common thread here is mo govmint, mo problems.]
Doesn't follow from your own analysis, actually. If the government had actually been doing things to benefit the people in the trenches things would have turned out differently. The problem is clearly that the cost of getting elected to government position favors the wealthy (either to influence politicians or to be elected themselves) and this has destroyed any balance in how government conducts its business, with the results you describe.
There probably is a point of diminishing returns in size of government. However I am not prepared and never will be prepared to accept at face value the premise that corporations if left to their own devices will Do The Right Thing -- on any topic whatsoever -- including not killing their own workers or destroying utterly the entire planet.
Government sucks. Too little government would be apocalyptic. We need better government at least. Therefore we need to get corporate money out of elections and away from regulators.
Cougar, you're a lot closer than most to understanding the source of the problems...
THE issue, as far as I'm concerned, is the concentration of power: the more that power is concentrated, the WORSE things get- doesn't matter whether it's govt, business or churches.
I think that the US failed to apply the no-standing-army approach to govt- should have also had "no standing-govt." In a way that's what they we targeting with representatives only meeting every once in a while: but, just like the failure to keep a full-time army from setting in, the full-time govt also set in.
["no standing-govt." ]
Ah ha. Thanks for that.
I've also heard (though I have never tried to track down a reference) that the Founders imagined that the Constitution as written would stand for only a few generations, then to be largely scrapped and re-written in a regular but controlled process of creative destruction. If so, then they were both more brilliant and more cautious than anyone today can possibly imagine.
In some ways, having a standing government and a creaking old Constitution has played to the hands of the oligarchs. Probably they knew it would and helped ensure that it was never challenged. Getting themselves protected as individuals in the 14th Amendment sealed the deal; a Constitution written to keep standing corporations protected from restraints and alive forever. The recent SCOTUS decision just served to put a bow on it.
The recent SCOTUS decision just served to put a bow on it.
Ah, but sometimes one has to think creatively. I can't remember where I'd heard/read it, but if corporations enjoy ALL aspects of protections afforded individuals then they can also receive the same PUNISHMENTS that individuals can. Three Strikes! Screw up criminally three times and all is finished! Yes! It's brilliant! Before too long you'd have big business pleading to be excluded!
I think one of the founders suggested that the Tree of Liberty was to be replentished by the blood of patriots every once in a while.
Unions have contributed the most at the Federal level the last two election cycles. I agree that Corporations should be limited but no less than Unions. I am Union member and the CWA is full of sh*t.
'The Corporation' is not the sole possessor of Greed ... think CWA, SEIU, etc!
It's concentrated power, people, concentrated power! Quit trying to pick bones!
Once upon a time workers actually proved to be a threat to corporations, that wsa removed when the govt recognized unions: this gave a mechanism for manipulating the worker's energy (look how big business has strengthened, and then look at how unions workers power has diminished).
This doesn't consider NTI ("non-taxed-income") like cash-under-the-table.
I know the US is not as corrupt as Greece, and many US households have explicit W-2 statements, but there's a tremendous cash-under-the-table economy. And, $1 under the table is worth a LOT more (because that's $1 untaxed -- entirely spendable).
No one has ANY incentive to "inflate" their income, and quite an incentive to under-report their income.
Still, IMHO unemployment is under-reported, and government spending has little to do with income taxes, so we're screwed anyway.
IMHO, the thrust of the article is correct (the US middle class is screwed), but it's FAR more dramatic -- the poor are "richer" than they appear, but are not taxed, and the middle class is "poorer" than they appear (they cannot tread water).
.
Have you ever wondered why you can't afford what your parents could afford at the same age?
Have you ever wondered why real incomes have remained stagnant for the majority of people since 1973, and have actually fallen for the bottom 20%?
Have you ever wondered why 80% of the entire increase in GDP since then has gone to the top 2% of the population?
Have you ever wondered why the average CEO salary has risen from 40 to 400 times that of the average salary of their employee since 1981?
Have you ever wondered why despite all the technological improvements, enormous increases in productivity and increases in working hours, no one is any better off except the top few percent?
Have you ever wondered why the country used to be able to afford meat plant inspections four times as frequently in the 1970s as it can now, why the country can no longer afford to maintain its physical infrastructure, its civil and social infrastructure, despite the economy being twice as big in real terms now as it was then?
Have you ever wondered why you're always told that this situation is "inevitable", "natural", "unavoidable" and "the most economically efficient outcome"?
Have you ever wondered why no-one questions whether a great nation can remain a great nation by shipping off all its manufacturing and associated technology to it competitors?
Have you ever wondered why no-one ever questioned why the world's greatest creditor nation turned into the world's greatest debtor nation in less than a single generation?
Have you ever wondered whether the government that was granted circumscribed powers by the people is being governed by the people and for the people?
Have you ever wondered whether you're being lied to?
excellent post!
Have you ever noticed why a brand new penny feels like a little plastic piece of garbage (kinda like the pennies in the plastic toy money bags that you got as a kid)? I long for a penny that's a piece of copper that you could actually buy something with.
And a $100 feels like worhtless paper...
Advice: Trade your worhtless pennies for something before they become, well, before they become worthless :D
And a ten ounce bar of SILVER feels like a good days pay and worth keeping.
Have you ever wondered why no-one ever questioned why the world's greatest creditor nation turned into the world's greatest debtor nation in less than a single generation?
No, not really (and for most of the other questions as well).
The answer primarily lies in our (the US) trade deficit, which is 40% - 50% energy imports. At one time the US was the leading oil exporter, it's now the leading oil importer. You can pretty much trace the origins of our downturn back to the early 70s when the US's oil production peaked (concurrently we went off the last vestiges of a gold standard). Running energy-negative is something that cannot, and will not, continue.
How much oil does Japan have? How much does China have? How much does India have? How much does Taiwan have? How much does South Korea have? How much does Germany have?
I don't think your explanation really explains reality.
And your point? Careful where you step...
How is Japan doing?
How well will China be doing once its money reserves (from its internal spending and its decline in exports) go negative? Same for India. Same for Taiwan. Same for South Korea. Oh, and you missed Great Britain. With the exception of GB, these countries' attained economic levels have been very short, occurring with the last couple of decades. Time will prove that they've only been a flash in the pan.
From 1984!
http://www.foreignaffairs.com/articles/38788/arthur-f-burns/the-american...
Let me begin by reviewing some essential facts about the foreign trade of the United States. Until 1970, the United States enjoyed a surplus in its merchandise trade with the rest of the world. Since then, with oil prices higher and competition from its trading partners keener, trade deficits have been the rule.
Oil consumption per country (2007 stats):
http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption
RAND had this to say in their document Imported Oil and National Security (http://www.rand.org/pubs/monographs/2009/RAND_MG838.pdf):
The gap between U.S. production and consumption is so large that eliminating it
would entail extraordinarily costly changes to patterns of consumption and production
of fuels. Moreover, even if total U.S. imports were cut sharply, the price of oil in the
United States would still be determined by global, not national, shifts in supply and
demand. A large, extended reduction in the global supply of oil would trigger a sharp
rise in the price of oil and lead to a sharp fall in economic output in the United States,
no matter how much or how little oil the United States imports.
I challenge you, or anyone else, to demonstrate why this same logic does NOT apply to the the countries that you list.
As oil becomes more scare it will become more expensive. And for oil-importing countries this is, as the RAND document pretty much states, a death-knell: that's why the RAND document focuses on the use of the US military to "manage" oil supplies.
And, as Jared Diamond points out in his book Collapse, the loss of a key trading partner is one way that a civilization can fall: for today's world oil appears to be one of, if not THE, most important trade goods.
Japan posts a rare trade deficithttp://www.thefreelibrary.com/2ND+LD:+Japan+logs+1st+trade+deficit+in+26...
Imports advanced 17.3 percent to 7,379.9 billion yen, up for the 11th straight month, on continued jumps in crude oil, coal and liquefied natural gas prices, the ministry said.
Crude oil imports increased 64.3 percent and those of coal and liquefied natural gas surged 121.2 percent and 53.1 percent, respectively.
China posts trade deficit in March, 1st time in 6 yrshttp://mdn.mainichi.jp/mdnnews/business/news/20100410p2g00m0bu032000c.html
Imports of crude oil and iron ore surged 149.8 percent and 42.4 percent, respectively, by value in the period, the data said.
Economic Buzz: South Korea Posts Trade Deficit of US$470 Million in January 2010
http://www.indiainfoline.com/Markets/News/PrintNews.aspx?NewsId=28809585...
South Korea posted a trade deficit of US$470 million in January mainly due to a surge in energy imports caused by higher prices and a prolonged cold snap.
According to the monthly report by the Ministry of Knowledge Economy, the deficit is a sharp turnaround from the $3.09 billion surplus tallied for the previous month. The negative trade balance is also the first since a $3.76 billion deficit reported in January 2009.
The provisional findings said the country's exports came to $31.08 billion last month, up 47.1% on-year and the sharpest gain tallied since August 1999, while imports jumped 26.7% to $31.55 billion.
Surge in oil imports points to recovery; trade deficit widenshttp://www.livemint.com/2010/03/03210542/Surge-in-oil-imports-points-to....
India’s trade deficit has risen almost five fold, from $2.2 billion in February 2009 to $10.4 billion in January, mainly owing to rebound in international commodity prices, particularly oil and the revival in domestic demand.
And this is all going to imporove how?
A lot of bad/interesting things happened/started in the 70s. It was a time of great turmoil in American society, manufacturing and financials, and more was to come. But correlation is not causality, and becoming an energy importer while destructive to balance of trade won't be as important to the coming collapse as global oil depletion.
It might prove impossible to pin our current collapse on any single cause. However we are probably nearly the end of the "troubles" that began in the 70s, because nothing from that time or later will go forward from here. Including oil dependence.
We are going back. The period from 1970-2010 will be noteworthy as an interesting aberration in human history, and nothing more. That oil dependence occurred during that same period of time will be a footnote.
Agree. I think the Nixon Shock will be judged by history as being far more important than it is currently viewed. The tide had turned and this was the point when it became necessary to begin papering over it.
2008 was the year the paper ripped badly.
It's a race to the bottom alright.
The irrefutable turning point was the early 70s. And, because our world has been driven by economics it's safe to say that the energy shift had a huge economic impact that we're still fighting (and will lose to). It's a simple equation: more export dollars than import costs means positive cash flow, whereas less export dollars than imprt costs means a negative cash flow- spending more than you take in will only lead to a single end. And contrary to what some bozo economists believe, that trade deficits don't matter (because we can just keep increasing the balance sheet), over 40% of our hole-digging is due to oil (where previously oil was helping us to build mountains): the change, delta, is a LOT bigger than people believe:
http://www.globalpolicy.org/component/content/article/214/44192.html
A rough guess is that oil accounts for about -5% change in GDP. Even if this were to stay a flat -5%, the rule of 70 says that the contribution to our hole that energy imports cause would double in a mere 14 years! (at this pace the wall is coming up fast!)
The global abberation timeframe is like 1910 - 2010: the oil era :-(
I do pin the changes on a single cause.
The reason why I asked all the questions in the form of wonderment is that we've been told that the changes happened like changes in the weather, for unknown yet natural reasons. Yet the fact is that these changes didn't occur in other nations. Living standards didn't stagnate and income inequalities didn't start rising in other advanced nations (with the exception of the UK)
The reason why the US has had stagnant real incomes, huge increases in income inequality, a gutted manufacturing base, huge debts, declining physical and social infrastructure is not because of unavoidable changes in the world, but because of policy choices made by the leaders.
And they didn't make these policy choices because they were ill-informed or because they were naive or are merely the victims of unintended consequences. They made these policy choices deliberately.
And they made these policy choices because they favored the owners of capital and beginning in the late 70s the cost of becoming a Senator, Congressman or President rose to the level that it became impossible to become one without agreeing to take the money and support the policies the rich want.
That state of America is not an accident. Its not a result of mysterious unseen and unknowable global economic forces. Its the result of deliberate policy choices put in place over several decades.
Amen brother. It aint no 'black swan', if anything if a f_king white one, maybe slightly grey.
Living standards didn't stagnate and income inequalities didn't start rising in other advanced nations (with the exception of the UK)
Japan? Iceland? Greece? It's STARTING to happen EVERYWHERE! And why is that?
Have you ever wondered if people are going to dedicate some portion of their time to getting clued in about how to swing the pendulum back the other way?
Have you any friends or know anyone beside those here, who are willing to get up to speed by turning off their amusements for a few hours a day and learn the voting record of their politicians, the ones they vote for without thinking, partisans on both sides who prefer 'their crooked son-of-a-bitch", over the other guys "son-of-a-bitch", and throw out all incumbents?
Have you ever wondered why, why on this earth, those who vote and those who should will cease their toleration or even advocacy for politicians who are far better paid than their voters are, more secure in their jobs, with benefits to make an Emperor blush, with health care packages that take them from cradle to grave and for which they don't have to pay one red cent?
Have you ever wondered if the american people will have the guts to throw out every single politician now in office and start over? And if that doesn't get it done, to do it again, and again until these scoundrels get the message that THEY WORK FOR THE PEOPLE and not the other way around?
I have wondered all these things and I dare not bring them up on any occasion where good people meet and greet because they do not want to discuss it, let alone DO something about it.
I marvel at the financial retards around me. People who, under no circumstances, will they cut back on anything. It matters not what the situation, unemployment, being flat broke, whatever. Cell phones, land lines, vacations, cable television, every light in the house on. There are going to be hard times for a bunch of old people in about ten to twenty years. I actually pity the dumb dumbs in advance.
Most people cut back on their obligations to splurge on their desires.
Pity them? You should fear them. You just don't think they are going to lay down and die in povery for you. Hell no, they will demand that you 'share' your wealth even if you it by doing without while they spent every nickel they got. That you spent your time perusing boring quarterly reports and dry economic data while they watched sitcoms and reality TV all evening. You have to 'share' because there are 'unmet needs'!
None of them has figured out how to get on SS disability yet. LULZ
I have friends that sort of fall into this category. They don't go out and spend a ton of money on random things, go out from time to time with others (to maintain some social life, other than what work allows them to have), and generally don't spend beyond their means. I don't think that this is totally off base.
Some people have school loans for an education, that helped them to get jobs, that they need to pay the student loan, that allowed them to get the job. (in some instances cars follow a similar pattern depending on where you live)
Great summery.
"I realize this is a simplistic calculation..." Doesn't matter. In fact, post neo-liberal economics (yes, it has passed, imagine Paul Krugman "riding" a dead horse....easy to do, huh? Put a Colonial style triangle shaped hat on him, a wig, and stockings to match his buckled shoes, and there he is, beating a dead horse, "Gyddyup! Hyah!" hehe) simple is best. Forget anything BS Bernanke's "textbooks" teach. They are now irrelevant. I would recommend reading Kkkrugman and BS, but only to know how the other side lives. As the Godfather Don Corleone said, "Keep your friends close, but keep your enemies closer."
Yikes ... you have to be kidding me.
I am married and have two teenagers. Without even trying we spend less than "Joe". If we really tried we could go a fair bit lower yet.
Then again I have spent enough tiome in third world countires to know what is and what is not necessary. No we do not have a flat screen TV, no we do not have cable, no we do not have a cell phone, no we do not eat out at overpriced crap restaurants (or fats food joints, no we do not buy pop etc etc. Not because we can't afford them, but because they are a waste of money.
This is fair. And I think you're experience has enabled you to make those observations. I'm a firm believer in the affect that travel has on all the things you've mentioned. I'm just not sure enough people have that perspective.
Almost nobody has the right perspective right now. 30 years of e-z-credit and suburban living has dumbed down the population. The current run of moral hazard is pounding nails into the collective coffin. The trap is closing and shortly there will be no avenue of escape.
The coming forced austerity is going to hit people like a locomotive. I'm really afraid of the consequences for democracy when the "yeast people" start wailing for their former and sacred American way of life, and turning toward any dickless Hitler who promises to get it back for them.
+10 sigh.
the core of that truth, is that same generation feels entitled everything they've been getting. god given rights, and all.
and they'll fight to keep it coming. but who will they fight? each other, given the convenience of proximity.
a week of hand-to-mouth in the woods would adjust some attitudes, but its more likely that LA will become it's own special sort of 'woods' before the millions that live there will get the reality check (primal survival) that the real woods would offer.
i'm sure the folks that live near those woods don't really have an interest in a couple million LA residents stopping by for a week to learn how nature owes us nothing...
sorry. kind of a weird tangent.
Yes indeed. Spend some time with a Filipino or Korean immigrant and you can learn a lot about how to get by with very little.
I pay cash for everything now and find I get tremendous deals. I also shop at restaurant supply places and save a lot by buying in bulk. I get friends in on the act and we split the costs. I got an extra fridge for free on craigslist (to store the extra meat, etc). Why bother shopping at Macy's when you can comparison shop on the web, or buy used/similar items on ebay, craigslist, salvation army or garage sales. Mall culture and MTV should go to the guillotine along with the banksters.
There's so many errors this is pathetic. It reminds me of that email forward about how only two people in the whole US are actually working.
In brief:
-this article starts with median household income. Household income includes anything defined by the government as a household. A large number of those "households" do not own a house (via mortgage loan or otherwise) but instead rent, and a few have other arrangements still.
-then goes on to use the median home value. That would be fine, if the income that it was being compared to was a median income only of people who own a house. Since the income used encompasses a larger set, many of whom will have a lower income than homeowners, there is one big error.
-second, it goes on to list average utility bills. Well, an average mean, as opposed to a median, can be wildly skewed by the extremes. You can bet that the average utility bill will be much more skewed by McMansions and other high-users than by low users.
I'm not claiming that living in the US is cheap and easy (although it would be viewed that way by many foreigners) or that there is not a middle-class squeeze going on. I'm saying that this article is amateurish and unworthy of ZH content.
Leaves out a lot of things too. I didn't see any allowance for clothing. Utility bill of $100/month maybe about right for electricity but not if you heat with it and if you have gas hot water and heat add $100/month.
I think, overall, it is a pretty accurate reflection of the kind of squeeze middle America is under.
I think Tyler would be open to the possbility for you to make your own contribution-- if you think you can really do better.
Do you think the thesis is off the mark? If so, how?
The thesis, which seems to be that the average consumer is in a severe squeeze, is right on the mark. My complaint is with the faulty logic and marginally relevant assortment of data used in an attempt to prove that thesis.
I'm not so inclined to try and do a "revisioning" of an existing article. I will keep the invitation in mind for areas on which I have more expertise, though.
I'm putting this in the context of a money manager who probably doesn't have the time, nor the inclination, to actually do the quality research. I set my standards low here... because I know.
I do agree with the central thesis here, though.
I'd look forward to seeing a contribution from you, though, if you're so inclined-- what is your expertise?
A very boring corner of insurance. I'll contact Tyler/Marla if I ever have a good idea for an article, but my area doesn't lend itself much to covering the current financial crisis or tangents that most readers would find interesting.
you might be surprised in this crowd. defies category.
This artices numbers are spot on, and if anything are optimistic. Averages vs. median income or monthly expenditures aside, the joe six packs in the US are right on the edge of the cliff. Doesnt anyone remember what happened when gas went to $4 / gallon? If $4/ gallon gas happens again, the goldbugs may get their dreams realized.
Not too long now ... I pay $3.54 now (in Hawaii)
I sense that the article was offered as a back-o-the-envelope exercise. A place to start. A proper model of the quality of life of the average Joe would take many months to setup and run and might not improve the end product more than 25% either direction. Model designers are regularly amused at how close some of the early guesstimates actually came to being right on the money. Makes you wonder why we have models actually.
FWIW, my own experience of the contribution thesis is fairly similar. I think a lot of people are indeed not making it. A lot of them don't know it yet. They will know ere the end.
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Don't forget the home equity ATM; as the mortgage is paid down the HELOC gets bigger. That is gone with declining home values. If Joe was adding $24K per year via HELOC and can't, that's $2,000 for the 'major other' category--vacation, home upkeep, medical, college and TATER TOTS.
The average American is an Idiot and deserves to live like a rat. Superior Kingpins like myself deserve to live like a King. It's all fair and the way it should be. If you went a community college, you don't deserve to live like a Harvard grad. It's very simple Morons. You reap what you sow.
Harvard = Crime 101 (how to get away with "it")
@ Jory.
I can best your tripe easily, know nothing dunce.People in sub Sahara Africa are idiots who deserve to live like rats,illegal immigrants are idiots who deserve to live like rats...ad tedium ad nauseum.
Get a life jackass.Human beings have intrinsic value, and not as slaves.Unlike a parasite like you, I can now see a possible future, where people live in dignity and with respect towards one another.You have identified yourself as a member of that class which in the very near term will be called "the enemy".And that class will lose everything in a paroxysm of justice that will be terrible to behold.
Comfort yourself taunting us.Your doom approaches, as inexorable as the tide.
Like all the "ruling class" idiots, you make the unforgivable, as well as oft repeated, mistake of underestimating us.Our will, our resolve, our power to act to stop you.Simpleton...your age's end approaches...yet you perceive it not.
Good Bye!
Jory, what planet are you from? No man is an island!
Right. Guys like me need peasants to do my dirty work. I need gardeners, house cleaners, trash men, carpenters to build my homes, Chinese to make my clothes, women to lick my wick and on and on. What's your point? I'm supporting the broad economy. Quit your bitching.
You are unemployed living in your mother's basement. A real "kingpin" (WTF) wouldn't need to write that, act like you, any of it.
You are not a believable character at all. Try again, D&D boy, roll up another character and see if you can act that one more convincingly.
I know, I fed a troll.
I'm sorry, couldn't stop myself.
And to the other unemployed who post here, I apologize. You are not all like this made up thespian creation.
As the music plays.....
And no one has junked him. What a ball ZH is!
As the music plays.....
Dear Lady , we all get it. Master bates has many forms
Brian Summer is a good rational read but he has been posting about a crash since last year, again to no avail.
rationality no longer applies
Oh?
Or imagine instead that the crash actually DID happen (and is probably still happening) to the extent that the wings came off the economy and things are falling in an arc but it's still a ways to the ground. It looks like flight only if you don't understand the role of the wings.
I think a lot of people here agree that this is the case.
Crashes don't just happen, they are built up. Once the wings are off gravity wins.
If a tree crashes in the woods and everyone is in denial, did it make a sound?