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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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If a tree falls in the forest and nobody wants it to hit the ground is it still standing?
Sounds more appropriately absurd that way.
Trees don't crash, trees don't crash, trees don't crash..........
So....no sound.Everything is perfect.Just perfect.
And ignore the sound of that printing press too...
Nice to see you round da blog. ;-)
Good to see you see you too, side to side, in the good fight.Where have you been?
MsCreant, you're almost right.
If a tree falls in the forest, but we keep digging a hole so fast that it never actually hits the ground, do we still have a tree?
That's how you do a bailout.
peace
You can only have to dig so far ... then it get's real, real hot and the tree vaporizes ... poof! No tree = perfect bailout
"tree? what tree?" - steve liesman, CNBS (paraphrased...)
Or the slinky analogy, wherein everyone ignores the downward arcs (and just looks at all the little upward ones).
You mean Graham Summers. And yes, he has been posting about another crash for sometime.
Of course he can't predict when it will happen, but his rationale for the reasoning behind it is a pretty sound one.
158,000 individuals suddenly have more disposable income. And for every one of those 158K, I'll wager that there is at least one more who just drops out on their own. Just a thought.
Great commentary, when I used to write for motley fool I did a similar comparison for young singles in their lower 30's back in 2007-2008). The data was not encouraging then, and has only gotten worse. I don't see how anyone under thirty even has a shot right now. Maybe thats the purpose, we will have to beg from uncle sam for subsistance and sustinance.
Inflation is a national swindle; a hidden tax on the people by the bankers, the foreign money tyrants and their captive politicians.
It is the Fed, the Goldmans and JPMs and Warburgs, that has cheated Americans and our government out of our money. That is what has impoverished Americans and unemployed 1 out of 5 hardworking men; that is what has turned a paper and chicken wire box into a $220,000 “McMansion” that doesn’t even hold a candle to a Pilgrim-built log cabin; that is what has stolen the American Dream of a richer and fuller life for all that lured tens of millions to these shores; that is what has erected barriers to our individual liberty and right to property; that is what has torn down our borders and bankrupted our nation and our people.
Congressman Louis McFadden nailed it back in 1933: The Federal Reserve Banks “are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders. In that dark crew of financial prirates there are those who would cut a man’s throat to get a dollar out of his pocket… This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government.”
And we let them do it again.
Give them your stuff if you like till "it's impossible to 'get by'"; let them inflate/deflate your standard of living to a one-room tenement, a wool sweater and a bowl of gruel and blame your fellowman… As for me, I’m not giving up my stuff without a fight.
Inflation? Jefferson called it “swindling futurity."
"If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." – Thomas Jefferson
I agree with everything, except that the Jefferson quote is pure. As some here - http://www.dailypaul.com/node/80247 - seem to suggest, at best it's a compilation of various snippets/quotes, at worst...
all the same, i wish i'd said it... certainly seems relevant these days!
Why is it that Bankrupt Debtors always think they are the victims? They borrowed too much and were irresponsible. They deserve their fate. In fact, they should be thankful that they were able to live beyond their means on somebody else's tab and now are able to renege on their debts.
LOSERS.
The Banks should at least give the Borrowers the ability to rehabilitate themselves. Just like they were given the opportunity to rehabilitate themselves with the Government Tarp action.
Let Borrowers pay their Debt with Zero percent interest just like the Banks "for an extended period of time". Why not?
Ah, but where did the creditors/banks get the money? And under what pretenses?
Everyone wants 'something for nothing' ... and is usually willing to pay for it.
i think they have no idea the real price...
The simple bottom line fact is that median, and average, real incomes have been flat to down since around the Nixon Administration. That has put pressure on the average and median household. The critical question is why has that happened? Included in the why are things like:
1) We have exported jobs to try and effect a wage arbitrage (e.g., 'outsourcing').
2) We have imported mostly unskilled and semi-skilled workers willing to work for less (i.e., both illegal and legal). We have also imported lots of skilled workers in many fields as well (h1-bs, etc.).
3) We exported a good deal of technology & other intellectual property, and/or allowed it to be stolen.
4) We agreed to trade deals that were not in our favor (e.g., allowing China into the WTO).
5) We printed enough fiat money that had the effect of tending to increase the relative cost of many consumables that represent a relatively larger share of the median and average citizen's expenses (I would include in that the cost of housing).
etc.
Essentially increasing the effective supply of labor and agreeing to import other countries unemployment, while simultaneously effectively giving away the technology and real productivity goose that laid the golden egg. We have effectively turned the classic notion of comparative advantage on its head. Things we have had a clear comparative advantage in we willingly set up shop in another country and trained the people there to do it (e.g., silicon based microcircuits), fired many or most of those doing it in the U.S. and pretended that all was well. It's all about the real wage per person, and that has predictably been going down since our overlords decided to begin the great wage arbitrage experiment.
The simple fact is that the Skilled Rich have never been richer and the Unskilled Poor have never been poorer. That's the way it should be. What's wrong with that?
touche....douche
Maybe you should find a picture of Frankenberry for your avatar. He's a butthead too.
You sound like a milksop Randian (i.e. starry eyed romantic) wannabe. Anyone on this board could have you as an appetizer but it hardly seems worth the effort.
Somebody write a Rand essay so we can have a party....like baiting a trap for buttheads....
if you mean skilled as in 'weasel, shark, psychopathic behavior' then i agree
Jory:
To the extent we are not a nation but some collection of random people where trust and other such issues are irrelevant, that's fine; but to the extent there is some connection beyond what we can earn relative to our neighbor, then I would argue there is a social compact with fellow citizens that precludes one identifiable group largely in control of the state benefiting at the expense of another not in control of the state. That is, for me, I fall on the side of the argument that for a nation to be effective as a country and/or economic unit it must act in a manner that enhances intangibles like trust and fair play.
That is, a social fabric argument combined with a truely free fight argument. I hate to bring one off examples to bear, but those that paid for TARP and those that benefited from it are one extreme example of this. You have a case were the free market didn't determine the outcome and hundreds of billions (or in the end maybe trillions) were transfered largely based on political contributions and/or connections. This one case results in greatly diminished trust and a certain level of resignation that has an impact on the country and its economy.
It sounds like you would be better off living in France or Cuba. America is the land of the free. Success is rewarded and failure isn't. You want to live in a country where the doctor and janitor have relatively the same standard of living. I don't.
America is the land of the sociopathic monkey. Skillful theft is rewarded, honesty and hard work generally is not.
But I guess they managed to fool you into buying the concept that all the rich are deserving and all the others did it to themselves.
No, I am nowhere near a socialist. I am 100% in favor of true capitalism, Adam Smith or Ayn Rand style. It seems to have picked up and left the US completely.
Free Market Enterprise
steal a little and they throw you in jail
steal a lot and they make you a king
bd
Jory:
Don't jump to a silly conclusion; that isn't my point at all. The specific case I gave, TARP, is the antithesis of a free market solution. Are you saying you think that one group economically raping another due largely to its inside connections is what you are aiming for? My point is that economies specifcally, and countries more generally, rest on things like trust, for example. Trust isn't something I am individually paid for but it benefits the economy generally. Furthermore, to the extent true economic success is rewarded that is a good thing. My point is that the real wage drift since around the Nixon administration is due to things that are the antithesis of free markets or, yes, an implicit social compact among citizens. A doctor making more than a janitor isn't the issue, it's real per capita doctors wages far outstriping real per capita janitors wages because some asshole was paid off to vote on a bill to allow several million more janitors into the country than the average citizen would have expected or desired.
Success is rewarded and failure isn't
LOL, what hole have you had your head buried in for the past two years? Ever hear of moral hazard??? Christ!
This is absolutely the most depressing thread I have ever read....thinking about jumping out my basement window...
Free?Your meds need adjusted STAT!
" Success is rewarded and failure isn't."
I like that country you're talking about. Can you point it out on Google Earth?
I think even America used to be like that, or it used to preach that to countries like Japan in 1990, or Thailand, South Korea, and Indonesia in 1997 (Tim Geithner, non-taxpaying US citizen, employed by the IMF).
Of course Timmy changed his tune. Failure became the paragon of virtue, demanding rewards and untold riches from unborn generations. The bigger the failure, the bigger the reward. Goldman failed to the tune of $56.7 billion in taxpayer rewards all-in. AIG set the modern day record, though FNM and FRE will eventually top that. GM and Chrysler got a pretty good reward for both financial and manufacturing failure.
Oh, are savers "losers"? They sure as hell have gotten punished. Roll over million dollar TBills and do you know how much one is getting for each one? I guess the prop desk at Goldman needs to keep borrowing at 15 pips, eh? Or I should have tossed my money into the equity market in "winners" like BAC and ABK?
Anyway, I suspect you are not among the elite, but just a wannabe, so I have this job offer for you as you begin your climb from loser to moral hazard recipient. My toilet needs cleaning.
It's neither the skilled rich or the unskilled poor at issue. It's the vast middle class that is carrying the water for both of those privileged groups.
The middle class has been getting squeezed by the high and mighty and the low and loony. There's a lot wrong with that. And it's mostly the middle classes' fault for not throwing out every incumbent in congress beginning with the incumbent's 3rd term. I cannot fathom the density of the middle class putting a politician ahead of themselves, I don't care what his/her voting record is. They cannot seem to calculate that the longer the crooks stay in office the greater their opportunity to steal from their constituents grows with each passing term.
Anony:
It's truely a sad state of affairs, but here we are. What really scares me, and you mention it, is that the people most effected voted for these people (i.e., your typical voter profile is a suburban middle class American). At the extreme, I read an article related to this where the author noted the following (I paraphrase because I forgot where I read it): I am confident people will vote the bastards out in 2010 and finally 2012, that is not what bothers me; what bothers me is that these people were capable of voting for him (Obama/Soetoro) in the first place (i.e., our first affirmative action president, and a socialist with no proven record of anything). Any group of people that could do such a thing can do such a thing again, and that makes me have nightmares. Then I read the piece by the guy about 'good government' and if we Americans could just think hard about 'good government' all will be well, and I get freightened for the country for a similar reason. I then convince myself that we have outliers so I can go back to sleep, and who knows maybe they will realize what time it is, but deep down I know I lie to myself to make myself feel better.
The rich have no skills.
Money breeds.
Thanks for being a sane voice here!
This one's for Jory:
Brooks: Let Them Eat Workhttp://trueslant.com/matttaibbi/2010/04/10/brooks-let-them-eat-work/
You dismiss them too lightly.They are the quintessential parasites and exploiters.They excel at being inhuman scumbags.There are some exceptions.Very, very few.
Not that I enjoy class warfare, far from it.But once one meets them, simpering, full of guile, depraved, revulsion is the normal result.
Driven by insane appetites, they exist already in a hellish existence, driven by the urge for ever more.
How sad it must be...to have so much, and yet...so little.
So little compassion, so little mercy, so little love.Empty..void.
As some would say Karma is a bitch.
Their time is short.
You can downsize and live on not much but you can't save enough to really do anything much.
In the 1970s folks could own a home, save for retirement and their kids college all at once. While bitching to high heaven the whole time.
My question is what will a sustainable household economic model look like? Because we don't have one now. I think it will be a lot smaller, with smaller governmental takes, and the rest of the global economy will just have to go suck it's own hind tit.
If we get ahead of this transition we will be much better off. Too bad every kind of social 'leadership' is screaming at us to do the exact opposite.
No wonder they are deligitimizing themselves into oblivion. We are forging a less profitable model, out of evolutionary necessity, and they are trying to order the tide to cease.
a lot of people spend $10-20 on LUNCH when that would of lasted a week at least... no one wants PBJ's and a thermos anymore
The days of $10 - $20 lunches are over.
For an interesting exercise, please describe a point in time in which there was any semblance of a "sustainable household." And please describe the duration of "sustainment."
Note: I'd argue, and simple mathematics will back me up, that nothing physical can grow without limit.
Why don't you go read 'World Population and Human Values' by Salk and Salk and then get back to me?
We are in the inflection point of a sigma curve. There are long (very long) stretches of 'abundance' on one side and 'scarcity' on the other. In terms of growth there is zero, a huge spike and then zero.
Our roughly ten generations of humanity are experiencing the transition; something no others have done....and none will ever do again.
And we wonder that social evolution has not equipped us for these times; these completely unprecedented, never to be repeated times? Bwaahahahahahahaha.
People, my friend, generally don't know shit. A few of us know a little. And I bet everyone who regularly reads this site 'understands' exponential growth.
The Earth is a Petri dish. Population will level off. I have some ideas about what that means. I have also forgotten more resource economics than most people will ever learn. None of that is particularly mysterious.
Hint to Cougar: There is no 'going back' in the pure sense. But we have a lot to relearn. And even more to innovate.
I suspect that you weren't responding to me (if so, then you clearly haven't been paying attention to me incessantly hammering about the affects of growth.
"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."
Better recheck your math here. There are 2 months in every year in which Joe will get 3 paychecks. In this case, average monthly income after tax is $3750. I don't mean to nitpick, and this by no means invalidates your argument as the rest of your assupmtions are conservative, but the mistake is quite erroneous. Some people are grammer nazi's, I'm that way with math... sorry.
most people keep those 2 paychecks out of the monthly equation as either 'fun money' or 'i fucked up, catchup money'
Joe gets paid on the first first of the month and the fifteenth of the month.... which month on your calendar has 3 of those?
Um, the original author indicated Joe gets 26 bi-WEEKLY paychecks, not bi-monthly.
Just a thought!
+10
After hundreds of posts, it took someone this long to figure out a simple math error that results in 8% more income than originally budgeted??? lol No wonder we have so many people living off credit cards!
Gee, with that extra $$$, Joe can now afford a dog and the interest on $10K worth of credit cards!
Just remember, when Joe declares chapter 7, he gets to keep that extra $290/mo. At 6900 filings/day x $290 = $2M extra PER DAY being pumped into the economy via your local Family Dollar/Petsmart.
Green shoots everywhere! That's what you get when you pump $$$ through the belly of a dog!
how did this avg Joe get the scratch for 20% downpayment? Did he live in his mom's house rent free, fun free, for 8 years?
+1
* Remember, this has not been a saving-oriented nation for a generation or more.
His parents, his relatives, his buds????
His deceitful and corrupt mortgage lender?
(See previous post on S&P and Moody's.)
if your friends are headed for bankruptcy, they ought not to crack their IRA's/401K's etc.
You can file bankruptcy, wipe your debts and KEEP your retirement plan money.
However, most people spend themselves to the wall thinkig they will somehow get through it.
Best to plan for the other side, though it is one in a hundred who can make that mental transition ahead of time.
Um, this is why CHILDREN WILL GO TO WORK.
Now you might not be in the green yet, but you can extend and pretend you credit card debt until youre 80 years old and still paying off those cards.
Yeah, I have a hard time feeling sorry for all the bankruptcies. Not sure why people think they need that 3rd car and the Malibu Wake-setter in the driveway. What upsets me is that someone's inability to balance a checkbook adversely affects my family. Next year, I may not be able to put anything into savings because of looming tax hikes.
Sounds terrible I know, but people seriously need to take responsibility for themselves. The "Banksters" didn't hold a gun to their head...
Watch out for the "big brush" treatment. I believe that medical expenditures of the un-anticipated kind (like a severe accident, or cancer leaping up) is (or was up until very recently) the primary cause of bankruptcies: have to slice some of that $$ off for those "highly skilled," non-productive insurance folks!
Also, if you haven't already done so I highly recomment watching The Century of the Self (http://www.archive.org/details/AdaCurtisCenturyoftheSelf_0)
But yes, I agree that it is ultimately up to the individual to stay away from these debt-impoverishing schemes: unforuntately an anti-war person like myself had NO option other than to have my money stolen and given to the defense industries (shy of becoming a full ward of the State- imprisoned) :-(
Great article. And right on the money, no pun intended. The same also applies to folks making 80, 100, even 200K a year. And yes, this is just one of many reasons why there won't be a recovery. As for the market, it's rigged and is a bubble, a major one.
Well here in PHX, our a/c bills are 300+ in the summer. Not for 72 degrees, but for 80-82.
I'm sure for other places in the winter somethign similar could be said for heating.
Many other things aren't calculated in here, but once you hit 0, you already can reach a conclusion that the average person is screwed.
Also forgot things that affect many people like child support payments, savings for the children's college or the outflows for children currently going. 1200 month for a dorm room, 7 dollar meals, 150 dollar used textbooks, mandatory laptop, and tons of other insane expenses.
Your state also provides less services since Bush loved to outsource federal programs to states and then not give them any money. Plus you have the reduction in services that are hitting some, and will hit many others in much larger ways going forward.
What about nursing home costs for parents? Things of that nature.
Cars also breakdown, and if you don't know how to do it yourself, a 2 hour 50 dollar job (parts)...turns into $500-$1200.
Besides telling your children NO 363 days a year, there's still their birthday and xmas that have to be taken into account.
I sure hope 'joe's' kid's don't take up vandalism, and doesn't get in trouble with the law or drugs. Otherwise...much higher costs there.
The list can go on and on. But I do like specifically how the author got to the major points of how we progressed.
"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)."
We OUTSOURCED jobs. You mean the gekko was wrong? ROFL
To the peope who think we got here because of Gov't....you guys forget a couple of key points. Gov't is what you make it. Gov't can be as good as we've had it in the past, or as bad as Hitler. Both are gov'ts. You can't take the easy way and just say gov't is to blame. That is one of the most ASININE positions I've ever heard. If someone tells you this, you know they're an idiot because they can latch onto something that does not make a bit of sense and promote it like it's the cause of our ills. It isn't. BAD Governance, or more specifically IMPERIALIST CONTROL of our gov't is.
1. A gov't worth is determined by WHO is in gov't *and then what they push and pass*
2. The alternative of gov't not getting involved would have been worse unless you think the big banks would have governed on your behalf better.
It's WHO set up this rat race, and HOW it was set up. Monetary system = bs. Credit system = superior.
They also set things up FOR outsourcing. So we did.
Lower tarriffs, see above.
Derivatives and statistical models ruling everything, see above.
Crashed the system and 'needed' bailouts, see above.
Derivatives and debt bomb started in the 68-71 timeframe, by republicans, power elite, and what comprises the monarchy of the Queen of England who were trying to 'get out of the way'. So I find it very funny when people blame gov't in general that their 'lasseiz faire' policies, weren't lasseiz faire enough.
The fact is our gov't through their lasseiz faire, DID do ALOT...by doing NOTHING to stop these practices from becoming the norm and ruling our economy for ~40 years.
Imperialist control of gov't got us here, and created these conditions because it was good for business.
Following the corporate line is what got us here. We put profits in front of people for generations. Tried to bs that it wasn't happing through debt. Why pay your employees more? They can borrow. Still too much? OUTSOURCE...we can just lower tarriffs, and brand imperialism as globilization and that it can't be stopped. (which is complete bs...we can become more interconnected without having monetarism...but instead we link the two together and are wrong when we deem it impossible to stop. Because the nations can end monetarism and actually grow even closer economically with each other).
I didn't even mention the federal reserve which made all this bs possible.
This is a case where GOV'T MUST get involved to right all these wrongs. You won't get that if you deem gov't useless.
If you drown gov't in a bathtub, the Enrons, Squid, and BP will run the world. In a generation, you'll be BEGGING for crappy gov't compared to no gov't, or gasp, a society where business doesn't even NEED to lobby because there is no one to. Yeah things would be better that way, huh.
But all these figures were done 15 years ago and could come out the same way, EXCEPT, credit was available.
Anyone remember the Cosby episode where Bill cosby and theo were having an economic talk about how much it costs to LIVE? Without credit, many people, in many areas were in the same game then too and that was 20 years ago. BUT again, there was credit, and the derivatives slush greasing the wheels was only getting started, not about to crash.
The answer is MUCH more gov't, but not by the guys/gals we have in charge now. Non-corporatists of the left and right need to be in charge. Sadly that rules out about 99 percent of republicans as being viable congressmen, and about 60-70 percent of democrats. Even though the democrats are doing horrible now, they are running the REPUBLICAN playbook, just like clinton. Make no mistake, we haven't had a real democrat in office since JFK/LBJ. Since then it's been ONE ideology between two parties in power. First with repubs, then cowards dems who copied the repubs. Obama runs on change, little did we know the only change is that HE is president, not the economic/monetary/foreign policies. Those are sadly, the same.
I guess we should realize maybe THIS is why so many people put far to much into the stock market than they should. Because we went from a place that was for investment, to a place where the average person could only keep up if they invested, and only if they invested wisely. No one should be forced into the stock market. Yet for a generation, that's how its been. Then it got so bad, that even if you do that and plan to stick through it all for 10-20 years or more, you won't get ANY return. But you risk it ALL.
You want a market full of participants who are risking their excess money for gain....NOT a bunch of people who are ONLY in it because they feel they MUST be in it. Then, when a rough patch is hit, everyone isn't so quick to hit the exits. But hey Joe needs to, because otherwise he's broke.
So if gov't did bad, which it did. Force it to do GOOD. Don't strangle gov't.
If your child does something wrong, you tell them what they did wrong and how they should of instead acted/reacted. You don't drown your kid in the bathtub, that's murder. *this goes out to small gov't people who wish gov't were so small they could strangle it in a bathtub*
If you blame that gov't did bad, and rather than use gov't to fix it, you strangle it so it doesn't exist or can't do squat, you murdered your gov't.
We can go down one way and strangle gov't, which won't do any good, except make a bunch of idiots feel like they did something, when really they just signed their own death warrant by doing so. You'll still have all your problems, plus no doubt more, and have no way to solve them. As some/many problems can only be solved by an entity bigger than an individual.
Or we can demand the gov't DO the correct course of action. Vote the idiots out left/right that don't do these things. But first, we need to drop all the bs that has twisted people's minds the last 40 years or more.
The answer isn't less gov't. The answer is CORRECT governance. Too bad 99 percent of America doesn't have an inkling what CORRECT governance is. We're just at a point where the majority realizes that our current governance is INCORRECT. Dems have been going through this for a while. Repubs, just the past 1 1/2 years. Majority of both sides still utterly clueless. It will take time as we're not there yet.
LaRouche 4 powers plan is our ONLY way out. Fixed exchange rates, high tarriffs, virtually no outsourcing, CREDIT system NOT monetary system, ALL assets/debts put through GLASS/STEGALL standards. If the asset/debt can't pass the standared...it's WORTHLESS. Infrastructure, science, FUSION (NOT BACKWARDS WIND OR SOLAR), nuclear power in the meantime, and finally an ACTUAL space program....not the dismantling of....and outsourcing to private interests in the HOPES that they can do in the next 5 years what NASA was doing in the 1960's. Hell 1950's really.
Do we want a world of paper? Or a world of tangible things that offer tangible benefits? We are clearly head towards the first with nary anything on the 2nd. But we won't get much further on this plan, because it's broke and in a disintergration phase.
Coming to a reality near you....shock and awe....the REAL version. You though the tulips crash was dramatic, or the 1929/1987/2008 crash cycles were dramatic just WAIT until you see the global disintergration of 20XX.
You want to know what NO or SMALLER gov't look like? It's a lot like what we have currently, but even WORSE.
I guess you just don't know that Enron, Lord Blankfeind of Goldamn Sucks, and BP among other corporations ALREADY RUN THE FUCKING WORLD!!!
I tend to appreciate your kind of view more than the other side, but...
In your last sentance you violate you entire argument. Who is to say that a smaller BETTER govt isn't better than a big BAD one?
My contention is that those big power players that maniuplate our govt for their own good would find themselves out on the streets (out of business) without a BIG govt. BIG govt facilitates corruption by corporations.
TWO things WILL happen:
1) Big governments WILL die out;
2) Big corporations WILL die out.
Common element: BIG
Ultimate reason: we're in for a LONG contraction owing to scaling back resource exhaustion (not enough resources to maintain growth), which will sqeeze things back into the realm of the more sustainable (when we come to the actual realization and appreciation of such is anyone's guess, but it WILL happen). Non-productivity, or productivity that's not really key to Food, Shelter and Water will be more than an excess: by Shelter I'm not talking about McMansions or the corporate builders (this era is done).
In conclusion, I like your attitude (I tend to place more blame on corporations- after all it was the Founders who were more than suspicious of them), but your conclusion won't materialize (democracy, which is the only true egalitarian model, cannot scale very high, perhaps 120 or so; any other system presents corruptable mechanisms [such as "'representative' govt- these require YOU to give up power"]).
The avg. Joe is screwed, so are the so called rich who are now getting nailed by the AMT and considered rich by the president. Property taxes are not going down even though property values have shrunk.
A professional working couple with two kids living in a major city are not much better off after expenses then the average Joe. If our nice couple wants to send their kids to private school, put money away (in realistic numbers) for the kids college and their own retirement, there is not much left. Better off than Joe, sure theoretically, the lucky couple does have more expenses that could be cut but than why work the 60-80 work weeks?
If the unfortunate couple bought property in the last ten years they will be lucky to be able to sell their home without taking a loss, and where can they move to anyway? Theoretically a move to a nicer suburb with decent schools might save them some money but what was once a nice version of the American dream is much more of a desperate battle to tread water.
Never thought I would feel poor when I am privileged enough to owe 150k in taxes.
STICK SAVE AT 3:55 ,
PEOPLE LISTEN !!!
IF THE SHORTS & PUTS WOULD JUST GO INTO FREEZE MODE
FOR A FEW DAYS THIS THING WILL DROP HARD :)
DO NOT LISTEN TO THE SONG OF
THE SIRENS , NO SHORTING OR PUTS , YOU WILL
JUST BE HURLED AGAINST THE ROCKS IN
ANOTHER SHORT COVERING MELTUP .
FREEZE AND COOL DOWN , DO NOT FEED !!!
THIS THING WILL DROP HARD :)
The fate of Joe Sixpack doesn't matter. The US is a plutonomy. The rich get richer. The rest are of zero consequence.
Let's see, I'm 45 year old male, divorced, child support. I live in my office, my client/friend feeds me every day for over two years for work when he needs it, I just filled up my van with a $50 gift card from another friend that works at Chevron, I have an annual gym membership to take my showers and work out, I'm self employed, way under "Joe Six Packs" $50k, my internet is "borrowed" from my client/friend down the hall from my office (lan line running down the hall), no cell phone, no smoking, no alcohol, walk most every where, still living on savings. If I would of stayed married, I would have been BK years ago. I'm content but know the day of reckoning is coming, not thinking about it until it comes! Oh yeah, no insurance for years now, but I'm a US Navy veteran and can use the VA clinic for emergencies, no dental , no vision. Don't WANT and Don't need Obamacare!
You're a LOSER. Get a real job and a real life. No woman will want to be with a Loser like you.
Hey jory, thanks for your insight!
And thanks for your insight, even if Jory lacks the capacity, today, to get it.
Hey MsCreant, I had a successful business I started in 2000 with $150.00. 2008 to present, since the government took over the economy, my business is pretty much dead. Some crumbs (work) here and there but not enough. Oh well, I enjoyed the experience being self employed!
@Jory Epic win for portraying yourself as the kind of evil tempered loser women get restraining orders against!Yay for you!
Empathetic?Not so much eh?
Jory this last comment shows what a revolting little animal you have become. I wish you mercy
Check out this bankruptcy calculation:
6,900 per day/24 hours = 287.5 per hour
287.5 per hour/60 minutes = 4.792 per minute
4.792 per minute/ 60 seconds = .08 per second
About 1 BK every 12-13 seconds
That thar be a lot of po peeps! :o(
Increase in Property Taxes, Water Bills, Insurance, Home Repairs, Car Repairs. What about clothing, hair cuts, Vehicle Registration, Emissions Tests, Car Payments, Credit Card Bills?
Joe Schmo is way behind the eight ball.
Looks like Joe doesn't have any money left for his IRA, Roth IRA, 401K, Savings bonds, or trading account! If he had in the past he's sure to be taking it out now. He should see the boss 'cause he sure needs a nice raise to pay for the increase in the price of gas and groceries and everything else the Government says isn't going up in price.
As a lifelong skeptic, I never had a bank account, a credit card, or any contact with crooked financial instutions for about the first 10 years of my adult life, conducting all my business in cash. In 2000 when it became clear Bush was going to further leverage every dime in this country to give to the rich, and the system was rigged, I responded to every credit card application. I was honest about my household income, which was under $90,000. Before long, the cards starting rolling in, most with a $5,000 credit limit. I took a few trips to Europe, did some serious gambling, strip clubs, had a grand old time for about a year. Ran about about $25,000 in debt. Paid the payments for a little while, then when they became too big I decided to quit my job and go back to college. I stopped paying the credit card bills all together. As I had no assets for them to seize (I rented and my 1 car was too crappy), they had basically no recourse for recovering their unsecured loan.
Then, as now, I feel absolutely no regret shafting these thieving bankers. To this day, I live completely on a cash basis, and have no regrets about it. The statue of limitations on suing me has no passed on many of these credit cards, but I still get amusing letters from the banks now and then, begging me to pay a fraction of my balance, in return for which they will forgive my entire debt.
It will be a cold day in hell when they get one red cent.
You're a LOSER.
No.He gets it, and as a result of that is an Epic Winner.
IE:he rocks.
You don't jory.Not even a little.
As someone who has actually paid for everything that he's gotten, I think that you owe people like myself a "thank you," cause it's us poor tax payers, not the f*cking banking industry, that's paying for your theft!
I pay taxes too, and since they are taking my money and paying for the "theft" of trillions by those at Goldman, I am just taking my piece of the pie.
I am just taking my piece of the pie
YOUR piece? Do you want to qualify what That means? And, since the impacts of all of this behaviour have magnified, what makes you so certain that ONLY your portion has been extracted.
2/3 of the world's population lives on $3/day or less. By all accounts 1/3 of us (which would include probably all of us here) are over the average, over quota. The "entitlement" mentality is the disease that those sleasebag financial folks have.
When it is cost effective for a banker to fuck you out of money, so do so without hesitation. They do so in a cold, calculating manner.
Similarly, I made the calcuation that it was no longer cost effective for me to pay the bank, so fuck them.
Good for you, Barry. That Guinness looks mighty fine too. Cheers!
+1oz
Pay em' back with worthless fiat money once USD goes hyperinflationary...
Whatever you do, don't settle for paying half because the other half will count as income towards your taxes. Just a little something-something the big-banks don't bother telling all the suckers who just got suckered again and are only finding out as those 1099 forms come in.
Yeah, but your "fuck 'em" shot is a pass-through and ends up hitting the poor, as the banksters just dumped all that non-collectable debt right on the backs of the regular tax-payer.
You fucking scumbag.
As Henry David Thoreau said:
"The average man lives a life of quite desperation"
It's probably more true today than 150 years ago
I listened to an interview at KingWorldNews with a guy named Peltier. He said we had 1.8MM resi foreclosures in 2008; 2MM in 2009 and 2.5MM projected in 2010. Now it gets interesting... he estimated 8MM mortgages in arrears 90 days or more on payments and 12MM homes with outstanding loan balances greater than market value of the homes. Now does that sound like we have hit the bottom?
Well that was pretty intense...
My take:
1. you reap what you sow...thats a law of the universe.
2. We need a government of individuals who live by principals. Correct, righteous, time tested true principles. We may have started there with the Constitution, Alas, the love of money has corrupted many of our leaders in both government and business. There seems to be even a culture of the love of money, or cult of money.
3. Putting the love of money ahead of the love of God, Neighbor and County, has caused most of these problems we are having. It's like Keynes thinking consumption creates wealth, kind of backwards.
4. God, Guns and Gold are likely going to be necessary for survival in the near future.
Move to Florida under Progress Energy and that 920 Kilowatt hours will cost you well over $300. We used a little over 1000 kWH of juice and our bill was $345.
They may have no income tax in this state but they sure know how to ass-rape you in other areas.
My parents call it "nickle and dimeing", but death by a thousand cuts is still a pain in the wallet.
The county we live in tacked on a 6 cent a gallon gas tax above the state and federal fuel tax.
First in line for a bail out usually gets it (a la Greece) the last one in line is out of luck. If everyone decides not to pay their mortgages, CC and other bills, we will have a stampede towards the handout line. And when the handouts run out, you better be packing.
The attempt at costing life for the "common wealth" (MC) of the nation is admirable, but we're missing of a couple of intractable expenses.
1) Since the mid '70s, the man's part of this median income has been inflation adjusted FLAT. The increase in household income has come only from the mothers' venture into the workplace.
2) With a vast majority of moms in the workplace both full and part-time, two cars is not a conspicuous consumption, it is an intractable necessity. Double the car cost, and don't forget those depreciating assets, when assessing household wealth.
3) If you are that family with 2 kids, you paid, or will pay, for daycare, or pre-school, or a tutor to work on the kid with flashcards, the second his/her head comes out of the womb. Somebody has to watch the kids and it ain't gonna be Mom and Dad. They're at work.
So the Middle Class was well fucked 10 years ago. So, we then took up unnatural and stupid behaviors, so we could live in denial.
Here's the data from the Dept of Commerce, and the rest of Elizabeth Warren's research.
http://www.youtube.com/watch?v=akVL7QY0S8A&playnext_from=TL&videos=54FdA...
The more I learn, the less I understand how an economy works. The numbers presented in this article, even with the errors of extrapolation, simply do not work. Yet somehow people still spend and shopping malls are filling up again. Maybe that is the result of mortgage boycotts, maybe not.
The odd thing is that the United States is one of the most inexpensive countries in the world, and has one of the highest median incomes in the world.
If the US is a puzzle, how the hell do other economies do it? US gas is <$3/gallon. In the UK it's >$7. In Japan and Hong Kong also about $7.
A new Toyota Camry costs what in the US? In Thailand, a country with a per capita income of about $4500, it cost two times or three times as much. Traffic jams, though not as bad as a decade ago, are still horrendous, so plenty of car owners there.
In Hong Kong, there are tens of thousands, probably hundreds of thousands of apartments that rent for >$5000 US per month in a population of 6 million. The SCMP newspaper listings of apartments costing more than US$10K/month runs several pages. Not all of them are rented by ex-pats and not that many HKers make US$100K per year. Luxury property---again tens of thousands in HK where "luxury" is very generously defined to include rat infested hellholes---costs upwards of US$2500/sq ft in places like Red Hill, and twice that on the Peak.
In Japan it costs 710 yen, or about $7.50 to open the door of a taxi. At least there's no tipping! Subway rides are $1.80 to $2.50, and bus rides are $2.20.
In the US I can get a $4 appetizer at a restaurant and be stuffed full before my $9 entree even arrives. In Japan I can spend $100 for dinner at a similar style establishment and walk out hungry.
In Thailand, a track home an hour and half commute from Bangkok (or about 20 miles on a light traffic morning) runs $350K. Yes, not every Thai can afford this, but the numbers of these offerings, plus all the downtown Bangkok luxury apartments, are staggering. Thailand is also the world's largest market for Mercedes Benz vehicles. Again, per capita income of about US$4500.
I have yet to visit a country in the world---including the country of manufacture---where I can buy any consumer good cheaper than I can buy it in the US. That includes any Japanese product, any South Korean product, any Taiwanese product, any Italian product (except good wine).
If the US is having so much trouble making ends meet, I am at a complete loss as to how the rest of the world does it. Yes, the poor in these countries do not live this way, but the size of the Middle Class in these places is far larger than income/price levels would suggest possible.
Just a puzzle.
darn
No group of 5 or 30 or 500 can plan an economy for 7 billion. We have reached demographic deceleration into equilibrium, which means everything is going to turn upside-down. It's time to get real or get off the rock. Evolution is really not that demanding; just make everything you touch a little better everyday. I think if you randomly sample ZH commentary since its inception, it meets the criteria. You can only change yourself. The oil-dependent economy of highly integrated crony clicks will recede, as you replace it with more thoughtful exchange mechanisms around you. But I could be wrong.
@B9K9
+ 1oz
Brav-to-the-mother-effin'-o
Somebody actually "gets" it.
Uh oh. It isn't getting any better.
According to the latest report from Lender Processing Services, an additional 2.2% of all US mortgages that were current as of January 1, 2010 are at least 30 days delinquent as of 28 February. That's an additional 1,145,000 loans that were great on New Year's Day and are now not paying.
So much for the recovery picking up steam. Maybe it's mortgage boycott? Moral hazard for the masses?
Link: http://www.lpsvcs.com/NewsRoom/IndustryData/Documents/03-2010%20Mortgage%20Monitor/Pres_MM_Feb10Data.pdf
What about Tithes and offerings? What about charity?
No wonder tithes have such a bad name.
If you are coerced into giving 50+% of your earned income for statist, central banker's Ponzi schemes that is more palatable then the non-coerced government tithing system:
a) 1% to pay for the priest of our own choice for worship and education
b) 9% donated to an agency, foundation, service or business of our choice "Holy unto the LORD"
c) 5% donated to help the poor of our choice (could be widow/orphan)
d) 5% to spend with our family to rejoice in the Lord our choice(holiday funds)
e) coerced civil tax: about 17 grams of silver/year from males 20+ years old towards justice system (even a poor man can pay this easily)
f) NO long term DEBT (in case of emergencies the Bible allows a 6 year debt - MAX)
Save a bundle. Switch to reality: Adopt Atheism.
Or at least demand an apology from god.
Then I would be nothing more than a fool.
That would be an improvement for you.
Your not the judge.
I don't have to be a judge to fathom the inherent fear, weakness, and jelly-like cowardice that exists in people who cannot deal with the fact that they are merely an accident in the cosmos.
And their necessity to allay that fear by inventing an entity, such as god, to make them feel better about their impotence.
(That's "You're", btw, not "your". For that, I am the judge.)
fwiw, here's a big item i think you miss
I always have on average $1,500 of unexpected expenses pop up out of nowhere. Starter goes out on the car, water heater breaks, doggie hospital. Now, I'm one person, for a family of 4 I am sure it is close too 3-4k, thus, this is the reason you always hear paycheck to paycheck because this happens so frequently.
While most of the points of this article are valid, some are intelectually dishonest.
For example, the author talks about the median income, while for home expenses he takes median home price. However, home ownership is only about 65% and the rest of housholds are renters. Renters' income in most cases falls into lower part of the scale.
Therefore it would be much more honest to talk about the median income of homeowners, which would be much higher than $45K (after taxes).
Another example of dishonest analysis is calculating certain expenses based on Average rather than Median. Average food expenses are naturally much higher than Median, same with electricity and transportation.
As the result, the article compares Median income of the whole population to typical expenses of middle class. No wonder, the conclusion is: Median income is insufficient for Middle class lifestyle. Nothing new about it.
C'mon up to Canada. Property taxes are Ok and we feeze out nuts off. Other than that she's all good b'y
One flaw in the math: The average Joe does not own the average house.
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