Economic Reality: Bottom 50% Of Americans No Longer Matter

Tyler Durden's picture

Authored by Mike Shedlock via MishTalk.com,

The Fed likes to brag about the “We saved the world” recovery.

However, the unfortunate truth of the matter is a record Half of American Families Live Paycheck to Paycheck.

Does it Matter? Let’s investigate.

Unprepared for Nearly Anything

  • 50% are woefully unprepared for a financial emergency.
  • Nearly 1 in 5 (19%) Americans have nothing set aside to cover an unexpected emergency.
  • Nearly 1 in 3 (31%) Americans don’t have at least $500 set aside to cover an unexpected emergency expense, according to a survey released Tuesday by HomeServe USA, a home repair service.
  • A separate survey released Monday by insurance company MetLife found that 49% of employees are “concerned, anxious or fearful about their current financial well-being.”

Deleveraging? Where?

A Fed study shows U.S. Households Will Soon Have as Much Debt as They had in 2008.

The Federal Reserve announced Friday that the U.S. has $1 trillion in credit-card debt. Consumers hit that number in the fourth quarter of 2016, but eased on revolving credit during January 2017. The Fed announcement showed revolving consumer credit hit more than $1 trillion once again in February 2017.

 

“Credit card debt is rising quickly, but delinquencies are still really low,” said Matt Schulz, a senior industry analyst at the credit cards site CreditCards.com. “Many Americans are doing a good job of controlling their debts, but eventually with big debts and rising interest rates, it’s likely that something will have to give.”

Paycheck to Paycheck “Good Job”

Excuse me for asking but if half the nation lives paycheck to paycheck, is that really indicative of doing a good job at managing debt.

And as for “low delinquencies”, I remind you of my April 26 article Subprime Credit Card Losses Bite Capital One: Income Down 20%, Charge-Offs Up 30%.

Nonetheless, I remind you of an important perception.

We Saved the World

Two Reasons Not to Worry

  1. The stock market and housing are still going strong. We heard the same thing in 2007 but it’s different this time.
  2. The bottom 50% of the economy simply do not matter.

The real crux of the matter is point number two.

The Fed does not give a damn about the bottom half of the economy even though it spouts continual lies about “income inequality.

The Bottom 50% Do Not Matter

As long as the Fed can keep stocks and home prices elevated, there is no concern about the food-stamp, rent-subsidized, Medicaid-supplement, disability-income, Obamacare-subsidized 50% of Americans struggling paycheck-to-paycheck.

That money rolls in guaranteed, month after month!

That 50% cannot afford a house is irrelevant as long as suckers keep paying $500,000 to two-bedroom shacks in LA.

The game is to keep asset prices up so that the top 50% keep spending. The bottom 50% are taken care of by government (taxpayer) subsidies noted above.

Here’s the real deal: Fed Expects a Second Quarter Rebound, Higher Equity Prices.

Repeat Performance

The Fed needs to keep asset prices elevated even though it’s pretty clear concerns are mounting over bubbles.

Can the Fed save the world again?

Previously, the bottom third did not matter. Then the bottom 40% did not matter. Now the bottom 50% do not matter.

That statement is a bit over the top. By how much I don’t know. But the trend is clear, as is the fly in the ointment.

Brexit was the first warning shot. Trump was the second.

As soon as the bottom 65% don’t matter, those 65% may vote to take matters into their own hands.

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vulcanraven's picture

"The illusion of prosperity."

Bwana's picture

Hey Bucko I find your BS very insulting. I've worked since I was 16 and I'm 71 now and still working. I bought a new pick-up for cash in 1966 and a second one in 2002 for cash. I also have a 1976 motorcycle that I occasionally ride when my pick-up is down. Anything I put on my credit card is paid for when I get the invoice. I maintain and fix everything I own. I am highly disabled but I continue to work because when I retire I will have to sell my 1,800 square foot home because I will be unable to pay the ever increasing property taxes, vehicle registrations and other taxes inflicted on me by our parasitic local, state and federal governments. Since I have no debt I have no write-offs and the accountant I have do my taxes informs me I pay about 61% of what I make to government entities. For an example I bought my present home in 2002 and at that time my property taxes were $1,100 per year, 15 years later they are $4,500 per year and my hourly wage is only up about 10%. The problem is not personal fiscal mismanagement but it is governmental fiscal mismanagement in which every level of government and entity that has the power to forcibly extract money from people spends money with reckless abandon because regardless what they spend they just raise the taxes, fees or penalties to cover their shortfall at the working taxpayers expense.

On top of the increases governments at every level levy on the people, the people do not get pay increases adequate to compensate for the additional expenses and our federal government illegally gave the functions of the U.S. Treasury to a private bank that has inflated our currency to where it is worth 2 cents on the dollar. The rate of inflation will consume or destroy the buying or tax paying ability all of my savings within about ten years after i am unable to work anymore. Regardless of how much I am able to put away once I retire it will be a matter of ten years and my governments at all levels will make me homeless and on the street.

Maybe the persons you describe above have the right idea and just spend everything they can and enjoy their life because regardless of what a person does unless they are a member of the super rich they will die homeless and broke.

Justin Case's picture

Every empire ended the same way. The military grew faster than the economy could support. As the tenticles of the empire continuously engulfed nation by nation it had to maintain a presence there militarily. Which means moar personnel, equipment, rations, support systems etc. These funds came from the controlling (invaders) nations tax payers, but merica also extorts money through a club called NATO, to offset the costs of empire building and maintenance. 

The signs of those empire bulding costs are visible in the merican infrastrucures, education system, heathcare, pensions, jobs as they are not for anyone important, just the masses, (debt serfs). As in Rome, the rulers reached a point where the masses had reached the intolerable point and revolted against the leader. The rich here lead a decdent life style and get richer every year. Never in the history of merica has the wage discrepancy been greater than it is today at 300:1. The CEO of GM recieves $16 million base salary. There are bonuses, cars, travel dining pension healthcare plan etc., But just her base salary can pay 274 line workers a full year @ $20.00/hr. The highest paid CEO of a pharmaceutical firm earns $40,000.00/hr. Yup, per hour. Life is good, but not for the majority. How many new billionaires did merica produce in the last decade?

Things will eventually get bad enough in merica that the masses will react. As in Venezuela, riots, looting. People who had enough. That in merica is only a matter of time.

Radical Marijuana's picture

While that is surely an accurate description of the personal facts of life for many people, one may develop reasoned "excuses" for that behavior by understanding how and why that was driven to develop.

The American people have been subjected to the best scientific brainwashing which money could buy for generation after generation. The vicious spirals through the funding of the political processes that originally made and maintained the MAD Money As Debt systems, whereby public governments enforce frauds by private banks, were able to reinvest some of those profits from frauds in more frauds, through funding the foundations that directed the development of public education institutions, as well as captured control over the mass media. (Similarly, the profit from junk food and profit from disease systems had collective consequences which included wide-spread organic brain damage.)

While I too have little "pity" for the adults which have been so brainwashed to believe in bullshit, and so, do not want to learn about that, I do feel "pity" for the children, and those not yet born, who are innocently born into that milieu of social conditioning. It does not appear to me that a toddler has responsibility for being born into a political economy where their toys are necessarily paid for with fiat money, made out of nothing as debts, which frauds by private banks are enforced by governments.

At what point do people who have already become debt slaves, and always have been so, for generation after generation, supposed to be able to miraculously overcome everything that those systems have done to wage war against their consciousness throughout their life times, as well as the life times of their parents, and parents' parents ???

JRobby's picture

He brings up the name "Tim Geithner"...............(Laugh Track Deafening !!!)

William K. Black on Geithner: “The Guy Has a Track Record of Failure Everywhere He’s Gone”

 

But he belonged to all the right clubs !!!.........

swmnguy's picture

I remember in late September/early October 2008, both Sens. McCain and Obama promised, if elected to nominate that same Timothy F. Geithner as Secretary of the Treasury, to Wall Street's approval and improved comfort.

If that didn't tell everybody what they needed to know, I'm not sure how to make things more plain.  Even more to that point, it's realy hard to find references to that fact--which I clearly remember--now.  So somebody or sombodies also realized that convergence of thought between the two factions of the Corporate Finance/War Party revealed more than was perhaps wise.

JRobby's picture

Because you put a total tool in place if you want a $2 T bail out. Geithner was hand selected and the shiniest tool in the box.

This is from before Huff Post became part of MSM through AOL acquisition (HELLO !!!)

http://www.huffingtonpost.com/cenk-uygur/william-k-black-on-geithn_b_183...

UmbilicalMosqueSweeper's picture

OK, smartass. Now kiss my ring, give me the secret handshake, and remember the first rule of secret societies...everything is secret!

Offthebeach's picture

What would you expect out of McStain.  Failed Annapolis,  crashed multiple jets,Keting Five,  killed off S&L, 2009 crash, failed chumped Pres run.  Guy is like the Canary of fail.

HardAssets's picture

Gethner did exactly what he was supposed to do . . . for his true bosses.
They just didn't happen to be the American People.

In this he was like 99% of those in D.C.

https://m.youtube.com/watch?v=2gK3s5j7PgA&ebc=ANyPxKq5nkXtuZDtTrQHC3oa02...

curbjob's picture

The "unexpected " is really part of the problem and is best explained by the US slide from #1 in education to #30  since 1980.

stljoe's picture

Funny how that neatly coincides with the federal government getting involved in education. Just a coincidence I'm sure.

curbjob's picture

... it would be ironic if true.

However the Department of Education was just a rename in 1979;

prior to that it was the more centralized Department of Health, Education, and Welfare which was again, a decentralized creation of the Federal Security Agency formed back in 1939. 

 

 

Blankenstein's picture

It wasn't a rename, it was creating a separate entity for education and also expanding its size and powers.  

JRobby's picture

"unexpected " BY DESIGN

UmbilicalMosqueSweeper's picture

...but #1 in indoctrination. Besides, how can morons with a 60 IQ be "educated?" Animals can only be trained...just ask my neighbor Pavlov.

HardAssets's picture

Education has been under attack for over a century.

That attack was really ramped up around 1960.

'The Underground History of American Education ' - John Taylor Gatto

how_this_stuff_works's picture

The Dumbing Down of America. Lower standards, don't raise them.

sleigher's picture

"Trump was the second. Not so fast – he turned out to be just a “warning fart”.  ;-)"

 

I am starting to think Trump is trying to please everyone.  Nationalists who elected him and the globalists who are likely threatening him.  I was very quick to dismiss his decisions as he sold us out or was a con the whole time.  Looking at everything it seems he is just trying to please 2 masters.  He should know better...

Conax's picture

He's a 'Globalist' and a 'Nationalist', you know. He said so. That's like being a cow and a pig, too.  Walking the centerline, the Third Way.

*splat*

cbaba's picture

Well, he meant people elected him to be a voice against the establishment, Trump betrayed his  voters, but that's another matter.

Md4's picture

When the 60+ million who voted for this man FINALLY rise...

...we'll get action.

He.
Can't.
Do.
Shit.
Without.
US.

Melt the phone lines off the walls of Congress AND the fucking liberal judges hosing things up.

When THAT happens...it'll be warning shot number three.

There should be no further warning shots...

curbjob's picture

When it comes to US foreign policy in the ME,  50 states don't matter.

It's all about that 51st state and their overwhelming lobby.

Buck Johnson's picture

Exactly, all those bailouts did was to help a handful of powerful bankers and elite thats it. 

Justin Case's picture

all those bailouts did was to help a handful of powerful bankers

That would never happen in a true capitalist system. The weak fail and go to the dust bin of history, not bailed out with the public purse.

Umh's picture

They never have mattered. Even during FDR's regime the focus was on keeping prices stable so that the cronies did not lose. Feeding the people was an afterthought to ensure customers for the cronies.

ThisIsMadness's picture

This has never been more transparent than it is today!!! They do not care what we think as long as we obey.

GreatUncle's picture

When > 50% do not matter anymore any form of voting is pointless.

Law into ones own hands is the only way left.

That is what has been reached hence I will never vote again and you can burn the ballot box no concensus of opinion can be assumed by those who say they are better and rule over us.

 

takeaction's picture

Hold on....Isn't this the way it was designed...created...the dream...  You work hard, figure it out, and reap the rewards.  Every person gets up out of bed the same way each morning...it is the choices YOU make that decide how your life is going to be.  This is capitalism....you want to sit and do nothing...okay...there you go.  You want to get motivated, learn from your mistakes, be persistant, forward thinking, you will succeed.  How is it that people who are "Successful" are in any way responsible for non-successful.  If you continue to use drugs, live on the streets, work in fast food your entire life, how can ANYONE else be held accountable for your actions.  Another big one is HAVING KIDS YOU CAN'T AFFORD.  How can anyone else be responsible for your choices?  Now, is our system perfect...NOPE.  But with a system like this there will be people that rise to the top, and sink to the bottom.  My friend grew up in communist Russia during the cold war, and they explained to me that this type of situation ALWAYS plays itself out due to human nature.  Socialism, Communism, Capitalism....No matter what you try an control and implement...human nature gives you people that will fail, and people that will figure out the game and rise to the top.  So....hit me with the down votes all you want...these are some rules that you must live with.

#1 You have what you deserve...

#2 There is no such thing as luck...

#3 Short term decisions equal long term pain...

#4 The past does not equal the future...You can learn from it, but you can guide the future...the past is done...

#5 If you do not have a plan, others have a plan for you...

#6 Never reinvent the wheel...Find somebody who has what you want (In any aspect) Copy what they do, reap the same rewards.

I could go on and on....it is not that hard.  Don't all of us want to be in the top 1%??  That is what I want.....Why do people HATE those people for success...

Radical Marijuana's picture

The longer term consequences of the series of excessive successes

based on Civilization operating through enforced frauds

are runaway criminal insanities.

 

I do not HATE people for success.

I HATE that their successfulness is becoming runaway insanities. 

"#3 Short term decisions equal long term pain..."

Globalized Neolithic Civilization has become almost totally based on being able to enforce frauds, despite that doing so never stops thoses from still being fundamentally fraudulent. Nobody can be socially successful outside of those established systems based on being able to back up legalized lies with legalized violence, despite that being able to do so never stops those lies from still being false. Each increment of short to medium term successfulness based on being able to enforce frauds shall result in longer term pains, due to that path of least resistance being the path of least morality. Collectively, Civilization is headed towards the maximum long term pain, while individually everyone is socially successful to the degree that they "work hard, figure it out, and reap the rewards" in the shorter terms.

What are REALLY the longer term consequences from adapting to take advantage of sociopolitical systems based upon being able to enforce frauds?

What are REALLY the longer term consequences of about exponentially advancing technologies enabling about exponentially increasing fraudulence?

The emergence of globalized systems of electronic money frauds, backed by the threat of force from weapons of mass destruction, has resulted the human species as a whole becoming their own worst enemy. Indeed, not only do most human beings no longer count within those systems, that tragic trajectory is that not even the 0.001%, say of about 7 thousand, within the about 7 billion, are still actually in control of the systems of electronic frauds, backed by atomic weapons, that they were originally responsible for making and maintaining.

Why various people may well attempt to develop more "realistic" or "practical" personal attitudes towards adapting to living inside systems based upon enforced frauds, which are becoming exponentially more fraudulent, nobody is able to do so, other than in each short to medium term increment. In the longer term, Civilization as a whole automatically becomes more criminally insane every day, while those who derive the most personal benefits from participating in that happening are thereby contributing the most to those terminally sick and insane systems spinning out of any human control, because "controlling" Civilization through excessively successful applications of the methods of organized crime, such that enforced frauds enable successful symbolic robberies, all trends towards Civilization as a whole becoming too completely corrupt and crazy to be able to recover from that. Although it is theoretically possible that human beings and Civilization could understand themselves better. It continues to be politically impossible for that to happen, due to the long history of successful warfare based on deceits and treacheries becoming the basis for successful finance based on enforcing frauds. Rather, the almost exponential progress in physical science has enabled politics to become exponentially more insane.

Various "pragmatic" approaches towards "work hard, figure it out, and reap the rewards" are grossly deficient to cope with figuring out that Civilization has become almost totally based on enforced frauds, manifesting as integrated systems of legalized lies, backed by legalized violence, whose overall dishonesties are becoming about exponentially more dishonest! Since those who benefit the most from they ways that they "work hard, figure it out, and reap the rewards" are able to continue to dominate the established systems through the vicious spirals of all aspects of the funding of political processes, there are NO politically possible ways for their collective "successfulness" to respond sanely to their collective insanities.

The underlying features of the globalized electronic frauds, backed the threat of force from atomic weapons, were the scientific revolutions and profound paradigm shifts achieved through mathematical physics, such as made electronics and atomic energy able to be harnesses by human beings ... while those human beings were still basically the same monkeys and apes that they always were. In that context, almost everyone, and certainly those who appear to be most socially successful operating within taking advantage of systems based upon being able to enforce frauds, are NOT able and willing to go through similar sets of profound paradigm shifts in the ways that they perceive political problems, and especially NOT able and willing to recognize the deeper reasons for how and why money is measurement backed by murder.

Justin Case's picture

#7 Have political connections

#8 Be part of a dynasty

#9 born in a gifted race

waspwench's picture

Capitalism is fine but what we have currently is not capitalism.  

Capitalism is darwinism for business.   Successful companies survive and prosper.   Unsuccessful businesses fail.

In our society certain businesses do not fail.   The taxpayer's money is used to keep them alive in bad times and the businesses gets to keep their profits in good times.  We socialize the losses and privatize the profits.

CAPITALISM IT IS NOT.

"Why do people HATE those people for success..."?   We hate them because they are not genuinely successful - they are criminal.   Their "success" is the success of the thief.   They are stealing from the rest of us.

halcyon's picture

Of course they matter. They stop working and planes, trains, autos, electricity plants, plumbimg and groceries stop. They actually run the economy.

 

sgt_doom's picture

 

 

Fake News Report:  May Day (05/01/17)

Once in awhile, I brace myself with several ginger beers* and listen to Fake News America.  So I tuned into the Wall Street Journal Report, where they commented on a USA Today article/survey about Americans' concern with growing divisiveness, but were clueless as to its origins?

Well, that's easy enough.  There is a huge "think tank---foundation---institution" network out there which exists primarily to divide the populace!

Next I tuned into a local CBS affiliate (KIRO-Seattle), which interviewed a senior fellow from the "New America think tank" --- that's the outfit which houses the austerity group financed by Peter G. Peterson's Peterson Foundation, which seeks to foist austerity on the 90%.  (Peterson was a David Rockefeller protégé and co-founder of the Blackstone Group, originally financed with Rockefeller family seed money, and together Peterson and David Rockefeller founded the Peterson Institute, formerly known as the International Institute on Economics.)

Next I turned to NPR, where they were interviewing a "distinguished senior fellow from the Brookings Institution" --- which houses the Hamilton Project, founded by Robert Rubin to privatize everything!  (For the record, Alexander Hamilton wasn't about privatizing everything or anything --- his personal writing envisioned a multiracial meritocracy open to all.)

That "distinguished senior fellow" was Ben Bernanke, former chairman of the Federal Reserve, who was claiming that the Trump rollback of that Dodd-Frank so-called financial reform legislation would greatly lower capital requirements of the major banks.  For the record, that capital requirement put many local and neighborhood banks out of business, while greatly strengthening and fortifying the five top banks, who in lieu of actual capital, were allowed to claim their credit derivatives under this so-called capital requirement --- the top five banks own over 90% of said credit derivatives, and said credit derivatives along with their affiliated securitized debt was the cause for that global economic meltdown, which resulted in the greatest wealth transfer in human history, with trillions going to the 1%!

Also, Dodd-Frank, along with other nefarious stuff, legalized B.O.L.I., or Bank-Owned Life Insurance, meaning they could insure their own employees for fun and profit, much like an early scam referred to as "the dead peasants' insurance" --- whereby corporations insured unwitting employees and made a bundle on their deaths!  Recall that cluster of dead bankers several years back?  When a number of bankers around the world and in America were either murdered or allegedly committed suicide?  The bankers made a bundle on their deaths.

Unfortunately, the specific details are difficult to come by as the insurance company executive vice president in charge of those payouts was murdered a year or so ago when she was out jogging one evening in her gated community:  an unknown assailant came up to her and stabbed her dead center in her heart --- no theft or sexual assault involved, just a simple, horrendous professional murder!

Frequently over the past several weeks and month one could hear that submediocrity/pseudo-economist, Stephen Moore from the Heritage Foundation, who seems to routinely appear either on CNN, NPR or Fox.  Nobody appears to know anything about his background:  is he related to Timothy Geithner on the Moore side of the family?  Is Stephen Moore a Moore descendant of Andrew Mellon, who brought us the Great Crash and the Great Depression?  These are important questions when some foundation dude is supposedly spouting the (fake) news!

So the self-described real (??) newsies are telling us we need a austerity, more powerful bank monopolies, and another Reagan Revolution!

No thanks, bitchez!!!!

*About the only healthy softdrink around --- although carbonation is never recommended, the ginger content is great for nausea and indigestion, and has the required amino acids for muscle recovery after heavy labor or a workout.  The best is  Cock'n Bull, the runner-up is Reed's --- both highly recommended!

Recommended Reading:

Alexander Hamilton, the making of America, by Teri Kanefield

 

Alexander Hamilton, a biography, by Forrest McDonald


thunderchief's picture

When they get even close to 65 percent there won't be voting. 

At least nothing that does anything.  Almost there.

HumanMan's picture

>almost

Have you seen what our president is (not) doing?

how_this_stuff_works's picture

I'm not sure you can call it "voting" when Big Money/Special Interests select the candidates.

GlassHouse101's picture

The stage is set to make the United States a country of Serfdom.

divingengineer's picture

You worry too much.
Pass the cabbage.

Seasmoke's picture

Have you had the steak , yet ??

GreatUncle's picture

Yep, serfdom everywhere is the grand design and UN agenda 21 the global goal of serfdom for all.

GlassHouse101's picture

Want to eat? Get the chip (the mark)

Offthebeach's picture

( ....I have  a connection can get us squirrel meat..."

Justin Case's picture

Larva under tree bark is free and plenty of protein. Meat isn't all that healthy. Eat well.

ronaldwilsonreagan's picture

Your allowed just enough second amendment rights to create to illusion you can protect yourself from the 1%. You don't ! They have all the real weapons, you won't even hear the drone over head.

clade7's picture

Be 'Small and Quiet'...on the move constantly....adopt a coyote's attributes... its a proven strategy...

Sick Underbelly's picture

Drones can be taken out.  IR doesn't do too well under trees.  There are modified ghillie suits that change your IR signature.

Sleep at night with a thermal blanket as an A-frame "tent" with some foliage at the end to disperse what heat escapes, if you're very worried.

I thought I was thinking "outside the box" with making a "deer silhouette" to wear, only to search the internet and actually see this has already been done, also.

The best thing I can suggest is find a "buddy", learn about tracking and evading, then play "hide and seek" with your new skills.  It's really funny when you've hidden and evaded so well they pass by you 3 times before you "kill" them.  ;)

UmbilicalMosqueSweeper's picture

Guess who operates those "real weapons." Think there will be no dissention among the ranks as they are ordered to fire on their own families? Think fragging was a thing that only occurred during the Vietnam war? Think the king and his court can't loose their heads? Think again!