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Guest Post: Middle Class? Here's What's Destroying Your Future

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Submitted by Peak Prosperity contributing editor Charles Hugh Smith

Middle Class? Here's What's Destroying Your Future

According to the conventional account, the Great American Middle Class has been eroded by rising energy costs, globalization, and the declining purchasing power of the U.S. dollar in the four decades since 1973. While these trends have certainly undermined middle-class wealth and income, there are five other less politically acceptable dynamics at work:

  1. The divergence of State/private vested interests and the interests of the middle class
  2. The emergence of financialization as the key driver of profits and political power
  3. The neofeudal “colonization” of the “home market” by ascendant financial Elites
  4. The increasing burden of indirect “taxes” as productive enterprises and people involuntarily subsidize unproductive, parasitic, corrupt, but politically dominant vested interests
  5. The emergence of crony capitalism as the lowest-risk, highest-profit business model in the U.S. economy

Higher Energy Costs = Lower GDP, Lower Incomes

Let’s start with the conventional forces of higher energy costs.  The abundance or scarcity of energy is only one factor in its price.  As the cost of extraction, transport, refining, and taxes rise, so does the final price.  EROEI (energy returned on energy invested) helps illuminate this point. In the good old days, one barrel of oil invested might yield 100 barrels of oil extracted and refined for delivery.  Now it takes one barrel of oil to extract and refine 5 barrels of oil, or perhaps as little as 3 barrels of unconventional oil.

It doesn’t matter how abundant oil might be; it’s the cost that impacts GDP and income. Here we see that GDP in relation to the price of gasoline hit bottom in the wake of the 1979 oil shock. GDP soared in the late 1990s when oil plummeted to $15/barrel. It spiked lower when oil hit $140/barrel in 2008, and popped back up when oil dropped (briefly) to $40/barrel. (FRED charts courtesy of B.C.)

Here we see the cost of oil’s impact on wages:

As oil costs rise, wages and GDP decline. If we read between the lines, this chart reflects an economy that has become less dependent on oil for its GDP growth than it was in the 1970s, but oil’s influence on growth and income is clearly still fundamental.

This fifty-year history of oil, GDP, wages, and household debt reveals that GDP and wages only rose smartly in brief eras of depressed oil prices.  Households compensated for the stagnation of their wages by borrowing.

The Middle-Class Work-Around: Substituting Debt for Income

The key idea here is that real income can only rise if the productivity of labor and capital investment increases.  If productivity of labor and capital is flat, any increase in income is a mirage; i.e., a rise in nominal income that is not an actual increase in purchasing power.

Here we see that labor productivity has risen steadily, more than doubling since 1970.

Wages also rose—but household debt rose at a much higher rate than wages.

I have been asked by readers to use only “adjusted” or “real” measures of GDP, wages, etc., but sources rarely compare apples to apples, and the high probability that “official” inflation has been understated leaves even “adjusted” data suspect.

In nominal terms, the ratio of these two lines is what’s important.  From the point in time when they began diverging (1983), wages tripled but household debt rose sevenfold. (According to the Bureau of Labor Statistics’ (BLS) inflation calculator, $1 in 1983 is equal to $2.31 in 2012 dollars.)

If we dead-reckon that “real” inflation is probably more like $1 in 1983 = $3 in 2012, this still suggests that wages doubled in the past 30 years.

The increase (however you calculate it) flowed entirely to the top 10% of households.

That the bottom 90% of wage earners lost ground has been well established.  This summary from the New York Times encapsulates the stagnation:

According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065. Overall, median household income adjusted for inflation declined by 2.3 percent in 2010 from the previous year, to $49,445. That was 7 percent less than the peak of $53,252 in 1999.

The decline in earnings isn’t just income inequality at work. Labor’s share of the national income has plummeted to historic lows.

Clearly, the middle class (whatever way you choose to define it, it can’t be the top 10%) compensated for stagnating income with a “work-around” that was heavily incentivized by tax deductions of interest and declining interest rates: borrowing money.

Meanwhile, corporate profits have risen sevenfold since the early 1980s (as did household debt—an interesting coincidence).

Perhaps a more accurate measure of corporate profits is to view them as a share of GDP:

Corporate profits as a share of GDP zoomed to historically unprecedented levels in the credit-bubble era following the brief 2001 post-dot-com recession.

What accounts for this unprecedented rise in corporate profits and equally unprecedented decline in labor’s share of the national income?  The forces at work can be summarized in one word: financialization.

The Perverse Incentives and Feedback of Financialization

Financialization is the incentivization of debt, leverage, speculation, and regulatory capture (i.e., “deregulation”) that enables graft, fraud, and collusion as the “business model” for low-risk profits.

From the long view, modern-day corporate/State capitalism (Neoliberal Capitalism) ran aground in the 1970s on two shoals: the rise in energy costs and the exhaustion of consumerist demand driven by rising wages. After stumbling badly through the 1970s (adjusted for inflation, the S&P 500 stock index lost 67% of its value in that high-inflation decade), Neoliberal Capitalism developed a financialization model for growing profits.

As the cost of borrowing fell, a stagnant income could leverage (serve as collateral) for larger amounts of debt.  This new debt-driven demand boosted the value of assets such as houses and stocks, which then provided new collateral for even more debt.  Restrictions on leverage and speculation were loosened or gutted via State-mandated financial deregulation.

This created a self-reinforcing “virtuous cycle” of ever-rising debt, leverage, speculation, asset valuations, and financially derived profits.  In the final stages of this debt-based “prosperity,” auto manufacturers were booking most of their profits on auto loans; the actual manufacture of vehicles was merely a step in the origination of new debt.

This increasing reliance on debt for “growth” and “prosperity” aligned perfectly with the interests of the stagnating middle class, which had turned to debt as a substitute for income to support its lifestyle.  Thus in the early stages of financialization, the interests of the financial sector and the middle class borrowers were aligned, as were those of the Central State, which saw tax revenues climb as income and profits rose. 

Ever-expanding debt rose faster than income, however, so leverage had to constantly increase if debt were to continue rising.  This is why by the end of the financialization cycle in 2006, the housing bubble was being driven by “zero down payment” mortgages ($0 down leveraging a $500,000 loan) and “no-document” mortgages (“liar loans”), where phantom income served as collateral for phantom assets.

The “virtuous cycle” ends once leverage cannot be extended any further.  As overall debt expansion ceases, the asset bubbles created by debt-dependent demand implode, and the cycle reverses into deleveraging: as assets decline in value, assets must be sold off and debt either paid down or repudiated/written off.  The assets were phantom, but the debts left behind were real, and the losses were real, too.  Real income must be devoted to paying down debt that was based on phantom assets.

The middle class gorged on debt for 30 years as a “work-around” for stagnant income, and its wealth rose as its investments in housing and stocks reached bubble heights. Now that the credit-based expansion of asset valuations has reversed, middle class wealth has been gutted even as its income is largely devoted to servicing underwater mortgages, high-interest student loans, and other household debt.

The interests of the middle class have now diverged from the vested interests of the Central State and the financial sector, which used its expanding profits to capture regulators and buy political protection of its financialization rackets. Even now, four years after the implosion of the financialization model, we are treated to headlines such as “Rigged Rates, Rigged Markets.”

The Neofeudal Colonization of Home Markets

The use of credit to garner outsized profits and political power is well-established in Neoliberal Capitalism.  In what we might call the Neoliberal Colonial Model (NCM) of financialization, credit-poor developing world economies are suddenly offered unlimited credit at very low or even negative interest rates. It is “an offer that’s too good to refuse,” and the resulting explosion of private credit feeds what appears to be a “virtuous cycle” of rampant consumption and rapidly rising assets such as equities, land, and housing.

Essential to the appeal of this colonialist model is the broad-based access to credit.  Everyone and his sister can suddenly afford to speculate in housing, stocks, commodities, etc. and live a consumption-based lifestyle that was once the exclusive preserve of the upper class and State Elites.  (In developing nations, this is often the same group of people).

In the nineteenth-century colonialist, model, the immensely profitable consumables being marketed by global cartels were sugar (rum), tea, coffee, and tobacco—all highly addictive, and all complementary:  tea goes with sugar, and so on.  (For more, please refer to Sidney Mintz’s landmark study, Sweetness and Power.)

In the Neoliberal Colonial Model , the addictive substances are credit and the speculative consumerist fever it fosters.

In the financialization model, the opportunities to exploit “home markets" were even better than those found abroad, for the simple reason that the U.S. government itself stood ready to guarantee that there would be no messy expropriations of capital or repudiation of debt by local authorities who might decide to throw off the yokes of credit colonization.

In the U.S. “home market,” the government guaranteed that lenders would not lose money, even when they loaned to marginal borrowers who could never qualify for a mortgage under any prudent risk management system.  This was the ultimate purpose of Freddie Mac, Fannie Mae, and now the FHA, which is currently guaranteeing the next wave of mortgages that are entering default.

In my analysis, the Status Quo of “private profits, public losses,” and the incentivization of gargantuan household debt amounts to a modern financialized version of feudalism, in which the middle class now toils as debt-serfs.  Their debt cannot be repudiated (see student loans), their stagnating disposable income is largely devoted to debt service, and their assets have evaporated as the phantom wealth created by serial credit bubbles has largely vanished.

Subsidizing a Parasitic Central State and Crony Capitalist Cartels

In broad brush, financialization enabled the explosive rise of politically dominant cartels (crony capitalism) that reap profits from graft, legalized fraud, embezzlement, collusion, price-fixing, misrepresentation of risk, shadow systems of governance, and the use of phantom assets as collateral.  This systemic allocation of resources and the national income to serve their interests also serves the interests of the protected fiefdoms of the State that enable and protect the parasitic sectors of the economy.

The productive, efficient private sectors of the economy are, in effect, subsidizing the most inefficient, unproductive parts of the economy.  Productivity has been siphoned off to financialized corporate profits, politically powerful cartels, and bloated State fiefdoms.  The current attempts to “restart growth” via the same old financialization tricks of more debt, more leverage, and more speculative excess backstopped by a captured Central State are failing.

Neofeudal financialization and unproductive State/private vested interests have bled the middle class dry.

In Part II: The Middle Class Survival Guide, we look at what we can do to avoid serfdom and collaborating in an unjust, exploitative, and ultimately doomed system.

We are not powerless simply because we are not individually wealthy and politically powerful.  The Status Quo depends on our passivity, complicity, and collaboration.  Just as each vote we cast in an election supports or resists the Status Quo, every dollar we spend is a “vote,” too. Every dollar we don’t send to a cartel or quasi-monopoly is a dollar we can spend locally or invest in our own life.

Click here to access Part II of this report (free executive summary, enrollment required for full access).

 

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Thu, 07/12/2012 - 11:16 | 2609971 fightthepower
fightthepower's picture

All a part of the Rothschild's plan. 

Thu, 07/12/2012 - 11:27 | 2609999 SheepDog-One
SheepDog-One's picture

NAH the key is to dump money faster down the black hole....backfill theory.

Thu, 07/12/2012 - 11:29 | 2610007 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Still middle class?

Save your purchasing power by investing in gold and silver bullion.  It will never go away unlike gains from stocks.  Stock has huge counter party risk because you are investing in a corporation you are not running.  Look at BP!

Buy silver!

Thu, 07/12/2012 - 12:14 | 2610138 Raymond K Hessel
Raymond K Hessel's picture

I really, truly, without hesitation, H.A.T.E. it when people talk about the middle class when they really mean the median class.  

Middle Class is not a dollar amount.  

It's a way of life.  It means you either work hard on your business or get the best education you can't afford so that you can work for a high salary.  It means you want more out of life than just existing.  

Median class is a much larger demographic but it has nothing to do with Middle Class.  

There are Rich, Middle Class, Working Class, and Poor.  That's it.

Based on the same quantitative foundation that sunk the global economy, yes, most people are Working Class and they are getting rolled.  

The downturn in the economy effected the Middle Class but most people making less than $250,000 are probably not Middle Class people.  Most of them are Working Class.  Most Americans and Most Europeans are Working Class.

 

Thu, 07/12/2012 - 12:22 | 2610168 Conrad Murray
Conrad Murray's picture

Got any numbers to go with this? An infographic perhaps?

Thu, 07/12/2012 - 12:38 | 2610204 Raymond K Hessel
Raymond K Hessel's picture

To expand on what I meant that the Middle Class is not the Median Class:  The Middle Class is a QUALITATIVE demographic in that there are cultural distinctions that make a person a member of the Middle Class.  

The idea behind the "Middle" part is that these people are not Nobility but they are also not Poor.  Over time, as people migrated from an agricultural to an industrial economy, it becomes necessary to create a new class of people called the Working Class.  

It's my assertion that the Working Class makes up most of the population.  Politicians have successfully convinced people that they are Middle Class when in fact they are Working Class.

I hope I was able to "draw you a picture" with my words.  I'm not Banzai!

Thu, 07/12/2012 - 12:44 | 2610245 prains
prains's picture

the richest 400 americans hold more wealth than the bottom 150 million americans that's all that needs to be said right there

Thu, 07/12/2012 - 12:54 | 2610283 Raymond K Hessel
Raymond K Hessel's picture

When someone says "that's all that needs to be said" or "there's no more arguing" or anything that's supposed to end the debate without there being any real resolution, I know I'm talking to someone who believes in socialism / communism / fascism / corporatism / social justice / statism / tyranny.

I think there is more that needs to be said about the wealth gap and about how the economy got to be where it is.  

Thu, 07/12/2012 - 17:29 | 2611173 MillionDollarBoner_
MillionDollarBoner_'s picture

Let me simplify it fer y'all.

There's upper class, middle class and lower class. Upper class have good accountants so they pay jack sheet; lower class are unproductive, bloodsucking, baby breeding clients of the state so they pay jack sheet; the "middle" class pay for everything.

Got it now?

Thu, 07/12/2012 - 18:56 | 2611318 prains
prains's picture

couldn't be more wrong Raymond but nice try, if there is more to be said then please say it

all i stated was a simple verifiable fact the conjecture is all yours but i do believe you already live under all your above stated isms

called the united states of oligarkistan

Thu, 07/12/2012 - 12:23 | 2610174 Ghordius
Ghordius's picture

+1 though a Median Class lifestile has a price tag, too, as for the Middle Class.

The pricetag for middle class lifestile (as per statistics, etc.) in China is 10'000 USD per year, with 240m "partecipants"

Thu, 07/12/2012 - 12:37 | 2610216 Raymond K Hessel
Raymond K Hessel's picture

Ghordius, the point is that it's not a number.  It's a lifestyle that incorporates accummulating wealth, among other things.  

Some of these things include: acquiring a college education, starting a business, a sense of family and community, etc.

I think you get where I'm going with this.

Thu, 07/12/2012 - 12:48 | 2610252 Cathartes Aura
Cathartes Aura's picture

your point of view is similar to mine, with maybe a slight bitter twist. . .

in my observations, "middle class" are the aspirational class, always aspiring to more, better, faster - they're the shoppers and the ones with "toys" in their driveways, they wear the brand name labels, carry i-gadgets, and are well versed with media memes and sports scores - all the better to be recognised with. they are to be found taking courses to acquire "new workplace skills" or degrees to climb the corporate ladders.

just high end working class, schemin' & dreamin' - believing the "trickle down" is on its way, always lookin' up, with hope.                                                                       

Thu, 07/12/2012 - 12:57 | 2610299 Raymond K Hessel
Raymond K Hessel's picture

That's a little bitter and I think you're right about how the working class has used debt and toys to feel like they're middle class.

But you're certainly getting my point about these classes being at best economic lifestyles or attach some other tag to the qualitative differences between classes of people that carry with it direct economic consquences or features.  That's all I'm really saying.  

The post is a quantitive discussion about the Working Class.  Not the Middle Class.

Thu, 07/12/2012 - 17:06 | 2611120 Cathartes Aura
Cathartes Aura's picture

I agree with you - in fact, I'd say, if you're working. . . then you're working class.

the "middle" was just a story sold to get those who love to compete to work harder.

more taxes, happy IRS, the FED's strong arm, mafia model, WooHoo!

Thu, 07/12/2012 - 20:13 | 2611539 Anusocracy
Anusocracy's picture

The middle class is a group of people that wishes to run other people's lives without actually having to do so.

 

They are the wannabes, fools, and useful idiots, and only do the right thing when every idea or belief they can come up proves to be wrong.

 

 

Thu, 07/12/2012 - 13:37 | 2610451 ZeroAvatar
ZeroAvatar's picture

If I recall, it was CHS that wrote something, coupla' years back, about how there WAS no more middle class, people thinking they were 'middle class' were simply deluding themselves.  I'd have to look through a LOT of notes to find the reference.

 

Thu, 07/12/2012 - 11:47 | 2610003 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

A preminent University sociology Professor best known for writing books on the Occult told me back in the Fall of '08 that the reason for the designed economic collapse was to squeeze the last of the middle class into the lower class.

This was her last point after discussing Bohemian Grove and rituals, how David Rockefeller had said he, "Did not care what religion anyone had, as long as they have one and are fanatical about it" - this Rockefeller had said in the 70's - and where society will be going, at least as planned by these grand white wizards of fortune.

Thu, 07/12/2012 - 11:40 | 2610039 optimator
optimator's picture

Time to read the "Protocols" again.  For a fake document it sure has bin coming true for the last hundred some odd years, huh?

Thu, 07/12/2012 - 11:45 | 2610048 ITrustMyGut
ITrustMyGut's picture

exactly..

 

much like "The Report from Iron Mountain.."

Thu, 07/12/2012 - 11:59 | 2610083 SMG
SMG's picture

Just remember that wasn't a Jewish plan, it was a Luciferian Illuminati plan.

Want to make sure the pitchfork and torches get pointed in the right direction.

Thu, 07/12/2012 - 12:19 | 2610155 Ghordius
Ghordius's picture

very good article. Smith is at his best when he writes about what he knows (less so when he writes on europe)

fightthepower: duh! your comment "All a part of the Rothschild's plan" is exactly what makes me despair whenever I read ZH comments. Hello? Do you really need to believe in some hidden conspiracies when there is plenty of overt shenigans going on? Is this some kind of spiritual need for a "Devil"? Did you read the article at all? Rothschild my hat...

Go back and read what is eating up the US middle class (plenty of zero-sum games exemplyfied), and this time please put your thinking cap on.

Thu, 07/12/2012 - 12:55 | 2610287 Raging Debate
Raging Debate's picture

I remember being in High School in the 1980's and my history teacher talking about the Tri-Lateral Commission. The world globalized into a giant pyramid like all structures do, becuase it is in our evolutionary programming to think in pyramids and build them. This pyramid was made of paper rather than stone but the same lessons of Egyptian empire apply. The outcome in physics of pyramids is to split into two parts. Back to East vs. West again.

Thu, 07/12/2012 - 12:55 | 2610288 Raging Debate
Raging Debate's picture

I remember being in High School in the 1980's and my history teacher talking about the Tri-Lateral Commission. The world globalized into a giant pyramid like all structures do, becuase it is in our evolutionary programming to think in pyramids and build them. This pyramid was made of paper rather than stone but the same lessons of Egyptian empire apply. The outcome in physics of pyramids is to split into two parts. Back to East vs. West again.

Thu, 07/12/2012 - 13:31 | 2610422 Praetorian Guard
Praetorian Guard's picture

...and yet, people do nothing to change this. We can blame the bankers, business owners, and even the top 1%, but what are the others doing to better their lives? Most don't even want to work. It is scary to see the amount of young people who cannot even read a tape measure, or calculate simple mathematical problems. Logic is gone. The only thing that seems to pre-occupy these individuals are the newest tech gadgets, reality tv, and music. Most of the young, are pussies. Perhaps that was the "Rothchilds" plan, the de-stabilization/centralization of the individual from self to state. In any event, I believe people should stop whinning and bitching about "woa is me" and do something to improve their lives. ...but when 50% of the nation are sucking the welfare titty, what does that tell you? At some point the remaining 50% will capitulate, not because they want to, but because they are tired of dragging ass to get no further ahead than the rest of the slugs.

Thu, 07/12/2012 - 11:19 | 2609980 ich1baN
ich1baN's picture

I just got off the phone with SilverSaver and they are telling me that they are seeing unprecedented demand for physical gold and silver right now..... No wonder it is in backwardation. People, the physical PMs are experiencing huge volumes for the long side; this could mark one of the last great moments to buy physical before the miracle September Surprise, coinciding with the Indian Wedding surge. 

This is going to be one interesting month to month action. 

Thu, 07/12/2012 - 11:19 | 2609985 reader2010
reader2010's picture

 the Great Brainless American Middle Class is a piece of shit, and its most favorite passtime is shopping useless junk (more recently at dollar stores.) 

Thu, 07/12/2012 - 11:25 | 2609992 Unprepared
Unprepared's picture

Middle class is a thin myth.

Thu, 07/12/2012 - 11:34 | 2610025 Temporalist
Temporalist's picture

I read that at first as "thin mint."  It's wafer thin...

http://www.youtube.com/watch?v=rXH_12QWWg8

The American consumer

Thu, 07/12/2012 - 11:33 | 2610023 optimator
optimator's picture

Don't forget replacing three year old cars to get a no interest loan new car.

Thu, 07/12/2012 - 12:48 | 2610259 Metalredneck
Metalredneck's picture

From channel-stuffers.

Thu, 07/12/2012 - 11:35 | 2610029 Totentänzerlied
Totentänzerlied's picture

After WWII, the 20th century middle class in all advanced western nations came to be the embodiment of the phrase "more money (debt) than sense" (see: every Fed-enabled consumer-driven bubble), which was the money-power's Keynesian plan all along.

It's been said ten thousand times: one man's debt is another man's asset.

Thu, 07/12/2012 - 11:50 | 2610060 TaxSlave
TaxSlave's picture

There are two kinds of debt: value loaned out of previously produced savings against future productivity, and money created out of thin air against future productivity.

In the first kind, one man's debt is another man's asset.  In the second, not so much, because the value of the money created out of thin air was stolen from all members of the economy, never to be returned, but instead the value created to 'repay' it was skimmed off by bankers who never created a single fucking thing of value in their miserable lives.

So yeah, that was the plan all along.  People are waking up.  Little by little.

 

Thu, 07/12/2012 - 12:15 | 2610100 TruthInSunshine
TruthInSunshine's picture

One man's debt is another man's asset, except that it doesn't mean very much when the existing economic and monetary framework (controlled by a select few) essentially can mark one to the same value at its discretion, because the foundation for both is the same.

Just wait until we really find out how many creditors realize they're no better off than the debtors.

It's no conspiracy to say it's the literal game plan and has been rolling on schedule all along:

Harvest - From bubble to crash and boom to bust. Wash, rinse & repeat often.

Get almost all to be willing to pledge their real assets/wealth, that exists in tangible form and has productive value, in exchange for an illusory 'loan' of fiat that can be run up or run down in value with the stroke of a computer key, and then the real lenders of that fiat cull all those assets pledged for what is really just cotton/linen or a screen displaying digits.

Damn it must feel like omnipotence to be one who gets to feed off the Ponzi Scheme that is the world's debt-based monetary system, where debt can be created/issued in infinite amounts at zero cost by the fractional reserve central banks (at behest of their owners), and people and businesses must use this monetary system (taking on debt to conduct commerce and basic transactions) by force of law, and the debt that was created and issued at zero cost to they who make "the loan" can be used to seize real assets having inherent value.

Why doesn't everyone see that the global economic system based on fractional reserve banking and zero cost basis "money"/debt creation using full fiat notes, is the fundamental essence of a Ponzi?

 

The Secret of Oz (in my own words)


Thu, 07/12/2012 - 14:23 | 2610582 SmittyinLA
SmittyinLA's picture

actually you can get a lot of great bargains at the 99 cent store, in fact I get my least junkiest products there, hardcore basic food products, usually some blackberries, baby carrots, toffee peanuts and cashews, Toms chocolate oranges, and Snapple Peach Ice tea mix, and its right down the street from the gold and silver coin store.

Thu, 07/12/2012 - 11:27 | 2609995 PulpCutter
PulpCutter's picture

Wow - a ZH post that waited until NEARLY HALFWAY DOWN THE PAGE before it blamed the problem on 'liberals'!

Thu, 07/12/2012 - 11:33 | 2610010 SheepDog-One
SheepDog-One's picture

Sheepherding....all has to come back down to the phony as hell 'left/right' paradigm....red team blue team, got to pick a side and if you say you dont want to be on either fraud rigged team then they call you a 'freak'.

Thu, 07/12/2012 - 12:35 | 2610207 Euro Monster
Euro Monster's picture

Boink! I'm a freak!

Thu, 07/12/2012 - 18:26 | 2611280 Patriot Eke
Patriot Eke's picture

Fight club is full of freaks, and I'm thankful for it.  The Brotherhood of the Aware would be another good name for it.

Thu, 07/12/2012 - 11:49 | 2610050 PulpCutter
PulpCutter's picture

Smith is correct that overleverage of the banks is what's destroying our future.  But he misses the corallary: it's the GOP that's led the charge on watering down banking regulation - and no one more than the Tea Party Caucus.  Forget what they say, LOOK AT THEIR VOTES:

The banks "bought" the Tea Party. ALL FIFTEEN of the freshmen Tea Party Caucus members to substantial money from "financial services" industry PACs.  Was it just handly campaign money?  Bullshit; 11 of the 15 went on to COSPONSOR HR3461 "THE FINANCIAL INSTITUTIONS EXAMINATION FAIRNESS AND REFORM ACT".  The GOP, led by the Tea Party, has pushed to slash funding for the WallSt regulators and prosecutors with every budget crunch.

http://www.marketwatch.com/story/a-year-more-of-bank-reform-debate-likel...

Before Boehner, ABA President Edward Yingling told bankers that the longer that the Senate lawmakers can't come to an agreement on the bank-reform bill, the more leverage Sen. Richard Shelby, R-Ala., the banking committee's ranking member, has to prompt concessions.

"Every day that passes gives more leverage to Shelby," Yingling told bankers.

Boehner argued that a Senate bill that is approved will be "way, way, way" to the right of bank-reform legislation approved by the House in December, leaving the two chambers far apart from each other on key pieces of the bill.

It doesn't matter - red team is same as blue team?  BULLSHIT.  Look at the votes.  Pull your head out of your ass.

 

Thu, 07/12/2012 - 12:01 | 2610090 Overfed
Overfed's picture

Bullshit. Clinton signed the repeal of Glass-Steagal. Clinton signed NAFTA. O'bomb-a extended the "Patriot" act. O'bomb-a insisted on indefinite detention.

Republican, Democrat doesn't matter. They're all against US.

Thu, 07/12/2012 - 12:05 | 2610110 knukles
knukles's picture

Right on.
They just put on red and blue jerseys for the public scrums

Thu, 07/12/2012 - 12:26 | 2610179 Problem Is
Problem Is's picture

Fallacy of the False Dichotomy... The phoney left/right paradigm...

Thu, 07/12/2012 - 20:30 | 2611576 Anusocracy
Anusocracy's picture

public scrotums

Thu, 07/12/2012 - 12:13 | 2610112 PulpCutter
PulpCutter's picture

Actually, Obama vetoed the detention bill. 

House roll call on Gramm-Leech-Bliley (repealing Glass Steagall): 57 no votes; 51 Democrats, 5 Republicans

Senate roll call on GLB: 8 no votes; 7 Democrat, 1 Republican

House roll call on 2006 extension of Patriot Act: 138 no votes; 124 Democrat, 13 Republican

Senate roll call on 2006 extension of Patriot Act: 10 no votes; all Democrat

But don't let the facts get in the way of your bullshit.

Thu, 07/12/2012 - 12:18 | 2610154 Raymond K Hessel
Raymond K Hessel's picture

Idiot, are you saying that there were only 10 Democrats in the Senate for the 2006 extension of the Patriot Act?

The tallies are planned by each party so that legislators that are weak in their districts can appear to be centrist in the hopes of reelection.  None of the Republicrats or Demopublicans vote their conscience.

Thu, 07/12/2012 - 12:49 | 2610262 bobnoxy
bobnoxy's picture

Yes! And give old Bill credit for winning that epic battle, dragging the Republicans like Dick Armey, Phil Gramm and the rest of them in Congress kicking and screaming to get them to agree to deregulation! Who would have thought anyone could get the Republicans to agree on that?!

Moron. Read a fucking book instead of wasting your time posting nonsense.

Thu, 07/12/2012 - 12:14 | 2610139 WillyGroper
WillyGroper's picture

>>>>>it's the GOP that's led the charge on watering down banking regulation 

Let's see -  the Glass–Steagall Act was repealed through the Gramm-Leach-Bliley Act in 1999 by President Bill Clinton

didn't know Willy went Rep.

Thu, 07/12/2012 - 12:29 | 2610196 Problem Is
Problem Is's picture

Another brainwashed serf falling for the Fallacy of the False Dichotomy...

There is only one party Einstein... The Incumbent party owned by your elite oligarchy rulers...

Thu, 07/12/2012 - 20:32 | 2611584 Anusocracy
Anusocracy's picture

No matter who you vote for, government gets elected.

Thu, 07/12/2012 - 12:00 | 2610085 Offthebeach
Offthebeach's picture

"Liberals" . We mean 'Leftist', like in fascist Michael Dukakis statement of a new( for America ).." private corporation and government partnership. " Incestious, seemless, harnessing private greed and state power. See also Alexander Hamilton and everyone since.( this time the reform s will work. "We are different ")

Thu, 07/12/2012 - 13:12 | 2610337 earleflorida
earleflorida's picture

thy kingdom 'boston', where regal neo-colonist royalty reside in complete harmony with their betrothed loyalist,... whilst the surrounding territory rots in perpetual subjugation in a welfare pool neck-deep in illiquid futility

god bless king kerry and his dead accomplice for our many blessing 

Thu, 07/12/2012 - 12:07 | 2610116 Ricky Bobby
Ricky Bobby's picture

Hey Pulpfiction

It's Bush's fault, Clinton's fault, Bush's fault, Reagan's fault, Carter's fault, Nixon's fault... Blah Blah Blah.

Do you see a pattern here? I thought not! just get back to the propaganda matrix and STFU.

Thu, 07/12/2012 - 12:56 | 2610290 earleflorida
earleflorida's picture

socialist/democrats vis-a-vis fringe communism

Thu, 07/12/2012 - 11:28 | 2610004 ciscokid
ciscokid's picture

Middle class??? What middle class!!!

Thu, 07/12/2012 - 11:31 | 2610020 SheepDog-One
SheepDog-One's picture

'Middle class' today seems to be those who can afford bottled gas for their camp stove. Or really, those who can still pile up more debt....theyre 'doing well', see.

Thu, 07/12/2012 - 11:29 | 2610008 chistletoe
chistletoe's picture

can you say "strike"?

 

we don' need no stinkin unions!

 

we ain' workin on Maggies farm no mo'!!!!!

Thu, 07/12/2012 - 11:30 | 2610011 LawsofPhysics
LawsofPhysics's picture

What bullshit.  Paper-pushers try and make things complicated in order to justify their existance.

State the problem plainly - Captial and resource mis-allocation and mal-investment!!!!!  Lack of REAL consequences for bad behavior.

The left right bullshit is just that, bullshit.

 

Thu, 07/12/2012 - 12:21 | 2610160 gnomon
gnomon's picture

NO!!!  It is not bullshit!  Those who live it, rather than profess it,  know that conservative thinking, practices, and lifestyle always trump liberal (left) counterparts in the REAL WORLD.  And thus it will always be!  

We can not help that those we vote for are quickly "captured/co-opted" by the Beltway Machine for various reasons.  

For example, when TSHTF one better be living in a CONSERVATIVE region of the country as opposed to a LIBERAL region of the country.  No one with half-a-mind can deny that FACT.

The Blue States are booby-hatches already.  What will they be when things really go south?

 

 

 

 

 

Thu, 07/12/2012 - 11:30 | 2610012 Occams Aftershave
Occams Aftershave's picture

Great articulation of many reasons..

Another simple thing : govt workers all get juicy defined benefit retirement payouts for life.  Private sector workers have to suffer with 401k risk AND pay for the govt payouts, directly or indirectly.

 

Now THAT's a squeeze.

Thu, 07/12/2012 - 12:11 | 2610130 Ricky Bobby
Ricky Bobby's picture

I know this is just anecdotal but most of the prosperous people I know are payed by the state in one form or another. My less fortunate friends are in the private sector.

Thu, 07/12/2012 - 12:29 | 2610184 Never One Roach
Never One Roach's picture

My mailman makes $80k a year and the pediatrician next door makes $92k a year.

The mailman has excellent penison plan and health benefits and works 8-4. The pediatrican has minimal of both and works extra at nights "moonlighting" in a local ER so she can pay for her health insurance and retirement. They both do an excellent job from what I can tell. I can't put my finger on it but it still seems out of whack.

 

Thu, 07/12/2012 - 11:30 | 2610013 geewhiz190
geewhiz190's picture

well put, now what?

Thu, 07/12/2012 - 11:31 | 2610019 midgetrannyporn
midgetrannyporn's picture

The middle class got corzined.

Thu, 07/12/2012 - 11:32 | 2610021 I Am Not a Copp...
I Am Not a Copper Top's picture

This market is a fucking joke.  There I said it and I feel better.  Now I will read the article.

Thu, 07/12/2012 - 11:35 | 2610028 Dr. Engali
Dr. Engali's picture

What kills me through all of this crap is that people are still fighting over who is better the red team or the blue team. They can't see both teams are fucking them.

Thu, 07/12/2012 - 11:48 | 2610056 geewhiz190
geewhiz190's picture

how better to stay in control than to pretend that there are meaningful dirfferences between the 2 sides? this charade has been going on for centuries. all they need is to stoke the fires of partisanship...just keep telling lies until they become the truth.

Thu, 07/12/2012 - 12:04 | 2610099 PulpCutter
PulpCutter's picture

Total bullshit - you make no logical sense at all.  The better way to let the crooks stay in control is obviously to pretend that there are no differences. 

Hello?  Pretending there are no differences is for all intents and purposes the same as not having the right to vote. 

America has the lowest voter turnout in the world - substantially below the world average.  Into the resulting power vacuum have stepped the special interests, and some of the corporations - anyone who cares enough to try to 'tilt' things their way.  Democracy counts on an electorate that's able to critically think about the propaganda that's spewed their way - like Smith's post, here, and the Tea Party's lying bullshit. 

Thu, 07/12/2012 - 12:13 | 2610135 Ricky Bobby
Ricky Bobby's picture

Pulp fiction the latest iteration of the apparatchik boot licker.

Thu, 07/12/2012 - 12:21 | 2610149 PulpCutter
PulpCutter's picture

At the risk of repeating myself - explain how the following vote tallies are consistent with your assertion that "there's no difference between the two parties".

House roll call on Gramm-Leech-Bliley (repealing Glass Steagall): 57 no votes; 51 Democrats, 5 Republicans

Senate roll call on GLB: 8 no votes; 7 Democrat, 1 Republican

House roll call on 2006 extension of Patriot Act: 138 no votes; 124 Democrat, 13 Republican

Senate roll call on 2006 extension of Patriot Act: 10 no votes; all Democrat

Actually, the boot licker would be the one who voted Republican because he believed it when told the GOP was for "were for individual liberty and personal responsibility", despite the above voting record.

Thu, 07/12/2012 - 12:21 | 2610165 Raymond K Hessel
Raymond K Hessel's picture


Idiot, are you saying that there were only 10 Democrats in the Senate for the 2006 extension of the Patriot Act?

The tallies are planned by each party so that legislators that are weak in their districts can appear to be centrist in the hopes of reelection.  None of the Republicrats or Demopublicans vote their conscience.

Thu, 07/12/2012 - 12:25 | 2610170 PulpCutter
PulpCutter's picture

Wow - does the bold make your idiocy more convincing to you?  I was always told people shout when they start to realize they're wrong.

Light bulb starting to come on, is it?  Don't think so hard that you fall down, though.

Thu, 07/12/2012 - 12:38 | 2610226 Raymond K Hessel
Raymond K Hessel's picture

Cass?  Cass Sunstein?  Is that you again?

Thu, 07/12/2012 - 13:00 | 2610228 PulpCutter
PulpCutter's picture

Here, I'll walk you through it slowly.  Yes, most career politicians do not exhibit a 'conscience' in their legislative behavior.  What they DO exhibit is a finely-tuned sensitivity to whether they'll get re-elected or not.  When Americans signaled, 1980 to 2008, that the only thing their voted reacted to was the short-term health of their wallets, politicians followed suit.  Corruption or it's absense simply has not been reflected in the vote totals - politicians figured "hey, if the voter doesn't care about corruption, why the fuck should I?", and gorged themselves. 

If, conversely, corruption starts to play a role in voting behavior...few are quicker to pick up a new scent on the wind than a veteran politician.  Like any other issue, it doesn't have to be a night & day difference.  Vote for the less corrupt guy.  You're trying to make it a morality play: "I'm not voting for any corrupt politcian" - but all that means is that you're not voting.  Think of it as voting for the guy who is more in favor of drilling for oil, or moving to greener energy (your choice).  Most politicians support both forms of energy to some extent - and you're comfortable voting for the one who's simply more in line with your views.  Corruption is not different.  Should be, but as adults living in the real world, we know that it simply is not.

Vote for the less-corrupt. 

Didn't you guys have high-school civics classes.  We spent a good deal of ours stoned, or drinking Romilar, but still managed to pick up a little bit.

Thu, 07/12/2012 - 13:06 | 2610330 Raymond K Hessel
Raymond K Hessel's picture

Ohhh. Ohh.  Ohhh, okay.  I get it.

You're saying vote for the less corrupt.  Why didn't you start with that?

Vote Democrat!  We're less corrupt.

Now that I know you were stoned in civics classes, it makes sense to me now.

You. Are. A. Neo. Maxed. Zoom. Dweebie.

 

Thu, 07/12/2012 - 11:55 | 2610075 Totentänzerlied
Totentänzerlied's picture

Partisan politics:

Two slaves, each with a different master, are talking, one says, "My massa only whips us 3 times!", to which the other responds, "Oh yeah? Well mine only rapes the women-folk occasionally!"

Thu, 07/12/2012 - 12:18 | 2610153 WillyGroper
WillyGroper's picture

Ha-3 don't get it.

Thu, 07/12/2012 - 11:36 | 2610032 Everybodys All ...
Everybodys All American's picture

Where are the prosecutions? There are none and that's the problem.

Thu, 07/12/2012 - 11:46 | 2610038 Yardfarmer
Yardfarmer's picture

i especially like those plunging lines on corporate profit in late 2008, indicating the catastrophic corporate collapse which should have occured averted only by Hank Paulson's blackmailing the spineless Congress and threatening martial law while extorting $700 billion from the US Treasury which promptly went out the back door to his confreres at Golman Sachs et al. The socialization of losses and the privitization of profits. The greatest ongoing theft in history and in broad day light with the cameras whirring. nauseating.

Thu, 07/12/2012 - 11:43 | 2610045 SheepDog-One
SheepDog-One's picture

Yea and for all the talk of markets selling off due to lowered QE hopes, and must sell off lower to regain those hopes....theres markets now recovering all losses again.

Thu, 07/12/2012 - 11:45 | 2610047 Gringo Viejo
Gringo Viejo's picture

When you live in a union dominated state, where every fuckin' janitor is promised a 6 figure pension and free medical care, cities hence people, get bled dry.

Thu, 07/12/2012 - 12:01 | 2610091 bobnoxy
bobnoxy's picture

Yeah, that's right. It's the janitors, teachers, cops and firemen making $40k a year that tanked the economy, not the bankers who bleed states and cities with unaffordable, fee-loaded deals, or state and local politicians who piss the money away and load them up with debt during the boom years.

Do you ever stop for a minute and actually think about what you're writing?

Thu, 07/12/2012 - 12:49 | 2610265 Gringo Viejo
Gringo Viejo's picture

Actually I think that as an old free-market capitalist, I'm encountering more and more younger, socialist products of the public educational system at ZH. The very fact that you feel public employees should be allowed collective bargaining rights to suck off the taxpayer's teat, tells me all I need to know about you.

Thu, 07/12/2012 - 13:01 | 2610312 bobnoxy
bobnoxy's picture

I think what you're really saying is they shouldn't be allowed decent pay and benefits.

I thought you dumb ass Republicans...sorry, Libertarians believed in incentives. Disencentivize your public sector workers, and where are you, and your little town then?

This might hurt a bit, or a lot, but think it through for once.

Thu, 07/12/2012 - 15:48 | 2610864 MeBizarro
MeBizarro's picture

It's both and the numbers show that. Ugh.

Thu, 07/12/2012 - 11:46 | 2610051 Bartanist
Bartanist's picture

Neofeudalism? ... yeah, I guess one could apply Machiavellian teachings where corporations have become borderless feudal states and CEOs the new 'princes'.

It sure seems that global financialization has made the global financial system a much larger and interconnected version of the S&L debacle. Expand parabolically or implode.

Thu, 07/12/2012 - 12:21 | 2610164 WillyGroper
WillyGroper's picture

At least some crooks went to jail under Bush I. I understand Ivan Boesky is living off of alimony from his xwife. 

Thu, 07/12/2012 - 11:49 | 2610058 Turin Turambar
Turin Turambar's picture

Fractional Reserve Banking Central Banking and fiat currency are the reason.  It's really that simple.

Thu, 07/12/2012 - 11:50 | 2610062 americanspirit
americanspirit's picture

This is brilliant work IMO - and in one sense I don't mind the come-on that you have to sign up in order to get access to his 'solutions'. However, I am just constitutionally opposed to teasers, however brilliant and justified ( a man has to get paid for his work) they may be. My guess is that Part Two is a combination of Emerson's "Self-Reliance" and that deathless chant from the sixties - tune in, turn on, drop out.

At any rate, thanks for the finely-reasoned analysis of our problem. Too bad I'm not going to be able to read your solution.

Thu, 07/12/2012 - 12:03 | 2610086 Maos Dog
Maos Dog's picture

You don't have to pay for the solution, it's posted here everyday for free:

 

1) ABCD (Anything Ben Can't Destroy)

2) Gold and Silver

3) Rental Real Estate

4) Empty your trading account, only leaving "Play Money" that you can afford to lose

5) Guns, food, fuel

 

I am sure whatever advice you would pay him for would be somthing like the above or some combination thereof

Thu, 07/12/2012 - 11:53 | 2610069 Diesel Seven
Diesel Seven's picture

Ben is telling all of us (not in so many words) what to do to save ourselves (for a little while longer). Borrow (or sell your children to buy SPY) and you will be rewarded (until all hell breaks loose--someday). If we go to NIRP on the treasury curve, then you could expect high-quality paper (multinationals) to have very low cost of capital for debt. The simple Dupont equation shows us that ROE - Profit Margin x Asset Turnover X Financial Leverage (assets/eqty). Notice if you use debt to purchase assets (or stock)--all else equal-- ROE will Buzz Light-Year to infinity and beyond. Too bad about the "all else equal" part. Ignoring the potential for mining some asteriods or Uranus for additional resources, our wonderful global macroeconomy is tied to a finitie set of real assets--corn comes to mind today. Play with some numbers and you will see that based on per capita resource utilization China and India could never aspire to obatain the humble middle-class American's lifestyle, the western world would also need to drop to move toward a "global (NWO?) equilibrium . . . so some day . . . probably because of social instability or some other catalyst, China will decide that that the status quo is no more . . . but until that time, take out a home equity withdrawal, open a futures account and buy some S&P 500 e-minis . . . aww, shit, forgot that the average American has little or no equity--better make babies . . .

Thu, 07/12/2012 - 11:57 | 2610080 DavosSherman
DavosSherman's picture

Prozac nation

Thu, 07/12/2012 - 11:57 | 2610081 Troy Ounce
Troy Ounce's picture

 

 

No growth in a balance sheet recession.

 

So, what are we going to do about it.

 

How can we hurt banks and governments?

Thu, 07/12/2012 - 12:25 | 2610181 Raymond K Hessel
Raymond K Hessel's picture

You might hurt the banks by pulling your money out of them and putting it into your own business or into precious metals you can hold in your hand.

It is possible to hurt the governments by relying on your own home grown food, barter, and any economic activity that doesn't show up on credit cards, credit reports, tax returns, etc.

 

I don't think either is a long term solution.  Long term, we need to rethink government, central authority, etc.  I'm waiting for Peter Thiel to finish building his ark so I can climb aboard.

Thu, 07/12/2012 - 12:04 | 2610108 Fix It Again Timmy
Fix It Again Timmy's picture

According to the Chinese, America have large middle crass....

Thu, 07/12/2012 - 13:21 | 2610381 Bob
Bob's picture

According to the old Soviets, Americans lived in a slavish trance of mindless consumerism supported by imperialistic exploitation of the rest of the world. 

Oh . . . wait a minute.

Hey, at least it worked!  Too bad the middle class is now getting cleaned out and returned to the dirt from which they sprang. 

At least it's fair. 

Unlike HFT, of course.  

/sarc 

Thu, 07/12/2012 - 12:08 | 2610119 GeorgeHayduke
GeorgeHayduke's picture

The predatory Colonial Capitalists ran out of 3rd world countries to exploit so they started preying on the middle class in all countries. The money junkies will not be denied until they have bled everything dry. The question is: how long will the livestock put up with them? Quite a while from all appearances so far.

Thu, 07/12/2012 - 12:08 | 2610121 nah
nah's picture

you missed that faith is moving from religion to the supereconomy as well

.

churches are just the moral equivilent of bars

Thu, 07/12/2012 - 12:10 | 2610127 Shizzmoney
Shizzmoney's picture

The middle class gorged on debt for 30 years as a “work-around” for stagnant income, and its wealth rose as its investments in housing and stocks reached bubble heights. Now that the credit-based expansion of asset valuations has reversed, middle class wealth has been gutted even as its income is largely devoted to servicing underwater mortgages, high-interest student loans, and other household debt.

Who else gorged on debt? Corporations.

Those "profits" aren't really profits at all.  As magically as that money was created to fnd their enterrprises, they are also as quick to go away once the market knows the gig is up.

The majority of the profits, and expansion, by corporation is based upon debt.  Debt issued by big banks.  What happens if THEY fail?

Thu, 07/12/2012 - 12:13 | 2610137 sschu
sschu's picture

The biggest destroyer of the middle class is inflation.  The eroding of the purchasing power of the dollar to which increased wages can never keep pace along with the increase in taxes from bracket creep will insure the middle class can never draw even much less get ahead.

Inflation is the evil of all time, look at history and many of the major social disruptions are due to it, French Revolution, Weimar, and Rome.  

And we have a central bank and politicians wedded to the idea that "a little" inflation is good, it helps get the "economy going."  And the primary reason for this inflation are the actions of the central bank.

You want to make the middle class poorer and more dependent on government?  Inflation is your solution.

sschu

 

Thu, 07/12/2012 - 12:41 | 2610235 skipjack
skipjack's picture

Please stop with the "crony capitalism" bullshit.  That's a meme promulgated by statists  to make you despise capitalism.  Call it what it is - fascism, or if you don't like that, corporatism.

What it ain't is capitalism.

Definitions matter.

Thu, 07/12/2012 - 13:09 | 2610343 Raymond K Hessel
Raymond K Hessel's picture

You, sir, are a genius.

Definitions do matter and fascism is what we are operating under right now.

Thu, 07/12/2012 - 17:17 | 2611018 Bob
Bob's picture

Actually, I think "crony capitalism" is a term promulgated by the tools of predatory honest to God capitalism that makes us think, Thank God!, it has nothing to do with real capitalism. 

No doubt the commies play the same sad tune about their downfall, "but it wasn't the reeeeeeeeeeel thing!"

Funny thing is we're still blaming the commies!

Now that's some crazy shit there.

Thu, 07/12/2012 - 12:53 | 2610279 Snakeeyes
Snakeeyes's picture

It is more complated than "banksters are evil!"

Take the government's role in the housing market and ENCOURAGING borrowers to act stupdly and do things that aren't in their best interest.

Holder and Attorney Generals are acting as economic agents to stimulate housing during an election year.

http://confoundedinterest.wordpress.com/2012/07/12/wells-fargo-settles-f...

Thu, 07/12/2012 - 13:03 | 2610320 Diogenes
Diogenes's picture

According to the charts when labor is fully employed and paid well the whole economy does well. When labor goes down the drain everybody goes down the drain except the pig men.

Hmmm what can we learn from this?

Thu, 07/12/2012 - 13:10 | 2610348 Raymond K Hessel
Raymond K Hessel's picture

Deport the unemployed so that our numbers look better?

Thu, 07/12/2012 - 13:11 | 2610350 Cisco Kid
Cisco Kid's picture

I see the anti-govt. worker rants continue here, there and everywhere. To be "fair and balanced", many peeps complaining now should have become govt workers 20 years ago to reap the "rewards." Why didn't you,,,.? Many of you were making much higher salaries then, or flipping houses, etc....wherever the money was. Civil service workers always have traded off higher salaries and perks for long term stability. So now, unfortunately, your private sector imploded,and you get played into the witch burning class warfare blame game.

Sorry for your misfortune, but the govt is spending taxes on far worse things....like bailing out AIG. People making decent salaries spend money...AIG. And the rest of the corporate finance crew just suck the blood out of you...and your mothers.

Thu, 07/12/2012 - 13:14 | 2610359 Raymond K Hessel
Raymond K Hessel's picture

No government employee where the education requirement is a high school diploma should be making six figures.  Not even in NYC where I'm from.

There are trash men making as much or more than teachers.  Please.  Quit it.

Thu, 07/12/2012 - 13:28 | 2610413 Bob
Bob's picture

Leaping to the defense of teachers?

Hilarious. 

Divide and conquer.

Thu, 07/12/2012 - 15:54 | 2610884 MeBizarro
MeBizarro's picture

I would definitely support moving away from defined benefit to defined contribution for teachers and instead boosting initial salaries up front to attract more highly qualified people. 

Thu, 07/12/2012 - 16:57 | 2611097 blunderdog
blunderdog's picture

I personally would LOVE to get a job cleaning the subway stations. 

Those folks are grossing around $57K/year and they can smoke weed before they go to work.  Plus they get these nifty reflective vests to wear.  I'm sure the benefits/pensions are going to get torn to pieces, but I'd haul trash and spray disinfectant on anything the MTA says for that kind of money.

They're not hiring, though.  For some reason, the MTA is going broke, despite raising the fare every year.  Whoda thunk?

Thu, 07/12/2012 - 22:08 | 2611748 Lord Koos
Lord Koos's picture

$57k (gross, not net) to live in NYC, whoo hoo.

Fri, 07/13/2012 - 09:25 | 2612534 blunderdog
blunderdog's picture

For most, it's a damn cool place to live, and they're already doing it on far less.

If I didn't like NYC and wanted to save money, I'd move to Wichita.

Thu, 07/12/2012 - 13:26 | 2610399 Watauga
Watauga's picture

If people choose to live in any sort of structured society, there will be some leadership group that defines the structure and enforces its rules.  That leadership group is government.  Once a people enters into the structure and grants power to its government, the perpetual battle over power begins. 

The majority of colonists supported the effort to separate from the government defining the rules in the mid-1700s.  Once they won independence, the colonies formed a new government under the Articles of Confederation.  The people, through their elected State representatives, CHOSE this form of government.  They granted to this government extremely LIMITED power to do some very basic things, and no more. 

However, in the several years under the Articles, most of the colonists recognized that they had to cede additional power to the central government to make a union of States work.  Hence, the Constitutional Convention and, ultimately, the Constitution.  WE THE PEOPLE means just that--the people of the States, through the States, CHOSE to grant the additional powers to the central government under the new Constitution.  They granted additional powers, but not unlimited powers.  Indeed, the entire enterprise was about striking a balance of powers between the individual, SOVEREIGN States and the central government.  Until 1860, the scheme worked well for many, not so well for many others. 

LINCOLN (Abraham Lincoln, Northeastern monied interests, rising industrialists, anti-slave activists, Midwestern schemers and scammers) changed the game entirely by invading the Confederate States of America, a sovereign nation, and imposing the WILL OF THE CENTRAL GOVERNMENT upon those who had chosen to exercise their power to leave the union.  In short, he destroyed State sovereignty, individual liberty, and any limits on the central government.  The United States of America, as envisioned and formed in the late 1700s, was destroyed.  Ever since, the central government--LEVIATHAN--has simply chosen how much power it wishes to exercise and when it wishes to exercise it.

So, we end up with tyranny.  What else is Obamacare but the imposition of the will of a minority against the will of the majority?  What else are our undeclared wars, in obvious contravention of the clear language of the Constitution?  What else are the countless laws and regulations under which we try to live? 

We, as a people, want to trust in the Constitution, believe in its ideals, have faith that our elected leaders will abide by it.  But the reality of the last 150 years, and particularly since King FDR, the Constitution has been rendered meaningless in all practicality. 

It is all about a group of people creating a structure to order their intercourse (no, not sexual intercourse, for any sophomoric minds reading this).  In our case, WE THE PEOPLE thought we had created a system that would limit the central government.  We did not adequately prepare for tyrants such as Lincoln, FDR, LBJ, or Obama.  THEY wipe their behinds with that piece of paper and flush it down the toilet.  THEY define their power (e.g., Executive Orders to circumvent the law).  THEY define our liberties.  The nation was created as a "nation of laws, and not of men," but it has been stolen by evil men. 

The ONLY way out of the mess is to REORDER, or RESTRUCTURE, from scratch.  The only practical way to do this is for each State to restore its soveignty and order itself anew.  Any interstate unions that follow can devise schemes to structure the unions.  But the United States of America, as currently constructed, is tyranny, plain and simple, with unlimited central government controlled by evil men.  So, time to put down the Constitution, since it is has been rendered obsolete, and pick up the Declaration.  Now, what is that language at the beginning?

Thu, 07/12/2012 - 13:33 | 2610437 AnAnonymous
AnAnonymous's picture

Excellent US citizen post.

Thu, 07/12/2012 - 19:03 | 2611351 prains
prains's picture

nine iron

 

you really need to work on some new material

Thu, 07/12/2012 - 16:51 | 2611080 blunderdog
blunderdog's picture

Good idea.  So just stop paying your Federal taxes and stop cashing any Federal dole-checks.  If they come after you, go to your home State's embassy or governor's house and request asylum as a political dissident.

If that catches on, you'll have totally solved all the political problems here. 

(You may want to read your home state's Constitution a few times just so you know what you're dealing with.)

Thu, 07/12/2012 - 13:57 | 2610508 shuckster
shuckster's picture

If you had a company in the US in the last 100 years, and made anything more than $0.25 in doing so, you owe that success to those who made the system safe for you to do business. The Irish immigrants getting out of a boat and getting sent  to the front lines of the Civil War, the guy who fixes the street light so you don't get plowed on the way to your high rise office - the 19 year old kid who got his hand shot off in Kabal last summer - these people are the only reason that you can open up shop in the morning, much less get out of bed because your house isn't being invaded by marauders. You want to see Atlas Shrug? See what happens when these people go on strike. Try getting your mail. Try turning on your water. Job creator? You create jobs? You underwrite mortgages so these people can give you their life savings then be kicked out of the home they supposedly now own? You create menial jobs that take able bodied, able minded people and reduce them to order-taking and phone answering drones, devoid of life and purpose. Your jobs rob people of life. You exist to manage the cattle, so that they can stay calm while marching slowly to their premature death. A death which you profit from through life insurance. A death which you profit from through cancer treatment. A death which you profit from by selling them a $5000 casket - taking their dignity even as they descend into the earth from which they came. You are the vampire class. You are not Atlas, you do not hold the earth on your shoulders, you hold it wrapped in your tentacles

Thu, 07/12/2012 - 14:09 | 2610550 Watauga
Watauga's picture

Seriously?  What would you have anyone do, simply roll over and die?  It seems to me we are all in this together, and good business leads to good jobs for good people.  Greed for money, greed for power, greed for control--as exercised by some big business and most of big government--seem to be the problem.  90% of businesses out there are contributing as much, if not more, than they are taking out.  Sure, we all benefit from the military service of others, and the electricians, and the plumbers. . .  but those hard working Americans benefit from the rest of us, one way or another.  What a very strange rant.  I am almost at a point where I want to urge you to get help.  Need we do that?

Thu, 07/12/2012 - 17:21 | 2611156 Bob
Bob's picture

I think it would spare everybody a whole lotta grief if those 90% of the businesses would simply step up and condemn the other 10%. 

But they don't.  Facts are facts.  They're tools at best. 

Don't blame the ignorant for "misunderstanding." 

Thu, 07/12/2012 - 14:04 | 2610540 Bob
Bob's picture

Nice work, Charles!  Financialization seems to be an intellectual orphan in the finance community.  Sometimes I can't help wonder if they might actually like financialization . . . as long as somebody else pays the bill and gets the blame. 

Nah, couldn't be. 

Thanks for the tour of esoterica. 

Thu, 07/12/2012 - 15:37 | 2610826 TheObsoleteMan
TheObsoleteMan's picture

The Rockefellers never got over the SCOTUS decision that ordered their empire be broken up. They {and almost all of the uber wealthy} HATE free, democratic institutions that serve all people, not just them. So, they set out a plan to capture them, and destroy their enemy {the middle class}. Touche. They accomplished both goals. To qoute Papa Bush, "The consolidation of money, into tighter, righter hands" has been under way for decades now. The american/european elites accomplished all this through socialism in europe, and the Foundations {Ford, Carnegie, Rockefeller, Pew, etc, etc, buying media, academia and both political parties of the USA. They all have common goals: The monopoly of information and finance, the destruction of the middle class, a global central government along with it's accompanying single curency {which is electronic}. The USA is needed only until theirfinal  objectives are met. Then the only thing it has left {military} will be folded into the UN 'Peacekeeping" force.

Thu, 07/12/2012 - 15:49 | 2610863 blunderdog
blunderdog's picture

According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065. Overall, median household income adjusted for inflation declined by 2.3 percent in 2010 from the previous year, to $49,445. That was 7 percent less than the peak of $53,252 in 1999.

That doesn't sound right at all.  That sounds like household income, not individual worker wage-median.  Last year I looked, individual median wage was around $27,000.

Oh, well.  Not like it matters.  It should be obvious that all the income gains over the past 30 years has gone to about 150,000 people.

It's too bad we have to keep shifting the tax-burden onto the lower-paid folks, 'cause they ain't got no fuckin' money, honey.

Thu, 07/12/2012 - 15:57 | 2610891 EndGamed
EndGamed's picture

Since 9-11 everything has gone to hell.

Thu, 07/12/2012 - 16:00 | 2610904 Winston Smith 2009
Winston Smith 2009's picture

Financialization hasn't fully stagnated, it's moved.  It's now run up $1 trillion of student debt in the US, those students paying far more than they would have if that bubble hadn't been blown.

Thu, 07/12/2012 - 16:05 | 2610920 MrBoompi
MrBoompi's picture

If substituting debt for income wasn't profitable for the banking cartel and their buddies, they would never have allowed it to happen.

 

 

Thu, 07/12/2012 - 16:30 | 2611012 Laura S.
Laura S.'s picture

I had to repost this article since it is perfect in describing what the hell is going on. The problem is not only middle class. There is also a so called underclass, people who felt from the low class to a social status, where they can not work, are consumed by debts and spend their lives in prisons. Since the corporations realized they can make money by lending to people, the big business could have started. We are where we are now because the incentive was too big for us and our parents. And it is not only problem of the America. Even there are people who chose to immigrate from US to Canada they can not expect something diametrically different. The debts are consuming the middle class everywhere. Only way how to evade is to not borrow money. Don´t take mortgages, don´t buy a new car and don´t take any credit from anyone else.

Thu, 07/12/2012 - 18:14 | 2611263 gnomon
gnomon's picture

They have us by the balls. If a man does not conspicuously consume, he does not get conspicuously laid by the beauties.  Those are the facts, jack. 

That is why those little "pussy edifices" that they call homes were the perfect stalking horse for putting the stake into the middle class.  Men who should have known better were "sucked in" by their wife's oversized desires.  

Ha! Ha! Ha!  HOOAH!!!

Now many of those same men are underwater, unemployed, divorced, and crying the blues.   I pity them.

As Ben Franklin said,  "All cats are grey in the dark".                                                                                

More men should have said, "NO!". 

Thu, 07/12/2012 - 20:05 | 2611510 Cisco Kid
Cisco Kid's picture

Yeah...some of those guys were riding high back then, all arrogant and all....now some of them are squawking about what sanitation men are making, ..youre right...unemployed and crying the blues...maybe a little less of the McMansions...and a little more of the mcmuffins would have sufficed,....?

Thu, 07/12/2012 - 22:04 | 2611744 Lord Koos
Lord Koos's picture

Uh,  not enough good jobs?  

Thu, 08/23/2012 - 18:14 | 2731869 fnordfnordfnord
fnordfnordfnord's picture

What future? It's destroying the present.

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