FedUpUSA

Archive for the ‘corporate power’ Category

The war against the middle class is silent and has grown since the recession started.  We don’t hear much about this because in large part, those falling out of the middle class don’t have the funds to purchase airtime with the media who is wedded to Wall Street.  40 million Americans now receive food assistance.  How often do we hear about this?  Each month we add tens of thousands to this number yet we are somehow in a recovery?  A recovery for which group of people is the question we should be asking.  Clearly the middle class isn’t feeling this recovery.  Nearly 17 percent of our population is underemployed.  But then we add 20 percent of those who are employed who are part of the working poor.  If we look at the top 10 occupational sectors in the U.S. we start to realize that many in the middle class are giving up higher paying jobs to service the needs of a tiny elite class.

Take a look at the top 10 occupational sectors in the U.S.:

Source:  BLS

Keep in mind this group is part of the “fully employed” class.  When we think of those who are employed we tend to think that most work in sectors that offer them a decent wage.  That is not the case at all.  In fact, when we look at the median household income of $52,000 we realize that most people are working in the service sector with lower wages and only boost the stat higher because of the two income trap.  9 out of 10 of the above jobs from cashiers to janitors make median wages from $8 to $14.

“To even reach the middle class median income, someone would need to make $25 an hour.  So even looking at the higher end of the above pay scale for these jobs, you would need to have two people making the top $14 to squeak out the necessary $25 per hour to make the $52,000 median income figure.  Keep in mind the above is the top employment sectors in our economy.  In the past where we had a bulk of our population working in manufacturing making the median income wage with one job, now we have given that up for two jobs in service sector work.  I’m not sure many in the middle class wanted to make that trade off.”

Wall Street wouldn’t mind if most Americans were part of the working poor so long as they can keep their exploiting ways going.  In fact, these banks want to sink these people even further by creating this large class of middle class debt serfdom.  Enormous mortgages, student loan debt, and credit cards are the new chains to keep the working and middle class stuck in financial purgatory.  Keep in mind the money the banking industry funnels out is largely taxpayer dollars so the prison we are creating is largely with our own money.  Wall Street investment banks and the too big to fail financial sector is broke.  They would be nonexistent if it weren’t for the complete and generous handout from the U.S. Treasury and Federal Reserve.  How do they repay the people for this?  They begin by squeezing every ounce of productivity of those still working:

Now this is a fascinating chart.  Even in the worst economic crisis since the Great Depression somehow, we are able to become more productive.  Interestingly enough labor costs have fallen at the same time.  Of course the above translates to middle class workers having to put up with stagnant or falling wages while the bottom line keeps getting better.  But better for who?  The banking industry is juicing this game by gambling on Wall Street and not lending money out to the public.  This money was given to them under the pretense of keeping the loan channels alive for American workers.  So we have record foreclosures and bankruptcies while banks keep making billion dollar profits.  The raid on the middle class is like pirates taking the loot in broad daylight.

Yet the spin is out in full force.  Last month the rise in employment was largely from the government sector:

In fact, we can say that the entire rise in employment last month came because of temporary government work.  These Census jobs fall into the trend that we are seeing.  The middle class has to deal with transient work with no security and in order to have access to any semblance of a middle class lifestyle, must enter into a deal of debt serfdom with the banking elite.  We can see that we have hit an absolute structural tipping point in our society with the amount of long-term unemployed:

This is the largest percent of long-term unemployed in modern record keeping history.  What has happened is essentially the last hit against the middle class.  Without any security whatsoever, many are now unable to find work in a highly service oriented world.  The playing field is not level.  The banking sector fills the air with propaganda of the “free market” yet received trillions of dollars in handouts.  The hypocrisy is incredible and many Americans realize this.  This is why satisfaction with both Democrats and Republicans are at all time lows.  Both parties are beholden to the banking and Wall Street elite that work as a leech and are siphoning off every ounce of productivity from the American working and middle class.

The youth of our country are feeling this deeply:

The above chart would seem positive.  More students are taking summer school as opposed to working.  Yet this trend isn’t happening by choice.  It is happening by force.  There are little jobs for teens since they are competing with adults for low pay service sector jobs!  This is the idea of recovery in the new America.  A banking sector that is swimming in gold coins like Scrooge McDuck while middle class Americans find themselves competing with their own children for lower paying service sector jobs.

So what is the solution then?  How the argument is framed is completely false and the Federal Reserve is merely a protector of the banks.  They want to force austerity on the majority of Americans while banks and their predator executives still manage to keep their taxpayer subsidized yachts.  There is money but it went to the banking sector.  The game is fixed for most in the middle class.  Until we break up the too big to fail banks and have a government that truly represents the people’s best interest, there is little reason to believe that the overall trend will reverse.  The fact that 9 out of our top 10 job sectors are from the low paying service sector is not good news.

My Budget 360

America’s wealthiest 25 percent of households own 87 percent of all U.S. wealth. How the middle class face growing income inequality in the new era of the psychopath corporatocracy.

Posted by mybudget360

A true measure of economic vitality is measured by wealth.  We can look at incomes or other measures of productivity but real wealth is measured by net worth.  Who controls wealth in the U.S.?  According to a study from the Joint Center for Housing Studies the top 25% of U.S. households control 87% of all wealth in the country.  That number comes out to a nice hefty sum of $54.2 trillion.  If we look even closer at income distribution, we will find that the top 1 percent in our country control 42 percent of all financial wealth.  By all measures being able to acquire a piece of financial wealth was the hallmark of the middle class of previous years.

Today we have a society largely in debt to credit cards, auto loans, student loans, and immense mortgage debt.  Net worth is measured by looking at assets minus liabilities and many Americans are lucky to break even while many have a negative net worth.

Even after the current wealth destruction of the recession, our country has grown wealthier and wealthier over time and the trend is clear:

Source:  Wikipedia

Yet more and more of this added wealth is filtering its way to a smaller group and not necessarily the most productive in our country.  In the first quarter of 2010 some of the biggest banks in this country made continuous profits without really adding any benefit to our economy or society:

Source:  ABC News

In fact, many of these banks simply made money by hoarding money and actually lending it back to the U.S. government (who actually bailed them out to begin with).  These weren’t successful companies that produced a solid product.  These are the companies that failed but had politically bought out the right connections.  The U.S. Treasury and the Federal Reserve are designed to protect the top bracket of our society while allowing the systematic dismantling of the middle class.  They call the current process the “free market” but this doesn’t apply to the biggest corporations in our country.  In fact, many have leveraged the current recession to squeeze out every ounce of productivity from their current workers.  Buying out politicians through lobbyist is merely another line item expense on their balance sheet.

Corporations are holding many working class Americans financially hostage.  And if you look at our big trade partner in China, you will see that income disparities are also rising there:

“(China Daily) He said the income difference measured by certain indexes such as Gini coefficient might not reflect the real situation in China as it fails to take the local social welfare system and wealth disparity into account.

“Things could be even worse if we consider all these aspects,” warned Li, citing although the index of the United States is also above 0.4, but expenditure on social security and welfare accounts for about 50 percent of its total fiscal outlay, 40 percentage points higher than in China.

In addition, the assets of the richest 10 percent of the population account for 45 percent of the total residential assets in China, while the poorest 10 percent own just 1.4 percent of the total assets, according to an official report released in 2004.”

Think of those banking profits in the first quarter of this year.  It would be one thing if banks were lending to Americans and small businesses making local communities stronger.  Instead, they are gambling on the rigged stock market which really has become disconnected from every typical American.  Trillions of dollars in bailout funds have been diverted to protecting the banking interest which in turn looks after the interest of the corporatocracy:

Source:  It Takes a Pillage

When you break it down like this, you can see why most Americans have felt very little impact from the historical amounts of bailouts that have gone into the system.  The quarterly profits from the banks should tell you exactly what is occurring.  As local small businesses struggle with the recession and have difficult times accessing loans, big corporations and banks have no problem getting funding because they already have control of most of the wealth in our country.

And contrary to the propaganda out from Wall Street, most Americans earn money from their jobs and not investing or speculating on stocks:

Source:  Survey of Consumer Finance

90 percent of all households earn 70 percent or more of their income from wages (presumably from actual work).  But take a close look at the capital gains line.  The vast majority of Americans get 2 percent or less of all their income from capital gains.  You have to get into the top 10 percent to see any sizeable amount.  And even here, you would have to break into the top 1 percent to see real sizeable gains.  So this idea that the stock market reflects the health of Main Street is bogus but is a form of consumer manipulation to get more people into the rigged stock market to continue to fund the corporatocracy hunger for more capital.  Now that they have control of the government, they don’t care if average Americans jump into the game.  It is easier to rob it directly from bought off politicians.

Even as the recession has put our underemployment rate to 17 percent and has wiped out trillions of dollars in aggregate wealth, those at the top have actually become richer relative to most Americans.  You see many of these banking PR representatives with their sob stories of how much money they have lost.  It is nonsense because money is worth what you can buy with it.  So now, that millionaire banker won’t have to spend $20 million for that private home, he can have it for $10 million.  So his salary might be off by 10 or 15 percent but his buying power just increased because most people are struggling with wealth destruction if they work in the real economy.  Or these large banks can hire cheap labor since so many people are unemployed and use bailout funds to turbo-charge their bonuses.  This is how America is looted by the corporatocracy.

The corporation in the eyes of the law is seen as a person.  Yet it is driven by:

-The bottom line

-Disregard for workers long-term stability

-Ignores long-term objectives

-Narcissistic behavior

In fact, it is a casebook psychopath.  Yet under the law it is treated as a person and presumably, is acting under a moral obligation to society.  If you went out and robbed a bank, you will go to prison.  If a corporate bank robs the U.S. Treasury, it gets even more money with the threat of “we are too big to fail.”  So it should be no shock that banks are raiding the public trust and buying out politicians even though the current Wall Street structure is damaging to the health of America.  These people are so delusional preaching their “all things are great” mantra and forget to see that the current structure has led us to the biggest economic calamity since the Great Depression.  Clearly something has failed here.

If we keep allowing the current structure to play out the middle class will slowly fade away and be replaced by an even stronger corporatocracy.  The growing income disparity should give you a quick hint where things are heading.  The fact that you can’t pay for college without going into massive debt through the banks is another hint of where we are going.  This falls into the new paradigm of corporate rule because they would love nothing more than a giant population of mindless drones who simply go out and purchase their goods without questioning the system.

Goldman Sachs, Chess, and the Godfather

By Damon Vrabel 

Between the SEC charges and the congressional panels, the government is finally doing its job going after Goldman Sachs, right?  And this last week in April ends with the Justice Department picking up the baton, which puts Goldman under threat of criminal prosecution.  Things have suddenly gotten serious.

Two weeks ago on a radio interview, I suggested the SEC investigation will either be a chump charge to pacify the masses or it might potentially be the beginning of the sacrifice of Goldman Sachs for reasons explained below.  The Justice Department referral makes the latter more probable.  Criminal prosecution is indeed appropriate.  Goldman deserves to be broken up.  In fact, all banks of that size need to be broken up so that power is passed down to state and local economies, and countries are no longer held hostage by the mega firms.  Is that what is happening here?  Are we being saved from the financial parasites that have destroyed our economy?

Childlike Perspective:  Left vs. Right

The left thinks so.  The major media establishment is suddenly, as if by script, trumpeting the idea that government is cracking down on boogie man Goldman Sachs.  This view says, “Yey! Our good government servants that have our best interests at heart are fixing those greedy Wall Street parasites.”  That’s the entire purpose of the congressional panels—a stageshow for the Wall-Street-funded media to promote this narrative. But those very same government officials were the ones who did what Goldman Sachs representatives and the real powers behind Wall Street told them for the last 20+ years.  They still get all of their money from Wall Street.  Have they suddenly turned on the very people who feed them?  Of course not.

The right thinks this crackdown is bad because Wall Street and Goldman represent a benevolent free market.  This view goes beyond childlikeness and approaches insanity, like Goldman CEO Lloyd Blankfein thinking of himself as an angel from God.  Wall Street, the Fed cartel, is a government creation.  There is nothing “free market” about it.  It is the most powerful monopolized cartel in the history of the world.  Conservative media mouthpieces who trumpet Wall Street do not have a clue about our monetary system.  They have never looked beyond the false religion of neoclassical economics, which conveniently ignores the issue of money.

Conclusion: rule out the simplistic view of the left and right.  The Washington DC government has served Wall Street and big business for decades.  There is no divide between big government and big business.  They go hand in hand.  Neither could exist without the other.

Adolescent Perspective:  “They’re All Criminals”

Another group of people, far more accurate than the left vs. right disciples, think that Wall Street is just a predatory bunch.  Bringing down Goldman Sachs would therefore be a good thing in their view.  But they think DC government is a predatory bunch as well.  They see through the salesmanship and PR pumped through the corporate media.  They understand that frat boy behavior creates a self-serving clique whether on Wall Street or in Washington DC.  In fact, they understand how the boys in both groups get their power from working together.  It is all one club. 

Conclusion:  as correct as this view is, it leaves us paralyzed.  Adolescents are brilliant at seeing through adult facades, but they may fail to see the higher level picture. 

The Godfather:  Who the Criminals Work For

The key to what is really happening is to understand that the suits we see on television are not in charge.  A bunch of random self-serving people would not be able to pull off strategic, coordinated plans—the adolescent view is only half correct.  There are people far above the pay grade of a senator like Chris Dodd or a wage servant like Lloyd Blankfein.  He may be the top operating officer at Goldman, but by definition that means he is a servant of the ownership class—the Anglo mafia—that controls all money in the system.  The fact that he earns a wage and gets a W2 at the end of the year means he and his firm are not in charge.

Goldman Sachs is effectively a capo regime.  It is a powerful player in a game of controlled chaos.  It was given a territory and was then expected to deliver the goods.  And Goldman delivered better than all the other capos in the system.  It reaped the rewards.  Goldman’s officers were paid better than any other regime throughout the last several decades.  Its hit men were the most productive. The most loyal—Rubin, Paulson, etc—have been inducted into the upper level circle around the Godfather and removed from the stressful street jobs that bring public scrutiny.  Those guys made their hundreds of millions and no longer care whether Goldman exists or not.  And from the Godfather’s perspective, there comes a time when capos have served their purpose.  At that point, their life is in danger.

“The Game of the Century:”  Bobby Fischer and the Queen Sacrifice

But capos typically are not sacrificed unless doing so would serve a Machiavellian purpose.  So what would be the purpose of sacrificing Goldman?  Well, in one of the more famous games in chess history, 13-year-old Bobby Fischer brilliantly pounced on his opponent and guaranteed victory by boldly sacrificing his queen on move 17.  The queen is the most powerful chess piece.  Average people would narrowly play a game defensively protecting their queen and assuming any chance to take your queen would lead to victory.  But that elementary view would be precisely the weakness upon which a true chess mind, a Godfather, would prey.  Beware of the bait being laid in front of you.

Goldman Sachs is very much analogous to a queen in the chess game being played by the ownership class—the richest pools of private capital controlled by multi-generational wealthy families that hover above countries via the central banking system.  It has been one of the most potent pieces on the board for many years, its most recent attack being on the entire nation of Greece.  But as the endgame comes into view, perhaps the most brilliant play to reach checkmate is now the queen sacrifice.  Goldman employees had better be sending their resumes to JP Morgan Chase—a critical chess piece in the endgame that will be protected at all costs.

The Great Global Restructuring

What is the end game?  The ownership class is attempting to restructure the world under a new financial system.  We have had a global currency for a long time—the US dollar—but it has run its course.  Wall Street has leveraged up the dollar as far as possible.  The dollar now holds most nations hostage thanks to the power of the bond market, the central banking system.  The ownership class needs a new debt-based currency and banking structure to maintain control as they pump the capital engine through the 21st century.  This is why the G20 is working feverishly to build up the IMF, BIS, and new global financial rules.  This time the production center will be China rather than the US, which is why China and Japan are the most asset-rich countries in the world while the western world is the most indebted.  The west is on track for decades of slow decline while Asia is on the verge of seeing “the rising sun.” 

So unfortunately the government vs. Goldman Sachs story has nothing to do with reforming Wall Street in the interest of average Americans. Rather it is a strategic move to further the endgame of consolidating Wall Street power, focusing public rage on Goldman to protect JP Morgan Chase, fueling new regulations to clamp down on the smaller banks that we so desperately need, and creating a global structure even bigger than the already “too big to fail” banking system.  This may be setting up one of the biggest, most successful queen sacrifices in history.  We should take the queen by all means—Goldman is a predator.  But heed the lesson from 13-year-old Bobby Fischer.  Be wary of checkmate.

Want to know the REAL reason that government statistics appear to be pointing to ‘economic recovery’?

$10 Billion a Month Freed up Each Month from People not paying their Mortgage. $1.9 Billion of That is in California so People can continue Leasing their SUV Mercedes and Getting Tans. Thanks Bailouts!

Posted by mybudget360

Living in California, the central hub of housing bubble mania, I have come to realize that many people that overpaid for homes are now quickly shifting their mindset to one of non-payment revolt.  With the 24 hours news cycle and instant viral financial information, many are now realizing that strategically defaulting isn’t such a bad option anymore.  In fact, this is now a significant strategy for many.  The corrupt bankers and Wall Street have set the example so people figure why shouldn’t they follow the same path?  But the problem with that is someone still ends up paying.  And that is the prudent middle class.  Look at it this way.  We have 51 million homes with a mortgage.  Over 44 million Americans are paying their mortgage diligently.  Yet our economy is screwed because we are bailing out the bankers and Wall Street but also giving incentives to many others to walk away from their home or game the current bailout structure.

Let us look at the current U.S. mortgage market first:

Source:  Census, MBA

The latest data tells us that over 14 percent of all U.S. mortgages are either 30+ days late or in some stage of foreclosure.  In other words, 7.2 million people are not paying their mortgages.  Yet banks are turning out record profits even though they are bleeding in their real estate cash-flow.  Now let us run a hypothetical here.  The median mortgage payment of those 51 million mortgages is $1,514.  This is actual stimulus for people if you don’t pay that each month.  If you aren’t paying your mortgage you just relieved yourself of your biggest monthly commitment.  So let us run a rough number:

$1,514 x 7.2 million         =             $ 10,931,916,697

So this frees up some $10 billion each month (this is a rough number).  This seems close to what Mark Zandi has calculated:

“(Zero Hedge) No, not crazy. With some 6 million homeowners not making mortgage payments (some loans are in trial mod programs and paying something but still in delinquency or default status), this is probably freeing up roughly $8 billion in cash each month. Assuming this cash is spent (not too bad an assumption), it amounts to nearly one percent of consumer spending. The saving rate is also much lower as a result. The impact on spending growth is less significant as that is a function of the change in the number of homeowners not making payments.

I’m not sure I would say this is juicing up spending, but resulting in more spending than would be the case otherwise.”

Part of the jump in recent spending has come from people flat out not paying on their mortgage.  I can tell you of a case of someone that bought a home here in California.  They paid $700,000 for a home that is now worth $500,000 (if they are lucky).  That is typical.  What is also typical is that they took on an exotic mortgage for the full $700,000 amount.  Last year, they realized that they wouldn’t be able to sell the home and wouldn’t be able to make their new modified home payment.  So once it modified late last year, they stopped paying.  Yet they had the money to pay.  They explained that the bank wouldn’t deal with them until they missed a few payments.  Now, the bank is throwing itself like an obsessed lover to help them “modify” their loan.  The terms now seem nice but they want to negotiate for more.  You have the banking criminals using taxpayer money to negotiate with people that drive around in a leased Mercedes SUV and BMW.  Does this sound like the poor grandma being kicked out of her humble home?  Apparently I’m not the only one hearing and seeing this:

“(WSJ) Some borrowers are being helped by the Obama administration’s foreclosure-prevention program and other modification efforts. Irma Bravo, the owner of a cleaning service in San Diego, recently received a loan workout that lowers the monthly payment on her $522,000 mortgage to $1,736 from nearly $5,000.

“It’s a big, big relief,” Ms. Bravo says.”

Did you get that?  A $5,000 mortgage payment was pushed down to $1,736.  Now wouldn’t you, one of the 44 million prudent Americans want to have this kind of sweetheart deal?  If you want this deal you have to imitate your local crony banker and give them the middle finger and stop paying.  Suddenly, they’ll do handstands and back flips to lower your payment.  The Wall Street system has perverted the foundation of our economy.  Do I begrudge the people doing this?  Not really.  But what I do resent is the fact that banks are using the trillions of dollars in taxpayer money to make these deals work.  If they wanted to use their own money, so be it.  But that is not the case.  And we have many people that fall in this category:

Source:  Calculated Risk

I also wanted to get this data specifically for California:

So today you have roughly 798,000 California mortgage holders not paying their mortgage for a variety of reasons.  Clearly the main reason is the economy is horrible.  But a large number are taking advantage of the situation.  The median home payment in the state is $2,384.  Let us do the math:

$2,384 x 798,832               =             $1,904,414,716

So of the $10 billion in non-payer stimulus, California receives roughly 20 percent of the cut.  And what are people doing with this money?

“(CNBC) The person had an $1,880.00 monthly mortgage payment on which they’d defaulted, but said person’s monthly bank statement showed payments to a tanning salon, nail spa, liquor stores, DirecTV bill with premium charges, and $1,700.00 in retail purchases from The Gap, Old Navy, Home Depot, Sears, etc.”

Well I’m glad some people have their priorities straight.  The fact of the matter is the bulk of Americans, the middle class, are being screwed by the banks, Wall Street, and also the current bailout structure.  The median home price in the U.S. hovers around $170,000.  Why not cap any bailout help to mortgages at that level or less?  Do you feel good that the folks I talked about (who make over $100,000 a year by the way) in California who have a Mercedes and BMW and continue to live in a nice home rent free are able to do so because of your taxpayer money?  This is exactly what is happening.  No wonder why many Americans must feel like fools.

The name of the game is simple.  Get into massive debt, so much so that when you fail, you will then be able to negotiate lower terms because the government enjoys rewarding horrible behavior.  Things like this won’t last long because eventually, the public that is being ramrod into bailouts wakes up and revolts.  Yet this could be a few years or much longer before any of it happens.  Things have gotten so absurd that people are now calling up credit card companies and blackmailing corrupt banks saying they won’t pay on $50,000 on debt unless something changes.  In many cases, credit card companies are changing terms if you sound convincing enough.  Otherwise, if you are one of the majority who honor their debt be prepared to pay higher fees for the smaller group that are milking the system.  This is an absolute war on the middle class.  And why save when banks offer close to zero percent because of the Federal Reserve cartel?

$10 billion a month freed up from not paying mortgages.  No wonder why retail spending has jumped up recently.

The Great American Bank Heist – On the Day we Reach a Monthly Foreclosure Filing Record Banks Announce Record Profits and the Stock Market is up 80 Percent.

Posted by mybudget360

It is rather fitting that on the day we hear about banks reaching record profits once again, because after all it is so difficult to borrow at zero percent and gamble in the stock market and make a gain, that we also find out that March was the highest month of foreclosure filings ever (and we’ve had some bad months).  If there was ever a more clear indication between the split from Main Street and Wall Street this is probably the strongest indicator so far.  I’ll include the charts below but being blunt about the situation, the bailouts worked.  If we define “worked” as boosting banking profits once again while 40,000,000 Americans are on food stamps and 17 percent remain underemployed then all is well again in the economy.  Yet this isn’t what the American people bargained for in the bailouts.  In fact, they didn’t want the bailouts if you remember the massive anger from both aisles calling their representatives.  But the cronies didn’t listen since they receive millions in lobbying dollars and $13 trillion went to Wall Street in the biggest wealth transfer witnessed by the disgruntled American public.

It should be obvious the real economy is still a mess.  The latest foreclosure data is merely a reflection of failed government programs but more importantly, the absolute greed and robbery committed by Wall Street:

Just look at that chart.  We’ve had an 80 percent stock market rally in one year and today, we are at the peak of foreclosure filings.  That is, Americans getting kicked out of their homes because they are unable to pay their mortgages.  So much for banks using that money to help people stay in their homes and keeping the credit markets open as they preached.  JP Morgan announced stunning profits for the first quarter.  How did they make their money?

“(Yahoo!) NEW YORK – JPMorgan Chase & Co. reported a $3.3 billion first-quarter profit on big gains in the financial markets even as the Obama administration pressed for limits on banks’ trading of risky but lucrative investments.”

$3.3 billion is fantastic.  But how did they make that money?

“Investment banking, especially bond trading, generated the bulk of JPMorgan’s profits. The bank said that division earned $2.5 billion, up 50 percent from a year earlier.”

So their gambling division made up the bulk of their profits.  How are they helping out consumers with those billions in taxpayer dollars?

“JPMorgan said it lost $1.3 billion on its real estate portfolios, slightly more than the $1.1 billion it lost the previous year. Signaling that it expects further credit weakness, the bank set aside $3.3 billion for real estate loan losses, up from $3.1 billion a year earlier.

The bank’s losses in its credit card business fell to $303 million, while provision for future credit card losses also dropped to $3.5 billion.”

The formula is simple for these banks.  Use the taxpayer money to enrich their elite class under the guise of helping average Americans.  They have robbed the American people and much of this was all legal.  Yet we all know that there is something royally flawed in the financial system since it is the legislature that develops the laws and many are bought by the Wall Street crowd.  So this 80 percent stock market rally if we dissect it is being propelled by banks gambling:

Source:  Bloomberg

Notice how non-financials (i.e., the real economy) is only seeing a slight uptick in profits?  This probably has to do with 15 million unemployed Americans and another 9 million working part-time looking for full-time work.  But given there are 6 workers for every 1 job opening, things will be slow going.  Unless you are the corrupt banking sector.  In that case, you can borrow at zero percent and buy Treasuries, foreign currencies, stocks, or whatever it is and make money hand over fist while the real economy remains in the trough.  Why would you expect anything to be different?  We have yet to have one single piece of serious legislation hit the table for financial reform.  These banks are back to their same antics.

So what should be done?  Break the banks up.  Commercial banking should become more boring and what it once was, the lubricant to get the real economy going.  Right now it is merely a vampire sucking the blood out of the productive sectors.  Investment banking will be pushed to the edges and if banks want to gamble their own money then that is fine.  But right now they are gambling taxpayer money trying to get back to even while shifting all the toxic credit out of their books.  Privatize gains and socialize losses.  With a system like that, is it any wonder the banks are back to record profits?

And you have to ask yourself how is it that banks while pushing a record number of foreclosure filings are back to record gains?  It is actually very simple.  They can shift the crap to taxpayers as they have through the FDIC, HAMP, suspension of mark to market, and other absurd gimmicks.  Then, they can use taxpayer money primarily funded through the Federal Reserve and U.S. Treasury and then gamble on the stock market.  But don’t be surprised when the market falls through again.  And why wouldn’t it?  The real economy isn’t really improving.  For $13 trillion we sure got bunk but add up the Wall Street market cap and profits and you can see what occurred.

It is a simple formula to understand.  And with no rules being changed, things are back to normal for the banks.  Too bad the other 95 percent of Americans are still dealing with the repercussions of the actual economy.

What does it mean to be Middle Class in 2010? – No College Degree, Massive Amounts of Debt, One Health Crisis from Bankruptcy, and Beholden to the Banking Elite.

Posted by mybudget360

Being middle class today does not carry the financial security that it once carried in the 1950s and 1960s.  Interestingly enough, many Americans at that time did not own stocks yet somehow they managed well because they had access to affordable housing without toxic mortgages and many had the ability to work with one company and have some kind of security from their company.  It was a mutual relationship as even Henry Ford shook the auto manufacturing world by upping wages for his workers.  Yet today, we are being fed distorted information from Wall Street that we need to have this system where workers are disposable entities only to increase the profits of the corporate class.  If people are hurting so much why are we paying billions in bonuses to a small group of people that really haven’t helped the country?  In fact, many of these are directly responsible for our current economic problems.  At the root, this has been the cancer that has eaten away at what it means to be middle class.  Social government welfare for Wall Street and Darwinian capitalism for the rest of us.

The middle class has it extremely tough today not because of random events but purposeful and directed robbery from Wall Street.  This was a methodical and planned dismantling of the system.  First, let us walk through some details of the middle class to create a profile:

Source:  Census

The most common household formation in the U.S. is a married couple.  Certainly this has changed over time but this is the most common arrangement in the U.S.  But this has also led to the two-income trap that we have heard about so often:

Even though nominal wages are much higher today, inflation has eroded the buying power of Americans so much that even two incomes today cannot compete with one income forty years ago.  After all, if you could buy a car with $200 then $1,000 would seem like a lot.  But what is a $50,000 household income when home prices cost $250,000?  This is really the essence of what has broken the middle class apart.  Prices rose to astronomical levels because Wall Street created speculative casino products and injected the virus into the system.  The middle class today is fearful of even having enough to retire.  But beyond even retiring, many people have very little saved:

Now Wall Street would lead you to believe that people should just pucker up and save more.  Bailouts are only for Wall Street folks yet average Americans need to resurrect the ghost of Horatio Alger and pull themselves up from their bootstraps or hope that a rich uncle leaves them a nice inheritance package.  Yet what they forget is that we have a large part of our population that don’t even qualify as middle class:

38,000,000 Americans are receiving some form of food assistance.  These people are living day to day so saving isn’t even in their equation.  They are just trying to get by.  These are the folks waiting at midnight at Wal-Mart waiting for their debit cards to reload just so they can buy food for their family.  Do you think they are interested in investing in the next hot stock?  Even as hard as it is to be middle class, poverty has been amplified in this recession:

10% of all U.S. families are in poverty.  Yet the rate is a bit higher if we actually go by food stamp data.  The average household size is 2.61 in the U.S. so many families are struggling with children as the above data reflects.  Yet you would expect the middle class to have a better chance at going forward but more and more middle class families are entering what is now being called the working poor.

Wall Street and the banking system is at the core of this mess.  They didn’t create poverty but they have amplified it by setting up a system that has now pushed millions of Americans into foreclosure.  Why all of a sudden did Americans start gambling with their homes only when Wall Street got involved?  They have created a new financial fiefdom where they can siphon off resources from the productive sector of the economy all from the comforts of their NY,NY offices.  Even the idea that all Americans own stocks is not exactly accurate:

The top 1 percent control 42 percent of all financial wealth in this country.  And wealth is the key here.  So what if you have a $500,000 home if you have a $600,000 mortgage.  You are not wealthy.  So what if you have a leased BMW but have $30,000 in credit card debt.  You are not wealthy.  This is what Wall Street sold to America in the disguise of wealth.  And people bought it up at the expense of the prudent.  But that veil is now gone.  And who has the wealth?  This is what happens when you make a pact with the financial devil.

We must educate ourselves in order to have any fighting chance to have a solid middle class:

The sad fact above is these stats come at a time when public education is falling by the wayside.  We’ve had some of the cheapest and best public universities the world has seen.  That era is coming to an end as banks run the student loan market and for profit education is charging ridiculous amounts of tuition that are crushing the middle class.  As of 2008 only 27 percent of Americans have a four year degree or higher.  Now how will this number increase in a time when educational costs are going up and wages are stagnant?  As long as you have a population that is unaware of what Wall Street is doing, they can keep doing their robbery in the open.

We also have an aging population:

That 65 and over category is going to explode in the next decade as baby boomers enter retirement.  Many were betting on housing appreciation and unrealistic stock market returns for a long and prosperous retirement.  Instead, Wall Street has taken the money and many will have to work well into their retirement years.  One illness can wreck their entire financial nest egg (if they have one).  The notion that middle class meant a secure retirement is now gone.  And with health care costs rising more and more money will go to this category.  Education and health care are cornerstones of what we consider middle class living and this sector is enormous in terms of employment:

21% work in education services, and health care and social assistance.  This number is likely to increase given demographic trends.  Yet who are we really serving if students go into $40,000, $60,000, and even $100,000 in debt for degrees that don’t provide them adequate training to survive in a corporatist economy?  The banks don’t mind because they can saddle a young person with a stream of income for multiple years and have the government pay the bill.  How about we take banks out of the equation and require people to pay a sizeable portion of their education?  Ironically, this would lower costs.  It doesn’t have to all be upfront but allowing the current system to go on is criminal.  If you want proof look at the housing market.  Now that people have to document some income housing prices have collapsed.  The for profit schools only require 10% of funds to come from the students and then the government matches 90%.  In reality, these schools take that 10% on a credit card so this is really a zero down education.

The story of Wall Street is the story of putting Americans into debt.  If you really want to know where the middle class went you can look at the absurd amounts of debt.  And this idea that everyone is rich is pure propaganda:

Only 34% of U.S. households make more than $65,000 per year.  And that number is now much lower since this is based on 2008 data.  When we look at luxury auto sales they do not reflect the actual wealth in our country.  Much of it is pure debt financing.  All hat and no cattle as they say in Texas.

And we can see inflation eating away at purchasing power:

Just look at 1950.  The median household income could purchase the median home with twice their annual income.  In 2006 it required 4 times that income.  Even in 1980, the median household income could buy 3 cars with that salary.  Today, it is more like two.  And this is even more distorted because we have more two income households.

So the middle class is really facing a struggle in 2010.  But this just didn’t happen.  This was a forty year systematic robbery of the compact Americans had with government and the business community.  Where we go from here really depends on how much people value the middle class and coalesce to bring Wall Street in check.  So far things aren’t looking good.