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Monday, September 29, 2014

Economic Stories of Relevance in Today's World -- September 28, 2014

Hound Notes: I didn't put out an Economic Stories of Relevance in Today's World last week because I was sick, there were other priorities and I was enjoying  the back and forth between Harry and Talferris about the Privatization issue.

In a perfect world, I would agree with Harry and I do topically believe that Big Government steals our liberty. The question should be asked, 'Has government growth correlated with population growth and economic activity?' I believe that the growth has outstripped any reasonable parameters that would justify said growth... and that is at every level of governance.

One need only look at the devaluation of currencies through the growth of the money supply and the accumulating debt associated with that growth. Those in favor of Social Government have fed the corporate beast that they expressly state time and time again that they loathe so much. When monies are borrowed (debt) through the issuance of bonds, who is buying these instruments? Mainly corporate financial interests. This ties these corporate interests to the government. The question begs to be asked, 'Who is going to act in whose interests?'

Let's also get to the main point against what Harry is espousing. When most everyone associated in the highest governmental positions put their personal interests to the fore, then who is going to be there to ensure the people (the public interest) don't get ripped off.

I have been saddened by the reality I have witnessed here in my middle age. There are very few people that I trust, because I inquisitively attempt to understand people's character. Most people in our society live with blinders on and they are ignorant as to the effect they have on others through their interpersonal interactions. Personally, I don't want to run over others and I'm not going to allow others to run over me. I refuse to be a willful victim. I am not a Me First! (Me, Me, Me, me, Me) Person.

What we have is a moral dilemma. There's a storm a comin' and you better make peace with how you are going to deal with the struggle. I truly believe that "Preparation is the Key to Success." Look up the term Mise En Place. There is a Reckoning coming and it is because people like to kick the can down the road... Have your cake and eat it too. Maybe some of you think you can do that forever?


The Secret Slave Labor Ring Coming to Your Neighborhood
- The Daily Reckoning - Chris Campbell - September 26, 2014
- ...“America has about 4% of the world’s people,” Hank Green, the creator of the video began, “and about 25% of the world’s incarcerated people...             “We have the highest incarceration rate in the world,”                                There are about 2 million people in state, federal, and private prisons in the States. That’s 500,000 more than China. And China’s population is five times greater...             
The past few decades have seen a prison population explosion: We had fewer than 300,000 inmates in 1972. By 2000, that figure grew to 2 million...                       ...Forty-one percent of American juveniles and young adults have been arrested by the time they turn 23.                         “And it’s an expensive one, with some institutions paying more than $100,000 per year, per prisoner.”
... Instead of efforts to rehabilitate and integrate criminals back into society, something really grim is happening…                           “They don’t have to worry about strikes or paying unemployment insurance, vacations or comp time,” Vicky Pelaez wrote in Global Research.                    “All of their workers are full-time, and never arrive late or are absent because of family problems; moreover, if they don’t like the pay of 25 cents an hour and refuse to work, they are locked up in isolation cells.”                     “For the tycoons who have invested in the prison industry,” Pelaez writes, “it has been like finding a pot of gold.”                  Ten years ago, you would’ve only found five private prisons in the country. And collectively, they held a population of 2,000.                   Today, there are 100, with a population of 62,000...

50 Facts That Show How Far America Has Fallen In This Generation - The End of the American Dream - Michael Snyder - September 18th, 2014 - What has happened to America?  Please show these numbers to anyone that does not believe that the United States is in decline.  It is time for all of us to humble ourselves and face the reality of what has happened to our once great nation.  For those of us that love America, it is heartbreaking to watch the foundations of our society rot and decay in thousands of different ways.  The following are 50 facts that show how far America has fallen in this generation, but the truth is that this list could have been far, far longer…

VIDEO: Demographics – The West’s age distribution is too lopsided to support entitlements
- Washington's Blog - Chris Martenson - September 28, 2014 -When Americas social security and health care and entitlement systems were first conceived, the country has much different age distribution. There were roughly 7 active workers per retiree, and the ability to transfer some of that employee wealth to support older citizens was supportable.                          But with the arrival on the scene of the Baby Boom as well as advances in longetivity, the math changed dramatically. By 2005, there were only 5 workers per retiree. And by 2030, just 15 short years away, there will be less than 3.                     Our national demographic architecture no longer can afford the entitlement system we have. And that’s even assuming entitlements were currently sufficiently funded. But as the last chapter showed, the existing programs are underfunded to the tune of $100-200 Trillion.                    America’s demographic situation is a ticking time bomb. The older generation is already competing more fiercely than ever with younger ones in the job market, as many seniors can’t afford to retire. Youth also has to contend with trends like automation, outsourcing, and high unemployment/underemployment, which further handicap their ability to build capital and, importantly, to afford all the assets (stocks, houses, etc) that the Boomers are counting on selling to them.

This Is About As Good As Things Are Going To Get For The Middle Class – And It’s Not That Good - The Economic Collapse Blog - Michael Snyder - September 22nd, 2014 - The U.S. economy has had six full years to bounce back since the financial collapse of 2008, and it simply has not happened.  Median household income has declined substantially since then, total household wealth for middle class families is way down, the percentage of the population that is employed is still about where it was at the end of the last recession, and the number of Americans that are dependent on the government has absolutely exploded.  Even those that claim that the economy is "recovering" admit that we are not even close to where we used to be economically.  Many hope that someday we will eventually get back to that level, but the truth is that this is about as good as things are ever going to get for the middle class.  And we should enjoy this period of relative stability while we still can, because when the next great financial crisis strikes things are going to fall apart very rapidly.                                The U.S. Census Bureau has just released some brand new numbers, and they are quite sobering.  For example, after accounting for inflation median household income in the United States has declined a total of 8 percent from where it was back in 2007.                     That means that middle class families have significantly less purchasing power than they did just prior to the last major financial crisis.                       And one research firm is projecting that it is going to take until 2019 for median household income to return to the level that we witnessed in 2007...
For everybody wondering why the economic recovery feels like a recession, here’s the answer: We’re still at least five years away from regaining everything lost during the 2007-2009 downturn.
Forecasting firm IHS Global Insight predicts that real median household income — perhaps the best proxy for middle-class living standards — won’t reach the prior peak from 2007 until 2019. Since the numbers are adjusted for inflation, that means the typical family will wait 12 years until their purchasing power is as strong as it was before the recession. That would be the longest period of stagnation, by far, since the Great Depression of the 1930s.
Of course that projection assumes that the economy will continue to "recover", which is a very questionable assumption at best.                        Meanwhile, total household wealth has been declining for middle class families as well.                   According to the New York Times, the "typical American household" is now worth 36 percent less than it was worth a decade ago.                         That is a pretty substantial drop.  But you never hear our politicians (especially the Democrats) bring up numbers like that because they want us to feel good about things.                        So why is all of this happening?                       The biggest reason why the middle class is struggling so much is the lack of good jobs.                            As the chart posted below demonstrates, the percentage of the working age population that is actually employed is still way, way below where it was prior to the last recession...

Survey: Three Out Of Four Americans Feel Like Recession Continues - NewsMax - Dan Weil - September 25, 2014 - Americans have a bleak view of the economy and their own financial situations, according to a new study from the Public Religion Research Institute.                      While the Great Recession officially ended in June 2009, only 21 percent of Americans believe it's really over, while 72 percent believe it continues.                     Only 7 percent of Americans report they are in excellent shape financially, while 34 percent say they're in good shape, 37 percent say they're in fair shape, and 20 percent say they're in poor shape.                           Just 30 percent believe the economy has improved during the past two years, while 35 percent say it has worsened, and 33 percent say it is about the same.                            Meanwhile, 36 percent of Americans say that someone in their household had to cut back on food to save money during the last year.                         “It looks a little gloomy,” said Robert Jones, CEO of the Public Religion Research Institute, which conducted the survey in conjunction with the Brookings Institution. “There's been a wavering belief in the concept of the American Dream. About half said it once held true but does no longer. One in 10 said it never was true,” he told the Houston Chronicle.                             “Despite the fact that there has been improvement in the economy since the Great Recession, approximately four in ten Americans live in households experiencing high or moderate levels of economic insecurity,” Jones told “Economic insecurity remains highly stratified by race, with nearly six in ten black Americans living in households with high or moderate levels of economic insecurity.”                              Meanwhile PBS Newshour reported that the most common economic fear "reveals a human suffering more visceral, and perhaps less publicized, than layoffs or unemployment rolls: food insecurity," with 36 percent of respondents saying they’d experienced it.                          "It’s possible that’s the budgetary item Americans feel they have the most control over (compared to whether they pay a monthly bill or not, for example), and thus find it easiest to cut. It’s not specified whether “cutting back to save money” means going hungry or forgoing an $8 bag of almonds," PBS Newshour reported.                             Life has been tough for many Americans for quite a while, says Wall Street Journal columnist William Galston.
                       "The American economy hasn't worked for average families since the end of the Clinton administration," he writes.                             "A recovery that leaves them out is no recovery at all, and they know it. This simple fact goes a long way toward explaining the tone of our current politics and the temper of our society."                      Median household income totaled $51,939 in 2013, down 8 percent from 2007.                    "The median earnings for Americans working full-time year round haven't changed much since 2007," Galston says. "But more than five years into the recovery, there are fewer such workers than before the recession."


Anonymous said...

I'm glad you enjoyed the debate and I hope you're feeling better.

But let me clarify a few things. I don’t believe that government can solve all of our ills. I also don’t believe it a pariah to freedom, individual or otherwise, either. If anything it guarantees it, because without it, what freedoms is it we would enjoy? Yes, government can be repressive as well and there is the median between the two extremes. As far as the measure of ‘big’ or ‘little’, how is that measured? Is it quantitative or arbitrary and how does one discern what is ‘just right’? A small government can be just as oppressive as a large one, perhaps more so. Case in point, you see it every two weeks on a Tuesday. Independent of size, it is more what that government does or does not do and what it stands for than a conceptualization of sizing.

You are correct however about personal interest and government mingling. I’ve never been quiet about the mingling of interests of the corporate sector and the public sector. We have a lot of laws on the books that seek to prevent that kind of activity should some nefarious soul be so inclined to utilize government for their own benefit or worse, punish those that voice opposition to their views and policies.

Our economic recovery, if one can phrase it as such. Oh sure, the economy is growing. Just last quarter, the economy grew at a rate of 4.6%. So where is that money going? It’s going up. As some of your economic indicator pundits put it, median household income is going down, not up. 8% lower between now and 2007 and 11% lower from 2000 to now. That’s not a new trend either. The ‘Reagan’ era started that crawl of cash toward the top and it is has continued unabashed and unabated since.

The wealthy, the elites, the corporations are not the job creators. The people that spend money drive the economy; the middle class. The more you consume, the more you produce, money keeps moving. Why is that so hard to figure out? The middle class boomed in this nation right after World War II and proceeded forward faster than it ever has before. But no, tax money and incentives must be given as corporate welfare, or they will go somewhere else with their ‘jobs’.

I’m not anti-business. Business must exist in order for the country to exist. But business no longer has leadership that takes all stakeholders into consideration. Their only consideration is profit for the shareholders. Along with how much the CEO can make for him/herself. Driving up the per share price is good for them too, since many are paid in stock. It’s self-serving.

I likewise agree that there is a reckoning coming. People are tired of being exploited, manipulated, thwarted, and lied to. And they are starting to figure it out. How severe will the fallout be? I guess time will tell. We have two directions in which to go. Standing still, treading water, or marking time is no longer an option. In that regard, I’m reminded of something Richard Pryor said in one of his routines. “If you got some money or a pistol, you can get something to eat.”

Harry Hipps said...

The thing that concerns me now as much or more than the size of government is the arbitrary nature of it. We are "following" the constitution only in the most general of senses. A good lawyer or legislator can make words and laws mean almost anything. As a prosecutor once said years ago: "We could indict a ham sandwich." We'll that may be good for police and prosecutors, but what kind of justice is that?

How is it just to pass tax laws, but exempt a couple of select corporations? How is it just to regulate an industry, but the connected get a pass? Is this not what the phrase " a nation of laws and not men" was intended to address. And if we all finally give up on the system, will we not just degenerate into chaos, and a world where naked power and aggression rules?

This corruption, division, and greed is killing us. If it doesn't stop we aren't going to have a stable, much less prosperous future. And I don't see any real heroes on the horizon.