Not only is it old news, but it's practically ancient history by now that several retailers began their Black Friday sales on Thanksgiving evening. I responded by ignoring the Thanksgiving Day sales with as much enthusiasm as I ignore the Black Friday sales. Having been forced to participate in a run on Cabbage Patch Kids at Toys R Us with my mother when I was about eight years old, I have a pretty negative reaction to the mob mentality that comes with the cattle-call pursuit of STUFF that is the backbone of doorbuster sales. Even though the Cabbage Patch Kid was for me, I knew back then that it just wasn't worth it. Sure, I was glad I got Francis Xavier (who later had a bow tied in his hair and was re-Christened Crystal Something-Or-Other). But if I'd known that I'd have to stand in line with a couple hundred adults and a (very) few children, then go stampeding with them to the very back of the store, and then witness grown-ups ripping dolls out of each others hands and pushing each other down, I think I would have chosen to do without Francis Xavier/Crystal Something-Or-Other.
Of course, after months of pre-election coverage and weeks of election post mortem, the talk shows on NPR that narrate my errands during the week were trying to fill the election vacuum with discussions about the new trend in Black Friday sales: starting them on Thursday, regardless of the fact that it's still Thanksgiving. And what struck me was the claim the retailers kept repeating over and over again: We're only trying to give the customers what they want. If they want to shop on Thanksgiving, then we want to provide them with that opportunity.
With a few notable exceptions, nobody wants to shop on Thanksgiving. What people do want, what many people need in this crappy economy, are the deals. And if retailers are only offering the good deals on Thanksgiving, then people are going to shop on Thanksgiving. Of course, if the retailers wait until their normal week-day opening time on Friday morning to offer the great deals, the customers would happily do their shopping at that time. But the retailers don't want to wait until 9 or 10 AM Friday morning, because they mistakenly believe that being open an additional 12 hours will beat out their competitors and improve their bottom line.
Why do I say they 'mistakenly' believe this? First because people will go for the deals, regardless of when the stores offer them. Second, because people only have a certain amount of money to spend and shopping to do, and forcing them to get it done earlier means they won't do it later. The New York Times recently reported that even though sales on Thanksgiving Day were up from last year (most likely because many stores were open more hours on Thursday compared to last year), Black Friday sales were down from 2011. Overall sales of the weekend (if you can really call the five-day period beginning with Thanksgiving and ending with Cyber Monday a weekend) were up a bit from last year, but the evidence suggests that would have happened anyway.
But the retailers will only look at the improved sales from Thanksgiving, and convince themselves that if people were lining up at the doors at 8 PM, then that means they really want to be shopping at 4 PM, and that's an extra four hours of sales, which means an extra four hours to earn a profit (not that that's why they're doing it--they only want to give the customers what they want, after all). And since there's zero chance of the economy improving significantly in the next twelve months and plenty of data suggesting it's going to get worse, the shoppers with dutifully show up for the great deals whenever they're offered. And that will improve next Thanksgiving's sales, which will tell the retailers that the customers really want the stores to open at noon, and, well, you see where this is going.
In the meantime, Black Friday sales and early and mid-December sales will decrease, keeping the overall holiday shopping frenzy reasonably stable, with the modest increases or decreases (based on overall economic health) being spread thinner and thinner over the ever-expanding 'Holiday Season,' further diluting the meaning of the season and reinforcing the idea that our primary purpose in life is to be consumers, not citizens with a heritage to celebrate, a religion to observe, or families to enjoy.
Retailers and shoppers, supply and demand, chickens and their eggs. Which came first? In this case, for as long as the retailers have the most sought-after prize (good deals on stuff people want), the retailers make the rules. Only when we stop behaving according to the retailers' assumption that we're nothing more than consumers can we begin asserting ourselves as people.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Wednesday, November 28, 2012
Monday, January 23, 2012
Dear Real Estate Industry
You're mad at us, I know. I can tell by the tone of the e-mail our realtor sent to my husband in response to our announcing that we're withdrawing our offer on the house we looked at last month. Our realtor suggested (though never actually stated) that we were being unreasonable, and attempted to shame us into changing our mind by assuming that we were withdrawing our offer because we were not actually qualified for a mortgage and have "strung along the seller and the bank" all this time.
Here's the thing. This house was a short sale. It's been on the market for a year, and in that time has dropped its price by nearly $100K. Even with that, the house was still overpriced, and we offered $15K less than the current asking price (a number which we still think is generous, considering that the house will need about $50K worth of repairs in the next five years). But before we made the formal offer, we asked our realtor to find out from the seller if they would be willing to consider a low-ball offer, because we didn't want to waste anybody's time. We were told to make the offer, and they would consider it.
This is my third time buying a home. I've sold three already. In every case, the initial offer was either accepted, countered, or rejected pretty quickly, and any acceptance was contingent upon the buyer securing their financing. Yes, our offer was slightly higher than our pre-approval, but our mortgage broker didn't think that should be much of a problem and told us that once we had an accepted P&S he'd get to work at formally processing our mortgage for the entire amount. He was operating under the same assumption I was: first comes the offer, then the acceptance, then the financing. That's the way real estate transactions have worked for a long time, excepting some transactions where the sellers state up front that proof of funding must accompany all offers (this transaction was not advertised as such).
Our offer gave the sellers and their bank two weeks to approve our offer. The sellers did their part in a day. Their bank let the offer expire with no action. We only found this out after we called our realtor on the day it was to expire to ask for an update. He had nothing, because he hadn't been following up. Acknowledging that those two weeks included Christmas, we extended the deadline on our offer until the middle of January. This time our realtor called us on his own initiative the day the offer was to expire, to tell us that the bank hadn't done anything yet but that the sellers had hired an attorney to try to move things along. The attorney called us a little while later and gave us a more detailed update: the bank wouldn't accept our offer until they'd appointed a negotiator, which he was optimistic would happen the following week. After that, things should move much more quickly. We decided not to formally extend the deadline of our offer, which gave us the option of pulling the plug at any time, or letting it ride and moving forward with it should the bank accept our offer later. For the time being, we decided to let it ride.
A week later we got another call from the seller's attorney. The bank still hadn't appointed a negotiator. They needed more information before they would do so, and it could still be a few weeks. An e-mail from our realtor informed us that some of what bank required was proof of financing and an addendum to the P&S stating that we would close within 60 days of approval.
We were fed up. After failing to simply accept or decline an offer for a month and missing two contractual deadlines, the bank was demanding we guarantee a quick closing that would hinder our ability to fully inspect and assess the property, plus demanding proof of financing up front? The whole thing reminded my husband of the scene in Empire Strikes Back when Darth Vader tells Lando Calrissian, "I am altering the deal. Pray I don't alter it any further."
Our realtor was offended at our offense, and informed us that "the bank is and has been working in a timely fashion...it is corporate America and procedure."
Well, corporate America, you have stated your terms, and we choose not to accept them. Like Lando Calrissian, we believe this deal is getting worse and worse all the time, so we're getting out while we still can.
I don't care if you're mad at me, Real Estate Industry. It's a sad day when a seller has to hire an attorney to get the bank to act on processing an already-approved short-sale. It's an even sadder day when a buyer trusts the seller's attorney more than she trusts her own real estate agent.
I believe in honor, diligence, and good faith adherence to contractual obligations. We have shown that. So have the actual sellers of the house. Real Estate Industry, you have not. Your attempts to shame us have failed, because we cannot be shamed by an entity that itself has none. Send us back the deposit we made in good faith, and go play your games with someone else. If the game can only be played by your rules, then we choose not to play. Despite what you may think and what you may want, we actually do have that option.
Have a nice day, and may the Force be with you.
Here's the thing. This house was a short sale. It's been on the market for a year, and in that time has dropped its price by nearly $100K. Even with that, the house was still overpriced, and we offered $15K less than the current asking price (a number which we still think is generous, considering that the house will need about $50K worth of repairs in the next five years). But before we made the formal offer, we asked our realtor to find out from the seller if they would be willing to consider a low-ball offer, because we didn't want to waste anybody's time. We were told to make the offer, and they would consider it.
This is my third time buying a home. I've sold three already. In every case, the initial offer was either accepted, countered, or rejected pretty quickly, and any acceptance was contingent upon the buyer securing their financing. Yes, our offer was slightly higher than our pre-approval, but our mortgage broker didn't think that should be much of a problem and told us that once we had an accepted P&S he'd get to work at formally processing our mortgage for the entire amount. He was operating under the same assumption I was: first comes the offer, then the acceptance, then the financing. That's the way real estate transactions have worked for a long time, excepting some transactions where the sellers state up front that proof of funding must accompany all offers (this transaction was not advertised as such).
Our offer gave the sellers and their bank two weeks to approve our offer. The sellers did their part in a day. Their bank let the offer expire with no action. We only found this out after we called our realtor on the day it was to expire to ask for an update. He had nothing, because he hadn't been following up. Acknowledging that those two weeks included Christmas, we extended the deadline on our offer until the middle of January. This time our realtor called us on his own initiative the day the offer was to expire, to tell us that the bank hadn't done anything yet but that the sellers had hired an attorney to try to move things along. The attorney called us a little while later and gave us a more detailed update: the bank wouldn't accept our offer until they'd appointed a negotiator, which he was optimistic would happen the following week. After that, things should move much more quickly. We decided not to formally extend the deadline of our offer, which gave us the option of pulling the plug at any time, or letting it ride and moving forward with it should the bank accept our offer later. For the time being, we decided to let it ride.
A week later we got another call from the seller's attorney. The bank still hadn't appointed a negotiator. They needed more information before they would do so, and it could still be a few weeks. An e-mail from our realtor informed us that some of what bank required was proof of financing and an addendum to the P&S stating that we would close within 60 days of approval.
We were fed up. After failing to simply accept or decline an offer for a month and missing two contractual deadlines, the bank was demanding we guarantee a quick closing that would hinder our ability to fully inspect and assess the property, plus demanding proof of financing up front? The whole thing reminded my husband of the scene in Empire Strikes Back when Darth Vader tells Lando Calrissian, "I am altering the deal. Pray I don't alter it any further."
Our realtor was offended at our offense, and informed us that "the bank is and has been working in a timely fashion...it is corporate America and procedure."
Well, corporate America, you have stated your terms, and we choose not to accept them. Like Lando Calrissian, we believe this deal is getting worse and worse all the time, so we're getting out while we still can.
I don't care if you're mad at me, Real Estate Industry. It's a sad day when a seller has to hire an attorney to get the bank to act on processing an already-approved short-sale. It's an even sadder day when a buyer trusts the seller's attorney more than she trusts her own real estate agent.
I believe in honor, diligence, and good faith adherence to contractual obligations. We have shown that. So have the actual sellers of the house. Real Estate Industry, you have not. Your attempts to shame us have failed, because we cannot be shamed by an entity that itself has none. Send us back the deposit we made in good faith, and go play your games with someone else. If the game can only be played by your rules, then we choose not to play. Despite what you may think and what you may want, we actually do have that option.
Have a nice day, and may the Force be with you.
Friday, December 30, 2011
Housing Prices Still Not Making Sense
My husband and I are looking to buy a decent house in a decent neighborhood for a reasonable price, but we're having trouble finding such a thing. There are decent houses in decent neighborhoods, but their prices are not reasonable. For all that housing prices have fallen over the past few years, I believe that they still have further to go.
How can I say this when houses have already lost anywhere from 20 to 60% of their values? Because they were inflated to more than that during the bubble, and incomes haven't risen significantly over the last decade.
Here's the thing. According to the Wall Street Journal, a household shouldn't plan to spend more than 28% of its gross monthly income on mortgage/property taxes/maintenance/PMI. (This is a fairly common rule of thumb.) In 2000, the median household income in Nashua, NH (where we're looking) was $51,969. Let's assume that household also had a monthly debt load of $500 (between car payments, student loans, and credit card minimum payments), and savings sufficient to put down 20% of the purchase price. Using the Wall Street Journal's mortgage calculator, that household income would qualify to purchase a home that cost up to $141,365*. In 2000, the median house in Nashua only cost $132,200, so the average household could purchase the average house, and then some. In 2009 (the most recent year covered by city-data), the median household income in Nashua had risen to $58,789. Using those same assumptions, that household could purchase a home that cost up to $181,942*. That's a problem, since the average house in Nashua in 2009 cost $248,500. In order for the average household to purchase the average house at that price, the median household income would need to be closer to $69,000. Even assuming our household is completely debt free, the maximum house they could afford would be $205,997, still well below the median. Neither housing prices nor incomes have changed much since 2009.
As much as sellers and realtors don't want to admit it, a house (or anything else, for that matter) is only worth what a purchaser will pay for it. As long as the average house is out of reach for the average purchaser, it's overpriced. Unless incomes go up significantly in the very near future, housing prices still have a ways to fall. In Nashua, it's looking like another 27%.
Maybe my husband and I are better off continuing to rent for now.
* I assumed a 30 year fixed mortgage at 8% in 2000 and 5.5% in 2009, both of which are historically accurate. The tax rate was roughly 2.1% in both years.
How can I say this when houses have already lost anywhere from 20 to 60% of their values? Because they were inflated to more than that during the bubble, and incomes haven't risen significantly over the last decade.
Here's the thing. According to the Wall Street Journal, a household shouldn't plan to spend more than 28% of its gross monthly income on mortgage/property taxes/maintenance/PMI. (This is a fairly common rule of thumb.) In 2000, the median household income in Nashua, NH (where we're looking) was $51,969. Let's assume that household also had a monthly debt load of $500 (between car payments, student loans, and credit card minimum payments), and savings sufficient to put down 20% of the purchase price. Using the Wall Street Journal's mortgage calculator, that household income would qualify to purchase a home that cost up to $141,365*. In 2000, the median house in Nashua only cost $132,200, so the average household could purchase the average house, and then some. In 2009 (the most recent year covered by city-data), the median household income in Nashua had risen to $58,789. Using those same assumptions, that household could purchase a home that cost up to $181,942*. That's a problem, since the average house in Nashua in 2009 cost $248,500. In order for the average household to purchase the average house at that price, the median household income would need to be closer to $69,000. Even assuming our household is completely debt free, the maximum house they could afford would be $205,997, still well below the median. Neither housing prices nor incomes have changed much since 2009.
As much as sellers and realtors don't want to admit it, a house (or anything else, for that matter) is only worth what a purchaser will pay for it. As long as the average house is out of reach for the average purchaser, it's overpriced. Unless incomes go up significantly in the very near future, housing prices still have a ways to fall. In Nashua, it's looking like another 27%.
Maybe my husband and I are better off continuing to rent for now.
* I assumed a 30 year fixed mortgage at 8% in 2000 and 5.5% in 2009, both of which are historically accurate. The tax rate was roughly 2.1% in both years.
Friday, November 25, 2011
Do College Students Have Justification for Joining the 'Occupy' Movement?
I've seen a lot of comments about the 'spoiled trust fund kids' who 'expect to be handed everything on a silver platter' and 'don't want to work for the things they have.' And other such statements. These are usually posted by people who proudly brag about the fact that they worked their way through college and now have a good job and a nice house that they earned through their own hard work with no handouts from anyone.
Good for you.
Times have changed.
I too worked my way through college. I vividly remember the days of working 60 to 70 hours per week between two jobs (one full-time dead-end job and one nights-and-weekends retail job), supporting myself in a should-have-been-condemned apartment in a pretty scary neighborhood, taking one night course at a time because it's all I could afford and all I had time for. I was destroying my health by eating nothing but Ramen noodles and instant oatmeal, because it's all I could afford. I handwashed my laundry in the bathtub because I couldn't afford to go to the laundrymat. I even counted the squares of toilet paper I used, in an effort to reduce how often I had to buy more. Eventually things got better when I was hired at a job with a future, one that would help me achieve that future by paying for the rest of my bachelor's degree. Of course, I was hired with an education waiver, so they could fire me if I didn't actively pursue my degree, and they emphasized that 'slow and steady' would not win the race. I had to finish that degree as soon as possible. So yes it was paid for, but I finished it by working full-time during the day and going to school full-time at night. It took me eight years of working my ass off to finally get my four-year bachelor's degree.
I know that luck was just as big a part of it as my own hard work was. And college students today aren't as lucky.
I've been appalled by some of the reactions to the pepper-spray incident at UC Davis last week. In many cases, the protesters were characterized as I listed in my introductory paragraph, and also lumped in with all the Occupy protesters everywhere, particularly those few bad apples who are causing trouble in some of the larger gatherings. (Apparently since there are a small handful of true trouble-makers giving the protesters a bad name in New York, the police were justified in pepper-spraying a group of students peacefully sitting on a pedestrian-only walkway on a college campus in California. Or so the argument goes.) The UC Davis crowd were trying to be clear that while they shared much in common with the other Occupy movements, some of their grievances were particular to them, specifically the issue of more tuition increases.
To those of you who proudly talk about how you worked your way through college, please consider the following numbers from the UC Davis website for an in-state undergraduate student who began her studies as a freshman in 2008.
Tuition and fees (excluding books, room, board, and other incidentals) per academic year:
2008/2009 - $9,496.60
2009/2010 - $10,989.95
2010/2011 - $13,079.91
2011/2012 - $15,123.36
You who so proudly worked your way through school, did you have to deal with a 59% increase in tuition between your freshman and senior years? I can tell you, no, you didn't. UC Davis was kind enough to provide historical information on their website going back as far as 1994. So let's assume that's when you started working your way through college.
1994/1995 - $4,099.00
1995/1996 - $4,554.00
1996/1997 - $4,262.00
1997/1998 - $4,331.50
If you started working your way through college before 1994, then your costs were even lower.
Now let's assume that you worked at California's minimum wage forty hours per week for twelve weeks during the summer, and twenty hours per week for thirty-six weeks during the school year, leaving four weeks of unpaid sick and vacation time each year (because let's face it, if you're working for minimum wage, you don't get paid time off). You would have earned (before taxes):
1994/1995 - $5,100 ($1,001 more than your tuition)
1995/1996 - $5,700 ($1,146 more than your tuition)
1996/1997 - $6,180 ($1,918 more than your tuition)
1997/1998 - $6,900 ($2,568.50 more than your tuition)
Today's senior who's worked the same number of hours at today's minimum wage in California (which has remained steady at $8.00 per hour since 2008) has earned (before taxes) $9,600 per year. That is:
2008/2009 - $103.40 more than her tuition
2009/2010 - $1,389.95 less than her tuition
2010/2011 - $3,479.91 less than her tuition
2011/2012 - $5,523.36 less than her tuition
So where you would have had $6,633.50 in the bank upon graduation, today's senior will be $10,289.82 in debt for doing exactly what you did.
And let's not even talk about what it cost you to buy your house in 1998 compared to today.
Starting school in 2008, that student probably figured that she could mostly work her way through school. It would be tight, and she might have to take on a little debt, but nothing too difficult to pay off with the increase in wages she's sure to see upon graduation. But each year her costs went up astronomically, forcing her to either take on more and more debt, or else cut her losses with nothing to show for it, and no hope of getting the higher-paying job that would enable her to pay off the debt she'd already incurred. What exactly is she supposed to do? What did you do when you were faced with that situation? Oh wait, that's right. You were never faced with that situation.
So before you start waxing eloquent about how hard you worked for the things you have, and how these lazy kids should do the same, consider that the world they live in is very different from the one you did. Let go of your self-righteousness, and consider that they might actually have something legitimate to protest.
Good for you.
Times have changed.
I too worked my way through college. I vividly remember the days of working 60 to 70 hours per week between two jobs (one full-time dead-end job and one nights-and-weekends retail job), supporting myself in a should-have-been-condemned apartment in a pretty scary neighborhood, taking one night course at a time because it's all I could afford and all I had time for. I was destroying my health by eating nothing but Ramen noodles and instant oatmeal, because it's all I could afford. I handwashed my laundry in the bathtub because I couldn't afford to go to the laundrymat. I even counted the squares of toilet paper I used, in an effort to reduce how often I had to buy more. Eventually things got better when I was hired at a job with a future, one that would help me achieve that future by paying for the rest of my bachelor's degree. Of course, I was hired with an education waiver, so they could fire me if I didn't actively pursue my degree, and they emphasized that 'slow and steady' would not win the race. I had to finish that degree as soon as possible. So yes it was paid for, but I finished it by working full-time during the day and going to school full-time at night. It took me eight years of working my ass off to finally get my four-year bachelor's degree.
I know that luck was just as big a part of it as my own hard work was. And college students today aren't as lucky.
I've been appalled by some of the reactions to the pepper-spray incident at UC Davis last week. In many cases, the protesters were characterized as I listed in my introductory paragraph, and also lumped in with all the Occupy protesters everywhere, particularly those few bad apples who are causing trouble in some of the larger gatherings. (Apparently since there are a small handful of true trouble-makers giving the protesters a bad name in New York, the police were justified in pepper-spraying a group of students peacefully sitting on a pedestrian-only walkway on a college campus in California. Or so the argument goes.) The UC Davis crowd were trying to be clear that while they shared much in common with the other Occupy movements, some of their grievances were particular to them, specifically the issue of more tuition increases.
To those of you who proudly talk about how you worked your way through college, please consider the following numbers from the UC Davis website for an in-state undergraduate student who began her studies as a freshman in 2008.
Tuition and fees (excluding books, room, board, and other incidentals) per academic year:
2008/2009 - $9,496.60
2009/2010 - $10,989.95
2010/2011 - $13,079.91
2011/2012 - $15,123.36
You who so proudly worked your way through school, did you have to deal with a 59% increase in tuition between your freshman and senior years? I can tell you, no, you didn't. UC Davis was kind enough to provide historical information on their website going back as far as 1994. So let's assume that's when you started working your way through college.
1994/1995 - $4,099.00
1995/1996 - $4,554.00
1996/1997 - $4,262.00
1997/1998 - $4,331.50
If you started working your way through college before 1994, then your costs were even lower.
Now let's assume that you worked at California's minimum wage forty hours per week for twelve weeks during the summer, and twenty hours per week for thirty-six weeks during the school year, leaving four weeks of unpaid sick and vacation time each year (because let's face it, if you're working for minimum wage, you don't get paid time off). You would have earned (before taxes):
1994/1995 - $5,100 ($1,001 more than your tuition)
1995/1996 - $5,700 ($1,146 more than your tuition)
1996/1997 - $6,180 ($1,918 more than your tuition)
1997/1998 - $6,900 ($2,568.50 more than your tuition)
Today's senior who's worked the same number of hours at today's minimum wage in California (which has remained steady at $8.00 per hour since 2008) has earned (before taxes) $9,600 per year. That is:
2008/2009 - $103.40 more than her tuition
2009/2010 - $1,389.95 less than her tuition
2010/2011 - $3,479.91 less than her tuition
2011/2012 - $5,523.36 less than her tuition
So where you would have had $6,633.50 in the bank upon graduation, today's senior will be $10,289.82 in debt for doing exactly what you did.
And let's not even talk about what it cost you to buy your house in 1998 compared to today.
Starting school in 2008, that student probably figured that she could mostly work her way through school. It would be tight, and she might have to take on a little debt, but nothing too difficult to pay off with the increase in wages she's sure to see upon graduation. But each year her costs went up astronomically, forcing her to either take on more and more debt, or else cut her losses with nothing to show for it, and no hope of getting the higher-paying job that would enable her to pay off the debt she'd already incurred. What exactly is she supposed to do? What did you do when you were faced with that situation? Oh wait, that's right. You were never faced with that situation.
So before you start waxing eloquent about how hard you worked for the things you have, and how these lazy kids should do the same, consider that the world they live in is very different from the one you did. Let go of your self-righteousness, and consider that they might actually have something legitimate to protest.
Saturday, October 29, 2011
What Do the Occupy Wall Street Protesters Want?
There have been a lot of snarky articles written about the Occupy Wall Street protesters (and their clones in cities across the United States), characterizing them as freeloaders, lazy college drop-outs, bored trust fund kids, unemployed people who would rather complain than work, etc. Most of my research is done online, so I can read the readers' comments on most of the articles about the Occupiers. Most of those comments are even snarkier than the articles. A popular way to discredit the protesters is to point out that they don't have a unified message, a platform, or specific goals that can be addressed.
Full disclosure: I am not one of the protesters. I do not speak for them. I've not discussed with any of them what their goals or objectives are. I do support them, and I'm doing so by publicizing what I can about them and, occasionally, dropping off a load of blankets, sleeping bags, and other needed supplies to the Occupy Boston crowd in Dewey Square.
I do not have a profile on the We Are the 99% webpage, but I am the 99%. And this is why I'm supporting the protesters.
Earlier this week the Congressional Budget Office released a report about income disparity between 1979 and 2007. The New York Times sums up the report's findings this way: Between 1979 and 2007, the top 1% of earners saw an increase of 275% in their after-tax incomes. The next 19% (or the remainder of the top 20%) saw an increase of 65% of after-tax income. The next 60% saw an increase of just under 40%, and the bottom 20% saw an increase of just 18%.
Remember, we're not talking about overall wealth growth, so the argument that wealth begets wealth doesn't apply here. This is a strict after-tax income-to-income comparison. Yes, things like capital gains are included, but that only applies if an asset is sold. The value of assets that one continues to own such as a house or investment portfolios is not included. Things like Social Security payments are included in these numbers.
Looking at Table A-1 from the CBO Report, the real dollar increases are as follows (earnings include wages, capital gains, and 'Transfers' such as Social Security, and after federal taxes are deducted):
Someone earning $15,411 in 1979 was earning $18,979 in 2007, an increase of $3,568.
Someone earning $22,851 in 1979 was earning $29,769 in 2007, an increase of $6,918.
Someone earning $30,341 in 1979 was earning $42,202 in 2007, an increase of $11,861.
Someone earning $51,613 in 1979 was earning $81,135 in 2007, an increase of $29,522.
And someone in the top 1%, earning $115,965 in 1979 was earning $252,607 in 2007, an increase of $136,642.
One might argue that the higher-paying jobs increased in complexity more than the lower-paying jobs, thus justifying a greater increase in salary over the years. That is a valid point. But consider the following information as well:
While some of the protesters may want perfect income equality, most of us are only trying to have a chance. We can't do that if incomes are not keeping up with the cost of living. The Declaration of Independence lists life, liberty, and the pursuit of happiness as the three unalienable rights of [hu]man[ity]. Americans are not guaranteed a comfortable, middle-class lifestyle, and I believe in hard work and personal responsibility. Safety nets should be in place to prevent starvation and depravity, but not ensure comfort. But in the last thirty years, hard work and personal responsibility are no longer enough to achieve 'happiness' (or, as I define the term in this context, the 'American Dream'). To list 'pursuit of happiness' as an unalienable right must mean that the achievement of said happiness is possible for ordinary people willing to put in the effort, and right now it's not.
I realize that the world is changing, and we are now in a 'knowledge economy.' Presumably that means knowledge is the key to success. The logical course then seems to be to prioritize higher education: i.e. if you want to succeed, go to college and get a degree. In 1979 the average in-state tuition (including room and board) for a state school was $2,327 for the academic year. In 2007 that same year's worth of tuition, room, and board cost $13,589, an increase of 484%. Families in the bottom 99% can't save the money to pay for their kids' college education, and the kids who borrow the money won't earn enough at their non-top-1% jobs to be able to pay those loans back. The American Dream has become a pipe dream.
What do the Occupy Wall Street protesters want? They want people to realize what is going on. They want people to realize that many of us are following the same rules as the much-vaunted 'Greatest Generation' followed, but the game has changed, and following those rules will no longer earn you the comfortable, middle-class lives our grandparents lived. Following those rules now earns you a house with an underwater mortgage, a job that demands annual pay-cuts while the company is declaring record profits, the risk of having that job taken away from you at any moment, fewer (if any) health and retirement benefits, and ever-growing credit card debt just to keep food on your table.
The protesters are not politicians. They don't have a platform. They don't have a neat three-point plan. They don't have the answers. And they're not supposed to. No one elected them to get or keep the country on the right track. They are protesting the fact that the people who were elected to do so by and large owe their political power to the corporate and special interests who funded their campaigns, and it's those corporate and special interests that they're representing. The protesters are not trying to 'hurt' banks or corporations or politicians. They are trying to get banks and corporations and politicians to be accountable for their actions, and if that accountability is interpreted as 'hurt,' then I'd say there's definitely something wrong that needs to be fixed.
There's something wrong when those who are elected to represent the people can only make it to election day with the help of the rich and powerful.
There's something wrong when banks give oversized mortgages to underqualified borrowers, and sell securities backed by those mortgages as good investments, and also sell - as good investments - credit default swaps betting that those mortgages will fail.
There's something wrong when CEOs make decisions that cost thousands of people their jobs, cause millions of people to lose money on investments, and get paid multimillions of dollars as a severance package for a job poorly done.
There's something wrong when banks and corporations make mistakes and receive taxpayer-funded bailouts, but when individuals make mistakes they're told to suck it up, and are accused of being greedy, lazy, and irresponsible.
There's something wrong when interest rates punish those who behave responsibly and live within their means, but reward those who finance their spending and risky investments with other people's money.
And there's something terribly wrong when Americans look at other Americans who are exercising their rights and, more importantly, fulfilling their civic duty to question the actions of their leaders, and call them lazy, stupid, spoiled, freeloaders, etc.
It's a recession when your neighbor loses his job. It's a depression when you lose yours. If you're not part of that top 1%, just wait: your depression will come. The numbers have proven that it's just a matter of time.
You are the 99%, whether you like it or not.
Full disclosure: I am not one of the protesters. I do not speak for them. I've not discussed with any of them what their goals or objectives are. I do support them, and I'm doing so by publicizing what I can about them and, occasionally, dropping off a load of blankets, sleeping bags, and other needed supplies to the Occupy Boston crowd in Dewey Square.
I do not have a profile on the We Are the 99% webpage, but I am the 99%. And this is why I'm supporting the protesters.
Earlier this week the Congressional Budget Office released a report about income disparity between 1979 and 2007. The New York Times sums up the report's findings this way: Between 1979 and 2007, the top 1% of earners saw an increase of 275% in their after-tax incomes. The next 19% (or the remainder of the top 20%) saw an increase of 65% of after-tax income. The next 60% saw an increase of just under 40%, and the bottom 20% saw an increase of just 18%.
Remember, we're not talking about overall wealth growth, so the argument that wealth begets wealth doesn't apply here. This is a strict after-tax income-to-income comparison. Yes, things like capital gains are included, but that only applies if an asset is sold. The value of assets that one continues to own such as a house or investment portfolios is not included. Things like Social Security payments are included in these numbers.
Looking at Table A-1 from the CBO Report, the real dollar increases are as follows (earnings include wages, capital gains, and 'Transfers' such as Social Security, and after federal taxes are deducted):
Someone earning $15,411 in 1979 was earning $18,979 in 2007, an increase of $3,568.
Someone earning $22,851 in 1979 was earning $29,769 in 2007, an increase of $6,918.
Someone earning $30,341 in 1979 was earning $42,202 in 2007, an increase of $11,861.
Someone earning $51,613 in 1979 was earning $81,135 in 2007, an increase of $29,522.
And someone in the top 1%, earning $115,965 in 1979 was earning $252,607 in 2007, an increase of $136,642.
One might argue that the higher-paying jobs increased in complexity more than the lower-paying jobs, thus justifying a greater increase in salary over the years. That is a valid point. But consider the following information as well:
- Cost of a new house
- 1979 - $58,100
- 2007 - $308,775
- 431% increase
- Average rent for a two-bedroom apartment
- 1979 - $280
- 2007 - $1,368
- 389% increase
- Cost of a loaf of bread
- 1979 - $.35
- 2007 - $1.25
- 257% increase
- Cost of a gallon of gasoline
- 1979 - $.86
- 2007 - $2.80
- 226% increase
- Cost of a dozen eggs
- 1979 - $.85
- 2007 - $1.75
- 106% increase
- Cost of a gallon of milk
- 1979 - $1.62
- 2007 - $3.27
- 102% increase
While some of the protesters may want perfect income equality, most of us are only trying to have a chance. We can't do that if incomes are not keeping up with the cost of living. The Declaration of Independence lists life, liberty, and the pursuit of happiness as the three unalienable rights of [hu]man[ity]. Americans are not guaranteed a comfortable, middle-class lifestyle, and I believe in hard work and personal responsibility. Safety nets should be in place to prevent starvation and depravity, but not ensure comfort. But in the last thirty years, hard work and personal responsibility are no longer enough to achieve 'happiness' (or, as I define the term in this context, the 'American Dream'). To list 'pursuit of happiness' as an unalienable right must mean that the achievement of said happiness is possible for ordinary people willing to put in the effort, and right now it's not.
I realize that the world is changing, and we are now in a 'knowledge economy.' Presumably that means knowledge is the key to success. The logical course then seems to be to prioritize higher education: i.e. if you want to succeed, go to college and get a degree. In 1979 the average in-state tuition (including room and board) for a state school was $2,327 for the academic year. In 2007 that same year's worth of tuition, room, and board cost $13,589, an increase of 484%. Families in the bottom 99% can't save the money to pay for their kids' college education, and the kids who borrow the money won't earn enough at their non-top-1% jobs to be able to pay those loans back. The American Dream has become a pipe dream.
What do the Occupy Wall Street protesters want? They want people to realize what is going on. They want people to realize that many of us are following the same rules as the much-vaunted 'Greatest Generation' followed, but the game has changed, and following those rules will no longer earn you the comfortable, middle-class lives our grandparents lived. Following those rules now earns you a house with an underwater mortgage, a job that demands annual pay-cuts while the company is declaring record profits, the risk of having that job taken away from you at any moment, fewer (if any) health and retirement benefits, and ever-growing credit card debt just to keep food on your table.
The protesters are not politicians. They don't have a platform. They don't have a neat three-point plan. They don't have the answers. And they're not supposed to. No one elected them to get or keep the country on the right track. They are protesting the fact that the people who were elected to do so by and large owe their political power to the corporate and special interests who funded their campaigns, and it's those corporate and special interests that they're representing. The protesters are not trying to 'hurt' banks or corporations or politicians. They are trying to get banks and corporations and politicians to be accountable for their actions, and if that accountability is interpreted as 'hurt,' then I'd say there's definitely something wrong that needs to be fixed.
There's something wrong when those who are elected to represent the people can only make it to election day with the help of the rich and powerful.
There's something wrong when banks give oversized mortgages to underqualified borrowers, and sell securities backed by those mortgages as good investments, and also sell - as good investments - credit default swaps betting that those mortgages will fail.
There's something wrong when CEOs make decisions that cost thousands of people their jobs, cause millions of people to lose money on investments, and get paid multimillions of dollars as a severance package for a job poorly done.
There's something wrong when banks and corporations make mistakes and receive taxpayer-funded bailouts, but when individuals make mistakes they're told to suck it up, and are accused of being greedy, lazy, and irresponsible.
There's something wrong when interest rates punish those who behave responsibly and live within their means, but reward those who finance their spending and risky investments with other people's money.
And there's something terribly wrong when Americans look at other Americans who are exercising their rights and, more importantly, fulfilling their civic duty to question the actions of their leaders, and call them lazy, stupid, spoiled, freeloaders, etc.
It's a recession when your neighbor loses his job. It's a depression when you lose yours. If you're not part of that top 1%, just wait: your depression will come. The numbers have proven that it's just a matter of time.
You are the 99%, whether you like it or not.
Tuesday, October 4, 2011
All Animals Are Equal, But Some Animals Are More Equal Than Others
When I first heard about the protesters on Wall Street a few weeks ago, I didn't have much optimism for their success. Based on the YouTube videos that were circulating, I saw a crowd of mostly twenty-somethings protesting corporate greed with some recording every minor police altercation in an attempt to claim police brutality. I agreed with their general ideas--there are few in this country who aren't angry about corporate greed--but I didn't believe they could accomplish anything (and I didn't see any real police brutality in those early videos, either). I wasn't sure what they were trying to accomplish. I wasn't sure they knew what they were trying to accomplish. My husband believed (and I agreed) that nothing would change because too many people are too comfortable with the status quo. In order for revolution to happen, there needs to be a critical mass of people who are willing to pledge their lives, their fortunes, and their sacred honor to the change they wish to see. Most 'revolutionaries' today seem to be willing to 'like' a Facebook page dedicated to their cause, and maybe copy and paste a status update that they agree with, and that's it.
But now I'm not so sure. The protests are growing, spreading, and appear to have broken the media blackout. (I regularly read the Wall Street Journal Online, plus use the news and weather app on my phone which draws from a variety of outlets, and I didn't know anything about the protests until another blog I follow posted one of those YouTube videos three or four days after the protests began. Now the WSJ Online is providing regular updates on its homepage.) Additionally, the protesters have begun to focus their message. The First Official Release From Occupy Wall Street articulates some of their specific grievances, and they are working on a List of Demands.
Now they're getting more organized, focused, and specific. Their grievances basically amount to calling out the government for allowing large corporations to dictate US economic policy in such a way that it benefits 1% of the population at the expense of the other 99% (this is my interpretation and summary, not a statement from their document; I encourage you to follow the links above and read their statements for yourself). And it's not just that the rich are getting richer and the poor are getting poorer; it's that the poor are getting poorer because the rich are usurping power from our supposedly democratic government, drowning out the voices of the majority of the population with the money our elected representatives need for reelection, and changing the rules to benefit themselves while causing harm and injustice to everyone else. I don't necessarily agree with all their grievances, but there is definitely enough common ground there for me to hope for their success.
But what about the concern that too many people are too comfortable with the status quo to risk their lives, their fortunes, and their sacred honor? I'm beginning to realize that people are more uncomfortable than I'd realized. I knew things were rough; my own family is struggling to make ends meet after a prolonged period of unemployment and underemployment, and I have no idea how we're going to pay down the debt we accumulated during that time. But I hadn't realized just how many people have already lost not only their fortunes, but their hope of ever rebuilding them. Honor isn't what it once was, however there is enough anger against large corporations and the super-wealthy that aiding in the effort to stop filling their coffers with the hard work and sacrifices borne by the rest of us will gain honor, not lose it. And if you've already lost everything and have no hope of ever getting it back under the current system, why not pledge your life to trying to make things better? If the current system doesn't care about your life or well being (and it doesn't), what have you really got to lose?
Americans are sold a bill of goods. We're taught that if you study hard, work hard, maybe even serve your country in the military, you can make something of yourself. You can live the American Dream. Instead we're seeing college graduates who did what they were supposed to do saddled with impossible debt loads and unable to find the jobs that were supposed to be worth that investment. We're seeing people who have worked hard at their jobs all their lives taking pay cut after pay cut, until finally ending up unemployed and unemployable because their entire industry is virtually gone, losing their houses, their health insurance, and, eventually, their health. We're seeing veterans ignored and forgotten once they take off their uniform (and sometimes before they've taken it off). There are a lot of people represented in that 99% who are being screwed over by the 1%. Rather than try to tell you their stories, I'm going to let some of them speak for themselves.
The following is only a small sampling from 'We Are the 99 Percent.' Please go to that website and see why people are protesting on Wall Street (and elsewhere in the US), especially if you tend to believe that things aren't all that bad, and people who are complaining should just suck it up, stop slacking off, and work harder.
* I’d never been unemployed, until the company I worked for tanked a month ago. Up until then, I was living paycheck to paycheck, sharing a small apartment with my elderly, unemployed mother, making just enough to pay rent, grocery bills and medical insurance. Now we have no jobs, no savings, no health care and no furniture in our apartment; we sold almost everything we had to pay for food and rent. We both have extensive medical problems and are wondering how we’re going to pay for the medications we need to keep functioning. I don’t want sympathy, or handouts. I want a job, affordable rent and the restoration of the “American Dream.” I AM THE 99%!!!
* I have a master’s degree from a top university and $75,000 in student loan debt. I have applied to jobs all over the country but I can’t even get an interview. My mom lost her job in 2010 and hasn’t been able to find anything since. I don’t know what we will do when her unemployment runs out. I’ve given up all hope in having a future. I am the 99%!
* I am educated, hard working and responsible. I am employed full time and have been for all of adult life. And yet I struggle each month to pay my bills, to feed my dog, to keep gas in my car. I dream of grad school, of a job in social services or ministry to make this world better than I found it. And yet, I am trapped. I am chained to my mortgage, to my unsellable home, to my mediocre job, to my city. Sometimes I feel a failure to be part of the first generation that will not exceed the accomplishments of the last and yet everyone I know works so hard. Just to get by. Our priorities have gone so astray in this country. We have lost sight of the importance of community and equality. Of justice and forgiveness. Of generosity and faith. Of democracy and hope. We got lazy and distracted and entitled and we didn’t realize that a few people have been making greedy decisions that would and do negatively affect the lives of the many. It’s time to wake up. To pay attention. To stop worshiping the dollar and start worshiping each other again. All of us. Together, being the change. My name is Emily Wheeland and I am one paycheck away from homelessness. I am the 99 percent.
* Single mother. Living with my parents, who own a small business and are barely scraping by themselves. Neither has health insurance or savings. My grandparents have spent their savings on medications. My daughter’s father joined the military to get a degree in a field he doesn’t want to study in, because it offers job security. He is stationed overseas for 2 years and is missing his daughter growing up…she asks for him almost every day, if she will see him soon. She won’t, not because he can’t get leave from work, but because we can’t afford tickets. We stay married for health insurance and assistance with my college. I have $15k in medical debt (collections) and terrible credit. He owns my car and we live off of his child support while I am in school. My parents provide free childcare so I can go to school. EVERYTHING I have—roof over my head, financial aid for my classes, my car and financial security, are all due to someone else’s generosity. I am grateful and scared. When will I be able to support myself so I can feel safe? Will this degree be worth it? I can’t tell my daughter she can be anything she wants to be. I can’t even guarantee she will have clean air to breathe or a school that isn’t underfunded and understaffed. WE ARE THE 99%!!!
* I’m 50 years old. I am one of the lucky ones! I’ve worked since I was 16, I’m a decorated US Military Vet. I’m well educated and work in the IT field and haven’t had a raise in five years. My wife is a school teacher who has lost $5000.00 of her salary due to budget cuts. Wells Fargo started foreclosure proceedings after we missed a payment, they would not talk to us until they successfully foreclosed on our home, then socked us with legal fees and refinanced making us upside down on our mortgage. To make ends meet, I’ve had to take a better paying job out of state, leaving my wife and child (a foster care adoption) in our home we cannot sell and cannot rent. I’ve been tuned down for insurance even though I’m healthy. I’m looking for a 2nd job so I can move off of my friend’s couch because with my wife and my combined salary I can’t afford a cheap efficiency apartment. WE ARE DOING WELL! WE ARE THE 99%
In a land where everyone is equal, the stories of the people above should not be true. But they are. The needs of the 99% are not equal to the wants of the 1%, and rather than majority rule, the 1% is calling the shots. Why does my husband pay more in personal income taxes than the multinational corporation he works for pays in corporate income tax? Why do banks make risky investments and get bailed out with public money when those investments fail, but individuals with pension funds that believed the banks about the safety of those investments have to accept their losses and start over from scratch? Why was the man in line in front of me at the pharmacy last week told that they couldn't fill his valid prescription from his physician because it wasn't on the 'approved' list from his insurance company, and it would take three days for them to get authorization? When he told the pharmacist that he couldn't wait three days for this medication, he was told to call his doctor and see if he could be prescribed something else.
According to the Supreme Court, corporations are 'persons' just like anyone else. All persons are equal, but apparently some persons are more equal than others.
But now I'm not so sure. The protests are growing, spreading, and appear to have broken the media blackout. (I regularly read the Wall Street Journal Online, plus use the news and weather app on my phone which draws from a variety of outlets, and I didn't know anything about the protests until another blog I follow posted one of those YouTube videos three or four days after the protests began. Now the WSJ Online is providing regular updates on its homepage.) Additionally, the protesters have begun to focus their message. The First Official Release From Occupy Wall Street articulates some of their specific grievances, and they are working on a List of Demands.
Now they're getting more organized, focused, and specific. Their grievances basically amount to calling out the government for allowing large corporations to dictate US economic policy in such a way that it benefits 1% of the population at the expense of the other 99% (this is my interpretation and summary, not a statement from their document; I encourage you to follow the links above and read their statements for yourself). And it's not just that the rich are getting richer and the poor are getting poorer; it's that the poor are getting poorer because the rich are usurping power from our supposedly democratic government, drowning out the voices of the majority of the population with the money our elected representatives need for reelection, and changing the rules to benefit themselves while causing harm and injustice to everyone else. I don't necessarily agree with all their grievances, but there is definitely enough common ground there for me to hope for their success.
But what about the concern that too many people are too comfortable with the status quo to risk their lives, their fortunes, and their sacred honor? I'm beginning to realize that people are more uncomfortable than I'd realized. I knew things were rough; my own family is struggling to make ends meet after a prolonged period of unemployment and underemployment, and I have no idea how we're going to pay down the debt we accumulated during that time. But I hadn't realized just how many people have already lost not only their fortunes, but their hope of ever rebuilding them. Honor isn't what it once was, however there is enough anger against large corporations and the super-wealthy that aiding in the effort to stop filling their coffers with the hard work and sacrifices borne by the rest of us will gain honor, not lose it. And if you've already lost everything and have no hope of ever getting it back under the current system, why not pledge your life to trying to make things better? If the current system doesn't care about your life or well being (and it doesn't), what have you really got to lose?
Americans are sold a bill of goods. We're taught that if you study hard, work hard, maybe even serve your country in the military, you can make something of yourself. You can live the American Dream. Instead we're seeing college graduates who did what they were supposed to do saddled with impossible debt loads and unable to find the jobs that were supposed to be worth that investment. We're seeing people who have worked hard at their jobs all their lives taking pay cut after pay cut, until finally ending up unemployed and unemployable because their entire industry is virtually gone, losing their houses, their health insurance, and, eventually, their health. We're seeing veterans ignored and forgotten once they take off their uniform (and sometimes before they've taken it off). There are a lot of people represented in that 99% who are being screwed over by the 1%. Rather than try to tell you their stories, I'm going to let some of them speak for themselves.
The following is only a small sampling from 'We Are the 99 Percent.' Please go to that website and see why people are protesting on Wall Street (and elsewhere in the US), especially if you tend to believe that things aren't all that bad, and people who are complaining should just suck it up, stop slacking off, and work harder.
* I’d never been unemployed, until the company I worked for tanked a month ago. Up until then, I was living paycheck to paycheck, sharing a small apartment with my elderly, unemployed mother, making just enough to pay rent, grocery bills and medical insurance. Now we have no jobs, no savings, no health care and no furniture in our apartment; we sold almost everything we had to pay for food and rent. We both have extensive medical problems and are wondering how we’re going to pay for the medications we need to keep functioning. I don’t want sympathy, or handouts. I want a job, affordable rent and the restoration of the “American Dream.” I AM THE 99%!!!
* I have a master’s degree from a top university and $75,000 in student loan debt. I have applied to jobs all over the country but I can’t even get an interview. My mom lost her job in 2010 and hasn’t been able to find anything since. I don’t know what we will do when her unemployment runs out. I’ve given up all hope in having a future. I am the 99%!
* I am educated, hard working and responsible. I am employed full time and have been for all of adult life. And yet I struggle each month to pay my bills, to feed my dog, to keep gas in my car. I dream of grad school, of a job in social services or ministry to make this world better than I found it. And yet, I am trapped. I am chained to my mortgage, to my unsellable home, to my mediocre job, to my city. Sometimes I feel a failure to be part of the first generation that will not exceed the accomplishments of the last and yet everyone I know works so hard. Just to get by. Our priorities have gone so astray in this country. We have lost sight of the importance of community and equality. Of justice and forgiveness. Of generosity and faith. Of democracy and hope. We got lazy and distracted and entitled and we didn’t realize that a few people have been making greedy decisions that would and do negatively affect the lives of the many. It’s time to wake up. To pay attention. To stop worshiping the dollar and start worshiping each other again. All of us. Together, being the change. My name is Emily Wheeland and I am one paycheck away from homelessness. I am the 99 percent.
* Single mother. Living with my parents, who own a small business and are barely scraping by themselves. Neither has health insurance or savings. My grandparents have spent their savings on medications. My daughter’s father joined the military to get a degree in a field he doesn’t want to study in, because it offers job security. He is stationed overseas for 2 years and is missing his daughter growing up…she asks for him almost every day, if she will see him soon. She won’t, not because he can’t get leave from work, but because we can’t afford tickets. We stay married for health insurance and assistance with my college. I have $15k in medical debt (collections) and terrible credit. He owns my car and we live off of his child support while I am in school. My parents provide free childcare so I can go to school. EVERYTHING I have—roof over my head, financial aid for my classes, my car and financial security, are all due to someone else’s generosity. I am grateful and scared. When will I be able to support myself so I can feel safe? Will this degree be worth it? I can’t tell my daughter she can be anything she wants to be. I can’t even guarantee she will have clean air to breathe or a school that isn’t underfunded and understaffed. WE ARE THE 99%!!!
* I’m 50 years old. I am one of the lucky ones! I’ve worked since I was 16, I’m a decorated US Military Vet. I’m well educated and work in the IT field and haven’t had a raise in five years. My wife is a school teacher who has lost $5000.00 of her salary due to budget cuts. Wells Fargo started foreclosure proceedings after we missed a payment, they would not talk to us until they successfully foreclosed on our home, then socked us with legal fees and refinanced making us upside down on our mortgage. To make ends meet, I’ve had to take a better paying job out of state, leaving my wife and child (a foster care adoption) in our home we cannot sell and cannot rent. I’ve been tuned down for insurance even though I’m healthy. I’m looking for a 2nd job so I can move off of my friend’s couch because with my wife and my combined salary I can’t afford a cheap efficiency apartment. WE ARE DOING WELL! WE ARE THE 99%
In a land where everyone is equal, the stories of the people above should not be true. But they are. The needs of the 99% are not equal to the wants of the 1%, and rather than majority rule, the 1% is calling the shots. Why does my husband pay more in personal income taxes than the multinational corporation he works for pays in corporate income tax? Why do banks make risky investments and get bailed out with public money when those investments fail, but individuals with pension funds that believed the banks about the safety of those investments have to accept their losses and start over from scratch? Why was the man in line in front of me at the pharmacy last week told that they couldn't fill his valid prescription from his physician because it wasn't on the 'approved' list from his insurance company, and it would take three days for them to get authorization? When he told the pharmacist that he couldn't wait three days for this medication, he was told to call his doctor and see if he could be prescribed something else.
According to the Supreme Court, corporations are 'persons' just like anyone else. All persons are equal, but apparently some persons are more equal than others.
Tuesday, September 6, 2011
Let's Blame the Immigrants!
The US economy is in the crapper, everyone's feeling the squeeze, so of course it's time for the next round of "Let's Blame Immigrants for All Our Problems!"
The following post has been making the rounds on Facebook (again):
The following post has been making the rounds on Facebook (again):
Tuesday, August 16, 2011
Whose Fault is the Next Recession?
The government is tapped out. The big banks are teetering. Large corporations are watching their stock prices plummet, then skyrocket, then plummet again, with no idea where they'll settle. We are on the brink of recession. And if we go over that edge, it will be the fault of American consumers and small businesses.
At least that's what an article* in the Wall Street Journal suggested last week.
According to an economist interviewed in the article, consumers and businesses who worry about a recession and make spending decisions based on that worry will then, by their cautious actions, trigger that recession. He called it a self-fulfilling prophecy.
His words make sense, but they--and the article--leave out some very important details.
The United States government has been passing a deficit budget nearly every year since around 1970. That means that for about forty years, the government has been borrowing money to meet its expenses. Of course, they eventually had to pay that money back, and they did that by borrowing more money, on top of what they were already borrowing. And then, when those bills came due along with all the others, they paid those off by borrowing yet more. It's like someone paying all their bills with a credit card, and when their credit card bill comes due, they get a new credit card to pay it off, and on and on it goes. The recent fiasco in congress about raising the debt ceiling came about because someone finally questioned whether it was a good idea for the government to continually get a new credit card every time they maxed out the old one.
So now the government is trying to cut spending. And some of the things they are cutting are the safety nets. Now I for one see a distinction between a safety net and an entitlement program, but that's an entirely different rant for an entirely different post. At any rate, I believe that some of those entitlements do indeed need to be trimmed. But the entitlements benefit so many people that they have powerful lobbies, and it's hard to touch them at all. So the small safety nets that are still left and make the difference between life and death for a few people (comparatively speaking) are being cut or eliminated, and the backlash against the entitlements when it comes (and it will come) will cut too deeply, and then they will barely function as safety nets, either. So watch out, citizens! Don't count on Uncle Sam helping you out if you get in trouble; you're on your own.
Big banks were lending large sums of money to people with small incomes. Mortgages were great for the banks. The more money people were able to borrow, the more they were able to spend on a house. As more money was available to spend on housing, the more expensive houses got. So people had to borrow more money for less house, and with the availability of that money, houses got yet more expensive, and people had to borrow more. Anyone not buying a house was cautioned that they'd better do it before they got priced out of the market completely, because home prices were only going to go up. So more people felt pressured to buy, and took on interest-only mortgages with low monthly payments that would balloon later, expecting that by the time their payments went up, their house would be worth so much more than they'd paid for it that they could just tap their equity and make the house pay for itself. Free money, free house. Banks encouraged this by lowering their lending standards to practically nothing.
Then the banks began betting that their borrowers would default with the investment known as Credit Default Swaps (CDS). These little beauties made it so the banks won either way: if the mortgage was paid back along with the interest due, the bank got a payoff from its investment; if the mortgage defaulted and wasn't paid back, the CDS would pay the bank a lump sum, and the bank got a payoff from its investment. The losers were the ones who had to pay out the CDS. And since you don't have to actually be the creditor (i.e. hold the mortgage) to buy a CDS, anyone can get one. So those made their way into pension funds, mutual funds, etc., as safe investments with high payoffs, which was accurate (provided the mortgages never defaulted). Of course, once things reached a breaking point and people couldn't pay their mortgages, there was widespread failure across the system. The banks, who held both mortgages and CDS, found themselves overexposed and ready to fail. Of course if that happened, people and businesses couldn't borrow money, and the entire economy would seize up (because we've already established that no one can pay for anything unless it's with borrowed money). So the government bailed them out and covered their investment losses (but did nothing to help the individuals who suffered losses--except make it easier for them to borrow more money to make ends meet) and took more money out of taxpayers' pockets and gave it to the banks. So watch out, bank customers! Don't count on the banks working with you if you get into trouble; you're on your own.
Businesses have focused so much on quarterly earnings that they cost-cut their way to short-term profits while sacrificing their long-term strategies and even viability. They lay off employees (i.e. people who are trying to work for a living and take care of themselves) and expect unreasonable levels of productivity from those who are left. They shift more of the costs of health insurance to their employees. They make management decisions that cause the workplace environment to become unpleasant or even unhealthy (I'm aware of one company that has removed every third fluorescent tube from their overhead lighting to save money, making the office just dim enough to cause eyestrain). They use cheaper quality components in their products while charging their customers higher prices on account of the company's 'increased costs.' And finally they take advantage of perfectly legal tax loopholes that allow them to post record profits while keeping their federal income tax liability at zero. So watch out, employees! Don't count on your company to value your job over their shareholders' gains; if they need to lay you off to save a few pennies, that's your problem; you're on your own. And customers, don't count on prices going down, either.
Individuals aren't innocent here, either. No one was forced to take on an oversized mortgage. If you took out anything other than a conventional mortgage with a fixed interest rate, then you contributed to the problem. If you took out a home equity loan for anything other than major home repairs or improvements, you contributed to the problem. If you ever used your credit card and didn't pay off the balance in full at the end of the month, you contributed to the problem. (I'm not talking about the occasional large purchase that took two or three months to pay off; I'm talking about if you can't remember the last time you didn't carry a balance on your credit cards.) Of course, this was also in an environment when costs were going up, salaries were remaining stagnant or going down, and we were being told that it was our patriotic duty to stimulate the economy by spending money.
No one (that I'm aware of) is spouting off that 'patriotic duty' crap this time around, but putting the responsibility of another recession on the backs of consumers amounts to the same thing. (It's also notable that the American public is usually referred to as consumers, and not citizens or people--I guess it's clear what our primary purpose is in this country.) We've learned that prices are going up, jobs can't be counted on to last, banks will gamble with people's money and expect the government to cover their losses, our own individual taxes will have to pay for those bailouts as well as make up for the taxes the large corporations aren't paying, and the government isn't going to help us out if we get in trouble. But if we practice fiscal responsibility by living within our means, saving for a rainy day, and spending cautiously, the next recession is our fault.
Give me a break.
*The article was "Penny-Pinching Puts Recovery on Thin Ice" by Ben Casselman and Conor Dougherty, in the Wall Street Journal's online edition on Wednesday, August 11, 2011. I have provided a link, but I believe the article is locked unless you have a subscription.
At least that's what an article* in the Wall Street Journal suggested last week.
According to an economist interviewed in the article, consumers and businesses who worry about a recession and make spending decisions based on that worry will then, by their cautious actions, trigger that recession. He called it a self-fulfilling prophecy.
His words make sense, but they--and the article--leave out some very important details.
The United States government has been passing a deficit budget nearly every year since around 1970. That means that for about forty years, the government has been borrowing money to meet its expenses. Of course, they eventually had to pay that money back, and they did that by borrowing more money, on top of what they were already borrowing. And then, when those bills came due along with all the others, they paid those off by borrowing yet more. It's like someone paying all their bills with a credit card, and when their credit card bill comes due, they get a new credit card to pay it off, and on and on it goes. The recent fiasco in congress about raising the debt ceiling came about because someone finally questioned whether it was a good idea for the government to continually get a new credit card every time they maxed out the old one.
So now the government is trying to cut spending. And some of the things they are cutting are the safety nets. Now I for one see a distinction between a safety net and an entitlement program, but that's an entirely different rant for an entirely different post. At any rate, I believe that some of those entitlements do indeed need to be trimmed. But the entitlements benefit so many people that they have powerful lobbies, and it's hard to touch them at all. So the small safety nets that are still left and make the difference between life and death for a few people (comparatively speaking) are being cut or eliminated, and the backlash against the entitlements when it comes (and it will come) will cut too deeply, and then they will barely function as safety nets, either. So watch out, citizens! Don't count on Uncle Sam helping you out if you get in trouble; you're on your own.
Big banks were lending large sums of money to people with small incomes. Mortgages were great for the banks. The more money people were able to borrow, the more they were able to spend on a house. As more money was available to spend on housing, the more expensive houses got. So people had to borrow more money for less house, and with the availability of that money, houses got yet more expensive, and people had to borrow more. Anyone not buying a house was cautioned that they'd better do it before they got priced out of the market completely, because home prices were only going to go up. So more people felt pressured to buy, and took on interest-only mortgages with low monthly payments that would balloon later, expecting that by the time their payments went up, their house would be worth so much more than they'd paid for it that they could just tap their equity and make the house pay for itself. Free money, free house. Banks encouraged this by lowering their lending standards to practically nothing.
Then the banks began betting that their borrowers would default with the investment known as Credit Default Swaps (CDS). These little beauties made it so the banks won either way: if the mortgage was paid back along with the interest due, the bank got a payoff from its investment; if the mortgage defaulted and wasn't paid back, the CDS would pay the bank a lump sum, and the bank got a payoff from its investment. The losers were the ones who had to pay out the CDS. And since you don't have to actually be the creditor (i.e. hold the mortgage) to buy a CDS, anyone can get one. So those made their way into pension funds, mutual funds, etc., as safe investments with high payoffs, which was accurate (provided the mortgages never defaulted). Of course, once things reached a breaking point and people couldn't pay their mortgages, there was widespread failure across the system. The banks, who held both mortgages and CDS, found themselves overexposed and ready to fail. Of course if that happened, people and businesses couldn't borrow money, and the entire economy would seize up (because we've already established that no one can pay for anything unless it's with borrowed money). So the government bailed them out and covered their investment losses (but did nothing to help the individuals who suffered losses--except make it easier for them to borrow more money to make ends meet) and took more money out of taxpayers' pockets and gave it to the banks. So watch out, bank customers! Don't count on the banks working with you if you get into trouble; you're on your own.
Businesses have focused so much on quarterly earnings that they cost-cut their way to short-term profits while sacrificing their long-term strategies and even viability. They lay off employees (i.e. people who are trying to work for a living and take care of themselves) and expect unreasonable levels of productivity from those who are left. They shift more of the costs of health insurance to their employees. They make management decisions that cause the workplace environment to become unpleasant or even unhealthy (I'm aware of one company that has removed every third fluorescent tube from their overhead lighting to save money, making the office just dim enough to cause eyestrain). They use cheaper quality components in their products while charging their customers higher prices on account of the company's 'increased costs.' And finally they take advantage of perfectly legal tax loopholes that allow them to post record profits while keeping their federal income tax liability at zero. So watch out, employees! Don't count on your company to value your job over their shareholders' gains; if they need to lay you off to save a few pennies, that's your problem; you're on your own. And customers, don't count on prices going down, either.
Individuals aren't innocent here, either. No one was forced to take on an oversized mortgage. If you took out anything other than a conventional mortgage with a fixed interest rate, then you contributed to the problem. If you took out a home equity loan for anything other than major home repairs or improvements, you contributed to the problem. If you ever used your credit card and didn't pay off the balance in full at the end of the month, you contributed to the problem. (I'm not talking about the occasional large purchase that took two or three months to pay off; I'm talking about if you can't remember the last time you didn't carry a balance on your credit cards.) Of course, this was also in an environment when costs were going up, salaries were remaining stagnant or going down, and we were being told that it was our patriotic duty to stimulate the economy by spending money.
No one (that I'm aware of) is spouting off that 'patriotic duty' crap this time around, but putting the responsibility of another recession on the backs of consumers amounts to the same thing. (It's also notable that the American public is usually referred to as consumers, and not citizens or people--I guess it's clear what our primary purpose is in this country.) We've learned that prices are going up, jobs can't be counted on to last, banks will gamble with people's money and expect the government to cover their losses, our own individual taxes will have to pay for those bailouts as well as make up for the taxes the large corporations aren't paying, and the government isn't going to help us out if we get in trouble. But if we practice fiscal responsibility by living within our means, saving for a rainy day, and spending cautiously, the next recession is our fault.
Give me a break.
*The article was "Penny-Pinching Puts Recovery on Thin Ice" by Ben Casselman and Conor Dougherty, in the Wall Street Journal's online edition on Wednesday, August 11, 2011. I have provided a link, but I believe the article is locked unless you have a subscription.
Subscribe to:
Posts (Atom)