REALITY ON THE OBAMA “RECOVERY”… Bankster donors profits SOARING! Foreclosures are SOARING! Welfare for illegals SOARING. Unemployment is SOARING! Illegals in our jobs SOARING!
“For the past several weeks, virtually every economic indicator has been worse than economists’ forecasts.”
“However, his only concrete proposal was to extend the Bush tax cuts for the wealthy—the 2 percent of households making more than $250,000 a year.”
“Those “tough decisions” include the multi-trillion-dollar bailout of the banks, the forced bankruptcy of General Motors and Chrysler, liquidation of tens of thousands of auto jobs, and imposition of a 50 percent cut in newly-hired auto workers’ wages, as well as the rejection of any further stimulus measures and focus instead on deeper cuts in social programs.”
“Neither the Obama administration nor its Republican opponents are proposing any serious measures to create jobs or provide relief for the more than 20 million workers who are either unemployed or underemployed. The Democrats and Republicans differ only on the most effective tactics for imposing the full burden of the capitalist crisis on the working class.”
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HERE’S Rep. Lamar Smith’s comment on OBAMA’S endless sellout to illegals:
THE ENTIRE REASON THE BORDERS ARE LEFT OPEN IS TO CUT WAGES!
“We could cut unemployment in half simply by reclaiming the jobs taken by illegal workers,” said Representative Lamar Smith of Texas, co-chairman of the Reclaim American Jobs Caucus. “President Obama is on the wrong side of the American people on immigration. The president should support policies that help citizens and legal immigrants find the jobs they need and deserve rather than fail to enforce immigration laws.”
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“The principal beneficiaries of our current immigration policy are affluent Americans who hire immigrants at substandard wages for low-end work. Harvard economist George Borjas estimates that American workers lose $190 billion annually in depressed wages caused by the constant flooding of the labor market at the low-wage end.” Christian Science Monitor
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Record drop in US home sales
By Barry Grey
25 August 2010
Sales of existing US homes in July plunged by a record 27.2 percent from the previous month, according to a report released Tuesday by the National Association of Realtors.
The virtual collapse in home sales affected every region of the country and was more than twice as bad as anticipated by economic analysts, who had forecast a drop of 12.1 percent. Sales fell to 3.83 million units, compared to June’s downwardly revised figure of 5.26 million.
On a year-over-year basis, existing home sales in July were down 25.5 percent from an annual rate of 5.14 million units in July 2009.
The July figure was the largest monthly drop since records began in 1968. It brought the rate of US home sales on an annualized basis to the lowest level since 1995.
Home sales fell 29.5 percent in the Northeast, 22.6 percent in the South, 25 percent in the West and 35 percent in the Midwest. The link between the housing collapse and the social distress caused by long-term mass unemployment was underscored by two pieces of data: nearly a third of the homes sold were distressed properties, and sales tumbled particularly sharply for homes in the lower to mid-priced ranges. In the Midwest, sales of homes priced between $100,000 and $250,000 plunged nearly 47 percent.
The July figure marked the third consecutive monthly decline since the April 30 expiration of a federal tax credit for home-buyers. The impact of the termination of the tax credit on the housing market has been compounded by the soaring number of foreclosed homes and the rising rate of mortgage payment delinquency.
Home foreclosures are running about ten times higher than before the housing bust of 2007. A survey released last week by Deutsche Bank showed that the rate of serious mortgage payment delinquency (more than 90 days) in the average US congressional district has nearly tripled from the time of the 2008 election.
The realtors’ report also recorded a sharp rise in the inventory of unsold existing homes in July. At the end of the month, 3.98 million homes were available for sale, which translates into a 12.5-month supply, up from 8.9 months in June and the highest level in over a decade. A six-month supply of available homes is considered a healthy level.
The disastrous home sales report is consistent with dismal reports last week on housing starts and new housing permits and other data, including a nine-month high for initial jobless benefit claims, which reflect a sharp contraction in economic growth and point to a further rise in unemployment, already near Depression levels.
Most economists believe that when the Commerce Department issues its revised estimate for second quarter US economic growth on Friday, it will downgrade the figure from the 2.4 percent it reported last month to 1.3 percent. Even this grim prediction may be overly optimistic. For the past several weeks, virtually every economic indicator has been worse than economists’ forecasts.
Dan Greenhaus, chief economic strategist for Miller Tabak & Co., spoke in a research note Tuesday of a “near, if not outright, collapse in housing.”
Paul Dales of Capital Economics said, “It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse.”
In a note analyzing the housing numbers, Nigel Gault, chief US economist for HIS Global Insight, wrote, “A sustained upturn [in the housing market] will depend on an improvement in the jobs market, which at the moment is slowing down rather than gathering pace.” He added, “There is no sign of any underlying recovery despite rock-bottom interest rates.”
The average rate for a 30-year fixed mortgage has sunk to 4.42 percent, the lowest rate in decades. That home sales continue to plummet despite such attractive rates underscores the depth of the economic crisis and absence of any real recovery. Workers who would otherwise be in the market are not buying either because they have lost their job or they fear joining the jobless ranks. Banks have also tightened their requirements and cut back on loans.
Stock markets around the world fell sharply on the latest sign of a slowdown in the US economy. Asian stocks, which fell Tuesday morning, in part in anticipation of the US housing report, resumed their decline on Wednesday. European stocks fell by more than 1 percent Tuesday, as did US stocks. The Dow Jones Industrial Average lost 133 points, a decline of 1.3 percent. The Standard & Poor’s 500 index and the Nasdaq fell even more sharply on a percentage basis. It was the fourth consecutive decline on Wall Street.
Other global indicators pointed to an erosion of confidence and mounting fear of a “double-dip” recession. Crude oil prices fell below $72 a barrel, their lowest level in eleven weeks. Gold for December delivery closed $4.90 higher at $1,233.40 an ounce at the Comex division of the New York Mercantile Exchange. The yield on ten-year US Treasuries fell to 2.499 percent, reflecting a “flight to safety” by big investors.
Neither the Obama administration nor its Republican opponents are proposing any serious measures to create jobs or provide relief for the more than 20 million workers who are either unemployed or underemployed. The Democrats and Republicans differ only on the most effective tactics for imposing the full burden of the capitalist crisis on the working class.
On Tuesday, John Boehner, the leader of the Republicans in the House of Representatives, made a demagogic speech in which he attempted to present himself as the advocate for unemployed and economically threatened working people. He denounced Obama for failing to stem the jobs crisis and called for the resignation of Obama’s top economic advisers, Treasury Secretary Timothy Geithner and Lawrence Summers, the director of the White House National Economic Council.
However, his only concrete proposal was to extend the Bush tax cuts for the wealthy—the 2 percent of households making more than $250,000 a year. He also criticized the extension of federal emergency jobless benefits and the $26 billion in federal aid to the states recently passed by Congress.
In response, the Democrats, speaking out of both sides of their mouths, sought to foist the blame for mass unemployment and growing poverty on the Bush administration, while touting the supposed “success” of Obama’s economic policies. Vice President Joseph Biden said that Obama’s 2009 stimulus package was “working to rescue the economy from eight years of failed economic policy and rebuild it even stronger than before.”
Speaking from the exclusive Massachusetts resort island of Martha’s Vineyard, where Obama is vacationing, White House deputy press secretary Bill Burton said Boehner “would fire the very people who helped to make the tough decisions, who helped to do the hard work to get our economy moving in the right direction again.”
Those “tough decisions” include the multi-trillion-dollar bailout of the banks, the forced bankruptcy of General Motors and Chrysler, liquidation of tens of thousands of auto jobs, and imposition of a 50 percent cut in newly-hired auto workers’ wages, as well as the rejection of any further stimulus measures and focus instead on deeper cuts in social programs.
Biden cited Obama’s auto policy as an example of successful “innovation.” The essence of this policy is to keep unemployment painfully high and use it as a bludgeon to permanently reduce the wages and living standards of the American working class, narrowing the differential between US workers and super-exploited workers in China, India and other “emerging economies.” On this basis, the Obama administration is seeking to revive US manufacturing as a cheap-labor platform for export to global markets.
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CORPORATE DONORS’ PROFITS CAN NEVER BE HIGH ENOUGH! WAGES CAN NEVER BE LOW ENOUGH!
Biden cited Obama’s auto policy as an example of successful “innovation.” The essence of this policy is to keep unemployment painfully high and use it as a bludgeon to permanently reduce the wages and living standards of the American working class, narrowing the differential between US workers and super-exploited workers in China, India and other “emerging economies.”
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The assault on US workers’ wages
19 August 2010
An article published in Wednesday’s Financial Times under the headline “US Matches Indian Call Centre Costs” gives some indication of the impact on American workers of a coordinated and escalating wage-cutting drive by big business, backed by the Obama administration.
The article begins: “Call centre workers are becoming as cheap to hire in the US as they are in India, according to the head of the country’s largest business process outsourcing company. High unemployment levels have driven down wages for some low-skilled outsourcing services in some parts of the US, particularly among the Hispanic population.” *****
***** NO WONDER OBAMA CAN’T HISPANDER ENOUGH! AND WHY MOST OF THE FORTUNE 500 ARE GENEROUS DONORS TO LA RAZA, THE MEX FASCIST PARTY of AMERICA… keeping the illegals pouring over our OPEN & UNDEFENDED BORDERS!
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July 13, 2010
Former Secretary of Labor, Professor at Berkeley
Posted: July 13, 2010 12:16 PM
The Root of Economic Fragility and Political Anger
Missing from almost all discussion of America's dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June's decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.
In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.
Meanwhile, a much smaller group of Americans' earnings are back in the stratosphere: Wall Street traders and executives, hedge-fund and private-equity fund managers, and top corporate executives. As hiring has picked up on the Street, fat salaries are reappearing. Richard Stein, president of Global Sage, an executive search firm, tells the New York Times corporate clients have offered compensation packages of more than $1 million annually to a dozen candidates in just the last few weeks.
We're back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground.
And as long as this trend continues, we can't get out of the shadow of the Great Recession. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don't have enough purchasing power to buy what the economy is capable of producing.
America's median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class could boost its purchasing power was to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn't pay their bills, and banks couldn't collect.
Each of America's two biggest economic downturns over the last century has followed the same pattern. Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation's total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America's total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928--with 23.5 percent of the total.
We all know what happened in the years immediately following these twin peaks--in 1929 and 2008.
Yes, China, Germany and Japan have contributed to America's demand-side problem by failing to buy as much from us as we buy from them. But to believe that our continuing economic crisis stems mainly from the trade imbalance--we buy too much and save too little, while they do the reverse--is to miss the biggest imbalance of all. The problem isn't that typical Americans have spent beyond their means. It's that their means haven't kept up with what the growing economy could and should have been able to provide them.
A second parallel links 1929 with 2008: when earnings accumulate at the top, people at the top invest their wealth in whatever assets seem most likely to attract other big investors. This causes the prices of certain assets--commodities, stocks, dot-coms or real estate--to become wildly inflated. Such speculative bubbles eventually burst, leaving behind mountains of near-worthless collateral.
The crash of 2008 didn't turn into another Great Depression because the government learned the importance of flooding the market with cash, thereby temporarily rescuing some stranded consumers and most big bankers. But the financial rescue didn't change the economy's underlying structure -- median wages dropping while those at the top are raking in the lion's share of income.
That's why America's middle class still doesn't have the purchasing power it needs to reboot the economy, and why the so-called recovery will be so tepid--maybe even leading to a double dip. It's also why America will be vulnerable to even larger speculative booms and deeper busts in the years to come.
The structural problem began in the late 1970s when a wave of new technologies (air cargo, container ships and terminals, satellite communications and, later, the Internet) radically reduced the costs of outsourcing jobs abroad. Other new technologies (automated machinery, computers and ever more sophisticated software applications) took over many other jobs (remember bank tellers? telephone operators? service station attendants?). By the '80s, any job requiring that the same steps be performed repeatedly was disappearing--going over there or into software. Meanwhile, as the pay of most workers flattened or dropped, the pay of well-connected graduates of prestigious colleges and MBA programs--the so-called "talent" who reached the pinnacles of power in executive suites and on Wall Street--soared.
The puzzle is why so little was done to counteract these forces. Government could have given employees more bargaining power to get higher wages, especially in industries sheltered from global competition and requiring personal service: big-box retail stores, restaurants and hotel chains, and child- and eldercare, for instance. Safety nets could have been enlarged to compensate for increasing anxieties about job loss: unemployment insurance covering part-time work, wage insurance if pay drops, transition assistance to move to new jobs in new locations, insurance for communities that lose a major employer so they can lure other employers. With the gains from economic growth the nation could have provided Medicare for all, better schools, early childhood education, more affordable public universities, more extensive public transportation. And if more money was needed, taxes could have been raised on the rich.
Big, profitable companies could have been barred from laying off a large number of workers all at once, and could have been required to pay severance--say, a year of wages--to anyone they let go. Corporations whose research was subsidized by taxpayers could have been required to create jobs in the United States. The minimum wage could have been linked to inflation. And America's trading partners could have been pushed to establish minimum wages pegged to half their countries' median wages--thereby ensuring that all citizens shared in gains from trade and creating a new global middle class that would buy more of our exports.
But starting in the late 1970s, and with increasing fervor over the next three decades, government did just the opposite. It deregulated and privatized. It increased the cost of public higher education and cut public transportation. It shredded safety nets. It halved the top income tax rate from the range of 70-90 percent that prevailed during the 1950s and '60s to 28-40 percent; it allowed many of the nation's rich to treat their income as capital gains subject to no more than 15 percent tax and escape inheritance taxes altogether. At the same time, America boosted sales and payroll taxes, both of which have taken a bigger chunk out of the pay of the middle class and the poor than of the well-off.
Companies were allowed to slash jobs and wages, cut benefits and shift risks to employees (from you-can-count-on-it pensions to do-it-yourself 401(k)s, from good health coverage to soaring premiums and deductibles). They busted unions and threatened employees who tried to organize. The biggest companies went global with no more loyalty or connection to the United States than a GPS device. Washington deregulated Wall Street while insuring it against major losses, turning finance--which until recently had been the servant of American industry--into its master, demanding short-term profits over long-term growth and raking in an ever larger portion of the nation's profits. And nothing was done to impede CEO salaries from skyrocketing to more than 300 times that of the typical worker (from thirty times during the Great Prosperity of the 1950s and '60s), while the pay of financial executives and traders rose into the stratosphere.
It's too facile to blame Ronald Reagan and his Republican ilk. Democrats have been almost as reluctant to attack inequality or even to recognize it as the central economic and social problem of our age. (As Bill Clinton's labor secretary, I should know.) The reason is simple. As money has risen to the top, so has political power. Politicians are more dependent than ever on big money for their campaigns. Modern Washington is far removed from the Gilded Age, when, it's been said, the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators. Today's cash comes in the form of ever increasing campaign donations from corporate executives and Wall Street, their ever larger platoons of lobbyists and their hordes of PR flacks.
The Great Recession could have spawned another era of fundamental reform, just as the Great Depression did. But the financial rescue reduced immediate demands for broader reform.
Obama might still have succeeded had he framed the challenge accurately. Yet in reassuring the public that the economy will return to normal he has missed a key opportunity to expose the longer-term scourge of widening inequality and its dangers. Containing the immediate financial crisis and then claiming the economy is on the mend has left the public with a diffuse set of economic problems that seem unrelated and inexplicable, as if a town's fire chief deals with a conflagration by protecting the biggest office buildings but leaving smaller fires simmering all over town: housing foreclosures, job losses, lower earnings, less economic security, soaring pay on Wall Street and in executive suites.
Much the same has occurred with efforts to reform the financial system. The White House and Democratic leaders could have described the overarching goal as overhauling economic institutions that bestow outsize rewards on a relative few while imposing extraordinary costs and risks on almost everyone else. Instead, they have defined the goal narrowly: reducing risks to the financial system caused by particular practices on Wall Street. The solution has thereby shriveled to a set of technical fixes for how the Street should conduct its business.
What we get from widening inequality is not only a more fragile economy but also an angrier politics. When virtually all the gains from growth go to a small minority at the top -- and the broad middle class can no longer pretend it's richer than it is by using homes as collateral for deepening indebtedness -- the result is deep-seated anxiety and frustration. This is an open invitation to demagogues who misconnect the dots and direct the anger toward immigrants, the poor, foreign nations, big government, "socialists," "intellectual elites," or even big business and Wall Street. The major fault line in American politics is no longer between Democrats and Republicans, liberals and conservatives, but between the "establishment" and an increasingly mad-as-hell populace determined to "take back America" from it.
When they understand where this is heading, powerful interests that have so far resisted fundamental reform may come to see that the alternative is far worse.
This post originally appeared at RobertReich.org
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