FALL OF THE AMERICAN MIDDLE CLASS
"The country is now at the edge of an abyss following years of
obfuscation, unaccountability, subterfuge, and law evasion by the
Obama administration that have numbed much of its citizenry into
a kind of base “group think acceptance” of government corruption
and abuse of power. Resetting Americans’ trust in government
needs to start with holding people in high office, like Hillary
"Paralleling the ever more extreme concentration of wealth, American politics is acquiring an increasingly dynastic and nepotistic character, traditionally a hallmark of the decay of bourgeois democracy. In a country of 350 million people, the Democratic Party could do no better than nominate as its presidential candidate an individual whose political career is based, to start with, on the fact that she is the wife of a former president."
AMNESTY: THE PLOT AGAINST THE
AMERICAN MIDDLE CLASS TO KEEP
WAGES DEPRESSED AND PASS ALONG
THE TRUE COST OF MEXICO'S
OCCUPATION, LOOTING, WELFARE AND
CRIME TIDAL WAVE TO THE SAME
Average Family Today Has Less Income Than When Obama Took Office: The President is actually arguing that he’s done a good job with the economy.
EVERY DAY, IN EVERY WAY, BARACK OBAMA HAS SABOTAGED AMERICA'S BORDERS AND LAWS TO BUILD HIS LA RAZA PARTY BASE OF ILLEGALS.
Average Family Today Has Less Income Than When Obama Took Office
I often use per-capita economic output when comparing nations.
But for ordinary people, what probably matters most is household income. And if you look at the median household income numbers for the United States, Obamanomics is a failure. According to the Census Bureau’s latest numbers, the average family today has less income (after adjusting for inflation) than when Obama took office.
In an amazing feat of chutzpah, however, the President is actually arguing that he’s done a good job with the economy. His main talking point is that the unemployment rate is down to 4.7 percent.
Yet as discussed in this Blaze TV interview, sometimes the unemployment rate falls for less-than-ideal reasons.
Since I’m a wonky economist, I think my most important point was about long-run prosperity being dependent on the amount of labor and capital being productively utilized in an economy.
And that’s why the unemployment rate, while important, is not as important as the labor force participation rate.
Here’s the data, directly from the Bureau of Labor Statistics.
As you can see, the trend over the past 10 years is not very heartening.
To be sure, Obama should not be blamed for the fact that a downward trend that began in 2008 (except to the extent that he supported the big-government policies of the Bush Administration).
But he can be blamed for the fact that the numbers haven’t recovered, as would normally happen as an economy pulls out of a recession. This is a rather damning indictment of Obamanomics.
By the way, I can’t resist commenting on what Obama said in the soundbite that preceded my interview. He asserted that “we cut unemployment in half years before a lot of economists thought we could.”
My jaw almost hit the floor. This is a White House that promised the unemployment rate would peak at only 8 percent and then quickly fall if the so-called stimulus was approved. Yet the joblessness rate jumped to 10 percent and only began to fall after there was a shift in policy that resulted in a spending freeze.
In effect, the President airbrushed history and then tried to take credit for something that happened, at least in part, because of policies he opposed.
One final point. I was asked in the interview which policy deserves the lion’s share of the blame for the economy’s tepid performance and weak job numbers.
I wasn’t expecting that question, so I fumbled around a bit before choosing Obamacare.
But with the wisdom of hindsight, I think I stumbled onto the right answer. Yes, the stimulus was a flop, and yes, Dodd-Frank has been a regulatory nightmare, but Obamacare was (and continues to be) a perfect storm of taxes, spending, and regulatory intervention.
And even the Congressional Budget Office estimates it has cost the economy two million jobs.
Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute. Mitchell is a strong advocate of a flat tax and international tax competition.
Bond yields fall as fears rise over global economic growth
Bond yields fall as fears rise over global economic growth
By Nick Beams
Amid rising concerns over global economic growth, global bond prices surged to a record high on Friday in a “flight to safety” as equity markets in Japan and Europe experienced their worst day since the turbulence at the start of the year.
11 June 2016
Yields on German, UK and Japanese government bonds, which move in an inverse relationship to their price, all reached new depths, with the yield on the German 10-year Bund, regarded as a benchmark for the euro zone, going as low as 0.01 percent.
The head of sovereign capital markets at Citigroup, Philip Brown, said to see the yield on the Bund so low was “shocking.” “Equities are falling and fixed income is rallying in a flight to quality—there are real fears in markets about global growth.”
The surge in government bond prices came as the European Central Bank began buying corporate bonds in addition to its purchases of government debt of €80 billion a month. The extension of debt purchases, the result of an ECB decision last March to step up its quantitative easing program aimed at pumping trillions of euros into the financial system, has been accompanied by deepening criticism from Germany.
The bond-buying program, which started on Wednesday, had been expected to only involve high-grade bonds. While the ECB has not disclosed which corporate bonds are being purchased, market analysts quickly discerned those involved. Contrary to expectations some of them are of “speculative grade” status.
One of the most prominent was Telecom Italia Spa, whose bonds are listed as below investment grade status by two of the major credit rating agencies and only qualified because of the higher grade status afforded them by the Fitch rating agency.
The new phase of ECB action was greeted with a 12-page report by Deutsche Bank chief economist David Folkerts-Landau denouncing the central bank’s program. The criticisms have been voiced before but the latest report is the most strident yet.
Folkerts-Landau said the ECB had “lost the plot” and its desperate actions—bond purchasing programs and the establishment of negative interest rates—raised the risk of a “catastrophic” mistake.
“ECB policy is threatening the European project as a whole for the sake of short-term financial stability,” he wrote.
“The benefits from ever-looser policy are diminishing while the litany of distortions, perversions and disincentives grows by the day. Savers are punished and speculators rewarded. Bad companies survive while good companies are too scared to invest.”
The report compared the ECB’s mistakes to the German Reichsbank in the 1920s which printed money, leading to hyperinflation and economic collapse. “That was a hundred years ago but mistakes keep happening despite all the supposed improvement in central banking.”
Tracing out the evolution of the ECB policy, he said that after the failure of the lowest interest rates in 20 generations to boost investment, the central bank embarked on a massive program of purchasing euro zone member government debt. But the sellers of that debt did not use the money to invest but just placed their money at the central bank, after which the ECB went to the “next logical extreme” by imposing negative interest rates on deposits. He noted that almost half of euro zone sovereign debt was trading with a negative yield, meaning that a bond purchaser who held it to termination would make a loss on the investment.
Folkerts-Landau also bought into a political row that erupted in April. At that time, German Finance Minister Wolfgang Schäuble said the impact of the negative interest rate regime on small savers was at least 50 percent responsible for the rise of the right-wing German populist party, AfD, which made considerable gains in recent regional elections.
“The longer policy prevents the necessary catharsis,” Folkerts-Landau wrote, “the more it contributes to the growth of populist or extremist policies.”
These comments point to the underlying reasons for the strident opposition within the German financial system to the ECB policies. A large portion of the German financial system consists of smaller regional banks whose business model, based on investment in secure government debt, is being hammered by negative rates. The operations of these regional banks form a part of the social base of the ruling party, the CDU.
The criticism of the ECB goes beyond Deutsche Bank. This week Commerzbank, which is partly government-owned and second only to Deutsche Bank, indicated it was looking at the possibility of hoarding its cash rather than placing its funds with the ECB where it is charged at a negative interest rate of minus 0.4 percent. As one commentator noted, such an action “would be the most flagrant bank protest against central bank policy yet seen.”
The policy agenda of Deutsche Bank and much of the German financial establishment was indicated in Folkerts-Landau’s indictment. Despite its “good intentions,” he wrote, the ECB had removed the incentive for euro zone government to revamp their policies through “structural reform.” Together with the reference to a “necessary catharsis,” this points to the growing clamour in financial circles for the initiation of further sweeping attacks on the social and employment conditions of the working class across Europe—a deepening of the measures which the French government is seeking to implement through its new labour laws.
The official rationale for the actions of the ECB and other central banks is that lower interest rates are needed to boost inflation and investment. But the euro zone remains in the grip of deflation and the ECB has lowered its own 2018 forecasts for growth in the region.
Opposition to present policies is not confined to criticism of the ECB. This week the Fitch rating agency reported that negative yielding government debt globally had now risen to more than $10 trillion following a 5 percent increase in bonds with a sub-zero yield. This means that the price of the underlying bond is rising, as yields and the price move in an inverse relationship.
Initially negative yields only affected the shortest-term bonds but the phenomenon is spreading and now encompasses seven-year German Bunds and 10-year Japanese government bonds. This is impacting heavily on insurance companies and pension funds which rely heavily on positive rates on government bonds to finance their operations.
Commenting on the $10 trillion mass of negative yielding sovereign debt, Bill Gross, the former head of the world’s largest bond trading firm, tweeted: “Global yields lowest in 500 years of recorded history … This is a supernova that will explode one day.” This refers to a situation in which interest rates begin to rise, leading to a fall in the price of bonds, thereby creating massive losses for investors who have purchased them at inflated prices.
Gross is by no means the only one warning of a possible financial catastrophe. Capital Group, which manages about $1.4 trillion in funds, has warned that negative interest rates are distorting financial markets and might lead to “potentially dangerous consequences.”
The head of the Los Angeles-based bond house DoubleLine, Jeffrey Gunlach, recently described negative interest rates as “the stupidest idea I have ever heard of” and warned that the “next major event” for financial markets could be when the ECB and the Bank of Japan cancel the experiment.
Larry Fink, the head of BlackRock, one of the world’s biggest hedge funds, recently wrote in a note to investors, that there had been plenty of discussion about how low interest rates had contributed to the inflation in asset prices. But, he continued, “not nearly enough attention has been paid to the toll these low rates—and now negative rates—are taking on the ability of investors to save and plan for the future.”
In other words, out of the horse’s mouth so to speak, comes the warning that the parasitic policies which have proved so beneficial to the hedge funds and other multi-billion dollar financial speculators are undermining the central foundations on which the financial system has rested for decades.
Bernie Sanders Wins, Even While Losing
Bernie Sanders Wins, Even While Losing
Friday, June 10, 2016
After hearing Monday from the Associated Press that Hillary Clinton had clinched the nomination, after absorbing Tuesday night a solid defeat in the California primary and losses in three other states, Sanders was still pledging to go on campaigning for the District of Columbia's 20 delegates in its primary next Tuesday and to fight on until the Democratic National Convention opens in Philadelphia July 25.
It's possible to ridicule Sanders' protests that he can still win the nomination of a party of which he's never been a member. But give him credit. He won 42 percent of the popular vote in primaries against Hillary Clinton and a whopping 62 percent of the votes cast in caucuses.
He carried 23 states, from Maine to Hawaii, and came within 2 percent of carrying five others. He carried or came close to carrying white Democrats nationally.
More importantly, he moved Hillary Clinton -- and the Democratic Party -- well to the left.
Clinton reversed previous positions and came out against the Trans-Pacific Partnership trade agreement and against the Keystone XL pipeline. She promised that she would effectively end fracking, which has sharply reduced oil and natural gas prices, and would discourage the mining of coal.
She came close to matching Sanders' promise of free college. She repudiated her husband's 1994 crime bill and his support of financial deregulation. Yes, a second President Clinton could and probably would welch on some of these promises.
But she's not going back to the first President Clinton's policies.
Sanders can claim credit for moving the Democratic Party closer to his own political creed, socialism, than any Democrat has cared or dared to do before. He did so with the critical help of young voters, the millennial generation, who voted about 80 percent for him against Clinton -- and for whom, multiple polls suggest, his self-proclaimed socialism is not a bug but a feature.
A YouGov survey in January, for example, found that 43 percent of under-30s were favorable toward socialism and only 26 percent unfavorable. A 2015 Reason-Rupe poll in 2015 found 48 percent of under-35s positive toward socialism. A 2010 Pew Research poll found 43 percent of under-30s positive toward socialism, nearly twice the 23 percent favorable among those over 30.
The promise of what Mitt Romney infelicitously called "free stuff" may account for some of the attractiveness of socialism to Americans too young to have any living memory of the collapse of communism and to have been taught a history that emphasizes the iniquities of oppressive Western societies. Hey, free college and free health care don't sound so bad.
Those who have actually had experience with government-run economies feel differently, as one can see from recent political results in Latin America.
In Venezuela, the socialism of the late President Hugo Chavez and his chosen successor, Nicolas Maduro, has destroyed the oil-rich nation's economy, to the point that toilet paper, groceries and medicines are simply unavailable, crime has soared to world-high rates and pro-government thugs crack down on protesters. Voters elected an opposition legislature, but Maduro is defying the law to stay in power.
In Argentina, voters in December repudiated leftist President Cristina Kirchner and elected businessman Mauricio Macri. In Brazil, leftist President Dilma Rousseff was impeached last month and removed from office pending trial in the Senate amid record unemployment and revelation of multimillion-dollar bribery conspiracies.
Peru has just had a close presidential election between two candidates both described by Reuters as "business friendly."
Or look at Sanders' favorite example, Scandinavia, where governments have, as Emily Elkins and Joy Pullman write in The Federalist, "opened their economies to free market forces in the 1990s, sold off state-owned companies, eased restrictions on business start-ups, reduced barriers to trade and business regulation and introduced more competition into healthcare and public services."
You didn't hear much about these developments in the Democratic primaries and caucuses. Nor did you hear much about the dismal performance of government here in everything from veterans' hospitals to Washington's Metrorail. You just heard bland assurances that an expanded government could provide free goodies without perceptible costs or glitches.
Hillary Clinton's leftward lurch in response to Sanders may not prevent her from beating Donald Trump. But it may not serve America or the Democratic Party well in the long run.
Michael Barone is senior political analyst for the Washington Examiner, resident fellow at American Enterprise Institute and longtime co-author of The Almanac of American Politics.
See Other Political Commentary.
See Other Commentaries by Michael Barone.
Views expressed in this column are those of the author, not those of Rasmussen Reports.