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10-12-2011, 06:38 PM   #1
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two economies in the usa

Here is what happened to our economy in two years:


The graphs are adjusted for direct comparison - vertical % & horz time are about the same.

about +10% GDP vs about -10% households

Clearly 2 economies.

What now?

10-12-2011, 09:29 PM   #2
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.

The top is pulling out of the median's site...


10-12-2011, 10:38 PM   #3
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Don't worry. It was Barny Franks and Jimmie Carters fault.
Just ask Rush Limbaugh.


PS. It's the stupid rich neighbors driving up the rents.
Welcome to the Plutocracy..............................................................
10-13-2011, 05:52 AM   #4
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I submit that the GDP and large company profit reports are gimmicked - a lot of expense is postponed as much as accountants will bend, and a lot of income is declared as much as accountants will bend. The result is that departmental PL's cannot sustain their employees - much less hire - and whatever salaries there are are being reduced. And a lot of this has to do with overtime pay - those who get it aren't in this environment. Of course the unemployed pull down the averages as well.

An interesting game to play is to assume the opposite of what the right wingers say. I.e. that public sector employees are paid much better than private sector ones. What they really mean is that public sector employees set a floor to pay and benefits - private sector can't really go much lower though they sure want to. Breaking public unions and cutting pay + benefits is a way to leverage private sector downwards.

If they blame Barney and Jimmy, the truth is they should blame Reagan. His financial innovations (straight out of the 'other' side of Keynes) resulted in a) historic bull market in bonds as interest rates came down from double digits b) the dollar and treasury bills and bonds becoming the primary US export -- plenty of other countries and companies were and are willing to buy 'safety' and at the same time fund the US welfare and military state.

There's also the notion that every dollar can only be spent - or created as value added - only either the government or the private sector, never both, and every dollar spent by the government is a dollar not available to spend by the private sector. This really doesn't make sense... but there it is. The argument is that government spending doesn't 'really' create jobs - or does so only to the extent that government provides the same service less efficiently than private enterprise would. This notion is at the root of small government economic thinking, and behind the idea that every dollar the government borrows is a dollar out of possible use by private sector companies.

10-13-2011, 10:57 AM   #5
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Having a Job Ain’t All It’s Cracked Up to Be - Businessweek

...but it beats the alternative?

QuoteQuote:
Tamra Loomis, a graphic designer and single mother of two boys, grows vegetables to trim grocery bills. She uses coupons when she shops. She doesn’t have a monthly Internet charge: She goes to her parents’ house and uses their broadband connection.

Loomis makes $17 an hour working at a sign company in Antioch, Calif., and hasn’t had a raise in three years. The owner has twice denied Loomis’s request for higher wages, she says, and in January he cut the hours for her and the company’s other employee to 30 a week from 40. “At this point, I’m paycheck to paycheck,” says Loomis, 32. “A lot of people aren’t hiring, and when they are, they offer even less than what I make.”

The plight of America’s unemployed is terrible. Yet for the 91 percent of those in the U.S. labor force who do have a job, the numbers also tell a dark story. Take-home pay, adjusted for inflation, fell 0.3 percent in August, the third decrease in five months, the Commerce Dept. just reported. The declines followed news from the Census Bureau that median household income in 2010 fell to $49,445, the lowest in more than a decade, while the poverty rate jumped to 15.1 percent, a 17-year high. Salary and benefit growth “has been going nowhere,” says Mark Zandi, chief economist at Moody’s Analytics (MCO) in West Chester, Pa. “One of the key reasons the recovery has stalled is that real incomes have fallen.”

By contrast, in the 1960s, household debt was low, savings were high, and salaries were heading steadily up. And since the end of the 2007-2009 recession, according to Sentier Research, a firm headed by a former top Census Bureau official, those not in the labor force have fared better on average than those who are. Retirees, for example, get their Social Security payments adjusted for inflation. Few workers today enjoy that benefit.

While Federal Reserve Chairman Ben S. Bernanke and President Barack Obama are focused on cutting unemployment, companies including United Parcel Service (UPS) say they may continue to hold down employee pay because of uncertain demand and a surplus of labor. UPS has “a very reasonable contract in place that will show modest, below-inflation increases in wages” for drivers, Chief Financial Officer Kurt Kuehn told investors in a July 26 teleconference.

Retailers such as Kohl’s (KSS) report that high food and fuel prices cut into paychecks. Stock market losses are eroding personal wealth. “It’s hard to see where consumers are going to get a lot of wherewithal to sustain strong spending,” says JPMorgan Chase’s (JPM) chief U.S. economist, Michael Feroli.

Most economists don’t see the U.S. sliding into recession. Yet the worsening outlook for incomes will cause “continued pressure on home prices and on the stock market,” says Malcolm E. Polley, who oversees $1 billion as chief investment officer at Stewart Capital Advisors in Indiana, Pa. There may be higher use of 401(k) loans as emergency funds. Americans will feel even poorer. “Perception is reality from the standpoint of consumers and investors,” Polley says. “We need people to start feeling good about themselves.”

The Bloomberg Consumer Comfort Index, which has been measuring confidence since 1985, slumped in the week ended Sept. 25 to the second-lowest level on record. The share of households saying it was a bad time to buy goods and services was the highest in three years. A record 91 percent of consumers expect that growth in their incomes will match or fall behind price gains in the coming year, according to participants in the September Thomson Reuters/University of Michigan sentiment survey, which dates back to 1978. Until people see their wages or the labor market get better, they will be “spending on necessities, not desires,” says Chris G. Christopher Jr., senior principal economist at IHS Global Insight.

Consumer spending rose at a 0.7 percent annual rate in the second quarter, less than half the 2.1 percent pace in the January to March period, the Commerce Dept. reported in late September. Gross domestic product expanded less than 1 percent on average in the January-June period, the worst six months of the recovery to date.

“Most workers don’t have a lot of sway in demanding higher wages unless they have very specialized skills,” says Omair Sharif, an economist at RBS Securities. Employees cannot hope for more bargaining power anytime soon, says Harry J. Holzer, a professor of public policy at Georgetown University in Washington and former chief economist at the Labor Dept. Through August, the U.S. had recovered only about 1.89 million of the 8.75 million jobs lost in the recession. “There is so much slack, it will keep earnings from rising very much,” says Holzer. “It will take most of this decade” to repair the damage.
10-13-2011, 05:34 PM   #6
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Just as a little point of fact, though:

QuoteQuote:
Retirees, for example, get their Social Security payments adjusted for inflation. Few workers today enjoy that benefit.
Actually, there hasn't been a cost-of-living increase for two or three years, despite *huge* increases in the prices of things like food and fuel, especially in this past year. Part of the issue there relates to the metrics they calculate with, (I'm a little hazy on the details at this point, but I think a big part of the calculation involved home prices, though it's hard to imagine why: falling property values don't generally translate to lower mortgage payments or rent bills for Granny or anyone, ...Prescription prices may have actually stabilized in there, too, ....and in response to increasing costs, people actually cutting back consumption in response to higher bills and prices may have depressed that figure as well, though you can only cut back so far in some areas, (I eat like a bird, often to unhealthy extents, as it is, but I'm definitely feeling the food insecurity, just when I need to be keeping my strength up. I'm not even in trouble, yet, really, but yikes, I'm getting too old for this. )

Anyway, there's unfortunately ways in which the real cost of living and the 'adjustments for inflation' don't always coincide. Flat/falling wages and increasing costs are of course a key part of the problem for the workers, and the economy at large. Which actually has a lot of bad knock-on effects all around. (People forget that though some draw big divisions between wage-earners and people dependent on social services, economically, there's a great deal of interconnectedness there: if Granny or someone like me is lucky enough to have relatives willing and able to help out, then where the benefits don't meet expenses, it can be on the wage-earners to try and make up the slack. (Out of their flat 'real wages' or retirement funds or other things that could be saved for or spent on in the local economies..... and there we are with another economy-suppressing little cycle. )

The real problem is actually *everyone's* cost of living going up, and, yeah, the workers' share of the pie is stagnant/falling. I do think the solution has to be putting more of us to work doing things that add lasting value to the world and economy, rather than just consume over and over. I think the whole economy is just too much of selling each other stuff, or things that aren't even 'stuff,' but numbers about other numbers, and no wonder it is so drained by all that 'profit growth' at the top. Our civilization takes *energy* and resources, a lot of which aren't getting any more plentiful or cheaper, and aren't going to... and demand probably won't go down the more environmental destruction and pollution there is to cope with. ...especially as it makes our health more and more problematic to maintain. So what really has to happen is that we need to get together as a nation (at least) and as communities and put more of all that input into things that are economically and ecologically sustainable. That seems to be the only way to really start things in a better direction.

I just don't think there's a way to really starve or skim or cut or belt-tighten our way out of this, especially if the aim is just to go back to over-consumption without really investing in ourselves and a better future. We've got to use what we've got and make something better, not just try and convert the world's resources and human effort into bigger numbers on a balance sheet over and over. Cause in a way, trying to diet one's way out of starvation, so to speak, isn't 'saving ten or twenty percent,' ....it's wasting much of what went into the other eighty or ninety. Including time and people's lives.

It's always been part of my little dream to be part of building something of some lasting value: until recently, I thought this'd involve sweetie and I putting down roots in a community that's ready and willing to start changing some of these things. And I really watched a lot of my part of that sort of getting nickel-and-dimed down to slower and slower progress, till, you know, the real jobs just really dried up for sweetie, (whose field that we were working on her degree in was among the last to really have that happen...) and I'm sort of looking at struggling-to-maintain-survival mode, possibly instead of managing some kind of productivity. (And at least being able to say, 'Well, I'm helping my dear one save some of the trees or something.'

It's been pretty clear from my perspective that where we've had the top of the economic pyramid continuing to try and stonewall social and sustainability progress or even roll it back, practically immobilizing the whole economy by sitting on it, ....that, well, life's been going on, or trying to, and it's not been cost-free just cause someone wants to keep it in a holding pattern so they can try and consolidate excessive privilege, and keep making more and more profit off a pie that's not getting bigger: it's like with the bank fees: if the government tries to say, 'You're suppressing local economies with excessive swipe fees, ' the big banks say, Well now we 'have' to take it out with even more-excessive fees direct from the consumer. It's like, 'No, you dont' 'have' to,' you *choose* to. And then turn around and say 'And also, we demand even less regulation and more cuts to things that benefit the people, cause we want more tax cuts for ourselves, claiming this will start helping the economy any minute now.'

I actually just don't see how the Wall Street people and ('corporate persons') expect more of the same to turn things around, or if they even care or can help themselves. The people really do have to start standing for something else. There's no reason our own government should be bought out to act so against the interests of most of us: there does need to be a better balance, if we expect the country to be vital.
10-14-2011, 01:03 AM   #7
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QuoteOriginally posted by newarts Quote
...
about +10% GDP vs about -10% households
...
The money the +10% and -10% represent must have gone someplace else than the households. Where did it go? (Why?).

10-14-2011, 01:12 AM   #8
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QuoteOriginally posted by Nesster Quote
I submit that the GDP and large company profit reports are gimmicked - a lot of expense is postponed as much as accountants will bend, and a lot of income is declared as much as accountants will bend. ...
I suppose this could have been done in anticipation of higher tax rates? (Why else?).
10-14-2011, 05:28 AM   #9
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QuoteOriginally posted by jolepp Quote
I suppose this could have been done in anticipation of higher tax rates? (Why else?).
Purely in order to show higher profit now, and therefore justify higher stock price now, which in turn improves management compensation. It is a rare corporation that willingly shows how badly things suck - and they are willing to gamble that in the future they can grow out of the hangover brought on by today. It seems a lot of the people running corporations have studied and learned from the old GE. I see signs of this everywhere.
10-14-2011, 07:06 AM   #10
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Two economies

QuoteOriginally posted by jolepp Quote
The money the +10% and -10% represent must have gone someplace else than the households. Where did it go? (Why?).
The total GDP is the sum of smaller GDP's.The median household represents a huge number of people - more than 1/2 the population; large enough to have its own GDP.

As the total GDP rose, the huge loss in household income must have gone elsewhere; where? It went to what we might call the "oligarch sector".

A fall in GDP.household combined with a rise in GDP.total implies a huge transfer of wealth to the oligarch sector.

While the total GDP has been growing for two years the actual GDP for most of our population has been in severe recession!

It is time to reverse this dichotomy by regulation, legislation, and, if necessary, by force of arms.

Last edited by newarts; 10-14-2011 at 07:29 AM.
10-14-2011, 07:18 AM   #11
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QuoteOriginally posted by newarts Quote
As the median income for all household represent more than 1/2 the population the huge difference in income must have gone elsewhere.

The median household represents a huge number of people; large enough to have its own GDP.

A fall in GDP.household combined with a rise in GDP.total implies a huge transfer of wealth to the oligarch sector.

It is time to reverse this flow by regulation, legislation, and, if necessary, by force of arms.
LOL, sounding a bit tea-ish there

This transfer of wealth has other implications/causes - the transfer of work globally vs the booking of wealth in-country. Given that corporations keep much of their foreign profits out of the USA, probably indicates the GDP numbers are under stated (though technically correct). Essentially, imported stuff is bought by Americans, accruing GDP benefits but not greater employment in the USA.

There's also the effect of rising population divvying up an income pool that has stagnated. Just a different way of looking at the same data.

Fact is, the majority of workers have not been prepared for the globalization changes - this has been difficult enough for businesses - and there is nothing in plain capitalism that addresses this before there is some catastrophic crisis.

The top earners have sucked up most of the benefits of both globalization and GDP growth as much higher income. Why? Because they can, and government policy has largely encouraged this post Reagan. Not much has trickled down, and this is becoming unsustainable. When at last the $200K+ crowd starts to feel it, something will change. I thought this point came in the last crisis, but appears perhaps not.
10-14-2011, 07:20 AM   #12
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QuoteOriginally posted by newarts Quote
if necessary, by force of arms.
By who? The cowards in the NRA?
That concept became a complete fail when they didn't react to the passing of the Patriot Act.
It's also proven to be a complete failure in protecting any amendment other than the 2nd.

In those States that are open carry, please show proof that they have done anything to protect free speech, or the concept of a free press, or the right to privacy.

Last edited by shooz; 10-14-2011 at 07:27 AM.
10-14-2011, 07:37 AM   #13
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QuoteOriginally posted by shooz Quote
By who? The cowards in the NRA?
That concept became a complete fail when they didn't react to the passing of the Patriot Act.
It's also proven to be a complete failure in protecting any amendment other than the 2nd.

In those States that are open carry, please show proof that they have done anything to protect free speech, or the concept of a free press, or the right to privacy.
That was not meant to be anything other than a call for law changes and enforcement - which ultimately works by force of arms. Perhaps I should edit the statement?
10-14-2011, 07:46 AM   #14
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QuoteOriginally posted by Nesster Quote
LOL, sounding a bit tea-ish there

This transfer of wealth has other implications/causes - the transfer of work globally vs the booking of wealth in-country. Given that corporations keep much of their foreign profits out of the USA, probably indicates the GDP numbers are under stated (though technically correct). Essentially, imported stuff is bought by Americans, accruing GDP benefits but not greater employment in the USA.

There's also the effect of rising population divvying up an income pool that has stagnated. Just a different way of looking at the same data.

Fact is, the majority of workers have not been prepared for the globalization changes - this has been difficult enough for businesses - and there is nothing in plain capitalism that addresses this before there is some catastrophic crisis.

The top earners have sucked up most of the benefits of both globalization and GDP growth as much higher income. Why? Because they can, and government policy has largely encouraged this post Reagan. Not much has trickled down, and this is becoming unsustainable. When at last the $200K+ crowd starts to feel it, something will change. I thought this point came in the last crisis, but appears perhaps not.
I completely agree with you. The fact remains that the public is being told the recession has been over for 2 years when actually the public's recession has deepened.

In a broad sense it doesn't matter much where the money went to those who lost their share.

At least the public should know the truth.
10-14-2011, 07:51 AM   #15
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QuoteOriginally posted by newarts Quote
At least the public should know the truth.
This would take a re-enactment of the Fairness Doctrine.

That would mean the end of Flakesnews, as we know it.
What are the chances of that happening?
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