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On Sunday April 23, Bernie Sanders said, “The Democratic Party’s model is failing,” and if voter turnout doesn’t grow “there is no future forward for the Democratic Party.”

Now how about that? The Democratic Party is controlled by billionaires and the grassroots is drifting away. They ran Walmart/Wall Street candidate Hillary Clinton for US president and lost to an outsider who said outrageous and pretty stupid stuff in 2016. Of course, Donald Trump also kicked the crud out of 16 other contenders for the Republican Party nomination, so maybe the Republican grassroots are tired of the other billionaires that control their political party.

“Well,” Sanders said. “I think what is clear to anyone who looks at where the Democratic Party today is that the model of the Democratic Party is failing,” Sanders said on “Face the Nation.” “We have a Republican president who ran as a candidate as the most unpopular candidate in the modern history of this country. Republicans control the House, the Senate, two thirds of governors’ chairs.”

“And in the last eight years, they have picked up 900 legislative seats,” Sanders continued. “Clearly the Democratic Party has got to change. And in my view what it has got to become is a grassroots party. A party which makes decisions from the bottom on up. A party which is more dependent on small donations than large donations. A party… that speaks to the pain of the working class in this country.”

Sanders, who ran against former Secretary of State Hillary Clinton for the Democratic presidential nomination in 2016, is on a “unity” tour across the country with Democratic National Committee Chairman Tom Perez to reinvigorate the Democratic base. The Vermont senator said the party must “take the lead” on issues that matter to the working class to increase voter turnout and “regain control of the United States Congress.” He failed to mention this is unlikely to occur with the billionaires in control of the party.

“So what we have got to do and what Democrats have got to do is go all over this country, start getting into those red states which have been ignored for decades, start growing the voter turnout,” Sanders said. “Having an agenda which brings people together to say that, ‘In the richest country in the history of the world, yeah. You know what? We can have health care for all people as a right. We can raise the minimum wage to $15 an hour. No, Donald Trump is not right. Climate change is not a hoax. It is a major planetary crisis.’”

Of course, none of this is going to happen until the next recession begins this summer because the billionaires don’t want it to occur. After the brunt of the recession begins to hit in earnest some months later, voters of the Democratic Party will hopefully chase out the billionaires because a series of grassroots movements has already formed though they have not coalesced except to be anti-Trump. This, of course, means these movements against Trump have a striking resemblance to the Tea Party that dogged President Obama during his eight years. The Koch Brothers primarily fund the Tea Party and exercise significant control over its leadership.

The problem with many of the grassroots who are involved in the Democratic resistance to President Trump is what also ails Tea Party grassroots members, which was an attitude of “Obama bad, anything Republican good.” Many members of the Democratic grassroots resistance follow a similar small minded path, only it’s “Hillary good: Trump bad,” and “Democratic Party run by billionaires good; Republican Party run by different bunch of billionaires bad.”

Too few of these people don’t realize they need to kick the billionaires and millionaires and their plutocrats like Hillary and Bill Clinton out of the Democratic Party. If they fail to achieve this, they will simply be used by the billionaires who control the Democratic Party to defeat Donald Trump in the next presidential election rather than cleaning their own house. The corruption in both major political parties stinks like two pigsties.

When Tom Perez became Chairman of the Democratic Party by defeating Democratic Minnesota Congressman Keith Ellison the grassroots lost to the billionaires, and many of them didn’t even know it. This means the grassroots resistance has yet to influence the Democratic Party in any meaningful way. This suggests that if the Democratic Party bosses successfully use the grassroots resistance to unseat Donald Trump in 2020, it’s still going to be business and corruption as usual.

The latest in a long line of stock market bubbles is being fueled by record amounts of debt according to the New York Stock Exchange. This debt is called “buying on margin” (BOM). Notice the acronym of BOM, which is pretty close to bomb, and this current bubble is going to explode. Total BOM hit a record high of $528.2 billion in February 2017.

That’s more than half a trillion dollars being used to purchase corporate shares. That’s not a big problem when the market is going up, but it’s now late in the ball game. Our economic expansion is 94 months old, making it the third longest in US history. Statistical indications suggest that it isn’t going to challenge for the number two spot, and that it should peak within the next few months, and then we’ll hit a recession, which will be really bad.

February’s total BOM was $40 billion more than in December 2016. This increase is a sign of optimism or foolishness. People and institutions like hedge funds want to get in on the action while the stock markets are rising. This is probably a good thing to do early in a business expansion, but it’s extremely dangerous to investors and the economy to do this on this scale so late in an expansion.

Suppose you have have $10,000 to invest, so you purchase 100 shares of Home Depot at $100 per share. The market crashes, and the share price drops to $40. Now your investment is worth $4,000. That is not a good result, but your investment is still worth something, and can potentially recover if you hang on to it in the long run.

On the other hand, let’s say you borrow an additional $20,000 to buy another 200 Home Depot shares at $100 for a total of 300 shares and at a total cost of $30,000. The market crashes and the share price quickly drops to $40. Now your shares are worth $12,000 — but you owe your broker $20,000 (plus interest) for borrowing money to buy the stock. That broker calls in his loan. You are forced to sell your shares to get the funds, but at the lower price. You lose $18,000 on your investment. But your broker wants the rest of his $20,000 plus interest. That’s more than $8,000.

So your original $10,000 is wiped out, and you need to put up extra money to pay back your broker.

During most recessions, it’s much more difficult to get credit to pay your broker back, so you may both be out of luck, although you’ll likely be in court defending against him, her or it.

On a massive scale, that’s a recipe for absolute disaster for the whole economy.

Home mortgage applications

To one my stories about how income had finally begun going up in 2016, somebody wrote, “Yes the 80 bucks more a month I’m getting now completely covers the hundreds of dollars my rent has gone up due to rich developers moving in and gouging us all.”

There are a few things to be said about the comment above. As you can tell by the graph above, applications for home mortgages peaked in 2005 and have dropped quite a bit since then. So why are home and rental prices still shooting through the roof?

The big banks in 2007-11 conspired together to keep over 50 percent of vacant houses off the market so as to jack up prices. Home prices have artificially risen since then. The banks have allowed an increasing dribble of these homes back onto the market as prices have artificially and illegally risen.

Rents are artificially high as well, and for the same reason. What the big banks have done is commit a crime called “a conspiracy in restraint of trade.” This collusion redistributes income from home buyers and renter (the 99 percent) to share and bondholders of the 1 percent.

90 to 95 percent of US population growth is due to immigration. When population constantly increases while large amounts of housing units are illegally taken off the market, the result jacks up housing prices and rents. See Shadow Inventory: More Houses Will Soon Be Available for Sale–Rismedia.com. See also The 7-Million Housing Shadow Inventory Could Trigger A Price Avalanche–Business Insider.

The government has changed the way it measures inflation twenty times since 1981 so as to reflect a lower rate of inflation than actually exists. This means real wages are actually higher than they would have been under the old methods of measuring inflation, so that when the government tells us wages have been stagnant for thirty-six years, it really means real wages have gone down significantly.

Meanwhile, increases in home and rental prices are not actually counted in the inflation rate. See How to Fix the Housing Component of CPI–Slate. Food and energy prices are not included either, but they used to be. There’s a reason for this; inflation measured against wage increases would demonstrate real US wages have plummeted over the last three and a half decades, rather than stagnated. Both Republicans and Democrats in public office don’t want you to know the real story, and neither does their corporate news media.

Both major political parties are controlled by big corporations, billionaires, hedge funds and Wall Street investment banks, and most of these benefit from this conspiracy in restraint of trade. So don’t expect the US government to do anything about this illegal manipulation of prices. It isn’t going to happen until we get honest government back to Washington.

Editor’s note;

The big banks have conspired against Federal law and supply and demand to withhold product from the market in order to manipulate prices and profits upward so it is the renters and buyers who are ripped off. Much, if not all, of this conspiracy has to do with mortgage backed bonds, and the profits and losses to be had from them. A loss in value of 8 percent in the housing that backs triple B rated bonds sends the value of those bonds down to zero, according to Michael Lewis in The Big Short. Likewise, he writes, a 20 percent slump in the price of housing sends the value of AAA home mortgage backed bonds to zero. A lot of billionaires and millionaire investors lose in this instance. So the big banks conspired to keep over 50 percent of the vacant housing off the market in order to prop up the value of those bonds. However, there are other significant benefits to those banks to keep houses off the market. Buyers and renters pay the price of this conspiracy because the obvious result of the actions of the big banks is to redistribute hundreds of billions, if not trillions of dollars, every year from the 99 to the 1 percent.

Dear Democrats, please note then President Bill Clinton refused to sign legislation that would’ve regulated derivatives. Home mortgage backed bonds are a derivative, since their value is derived from an underlying asset. That’s why they’re called derivatives.

The Republican Party leadership has shown its true colors for all the world to see. The loyalty of Wall Street Senator Mitch McConnell, as well as most of the rest of the Republican establishment, is to Wall Street and large corporations and to the Koch Brothers. McConnell and the Republicans were willing to put an end to the filibuster against US Supreme Court candidates desired by big business. Neil Gorsuch was the most pro-billionaire, anti-original intent jurist yet selected to the highest court. See Gorsuch is not an Original Intent Candidate: Another Reason Why Trump’s Supreme Court Nominee is Not Fit to Be a US Supreme Court Justice–JohnHively.wordpress.com

Now, let’s see if McConnell will do something to show his loyalty to the Republican grassroots and put an end to the filibuster so that it cannot be used against legislation that is intended to end legalized abortion. The answer, of course, is no he won’t. That’s because McConnell and most of the rest of the Republican Party establishment are loyal only to corporate profits, surging dividends and the stock market bubble that is within a few months of bursting.

No doubt, the Democratic Party establishment is also against ending the filibuster when it comes to legislation. The Democratic grassroots would then demand an increase in the minimum wage to $15, single payer health insurance, renegotiate trade treaties to stop US corporations from exporting US jobs (Republican grassroots would also demand this), and a lot more.

The billionaires who control the Democratic and Republican Parties wouldn’t want to see any of this occur. These things would put downward pressure on their profits, dividends and share prices. It’s Warren Buffett (Democrat) vs the Koch Brothers (Republican), Costco (Democrat) vs Walmart (Republican), etc….

So don’t expect Wall Street Senator Mitch McConnell to put an end to the filibuster when it comes to legislation, especially as it pertains to abortion, even though the Republicans control the white house and both houses of congress. That will never be allowed to happen. The billionaires won’t let it.

Neil Gorsuch, Donald Trump’s nominee to be the next US Supreme Court justice, is completely unfit for the office. There are a myriad of reasons why this is so. The most damning thing is that he thinks corporations are people.

That’s been the slogan repeated by conservatives for over a hundred years, and yet, corporations are purely and only an idea of a business structure that sprang forth from somebody’s mind and not from a woman’s womb. Conservatives, and Gorsuch in particular, haven’t figured out the difference between babies that spring forth from a woman’s womb, and an idea that originated from a human brain.

Anybody who has not figured out the difference is not mentally fit to sit on the bench of the United States Supreme Court. That really means that none of the conservative justices, and perhaps a few of the liberal justices as well, are not mentally fit to serve on the highest court. Yet, there they are, and that’s because the US Supreme Court is a battle ground between persons with legal rights protected under the US Constitution, and the corporations used by the rich and powerful to take those rights away, as much as possible. The rich have used this argument to provide themselves with greater legal rights through their corporations, since those corporations are managed and largely owned by the 1 percent.

Ergo, the idea that publicly traded limited liability corporations are persons protected by the US Constitution is simply a legalistic slight-of-hand maneuver that has succeeded to undermine the original intent of the founding fathers to establish and protect individual rights, and twist the law in favor of the rich and against the 99 percent. That is the sole purpose of using this lie in legal matters.

Gorsuch takes this anti-original intent further than most conservatives. He ruled that a truck driver should have frozen to death in his tractor rather than abandon his load and get to safety. Whenever possible, he has ruled for corporations and against people, as if working persons are disposable raw material whose sole purpose is to generate profits for corporations. Those profits primarily redound to the benefit of the rich.

Gorsuch does not care about original intent when it comes to the US Constitution. He is a judicial champion of the billionaires and their corporations in their war against the 99 percent.

Who among the founding fathers said that corporations were people? Who among them said that an idea of a business structure from somebody’s mind had the same constitutional protections as a person conceived in a woman’s womb? Not a single one of them said or wrote or implied such a thing, so far as I can discover.

The Great Recession came and went, and so did salaries and other compensation for people graduating with four year college degrees. The corporate news media continues to shower us with propaganda about why this has occurred.

Bloomberg news claims “technology and automation” have caused this decline. Only in the United States does there appear to be a problem with automation. It is strange how there is an overabundance of US manufacturing jobs in China, Vietnam and elsewhere. Those factories employ accountants, bookkeepers, managers, attorneys, and many more white collar employees. Those factories also purchase things from other local businesses that supply materials and designs and other things that employ white collar workers. Those factories used to be in the United States. And now they’re not. See https://www.bloomberg.com/news/articles/2017-03-30/u-s-college-grads-see-slim-to-nothing-wage-gains-since-recession

Those H1-B visa’s are also putting downward pressure on wages, as well as exporting high tech jobs to India and other nations.

Exporting jobs overseas by the tens of millions is why wages have declined on average for new college graduates, and why compensation has stagnated for older workers, and why wages have declined over the last thirty-six years. There are other reasons, but automation is not one of them. See Jobs: The Largest US Export Product–JohnHively.wordpress.com

As for those declining wages for new college graduates, what you study matters for your salary, the data show. Chemical and computer engineering majors have held down some of the best earnings of at least $60,000 a year for entry level positions since the recession, while business and science graduates’s paychecks have fallen. A biology major at the start of their career earned $31,000 on an annual average in 2015, down $4,000 from five years earlier. Some majors, such as petroleum engineers, have seen a bump in earnings for those just coming into the job market.

On the other hand, people with graduate degrees are still getting a bump in their salaries upon graduation.


How badly are US citizens financially struggling this late in an economic expansion?

In early January 2016, the US Department of Education announced the rate of people defaulting on their student loans had dropped from 11.8 percent in 2015 to 11.2 percent in 2016. Back in 2013, the default rate had nearly hit 15 percent.

In 2015, the Obama white house issued a report which stated, “The cohort default rate published by the Education Department is “‘susceptible to artificial manipulation.’” The report stated that the share of student borrowers paying down their loans more accurately reflects what is occurring than default rates alone. The report noted that a rising number of students are unable to make payments on their loans, but manage to avoid defaulting. Because of this, the report stated the actual default rate plus those former student loan borrowers out of school who are not paying down the balances on their loans stood at 25 percent.

However, it turns out the White House report understated the numbers by quite a lot. Leaked documents in early January 2016 showed only 46 percent of students out of school three years or more are paying down their student loan principal. This means 54 percent are not paying down their loans.

However, on closer inspection, something else is terribly amiss, as well. To be among the 46 percent, you cannot be in default, and you must have paid down the principal of your loan by at least one dollar. So if somebody who has owed $30,000 in student loans since they graduated from college ten years ago paid a dollar on the principal of their loan eight years ago, they have officially paid down their loan and are among the 46 percent. If somebody borrowed $16,000 twenty-five years ago, paid off a dollar on their balance, and haven’t paid a dime since, and have incurred tens of thousands of dollars of penalties and late fees, they, too, are among the 46 percent.

The bar for those who have not defaulted and are paying down their loans are about as low as one can get. The actual crisis, therefore, is even greater than we have been led to believe. This suggests a number of things.

One is that the number of people failing to pay on their student loan balances is significantly less than 46 percent if we raise the bar to $2 or higher. Second, the US economy is historically weak enough that tens of millions of student loan borrowers are unable to pay down their balances (There are roughly 42 million people who have student loan balances).

This suggests the economy is historically weak, and the consequences of this weakness will spread throughout the United States when the economy begins to tank this summer. This suggests defaults will be historically high on home mortgages, car loans, credit card debt, and much more. All of which, strongly suggests this next recession will be worst for the 99 percent than the Great Recession of 2007-09.