Feeds:
Posts
Comments

Posts Tagged ‘income inequality’

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.

Read Full Post »

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.

Read Full Post »

A new report from the United Nations shows that Norway has overtaken Denmark as the world’s happiest nation. The study was performed by the Sustainable Development Solutions Network (SDSN), which was launched by the United Nations in 2012.

“Happy countries are the ones that have a healthy balance of prosperity, as conventionally measured, and social capital, meaning a high degree of trust in a society, low inequality and confidence in government,” Jeffrey Sachs, the director of the SDSN and a special advisor to the United Nations Secretary-General, said in an interview.

The United States dropped to 14th this year from 13th last year. Sachs said the United States is falling in the ranking due to inequality, distrust and corruption. Economic measures that the administration of President Donald Trump is trying to pursue, he added, will make things worse.

US Senator Bernie Sanders had a lot to say about these issues.

“Norway,” he wrote, “is now the happiest country on earth followed by Denmark, Iceland, Switzerland, Finland, Netherlands, Canada, New Zealand, Australia and Sweden, according to the United Nations. Meanwhile, the United States has moved down to 14th on the list. Why are the people in Norway so much happier than the U.S.? It’s not that complicated.

While hundreds of thousands of bright, young Americans don’t go to college because they cannot afford the cost, public college is tuition-free in Norway.

While the U.S. is the only major country on earth that does not guarantee health care as a right, Norway has a single-payer health care system that provides high-quality health care to all of its citizens at a far lower cost.

While the U.S. is the only major country that does not guarantee workers some type of paid sick leave, Norway guarantees 50 paid sick days.

The U.S. has the highest childhood poverty rate of nearly any major country on earth, while Norway has one of the lowest followed by Denmark and Finland.

As we strive to be a more just society, we must follow the examples of our brothers and sisters in other countries who have made better progress. What do you think?”

Click here for more on the story from Reuters.

Read Full Post »

In 2012, news that wasn’t published hardly at all included the fact that Costco’s CEO Craig Jelinek decided that redistributing income from his employees to his shareholders by cutting wages was not good for the employees or for the shareholders. Wall Street was pressuring him to do exactly that (Click here for the story from http://www.zdnet.com). This was in spite of the fact that Costco’s closing share price hovered slightly below $39 a share in March 2009 and had risen to over $90 a share in March 2012.

That higher wage strategy seems to have worked beautifully. Costco’s share price has been steadily rising, and it closed at $177 on March 2 2017. Wall Street was proven wrong–again.

The truth is simple. When you have a massive income redistribution from the 99 to the 1 percent via federal legislation, as in the last thirty-seven years, you have a government and an economy that are sick with massive corruption. Costco has opted out of that business model. Thirty-six years ago, the 1 percent took home about 8 percent of the nation’s income, now it’s over 30 percent and growing, and it’s been stolen from the rest of us. Thirty-six years ago, the 1 percent owned 7 percent of the nation’s wealth, now they own over 40 percent, and it’s growing at the expense of us all. However, when the latest stock market bubble bursts, and it will, much of that wealth will evaporate.

 

This is why the current economic expansion is long, but historically weak by virtually all measurements, despite a bigger gross domestic product, greater worker productivity and larger population than in years past. Demand should be robust compared to decades ago, but it instead remains comparatively lackluster. That is because the income of the 99 percent has been redistributed to the 1 percent, leaving the rest of us insufficient money to boost this economy in the manner of the past.

It’s time to put a little more balance in the economy by following the Costco model. The government has redistributed income from the 99 to the 1 percent via free trade treaties, privatization scams, corporate welfare and other means. It’s time for the government to move in the opposite direction on behalf of all of us, not just the rich.

Read Full Post »


The Republican Party is about to determine whether or not it will become the biggest death panel since Adolf Hitler and the Nazi Party tried to exterminate the Jews of Europe.

US House of Representatives leader Paul Ryan pulled out his new American Health Care Act last week, which he is hoping will be used to replace the Affordable Care Act. According to the Congressional Budget Office (CBO) yesterday, within a decade as many as 24 million US citizens will lose their health care coverage and premiums will go up for the rest of us if Ryan’s plan is passed, and especially for low income people and the elderly. Many grandmas and grandpas will have to chose between starving to death, or not paying their overpriced healthcare premiums, thanks to the Ryan plan.

Obamacare has only added slightly more than 19 million people to the rolls of the health insured. That means another 4 million US citizens beyond Obamacare may lose their coverage with Ryan’s carefully thought out health care bill. And it has been carefully thought out.

March 8, 2017

The primary purpose of this bill by all appearances is to provide tax cuts to the rich, the only people who have been the beneficiary of thirty-six years of economic expansions, and deliberately so. Currently, there is a 0.9 percent tax on income over $200,000 a year to help fund Obamacare. There is also a 3.5 percent tax on capital gains for the same purpose, such as the profits from the sale of stocks and bonds. This is why Wall Street hedge funds and big investment firms want Obamacare gone.

Many Republicans are prepared to make the Republican Party and all it stands for into a giant death panel in order to make its billionaire masters richer. Herr Ryan is one of these. Yet, other Republicans want to get reelected.

Florida Republican Rep. Ileana Ros-Lehtinen, for example, said Tuesday that she wouldn’t be able to support Ryan’s health care legislation after the CBO score revealed the high number of people who would lose insurance.

“I plan to vote NO on the current #AHCA bill. As written the plan leaves too many from my #SoFla district uninsured,” the Florida congresswoman wrote in two consecutive tweets. “As #AHCA stands, it will cut much needed help for #SoFla’s poor + elderly populations. Need a plan that will do more to protect them.”

This shows several things. The legislation is not likely going to pass. The Republicans are going to find it difficult to give their billionaire masters tax cuts by replacing Obamacare. So they will likely try a different tack.

The most likely scenario is simply keeping Obamacare largely intact, but shifting the tax burden from the rich to the middle and lower classes, and then marketing this plan as replacing Obamacare. One thing is certain; replacing Obamacare and taking health insurance from tens of millions of people in the process is not going to be politically palatable.

Read Full Post »

The Economic Policy Institute (EPI) reports that US wages grew in real terms (wage growth minus inflation) during 2016. While good news for the people who actually do the work of producing the goods and services necessary to keep the economy humming, this is also bad news.

EPI reports that income inequality continues to rise. “Rising inequality,” the report states, “means that although we are finally seeing broad-based wage growth, ordinary workers are just making up lost ground, rather than getting ahead. The way rising inequality has directly affected most Americans is through sluggish hourly wage growth in recent decades, despite an expanding and increasingly productive economy. For example, had all workers’ wages risen in line with productivity, as they did in the three decades following World War II, an American earning around $40,000 today would instead be making close to $61,000 (EPI 2017c).” That income difference has been redistributed to the very rich since 1981.

The report went on, “A hugely disproportionate share of economic gains from rising productivity is going to the top 1 percent and to corporate profits, instead of to ordinary workers—who are more productive and more educated than ever. This rising inequality is happening largely because big corporations and the wealthy have been rewriting the rules of the economy, particularly the job market, to stack the deck in their favor. This has prevented the benefits of productivity growth from “trickling down” to reach most households.” In other words, trickle down economics was a complete farce.

Now for the bad news. The economy is heading on a crash course with the worst and most prolonged recession since the Great Depression sometime around June of this year, give or take a month or two. The severity of this recession is due to the income and wealth inequality the US and the world has experienced since 1981, the year it pretty much began. I have been watching this current business expansion unravel since before November 2015. See The Coming Recession is Going to Be a Big One-JohnHively.wordpress.com There are always certain variables that precede a recession. Many of those began a year and a half ago.

Typically, the last variables to happen before an economy tanks is that wages rise and the Federal Reserve raises interest rates. Now those variables have officially happened. The Fed will likely raise interest rates again this month.

Somebody might point out that the economy is humming along with wage growth, low unemployment, etc…. How can we go into recession?

The growth of any business expansion has much in common with hiking up a mountain. Once you step on the highest point of any mountain, the next step is down. And so it is with any economic expansion; once it hits a peak, the very next step is down into recession. This month, March 2017, is the 93rd month of this economic expansion, making it the third longest in history. Compared to every economic expansion lasting six or more years, the current is the weakest by almost every measurement. So don’t expect it to go on much longer.

Click here for the entire EPI report on wage growth in 2016.

Read Full Post »

The rich are about to win politically again through their corruption of the federal government.

President Trump has wasted no time in taking aim at the Affordable Care Act (ACA), otherwise known as Obamacare. Joint research from the Urban Institute and the Robert Wood Johnson Foundation show up to 30 million Americans may lose their healthcare coverage if the ACA is repealed. For high-income investors, however, the end of Obamacare could bring a financial windfall.

Rebecca Lake of Investopedia.com points out that individuals earning over $200,000 and couples filing jointly and earning over $250,000 a year pay an additional 0.9 percent Medicare tax helping to fund the ACA. In addition, another “provision is the 3.8% net investment income tax. This tax applies to capital gains on investments and it follows the same income thresholds as the additional Medicare tax.” Capital gains is money earned through the sale of assets, such as stocks and bonds.

Repealing Obamacare would put significant amounts of money back into the pockets of the rich, who would then use their newly created windfall to pump more money into the current stock market bubble, blowing it up even more and blowing away the economy much more severely when it explodes, as well as use the funds to corrupt government even more in their favor. The rich already own the entire Republican Party, and most of the Democratic Party.

“An analysis by the Center on Budget and Policy Priorities has found that millionaires would stand to get an 80% tax cut if the additional Medicare tax and the tax on net investment income were to disappear. The average tax break for those earning more than $1 million annually would total just over $49,000.” The 400 biggest income earners would receive a tax cut of over $7 million each. That would be a tax cut every year for infinity for the folks who have corrupted both major political parties and rigged the economic and political game in their favor.

5753380425_0d92a2986e_o

 

No doubt, any replacement for the ACA will be written to shift the tax burden from those who have political and economic power to those who do not. In other words, the Republicans and President Trump are redistributing income and wealth from the 99 to the 1 percent via repeal of the ACA. The Republicans are likely setting up some form of death panels by simply repealing the ACA and replacing it with something that will be underfunded.

Read more: Why a Repeal of Obamacare Could Be a Boon for Wealthy Investors | Investopedia http://www.investopedia.com/insurance/why-repeal-obamacare-could-be-boon-wealthy-investors/#ixzz4aqwCkpYw
Follow us: Investopedia on Facebook

Read Full Post »

Older Posts »