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Posts Tagged ‘Michael Lewis’

From the Economic Policy Institute:

“Wage trends greatly determine how fast incomes at the middle and bottom grow, as well as the overall path of income inequality, as we argued in Raising America’s Pay. This is for the simple reason that most households, including those with low incomes, rely on labor earnings for the vast majority of their income. That is why my initial look at the data from the newly released Census Bureau report on income and, poverty in 2013 will look at wages and the incomes of working age households.

The Census data show that from 2012 to 2013, median household income for non-elderly households (those with a head of household younger than 65 years old) increased 0.4 percent from $58,186 to $58,448. However, that modest growth barely begins to offset the losses incurred during the Great Recession or the losses that prevailed in the prior business cycle from 2000 to 2007. Between 2007 and 2013, median household income for non-elderly households dropped from $63,527 to $58,448, a decline of $5,079, or 8.0 percent. Furthermore, the disappointing trends of the Great Recession and its aftermath come on the heels of the weak labor market from 2000-2007, where the median income of non-elderly households fell significantly, from $65,785 to $63,527, the first time in the post-war period that incomes failed to grow over a business cycle. Altogether, from 2000 to 2013, median income for non-elderly households fell from $65,785 to $58,448, a decline of $7,337, or 11.2 percent.”

So the question is: why has average US family income dropped from $65,785 in 2000 to $63,527 in 2007 and then to $58,448 in 2013?

The answer is simple. The money has been redistributed from the 99 to the 1 percent, which is why the stock markets and corporate earnings are at record levels and family income has plummeted for fourteen years, and now remains static and historically low.

Free trade treaties, for example, have shipped jobs overseas, and the difference between the old higher US wages and benefits and the new lower overseas wages and benefits has gone directly from the 99 percent and into the pockets of the 1 percent thanks to politicians such as Wall Street Senator Ron Wyden. Nearly two million US jobs were exported from the US in 2013, according to the Federal Reserve. Around thirty million have been exported since 1990. Thank you Senator Wyden.

Corporations have also pushed the income of their employees down, except of course, for CEO’s and important members of the major Wall Street investment banks. Many of these Wall Street people earn millions of dollars by illegally ripping off the retirement accounts of working Americans. US politicians make certain they’re able to do it. See the book Flash Boys by Michael Lewis.

There are a myriad of other ways the government acts as a legislative conduit to redistribute income from the 99 to the 1 percent. This has been ongoing since 1981.

Essentially, this means that the current massive income and wealth inequality we experience today is a function of tax cuts for the rich, which were then used to corrupt government at all levels, as well as both political parties.

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A friend named Sloan purchased a vacant lot in the city of Portland, Oregon for $120,000 in 2010. This year he was offered $210,000 for the same land. Okay, the housing bubble has been resurrected under President Obama, and just like President George W. Bush and President Bill Clinton and their housing bubble, our current president has no intention of doing a thing about it, even as Bush’s bubble wrecked the economy.

Why is Obama not doing anything about the bubble? Because Wall Street loves it, and whatever Wall Street loves, Obama seems to it love it just as much.

Wall Street investment banks such as Goldman Sachs purchase bonds backed by home mortgages to the tune of trillions of dollars. There is a lot of money in this. A rise in housing prices means a rise in bond prices. When the housing bubble peaks, it will only take an 8 percent drop in home prices for those bonds to become worthless, according to Michael Lewis in his book The Big Short.

Then the government will rescue those who are too big to fail, not that they are too big to fail in a business sense. Rather, they will be too big to fail in a political campaign contribution sense. And that’s why the current housing bubble is allowed to continue.

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