The New Financial Overlords: The Debt Class and those that provide the Debt in Serfdom. Understanding the new Structure of the American Financial Landscape.
The stock market at least in its current form is a horrible indicator of the actual economic carnage falling upon the majority of Americans. Most Americans are witnessing the current rally and wondering why the massive run up (largely in financial related stocks) is going forward while they are getting called into supervisor offices behind closed doors and being laid off or seeing their hours cut back. Wall Street has completely disconnected from Main Street. It is also hard for many to understand how they are having their limited income being taxed to finance the bailouts of Wall Street and financial cronies while they are asked to do more with less. They are seeing these same institutions, alive because of the massive funding from the American people since our government ideally should reflect the will of the majority, shut off credit lines and raise rates while the government through the U.S. Treasury and Federal Reserve showers the banks and Wall Street with easy low rate financing thanks to the American taxpayer. Welcome to the new America. Where unemployment is good news for Wall Street and bailouts are now seen as a new source of revenue for financial companies. New accounting students will learn how to incorporate bailout funds as a new source of revenue.
It is easy to turn a profit when trillions are funneled into the financial system. This is like jumping into the blue ocean and being shocked you got wet. Yet the problem of course is very little of this money is trickling down to the real economy; you know, the economy that doesn’t involve Bloomberg Terminals and pinstripe suits? Imagine a giant person eating at a table and the mice are running around on the floor hoping to pick up the scraps. Guess who the mice are? The last few weeks have been great for the financial companies because they are now operating in a pseudo reality that is for the privileged few. These are the new financial overlords and all it took was the collapse of debt to show them for what they truly are. Many people for the last few decades have confused debt with actual wealth. That is a mistake we are now coming to terms with. Many families now are seeing $5,000 in credit card debt at a good rate all of a sudden jump up just because banks have decided to change terms. They are doing this on a massive scale while cutting the credit lines of many Americans. Just to highlight this split, let us look at the unemployment numbers released for California on Friday:
The unemployment rate for California is now 11.2%, the highest on record. While the markets are rallying states are reporting higher and higher unemployment rates. In California, this translates to 2,131,200 unemployed and the trend is still moving higher. Most Americans would say that there biggest source of income is their job. So how can an economy be healthy if people are losing jobs and breaking records? Again, the small elite circle of financial kingpins are squeezing the debt serfdom to pay as much as they can even though they are confronting one of the worst employment markets in history. We have been throwing money at this problem for many months now. We first brought out the TARP in the fall of 2008 and that has been an abject failure. Remember that most officials have been saying that it has been crucial to stabilize the housing market. You would think that $12 trillion in committed bailout funds would at least stem some foreclosures. In fact, the opposite has occurred. The latest data shows foreclosures breaking all time records:
Even with all the moratoriums, incentives to banks, and other smoke and mirrors foreclosures keep on moving up meaning more and more Americans are losing their homes. So what have all those bailouts accomplished? They have kept the banking feudal lords sitting pretty while the rest of country finances their massive losses. I even hesitate to call this corporate welfare because many corporations still have to face the grim reality like all us. I call this crony financial capitalism run by a small group of plutocrats. If you are looking at the stock market as some sign of the overall health of the economy you are really looking in the wrong place.
So what has happened to the income of most Americans? Let us take a look:
Keep in mind the above data does not include the destruction of $11.2 trillion in financial wealth because of 2008. Even without that cold hard fact, American families overall have seen their income not only stagnate, but go negative when adjusted for inflation. So who has done well in the last decade?
While most families have seen their income move sideways or decrease, the top 10 percent of wage earners have seen gigantic shifts in their income upward. Even with the top 10 percent, you see most of it being skewed by the top 5 percent of all incomes. And the more money you have, the less you depend on wages:
So while 90 percent of Americans depend on their wages for 70 percent of their income or higher, the top 10 percent of wage earners only depend on wages for 46 percent of their income, a drop from 53 percent in 2004. What does this mean? They get more money from passive sources. Passive sources like fleecing the 90 percent of American taxpayers to make sure their bond income or stock portfolio pays enough in dividends so they don’t have to go out there with the other 90 percent of poor schmucks trying to make a living. And keep in mind, those at the higher end of the curve are not part of that elite group. Let us look at the income break down for the U.S.:
In order to be in the top 10 percent your household will need to bring in $118,200 or more. Here in California that is basically a household of two working professionals. But given the high unemployment rate, the number of families here is decreasing. I would argue that you will see a bigger difference if you look at household incomes of more than $200,000. That is where the separation begins.
The problem with the current system is the abject hypocrisy. Most Americans for the most part, do believe in the basic tenets of capitalism. Competition. Supply and demand. But here you have a system that does not favor competition. In fact, the top five banks control upwards of 60 percent of all banking. How is that competition? How about AIG posting the biggest quarterly loss in history? Their punishment is more money. In addition, the core belief of competition is that the best businesses will survive and thrive. In our current environment, we are rewarding the worst and most corrupt businesses. It is contrary to what many have been told. That is why you are seeing such anger and frustration out in our country. Wall Street and politicians can’t admit to what is going on but if you have two eyes and a bit of logic, you will realize that all we have been doing is a transfer of wealth from the majority to the tiny minority. To show this even clearer look at the income for various brackets:
It would be one thing if the top earners made their money from solid businesses. There are many that did do this. But there is a massive majority that created their wealth through AIG, Lehman Brothers, Fannie Mae and Freddie Mac, and other complete failures of business. Many hedge funds thrived because they placed bets on casino like profits in finance and real estate. If you want to see who are the biggest failures just look at the TARP recipients yet they are the companies seeing the biggest benefit in the current rally. They are all trying to prance around in this parade with their first quarter profits but those are thanks to the taxpayer, not them. If it wasn’t for the bailouts, they would be in bankruptcy themselves if they didn’t have control of an oligarchy system of finance. The best course of action should have been receivership. But that would cut in to this select group of people and their income so we couldn’t do that. Therefore the next logical step was to snow the masses into believing the world would end if we didn’t step in. They should have qualified that their financial world would have ended which isn’t necessarily a bad thing. Since that time, unemployment has been skyrocketing, foreclosures are at all time highs, and we are too believe that this is good for us? For many people things are ending (i.e., jobs, losing homes, losing healthcare, etc).
And even amongst the wealthy, there is also a caste system:
We can throw in a few hedge fund managers and bond managers in this group. Ultimately, the system is flawed. Most Americans have been under the illusion that they were wealthy. They are not. In fact, we can pinpoint this decline on a graph:
Starting in the 1970s, we started seeing a massive decline in the savings rate and an explosive jump in consumer debt. Debt per se isn’t bad. In fact, for nearly 50 years the 30 year fixed mortgage served us well when borrowers came in with a down payment (which they saved). That all changed of course. Now, debt was used as a supplement to the lack of real wage growth. It was like a fake Hollywood set. It was only a matter of time before we walked up to the cutout of a building and pushed it over. Time to put that Fiji vacation on the credit card. Let us put the Jacuzzi on the American Express. Time to put those breast implants on the card. It was used for everything and anything. And that was the problem. Debt was given to all with the implicit notion that if everything went boom, the government would step in to backstop it all. No one really explicitly said this but the inner circle knew this. Everything has gone boom and here the government is bailing out decades of frivolous spending financed by the loan sharks on Wall Street. As a society we setup the environment to create Frankensteins like Bernard Madoff. He got away with it for so long because the system rewarded people like him. He merely played the game better than most. Don’t hate the player, hate the game. There are many that are worse than Madoff but they played within the plutocracy rules therefore everything is fine. But is it? Is this the kind of system we want where gains are privatized and losses are socialized on the back of the population?
I know many people are screaming about socialism now but they are late to the game (like a few decades late). Also, what exactly is the mass population getting for this new expensive socialism? Employment security? Healthcare? If this is socialism we are getting very little out of it. For a history lesson, Mussolini’s government was supported by the military, the business class, and the extreme wings of the political branches. Sound familiar? In fact, in 1935 Mussolini pushed for government control of business. By 1935 nearly 75 percent of Italian business was under state control. We have AIG, Fannie Mae and Freddie Mac, all the TARP banks, and what else? We definitely do not want to go down this path. Are we looking at Japan and there 2 lost decades as an example? The crowd that is getting silenced here is the moderate majority.
In fact, I talk with both moderate Democrats and Republicans and we have more in common than many think. Yet you have the extreme wings of the party hijacking issues. Like the tea parties started with anger toward the bailouts. Yet many protests started having people use other wedge issues which have nothing to do with the bailout. These are distractions. Keep your eye on the ball. The first news station that does a two hour piece shredding the Fed and U.S. Treasury gets a massive high five (hint hint CNBC).
The current administration has two widely respected financial experts in Paul Volcker and Elizabeth Warren. They should unleash both of them on the current financial industry. Last I heard is they are putting Volcker on the task of reforming the tax code which is incredibly important. But why not have him tackling the current banking crisis as well? He can walk and chew gum. Also, Elizabeth Warren showed up on The Daily Show and said all the right things. Yet when John Stewart asked her what her power was, she really couldn’t say. All she could say is “I’ll talk about it.” What use is transparency without the ability to act on what you find? Now I realize a fiscal problem 30 years in the making won’t be fixed in 3 months, but I hope we start seeing some progress in protecting the American people because ultimately, we are all going to pay if we continue down this path.
The bottom line is there is a two class system in the U.S. and it doesn’t separate along party lines. Those that rely and use debt and those that create it with the aid of the government (aka Wall Street). Banking should be a utility that provides capital for the most efficient resources. That is it. Banks should not be seen as a large segment of the economy for employment. They are like a parasite that depends on the host producing over and over. Now that defaults are hitting, they are looking for a new vector and now they are latched onto the government (aka taxpayers). There was a reason banking became a boring enterprise after the Great Depression. If we learn any lessons from our Great Recession banking will go back to being a boring, controlled, and tiny part of our economy. In the mean time, enjoy the stock market rally for the feudal lords while unemployment keeps skyrocketing for serfdom.
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52 Responses to “The New Financial Overlords: The Debt Class and those that provide the Debt in Serfdom. Understanding the new Structure of the American Financial Landscape.”
Great article,can we take it one step further and call it kleptocracy? Seems no one in our government is the least bit curious why we are throwing money down a hole,makes me wonder.
Another spot-on post, doc! Those of us in the bottom 90% are getting screwed and they aren’t even buying us dinner. Maybe we shouldn’t be surprised, the wealthiest corporations all have PACS and Political apparatus to buy up our politicians. Even politicians with good plans get squashed. That is why we need the 28th amendment to the constitution: Separation of Corporations and State. Multiple BILLION dollar corporations should not be able to manipulate our government through PACS, Campaign Funding or any other method.
Elizabeth Warren is great but she has no power.
Read “Web Of Debt” by Ellen Brown.
Read “Tragedy and Hope” by Carrol Quigley.
The scumbag bankers own and rule the earth. They own the politicians(including Obama) And this is clear, otherwise Mr. Change would have appointed an independent special prosecutor to go after the Wall St. scum that engineered the meltdown. Can you hear the crickets?
The money power kills anybody who gets in their way. They steal and plunder, kill and cause wars…we are so screwed.
As one person said, “I never want to hear the term ‘welfare queen’ again.” These bailouts give welfare a whole new meaning. Every financial advantage is slanted in favor of the banking industry at the expense of the consumer. On the very day that Citi Bank received 65 billion from the feds (taxpayers), I received a letter, from them, indicating that my credit card rate, on outstanding balances, was being raised to 29.9%! In 25 years I have never been late or have even carried a balance. Pity the poor sucker who does. Essentially, those poor suckers with outstanding balances are the very same ones who bail out these greedy bastards; and this is their thanks? How did whole thing get so convoluted? Greed-Greed-Greed
Oh Obama has definitely sold out. Here is your one word proof: Geitner. I doubt this was the change people wanted.
I’m afraid that only violent overthrow will right the ship.
Goldman Sachs was actually betting AGAINST the mortgage bundles that they were selling at the same time!
Paulson should be shot, along with the rest of those scumbag bastards.
You can’t have a free market economy when there’s a monopoly on the money supply.
I wish that people would wake up and figure out what’s going on.
Usury has ruined this country, as well as most of the developed world. You cannot allow the banksters to run the world and expect anything but suffering. They seek to enslave everyone with debt, and those who won’t cooperate are murdered.
The idea that a man could casually walk into Congress and demand a check for close to a TRILLION dollars, and threaten martial law if they didn’t comply…MY GOD! The biggest and easiest stickup in all of history! And that was only a down payment. Those pricks have gambled close to a quadrillion in airball derivatives, so no wonder that 12 trillion doesn’t seem to be helping much. This is a black hole of debt and I wonder if we will ever crawl out from under it. They played fast and loose with our nation’s economy, and truly, I wish that someone would kill them all.
I don’t know how to get the information, but there is a whole lotta smoke.
I think AIG insured state and city bonds. States and cities purchased the insurance to reduce the interest rate – and improve their rating.
What happens to the state and city bonds if AIG no longer backs them with insurance?
Everything is going according to the plan.
By summer, after Amerika has it’s next “false flag” terror attack, the stock market will start to collapse, followed by riots, and then the “S” will hit the fan.
http://totalinvestor.blogspot.com/
Good posts people!
Trillion bucks or marshal law? What’s that about? Gecko? Paulson?
Instead of trying to kill the problem, people that are losing their incomes and homes are shooting their kids, wifes family’s and selves. Gangsters shoot each other for territory. Maybe, that’s why Hillary is trying to get the guns before the sheep turn their anger where it belongs?
If our leaders are able to return our country to the status quo, and make the bankers whole again,how are they ever going to make enough money to pay back all the grant money given them? There’s only a little left in the pensions, none in social security, just where is the money going to come from?
I wish I’d saved the article that said Hillary promised the chinese infrastructure for debt payment. You do know bush and clinton gave the National parks to the U.N. don’t you? The toll roads, bridges and ports are sold off to sovereign wealth funds. What’s left? Housing?
Re Curt:
The reason your interest rate increased is because the banks do not want you to carry a balance. When it was 10% I would let the balance role over to next month because it was no big deal. But now my interest rate has been increased to 22.9% and there is no way I let this one carry over. If I can’t pay it off I don’t buy it.
Also the stock market does not reflect reality due to the bailouts. Citi cannot claim it has made a profit after receiving bailouts unless this is considered a new income stream. Wells Fargo’s profit did not include the losses from Wachovia, again the numbers are being manipulated.
Do Svidanya Tavareesh
Excellent article, Doctor. People, since the bankers control the government, effective change must start with changing the financial system especially the large crony banks and the federal reserve system, which is a Trojan horse for the bankers.
Great article by the good Doctor! People, please help get this article posted widely on the internet, email it to associates, etc.
I print and spend all the money so I decide what will get done and how much things will cost. I have more money than God so I can easily afford to hire goons to impose my will. I laugh at your puny savings and destroy your value whenever I choose to. You will work hard untill your health fails you and do as your told. If I decide your unnecessary, redundant, or an old useless eater then it will be ok if you die. What don’t you get?
@Boghie
I think we already found out:
http://www.sacbee.com/topstories/story/1781008.html
California Asks Feds to Back Its IOUs
It’s been over for some time, capitalism that is. We live in a bankocracy/kleptocracy. Neither mainstream party can possible get us out of this mess because they are owned by the bankers. The only way to restore capitalism is to elect a party that will use military force to bring the ultra-wealthy into line. I have no problem with each billionaire being subject to a one-time 80% percent tax. But it ain’t going to happen. Lobbyism must die. Corporate donations to politicians must be illegal.
In 2008 White plains NY raised it’s portion of local sales tax from 2% to 2.25%. The rading agencies worned that there bond rating will be downgrated. The reason? hevy dependence on sales tax vs property taxes witch are near the top nationally. Of cource council members & the mayor’s office responded as “what do they know, they don’t have a clue on what happens here on a day to day basis”.
As it turns out the war of words died quickly & the rating never changed. To paraphrase Wall Street-rather then raising sales taxes wich will spread to everyone slightly, White Plains should have kept raising property taxes wich would hit the residents only.
This reflects the insilated world view of the Wall Street crowd. This is ironic because a fair amount of these people live if not White Plains it self then nearby communities in Westchester County or Fairfield county CT. Same holds true for parts of northern New Jersey like Summit & the north shore of Long Island.
We should not forget the underlying cause of the current crisis. It was the issuance of unregulated Derivatives by AIG and others that were without sufficient collateral to pay the defaults as they occurred.
These derivatives were sold to unsuspecting investors, worldwide, in astronomical numbers for equally absurd purported values. When the value of these Derivatives collapsed, the losses put nearly every bank and financial institution invested in them at immediate risk of failure, worldwide.
So, let’s keep focused on the real cuptits. If the President did not act as he did, the entire world economy was at risk of immediate collapse.
I believe we have now stemmed the tide of financial institution failures. If we have, then we need to focus on, and demand, new regulations to prevent this from hapening again.
Institutional greed, not the misled consumers, were the fundemental cause of our current crisis.
Republicans, hide your heads in shame for your lack of oversight.
1. The original TARP legislation was defeated by the “extreme” wings of the two parties. The moderates were the ones who bought in the idea of “too big to fail.”
2. The Democrats held control of Congress for 2 years, but did nothing to improve financial regulation. They currently hold the White House and both houses of Congress, but have done little except dream up even bigger and grander bailouts. Timmy Geithner is simply Hank Paulson with hair.
Comrades,
Our country has formed into three distinct groups, those in denial of the dire situation, those at the top who are knowingly gaming the system for personal gain and to keep everyone else in denial, and the group that reads this blog! Comrade HB is absolutely right about the financial overlords. Watch the news the next few weeks because we are ready for the next leg down (or at least a good sobering up from this sucker rally). Nouriel Roubini’s RGE Monitor newsletter says the following:
“The spin machine about the banks’ stress test is already in full motion; some banking regulators or other US government officials have already leaked to the New York Times the spin that all 19 banks who are subject to the stress test will pass it, i.e. none of them will fail it.But if you look at the actual data today macro data for Q1 on the three variables used in the stress tests – growth rate, unemployment rate, and home price depreciation – are already worse than those in U.S. government baseline scenario for 2009 AND even worse than those for the more adverse stressed scenario for 2009. Thus, the stress test results are meaningless as actual data are already running worse than the worst case scenario.”
Let’s hope for everyone’s sake that the overlord’s slight of hand will be revealed by someone (anyone listening at CNBC?). And while this little game is being played out by the Wall Street boyz, the Detroit boyz are at it as well. Thanks to Comrade HB for the important service he is providing to the public.
Be brave Comrades!
We can all stop the spigot to the Treasury and Congress by fully understanding how the “income” tax works and thereby starve the beast. Go to (www) (dot) losthorizons (dot) com and see how educated Americans are getting full refunds back from the IRS and state governments in excess of 9 million dollars. The book is aptly named, Cracking the Code: The Fascinating Truth About Taxation in America, by Peter Hendrickson.
I am a benefactor of this knowledge for three years running.
Learn to walk the walk and bring runaway government to its rightful place – in the hands of its citizens!
Republicans????????????!!!!!!!!!!!!!!!!!!!!!!!!! HAAAAAAAAAAAAAAAAAAAAAAAAA!
As if!!!!!!!!!!!!!!!!!!!!!!!!!
Go to youtube and watch the Fannie/Freddie hearings, where the Republicans confronted the Black Caucus about subprime and were told that there was no problem and were called racists.
Rubin had a hand in this mess, as did Clinton, well the list is endless on both “sides.”
If you are still a partisan at this point, I’m sorry but you are stooooopid.
The parties are a dog and pony show, insignificant. There is only ONE party; the party of money. The shadow government rules all of us. The matrix is real.
Mr. Westbrook, please consider that this was an entirely bipartisan effort and so the Democrats need to be engaging in some head-hanging, as well. Remember that the president who signed Gramm-Leach-Bliley into law was definitely not a member of the Republican Party.
As the good Doctor stated in his essay, our two class system in the U.S. doesn’t separate along party lines. The creation of it didn’t, either.
I forgot some of the biggest Dem culprits of all! Dodd and Frank! Both up to their ears in this mess. Fannie/Freddie was absolutely the Dems fault.
Truth is, THEY ALL SUCK.
Barney-Frank-sez,its-not-my-fault!
I recall the US government, the busineses, and the American people (Democrats, Republicans, Green Party, Libertarian, Independents, etc) being all to blame for this mess. So as we focus on the US government and the business institutions that discarded sound financial principals in favor of short term gains, let’s not lose our focus on the American people. Who cares about what the banks are doing with credit cards. Screw American’s who need to have credits cards to live and pay bills. As we learned with the whole deleveraging of our economy, it is better for American’s to be off credit cards, and to rely more on their personal savings during hard times anways. Yes I understand this is unprecedented times and pink slips are common but if this year has taught us nothing, its that Americans need to change their culture of borrowing (even if the US government and state governments have not yet caught on), and if that means those without have to go with less, shack up with family/friends/charity to get by then so be it.
L–
How can Americans “change their culture of borrowing” when, adjusted for inflation, wages of your average working American have remained stagnant since the early 1970’s? Had wages kept pace with productivity from 1972, minimum wage would be $19 per hour–a far cry from what it is today. This economic tempest wasn’t simply a matter of granite counter tops and BMWs; many people turned to credit for necessities they otherwise could not afford. Plainly, the business world has conveniently forgotten that its very foundation is built on the backs of the middle class. Until it remembers, nothing will change.
Comment by Honneker
2. The Democrats held control of Congress for 2 years, but did nothing to improve financial regulation. They currently hold the White House and both houses of Congress, but have done little except dream up even bigger and grander bailouts. Timmy Geithner is simply Hank Paulson with hair.
___
Actually that is procedural incorrect.
>>>
Prior to the ’08 election, in the US Senate the Dems had 49 plus Bernie Saunders (Ind.) plus Lieberman (whatever he may be.) That gave them 51 votes. While that is a majority, it is NOT a suffficient number to pass cloture and bring a bill to the floor. Cloture is the vote that ends debate on a bill and that takes 60 votes. If cloture can not be passed, the other side can debate and debate and talk and talk and keep anything from being passed. In fact, a super majority is needed before a party can be said to be “in control” of the US Senate and able to pass what they want.
>>
Then there is the other matter. The Legislature passes laws but the President is the one who can veto. In case you didn’t notice, suring ’06-08 while the Dems had 50 votes plus Liberman in the US Senate, the President was a Republican. Overridng a veto takes a 2/3rd majority in BOTH houses which, in the Senate again means having even more than 50 votes.
>>
That is rightwing nonsense – the trying to blame the Dems in Congress in ’06-08 when they didn’t have enough votes to absolutely control the Senate or to override a veto.
>>>
Still have the same problem now. 58 votes in the Senate is NOT 60. Republicans can still block legislation.
Underlying this is the quality of people you elect.
Why …because the President & Congress have worked against the interest of the everyday person for many a decade.
Yes, Obama turned out to a puppet of Wall St. Should that come as a shock to his supporters when he made countless promises during his campaign yet didn’t offer specifics about how they would be paid for? Didn’t that tip you off about his integrity. Is it any wonder that he suddenly changed his stripes & appointed tax cheat Geithner and Wall St bought Larry Simmers. Or that they continued looting the public funds to prop up Wall St.
Why hasn’t Obama demanded the resignation of that loser Ben Bernake from the Fed? The reason is that Obama owes his election to Wall St. Silly you, you don’t think YOU elected him, do you?
And Congress, how many of you sheeple out there are aware that they get there FULL yearly salary (currently about $180K) for LIFE… after having serving only ONE term. Isn’t that outrageous! But not nearly as outrageous as so many of you not even being aware of this.
Why oh why would anyone with half a brain elect someone who is feeding so heavily at the public trough. And yet so many of you keep sending the same incumbents back to Washington, term after term. So what was you favored incumbent doing for the past decade such that he/she didn’t catch this catastrophe brewing? Too busy running for re-election perhaps.
Social Engineering Theory
===================
In a multi-ethnic multi-religious society, in any large organizations, if the top 100 management positions does not reflect the composition of the multi-ethnic multi-religious society it can happen only though social fraud.
Above social fraud is done through the education system, professors belonging to minority tribes blatantly giving higher grades to students of their own tribe. When this happens lot of stupid people (who think they are brilliant because they got good grades) will occupy key positions in Media, Banking and Business. Then innovation stops, stupid people cannot innovate, instead they start cheating to cover up high expectations of their brilliance, the downward spiral of the society happens.
This is how countries fail…..
The only way to sustain prosperity is to ensure top 100 management positions in top 10 organizations in all sectors including banking, media, business and educational institutions reflect the general ethnic composition of the society.
Ok Don, you better look in the mirror and see if a Sheeple is staring back at you. Do you really think that everyone who voted for Obama really expected him to deliver the equivalent of rainbows and puppy kisses for all Americans? The banter back and forth between people trying to blame one another for our current mess obscures the fact that our political system has been corrupted to the point to where we don’t have a real choice. Don’t you get it? Those aren’t people we’re electing to public office, it’s Exxon/Mobil, Halliburton, Walmart, etc. Get real. The sooner you realize that things would still be just as screwed with McCain/Palin the sooner you can join the 1% of people who at least aren’t surprised when the “little guy” gets the shaft.
Regarding Congressional Pensions:
“Their average annual pension was $35,952 in 2006.”
Source:
http://www.senate.gov/reference/resources/pdf/RL30631.pdf
http://www.snopes.com/politics/taxes/pensions.asp
Great Article Dr. HB!
My favorite idea for the little people is “Debt Free Living” It is not as hard as you think. My husband and I read every frugal tip and debt reduction ministry tip on the internet and in books. It works!
We own our home, cars and have money in the bank for college for three sons (two years community college, and two years local universities in San Diego).
You actually end up richer with a some frugal living. Also, you can eat more healthy with home cooking. We can buy what we want now within reason at 48 and 52 respectively. We are building our reitirement savings, but more importantly, we have stress free and debt free living TODAY.
Don’t be a slave to the lenders! Dr. HB is right. They stink and love making money off of us, easily.
Just thought I would throw that tried and true idea out here where reasonable people are. Does anyone else feel this way, or are my husband and I almost alone on this?
Americans have such a high tolerance for pain. We need recent immigrants to remind us how to protest – think 3 – 4 years ago to the immigrates right protest and May Day 2007 in DT LA.
“That is why you are seeing such anger and frustration out in our country.” where, when, who? You mean the 15k nationwide strong tea party douche bags? C’mon no one is angry enough or frustrated enough to protest in the streets. NO ONE. and with the record hitting heat wave in Socal – forget it! I’m not going out there!
“They make you think that buying is rebelling – lyrics by RATM” – So now you’re out there spending your money on guns and ammo… To protect yourself against cartels??? Stop feeding your addiction to fear.
“Keep your eye on the ball” – Chavez who?
I am a 90th percentile working class American, who’s salary has never increased in 20 years of working.
Just a quick note to let you know that one of your posts was selected as one of my
4 BEST
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congratulations on your outstanding blog and thank you for all the work you are doing to make sure the public is informed of the truth.
Maximus
http://4best4worst.wordpress.com/
I’d just add that who enforces this system.It needs muscle to survive.The govnt
employees retiring at 50 with 90 percent pension.Healthcare,generous days off,
cost of living increases etc.Some capitalism-
I tire of dimwits who blame the people. Our “choices” don’t matter, because every viable candidate has already been vetted by the moneychangers.
Greed and corruptness are at the core of the problem!!!
The problem is idiocracy: we evolve as individuals and our ultimate demise is a function our inverse synergy. Our tendencies are to destroy other families, clans, villages, races, societies. We are not becoming a more sentient species, we are writing our own epithet. Thousands of years ago, men knew the truth; but all along the spoils have gone to the victors. Probably if we traced our ancestors back far enough, most of us were sired by violent rape at the hands of some warrior. It’s amazing that we do as well as we do, coming from where we began and trying to find the truth in this era of continuous mental warfare, where every grain of truth is concealed by a forest of lies.
Sad truth is we are basically on our own, singularly being devoured by the hoard of cannibals our species has become.
The populist demagoguery of your article is both typical and incredible. While your numbers are correct, even most of the 1.2% who had a median household income of $1.6 million in that year (2004 or 2007) are not the “crony capitalists” you whine about. Those people are an ever smaller part of the population than you claim.
Oh, and another minor detail on which you are DEAD WRONG. The “ideal” society would not be based upon the “will of the majority”. That is a recipe for mob rule. The United States political system should be based upon the CONSTITUTION before it became “flexible” starting around 1913. Ever hard of that?
@Kerri
You are right. You never have to worry about paying the mortgage when you’re free and clear. You are not free if you are in debt. How hard is that to understand? If you are in debt, you are a slave to the lender and to your employer. When they say jump, you ask how high?
People are angry because of the TARP bailouts and fraud in Wall Street, but neglect the elephant in the living room. The entire monetary system has basically fractionally reserved future tax burden of the American people for obscene profits off of loans they create.
The Fed is a front, the commercial banks that have deposits in the Federal Reserve are the “cabal” that profits for our debt. As treasury bonds are issued the Fed writes a check against itself (out of nowhere) and buys the bond, then the bond issuer takes the Fed check and goes to a commercial bank where it deposits the Fed check.
The commercial bank then goes back to the Fed and deposits the check as a “reserve” from which they can then lend out the allowable fractionally leverage amount of 10:1 (that ratio varies and sometimes is non-existent). Thus tax burden (Treasury Bonds) are turned into interest payments for the banks. Slick business if you can muscle into the racket.
Don, not so fast with my taxpayer dollars. Do some research – -Members of Congress do not have the same deal that presidents do (Obama will get 400K for life until they up it). M of C have pretty good retirements but nowhere near what you allege. They don’t even get paid over 180K on the job! Current pay is 174K for newbies — it goes up for officers (Speaker, Whip, etc.). This is a glimpse of what they get when they retire, and they need a MINIMUM of 5 years service to qualify:
Congressional pensions, like those of other federal employees, are financed
through a combination of employee and employer contributions. All Members pay
Social Security payroll taxes equal to 6.2% of the Social Security taxable wage base
($97,500 in 2007). Members covered by FERS also pay 1.3% of full salary to the
Civil Service Retirement and Disability Fund. Members covered by CSRS Offset
pay 1.8% of the first $97,500 of salary, and 8.0% of salary above this amount, into
the Civil Service Retirement and Disability Fund.
Under both CSRS and FERS, Members of Congress are eligible for a pension
at age 62 if they have completed at least five years of service. Members are eligible
for a pension at age 50 if they have completed 20 years of service, or at any age after
completing 25 years of service. The amount of the pension depends on years of
service and the average of the highest three years of salary. By law, the starting
amount of a Member’s retirement annuity may not exceed 80% of his or her final
salary.
As of October 1, 2006, 413 retired Members of Congress were receiving federal
pensions based fully or in part on their congressional service. Of this number, 290
had retired under CSRS and were receiving an average annual pension of $60,972.
A total of 123 Members had retired with service under both CSRS and FERS or with
service under FERS only. Their average annual pension was $35,952 in 2006.
Doc, you are lossing me. You don’t allow even smallest variance of difference from your center of the wolrd opition. It is too much for me.
Ba-bye!
That is a lot to swallow. I had to read it twice to get all of the great opinions in this article. I love it.. The more I read, and study, learn whatever. The more I throw up my hands and say mercy already. Because I think what everyone is saying is “I don’t know” None of us do… Now I will say this much, when you don’t know something, please don’t go off making policy’s to fix the problem you don’t understand.. Wow that makes a lot of sense. Perhaps I should read that last sentence again and see if I understand it? In the end the consumer or the person that supposedly we are trying to protect is going to get burned. I agree lets just shut off all credit lines and deal with it.. Maybe we would see the reality. Because reality is, I could not find a parking spot at a Nordstroms in Salt Lake City UTAH. on Sat. It was a ZOO.. I don’t understand, but no body is spending money. Do all corporations really have such small margins that we need such high quantity of everything to turn a profit. I think the root of the problem is the business model. Time to change with the times to become profitable.. The lean companies will survive that is my bailout..
>If you are in debt, you are a slave to the lender and to your employer. When they say jump, you ask how high?
Even if you own your home, 100% free and clear, you still have to pay property taxes.
In some cities, that can be as high as $500 per month.
Here in Arizona, unemployment compensation is only $225 a month.
How is someone “free” if they have to worry about paying property taxes, with no job…?
Dear Doc,
You sound like a gloating buffoon. You’ve probably already refinanced and locked in a thirty year rate below 5% and waiting to ride out the storm like your followers.
Well, what if your loan gets sold within a legacy asset package and this purchaser decides to declare bankruptcy forcing you to shop around for a new loan when the only things available are at the 9 or 12% rate? You keep thinking these bankers are idiots maybe there just planning on having the last laugh. We’re going to get hosed whichever way we turn.
@Fraud
I’m making the assumption that you don’t want to live in a tent, so yes, you will have to pay property taxes. We are all going to die one day, and our health will decline, so we are never completely ‘free’, even if we are made men in the GS mob. The whole premise of this blog is that places like SoCal became unsustainably expensive and that inflated the tax assessments as well.
What I was asserting was that if you buy what you can afford and stay out of debt, you will be free of the bondage that comes with it, as Kerri was asking, and DHB suggests frequently.
@Dan,
Doc always asks “what do you think?” Don’t just get pissed and leave. Tell us why you think differently. We’re all just looking for some truth we aren’t getting from the MSM. (SP: ‘losing’, BTW)
For you making the red/blue arguments, read David Brook’s recent column:
http://www.nytimes.com/2009/04/21/opinion/21brooks.html?em
Dr. Housing rightly condemns crony capitalism but focuses attention on government and legislation. One reader identifies Geitner (ex-head of NYC Federal Reserve Bank) as the cause of the problem. The article on Crony Capitalism briefly mentions passing control of Fannie and Freddie to the Federal Reserve.
Should more condemnation be focused on the Board of Governors of the Federal Reserve system ??
They taunt themselves as an “agency†of the government and are created by Title 12, Sections 241 to 252—but they fail established characteristics of an agency. The Board’s daily operation is not under the control of government; they are not represented by DOJ attorneys during suits; they are not government employees (with a few exceptions); they are not audited by the GAO; they receive no government funds for operation; their salary records are not public information; staff salaries are set by the Board; the government is not responsible for any adverse judgment; the only available financial record of the Board of Governors is an annual two page gloss included in the Annual Report to Congress; etc.
(Do not confuse this discussion of the BOARD with any consideration of the Federal Reserve BANKS. The Banks have been identified as privately owned by the commercial banks but controlled and regulated by the Board. Ref. Title 12, Section 248(j). This writer would identify the FR Banks as franchises of the System.)
Yet it is the Board and its primary operating arm, the Federal Reserve Bank of New York City, that establish the monetary policy of the nation—including the bubbles of the last 30 years. The Board has been alleged to be privately owned by international bankers in SECRETS OF THE FEDERAL RESERVE by Eustace Mullins.
The operation of the Fed creates fiat currency in the amount of the principal of Treasury securities authorized by Congress. This creates the national debt. The contract (which has never been seen) is to pay off the securities plus interest. It can never happen. The money to pay the interest has never been created—it does not exist. The contract can never be culminated. The only way to pay the interest is to create more principal. Perpetual debt is inescapable. It is a classic Ponzi scheme. Any Ponzi scheme is self-destructive.
Is a stable economic system within the United States possible without considering the role of the Federal Reserve Board ?? It is they who assist their cronies such as AIG and other Wall Street financiers to fleece the public.
Well that last comment is a fitting end to the list so far. On spot. Read Modern Money Mechanics if you can find a copy it was published by the FED quite some time ago – and will explain exactly how they do this magic trick. How dumb are we that they even published it and told us what they were doing and we still didn’t get it?!
It is not a political/partisan world anymore, it is a class world. There are two main classes: those who rule and those who do not. But there is a third way to play – and that is to go your own way – and to create according to your own knowledge and ability and vision without regard for the “system” which will continue to do what it does best – manipulate those who are willing to pay it any attention at all.
Buckminster Fuller wrote it all down before he died in a little book called GRUNCH – and 99 percent of Americans haven’t read it or can barely say who RBF was – if you ask them they will say “Oh – he invented Domes, right?” Yeah. that’s it.
The plan is in full swing comrads, but it is still possible to choose how and/or if you participate- not by how you vote, (MY GOD what a silly idea – VOTING in this modern age!) but by how you choose to THINK, To ACT and to LIVE. Do all of these with an uncompromising decision to keep your own eyes and mind headed in the direction you intend to go and you will get there – but never by listening to the white noise of the media, the populace or the elected puppets…
We have an amazing power within us to create what we believe is possible – so we better start paying attention to what we believe – and working to shore up some new visions for this country that do not include any of the current players or their expensive habits.
The bright news is that when government gets so blatantly corrupt that everyone can see it even if they cannot properly identify the details of it, then people stop believing in government and frankly that is what we need to have happen. We have been trained since the beginning of the 20th century in this country to look to government for answers – that was NOT the idea of this nation – but we fell for it when they used the banks to trash our lives the first big time around in the 30’s. You didn’t actually think all this depression/recession stuff was accidental or an act of natural economic swings did you? oh dear.
But when government becomes so transparently sold out and full of BS that no one takes any of it seriously anymore then it has the chance to fall apart from lack of attention and lack of support – in East Germany the sign of the times before the wall came down was the long running comedy show in Berlin – making fun of the whole system – and we are almost there – when the majority no longer even give a shit what government does because they KNOW it’s all crap then things will change. For the time being, give up voting with a ballot and start voting with your mind and your action by creating a different vision for yourself from the inside and making it real in the outside world. That is where greatness always comes from anyhow. And we need some new greatness – We are creative geniuses who have been lulled into a waking dream of hysteria by the actors on the stage in front of us – time to turn off the noise and remember who we are – even if the UN owns our national parks – and our banksters run our government and Exxon runs our courts – and by the way, if you want to be accurate, we live in a Monarchy. Go look up how much of the government is now under the executive branch – and ask yourself why it is every time you turn around the President is telling us all again how it will be – What happened to the balance of power? It’s been gone for coming up on a century now…
Our country has turned into a mass of zombies addicted to caffeine, nicotine, sugar, salt, and all the other substances we subject ourselves to. To expect our government to do the right thing is naive and dangerous. They could have and should have been our spokesmen, our collective voice to shout at the powers that would take our liberties. Instead, they sold out, and now we are controlled by the laws we helped create. Read the Bible carefully, it says we should have no other law than that of God’s law, else we be trapped by it.
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