Wall Street Booms, Middle Class On Edge of Cliff, Unhappiness Greater Last Ten Years
By Elaine Meinel Supkis
Three news stories in one day, two detailing how the middle class is falling behind while the first one is about how the very rich are making money like crazy, as fast as Greenspan can crank out M3 funds. Meanwhile, inflation rages below decks.
From the New York Times:
Wall Street bonuses are expected to have hit a record $21.5 billion in 2005 from $18.6 billion in 2004 as investment banks reaped record earnings, New York State Comptroller Alan Hevesi said Wednesday.Singing, "We're In The Money!" is fun. Only this is funny money. The fundamentals get worse and worse and this year, right off the cliff but everything is still coming up roses as long as Greenspan and his crew keep pumping in more dollars, after all, Wall Street has a nifty plan: to prevent all this stash from causing inflation, they will squeeze workers very very hard! As all workers loose their pensions, pay raises, inflation indexes, health plans, their very jobs, why, there won't be any inflation and this printing of money and then showering it on Wall Street can continue forever and forever.
Last year's bonuses beat the record of $19.5 billion set in 2000 at the peak of the equities boom, Hevesi said during a conference call with reporters.
Booming merger and underwriting activity, as well as a stock market rebound, helped revenues rise by almost 50 percent in the first three quarters of last year.
This insane plan has a flaw. It all depends on Americans being able to buy stuff. Lots of stuff.
So far, they have colluded with China and Japan to create a vast sea of red ink, both in our government, our military/industrial complex and in personal and real estate loans. Using this kitty courtesy of our traders who want to dominate our domestic markets, we have been on a buying spree that is about to end because you can loan the middle class only so much money before they go belly up.
From Harvard Magazine:
During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months.Elizabeth Warren's fine article is a must-read. She explains many things troubling the middle class but does leave out one huge element.
Middle-class families have been threatened on every front. Rocked by rising prices for essentials as men’s wages remained flat, both Dad and Mom have entered the workforce—a strategy that has left them working harder just to try to break even. Even with two paychecks, family finances are stretched so tightly that a very small misstep can leave them in crisis. As tough as life has become for married couples, single-parent families face even more financial obstacles in trying to carve out middle-class lives on a single paycheck. And at the same time that families are facing higher costs and increased risks, the old financial rules of credit have been rewritten by powerful corporate interests that see middle-class families as the spoils of political influence.
Namely, once women went into the workforce, both parents in a family could afford a much bigger house and much nicer cars and everyone upgraded a lot. I made a lot of money buying houses, fixing them up, yuppie style, ending with the planting of a host of rose bushes as a final flourish and then selling for a lot more money. Everyone wanted to live in a fine mansion.
Here is me talking about the biggest mansion we lived in, it was horrifically huge. "We had many stained glass windows, a huge staircase with 5' wide cherry steps, the central hall was 14'x 45' with oak pillars that were in the Corithian style, each 2' in diameter, six of them, the double/double front doors were stained glass and beveled glass with art nuveau ornate brass fictures, the front porch had 10 giant doric columns, a carriage entrance, the basement was so big, kids rode two wheeled bikes down there in winter, two kitchens, butler's pantry, another staircase for the servants, parqet floors with many designs, bay windows 20' long, a fireplace the size of a small room....and it was impossible to live in! I had to work so hard! Tending it was a nighmare for me!"
Well, it sold for a lot of money because everyone has a romance about such things. But you need a gardener or five for the groomed acre, a cleaning lady who understands fine wood floors and how to polish oak panelling. You need a butler for the pantry and two cooks for the two kitchens and a maid, to say the least, as well as a nanny if you have kids!
Of course, the cars come next: everyone and their sister bought gas guzzlers during the easy years! Huge, honking, gigantic Titanics of suburbia. Now they are sinking. And pulling down more than one family! I drove my little gas misers to and from the hulking mansion to the sneers of my richer neighbors. But even today, I have a gas miser and am quite content with it.
Americans most certainly did go on a wild binge. It did benefit me, I sold my various houses to them, but no one is to blame but themselves, they voted for tax cuts so they could have more money and I used to warn people, "Better to pay more taxes and have a booming ecomony than to cut taxes and find out you cut your own throat!"
Well, slice away, America! The loans used for this useless buying spree will come due. I just recieved in the mail yet another solicitation for loans, unsecured, I could get one for a lousy 24.5%! Whoo hoo. Ain't I lucky! If this isn't a sign that inflation is going to roar along, I don't know what is!
Those of us who squirrel away money are getting very nervous. All the bonds and such we normally would like to buy are not good thanks to the Japanese who don't care if the interest rate is 0% so long as they can keep their yen cheap, they buy. So we can't get the government to issue bonds with a realistic interest rate which I would peg, at this point, at around 7% to make up for not only inflation but we do have to get some benefit, in return! Or why bother?
But our government sells these to future enemies. People who aren't American get to buy this up and lard on even more frustrating our attempts at curbing this wild spending.
Meanwhile, unhappiness is on the rise. From Yahoo:
Overall, the percentage who reported at least one significant negative life event increased from 88% to 92%. Most of the problems were related to increased incidents of illness and the inability to afford medical care; mounting bills; unemployment; and troubled romantic relationships.This study says it has gotten worse in the last ten years but this is a lie.
It is specifically the last five years, things have gone quite badly. As inflation rages, all systems have worked day and night to eliminate good jobs, good benefits, good anything. The consequences of all this is, people feel a cold chill blowing down their necks.
This winter has been shockingly warm, insanely warm, dangerously warm but one thing it did was prevent hideous fuel bills due about now! This grace of the Goddess won't have a good ending, though, for this means this summer will be ferocious. Not to mention tornado season this year.
Smart people don't plan on warm winters to work out things on a budget! One has to put aside money for winter even in winter, next year, a volcano could blow and plunge us into deep cold! This grasshopper mentality that seems to afflict America will be our doom.
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