Tuesday, November 19, 2013

Screwed by Social Security Administrators? (And Not Even Kissed), Slump May Last Decades, Rethug's Drug Congressmen, Geithner Should Be In Jail Instead of LBO Fund, Jamie Demon Back in Business

Republican Felon Tim Geithner Should Be In Jail Rather Than Going to Work for Warburg Pincus.

And just as if "they" knew it was gonna go off without a hitch?

AP source: JPMorgan, Gov't Settle All Issues

Now we can go back to thinking of Jamie Demon as the smartest guy in the room again.

But not these guys:

Maddow: Cheney Family Drama Is Messier Than the Kardashians ...

Former British Bank Chief Is Sorry About The Time He Bought Crystal Meth

Florida (Rethug) Congressman Charged with Cocaine Possession

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I guess in this time of constant reminders about the deepening tragedy in Greece and throughout the bankster-stricken world of debt (not to mention the natural horrifics in the Philippines - although aid is finally flowing in), I shouldn't be so upset at getting a one-figure (last year it was much larger) raise in my next year's Social Security check (notice of which I received by mail today).

But I am.

Working for over 40 years, more or less, depending on what you call real or well-remunerated work (and suffering from long-term professional unemployment due to no fault of my own - trust me - I've never turned down any job offer and I've applied for thousands of jobs for many years including this one), and then finding out that all the money I paid in for so many years is worth only a single-figure raise in 2013 is a death knell.

Sure. There's a supposedly good reason why we don't deserve more than a 1.5% raise on our government-insured retirement savings while the Fed/government continues to feel free to lavish billions on banks and trillions on wars. Or so I've read.

Please forgive a dazed, unemployed person if I can't quite remember exactly what it is. I'm sure it'll come back to me after considering the record highs in the stock market. But meanwhile, back in the current economic jungle, I'm reminded daily why I need more than one extra dollar each month.

Right now, most economists argue that unemployment remains primarily cyclical. Ben S. Bernanke, the departing Fed chairman, made this point last summer, adding that an unemployment rate in the 5 percent range — an indication of a healthy economy — was still obtainable. Growth simply hasn’t proved strong enough to spur businesses to hire all the people who want jobs.

Economists come to this conclusion in part because there is no evidence that the long-term jobless are accumulating in any one industry, which would be a signal that the economy needs to move workers from, say, manufacturing into nursing. Long-term unemployment has hit workers young and old, of all industries, races and backgrounds. But the long-term jobless actually tend to be more educated. And long spells of joblessness have hit black workers especially hard, as well as single parents, the disabled and older workers.

. . . Economists have long thought that the strain of unemployment, plus the erosion of skills and loss of contacts that naturally occur, helps explain the “structural” unemployed in a nation’s work force. But new evidence shows that bias plays a much larger role than previously thought. Some of the long-term unemployed might never find work because businesses simply refuse to hire them.

In a recent study, Rand Ghayad, a Ph.D. candidate at Northeastern University, sent out 4,800 dummy résumés to job postings. Those résumés that were supposedly from recently unemployed applicants with no relevant experience were more likely to elicit a call for an interview than those supposedly from experienced workers out of a job for more than six months. Indeed, the callback rate for the long-term jobless ranged from just 1 to 3 percent, versus 9 to 16 percent for newly unemployed workers.

. . . the slack economy remains the primary culprit behind all the pain in the labor market, economists say. “We’ve got to be doing everything we can,” said Professor Rothstein at Berkeley. “That means direct hiring”— with the government providing jobs — “employment tax credits, just about anything you could think of.”

But the government is now doing the opposite. The mandatory federal budget cuts known as sequestration took as much as 60 percent out of unemployment checks this summer and fall. And, as of this winter, the federal emergency program that extends the maximum number of weeks of jobless payments will end, though the White House is pushing to extend it again.

Some fear that it may already be too late to prevent long-term joblessness from permanently scarring the American work force and broader economy. International Monetary Fund researchers estimate that the level of structural unemployment has increased significantly since the recession. And striking new Federal Reserve research shows that the scars from the recession have knocked the economy off its long-term growth trend.

Still feeling great about that big reduction in the deficit? Did you do any research to find out why the deficit had fallen so rapidly?

Bet you didn't think immediately about the fact that when the rich outsource jobs and pay few to no taxes (and I'm talking about the corporations, which pretend that their address is in foreign countries, also), they quit paying into the Social Security fund as well.

Also into all other social safety net programs. Because that's just an added benefit of moving their jobs overseas! After all, it's not like they owe anything (thank your Congressional representatives) to the USA USA USA!!!

Here's a part of what we know is occurring in our world today.

From the Angry Bear:

Wage Statistics Show The Rich Get Richer Again in 2012

The rich get richer and income inequality in America continues with no end in sight.  The latest evidence is from the social security administration  The gap between rich and the rest of us continues to grow.  The social security administration keeps statistics on average and median wages as reported on Federal income taxes and contributions to deferred compensation plans.  They use income tax data to calculate your social security benefits.  Below is a chart of the average wage and median wage from 1990 to 2012.

Median means 50% of all wage earners earned that wage or less. The average wage has increased 110.7% since 1990, yet the median wage has only increased 89.8%.

The reason the average wage has increased more than the median is the super rich. Average wages are calculated by taking the total compensation in America and dividing by the number of wage earners. The reason the median and average wage diverge is because those few at the top making millions push the average wage amount much higher.

To see this disparity of how most of America is working for peanuts, below is a graph of wage earners by income bracket.  A full 15.2% of wage earners makeless than $5,000 per year.  A whopping 24.2%, of all wage earners make less than $10,000 per year and almost a third, 32.2%, of American wage earners make under $15,000.  Think about trying to rent a one bedroom apartment never mind feed oneself with these kinds of wages.

Harsher cuts are on their way

Winter is coming, and the automatic cuts known as sequestration means that poor families across the country will have less money to heat their homes. Last week, the government gave out 10% less to states for the Low Income Home Energy Assistance Program, as compared to the previous year—a decrease that’s partly due to looming sequestration cuts in 2014. For Maine, whose funding got cut 3%, that means families are receiving $129 less in heating aid just as the temperature has started to drop. “That doesn’t buy enough heat to get through the winter,”  “The only thing you can tell them is to close off the rest of the house and stay in one room.”

It’s a reminder that the worst is yet to come for many programs if the across-the-board cuts continue, as agencies run out of stopgap measures that have kept them afloat for the last year and more reductions make themselves felt.

Unless Congress reverses the cuts, defense discretionary spending will be cut by an estimated $19 billion in 2014 and non-defense spending will be cut $12 billion more, according (to) Michael Linden, managing director for economic policy at the Center for American Progress. That’s on top of the cuts that have already occurred since March, when sequestration began. The reductions shrank defense spending by $9 billion this year, and non-defense spending by $36 billion, as compared to 2012.

I've said many times in this blog that considering the fact that most of the good (requiring higher educations) professional jobs were moved out of the country over the last 20+ years, and likewise, that the taxes that support this country, having been decreased for the wealthy many times over the past years by the Congress to where they are now only being imposed on those in serf-like jobs at the bottom of the wealth pyramid, that it could well be over 20 years before any type of stable civilization, like what the USA had had in the 50's and 60's, could be reachieved.

Professor Paul Krugman agrees.

Krugman writes: "What if depression-like conditions are on track to persist, not for another year or two, but for decades?"

A Permanent Slump?

By Paul Krugman

November 17, 2013 Comments

Spend any time around monetary officials and one word you’ll hear a lot is “normalization.” Most though not all such officials accept that now is no time to be tightfisted, that for the time being credit must be easy and interest rates low. Still, the men in dark suits look forward eagerly to the day when they can go back to their usual job, snatching away the punch bowl whenever the party gets going. 

But what if the world we’ve been living in for the past five years is the new normal? What if depression-like conditions are on track to persist, not for another year or two, but for decades?

You might imagine that speculations along these lines are the province of a radical fringe. And they are indeed radical; but fringe, not so much. A number of economists have been flirting with such thoughts for a while. And now they’ve moved into the mainstream.

In fact, the case for “secular stagnation” — a persistent state in which a depressed economy is the norm, with episodes of full employment few and far between — was made forcefully recently at the most ultrarespectable of venues, the I.M.F.’s big annual research conference. And the person making that case was none other than Larry Summers. Yes, that Larry Summers.

And if Mr. Summers is right, everything respectable people have been saying about economic policy is wrong, and will keep being wrong for a long time.

Mr. Summers began with a point that should be obvious but is often missed: The financial crisis that started the Great Recession is now far behind us. Indeed, by most measures it ended more than four years ago. Yet our economy remains depressed.

He then made a related point: Before the crisis we had a huge housing and debt bubble. Yet even with this huge bubble boosting spending, the overall economy was only so-so — the job market was O.K. but not great, and the boom was never powerful enough to produce significant inflationary pressure.

Mr. Summers went on to draw a remarkable moral: We have, he suggested, an economy whose normal condition is one of inadequate demand — of at least mild depression — and which only gets anywhere close to full employment when it is being buoyed by bubbles.
I’d weigh in with some further evidence. Look at household debt relative to income. That ratio was roughly stable from 1960 to 1985, but rose rapidly and inexorably from 1985 to 2007, when crisis struck.

Yet even with households going ever deeper into debt, the economy’s performance over the period as a whole was mediocre at best, and demand showed no sign of running ahead of supply. Looking forward, we obviously can’t go back to the days of ever-rising debt. Yet that means weaker consumer demand — and without that demand, how are we supposed to return to full employment?

Again, the evidence suggests that we have become an economy whose normal state is one of mild depression, whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing.

Why might this be happening? One answer could be slowing population growth. A growing population creates a demand for new houses, new office buildings, and so on; when growth slows, that demand drops off. America’s working-age population rose rapidly in the 1960s and 1970s, as baby boomers grew up, and its work force rose even faster, as women moved into the labor market. That’s now all behind us. And you can see the effects: Even at the height of the housing bubble, we weren’t building nearly as many houses as in the 1970s.

Another important factor may be persistent trade deficits, which emerged in the 1980s and since then have fluctuated but never gone away.

Why does all of this matter? One answer is that central bankers need to stop talking about “exit strategies.” Easy money should, and probably will, be with us for a very long time. This, in turn, means we can forget all those scare stories about government debt, which run along the lines of “It may not be a problem now, but just wait until interest rates rise.”

More broadly, if our economy has a persistent tendency toward depression, we’re going to be living under the looking-glass rules of depression economics — in which virtue is vice and prudence is folly, in which attempts to save more (including attempts to reduce budget deficits) make everyone worse off — for a long time.

I know that many people just hate this kind of talk. It offends their sense of rightness, indeed their sense of morality. Economics is supposed to be about making hard choices (at other people’s expense, naturally). It’s not supposed to be about persuading people to spend more.

But as Mr. Summers said, the crisis “is not over until it is over” — and economic reality is what it is. And what that reality appears to be right now is one in which depression rules will apply for a very long time.

But not to Larry and friends. And speaking of Larry . . . doesn't it seem like he's kind of switched sides? Or is this just more clever "positioning?" Not that there's not plenty of money to be made in a "depression rules" environment. Yippee Yi Yay!

Be sure to read the Comments for this article. The "Readers' Picks" are particularly fine with Karen Garcia at Sardonicky leading the way.

And, oh yes, I remembered now where that single-figure increase in Social Security benefits came from:  September 2013's ultra-low inflation data. Cause we ensure veeeerrry low inflation now in the USA USA USA!!!! And don't misunderstand my personal anxiety over Social Security payouts. I know it's my retirement account, funded by me, and insured by the government. And I am very proud that we have one program left relatively intact from FDR's vision in the 1930's to ensure that those past a certain age will not be put out on the street as charity seekers if they were unable to save enough privately for retirement. As we certainly have had more than sufficient economic disasters lately to really appreciate that farsightedness.

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