This recession ain’t like the others. The current middle class has been struggling to keep up with their parent’s generation, and failing.
Here’s what happened . . .
From around 1820 to 1970, we saw a steady improvement in opportunity, lifestyle and wealth for the working man. I say ‘man’ because families were easily able to live off the ever-increasing salary of the single salary household.
But around 1970, moms starting working as well. We can debate why this happened.
Did ‘Women’s Lib’ send ladies into the workplace, taking the pressure off employers to increase their husband’s salaries? Or, did women go into the workplace because the cost of living simply made a one-income family untenable?
Perhaps both reasons contributed to the ‘working mom’.
Anyway, with 2 incomes, families could continue the upward mobility American’s came to expect. Certainly there was a price to pay with latch-key children and all the trouble that brings.
But by 1980, even 2 incomes failed to satisfy the American feeling of financial entitlement – 2 nice cars, a big house, 5 TV sets, college for the kids. So we simply borrowed our way to the American Dream. I’m talking about serious borrowing – 1st mortgages, 2nd mortgages, car loans and credit cards.
So we sent mom to work, and then we started paying on credit.
American debt during the Great Depression was 30%. By 2005 it was 125%. That means that our middle class has been living ‘under water’ continuously as a lifestyle choice.
With cheap mortgages, and banks happy to sign you up for multiple credit cards, the middle class dream stayed alive – barely.
Then came the housing collapse of 2007/08 followed by an old fashioned ‘run on the banks’ in 2008, leading to expensive bailouts. Then unemployment hit 10%. Finally, we’re seeing an increase in defaults on credit obligations by tens of thousands of Americans every day.
The middle class has been holding on to their upward mobility dream for the past 40 years. They worked longer hours, they sent mom to work, they’ve taken out loans and charged everything on their Visa Cards.
What’s left for them to do? . . . Work even more hours? . . . Send the children to work? Make grandma get a job? We seem to have run out of options.
And remember, with globalization, employers can easily hire dirt-cheap workers overseas to replace our great American dreamers. The middle class doesn’t have the clout, the unions, or much say in anything anymore. The top 2% of our society is making 80% of the money while the middle class is in a serious downward spiral.
We know that unbridled capitalism eventually creates a 2 class system – rich & poor. It’s happened over and over again. It’s the nature of the system. So 100 years ago we outlawed the 60 hour work-week, child labor, we allowed workers to bargain with their bosses and imposed taxes on the wealthy.
It’s so sad to see middle class ‘Tea Partiers’ dancing to the tune of conservative Republicans. “Go back to the Founding Fathers and free markets! Eliminate business regulations and lower everyone’s taxes, especially the rich!
The poor ‘tea party’ people have no idea that the jokes on them. They’re calling for the end of regulations so that the bankers can screw them yet again. Screw them harder this time – right into poverty.
Is this the end of the middle class? We can stabilize our system and stop this never-ending roller coaster ride of ‘boom and bust’. We need strong rules, carefully managed taxes and dare I say – term limits for our politicians. If they know they can’t get re-elected maybe they’ll be willing to make some tough economic decisions.
I’ll offer some concrete solutions in a future blog. It’s complicated for sure, but there is a solution. The American middle class has been the wealthiest and most industrious group in world history. It can endure, but we can’t be afraid to tweak the system.
We have no choice. After 200 years, the American middle class has run out of options.
Your heart is in the right place. However calling for more regulation of the banks is in essence working for them. They have proved capable of buying off the regulators at every turn. Even Barney Franks former chief aid just took a job as PR guy for GS
The problem is that banks lend out more money than they have. In it’s essence this is worse than counterfeiting. Not only does the artificially created money dilute the money that everybody has to earn, but then the society is gradually enslaved in ertsaze debt.
As a first step a supercharged Glass Stegal act needs to be implemented. The ultimate real regulation needs to be done. The banks need to be broken up into deposit institutions and investment institutions.
The deposit institutions will not be allowed to loan out anything. They will keep cash on hand and store and redistribute it for a modest fee.
The investment banks will be stripped of depositor insurance and all other guarantees. They willl attract investors by their investment skills, prudence, and transparancey, as desired by the investors.
The present system rests on the fraud of fractional reserve banking held together by the printing press behind it and the forced use of the banks fake money forced down the publicc’s throat by the legal tender laws.
I urge to read Murray Rothbard’s book, What has the Government done to our money. Students of Rothbard and the Austrian School of Economics understood the problem and urged reforms in some cases decades ago. Ron Paul accurately warned about Fannie Mae back in 2003 and even predicted the natural response. Obama has just given them a blank check for three years, no limit no kidding, and the CEO of Fannie just got a 6 mil pay check approved by the pay czar.
Ultimately fractional reserve banking needs to go, along with the Fed and the legal tender laws. Until then we are all prisoners of the financial military complex.
Hi Steve
Subject to debate of course, but having the second income is indeed the source of many of our economic problems. If we look at the skyrocketing housing costs of the past 30 years, the second income has been the cause of, not necessarilly the reaction to, those high costs. Let’s take housing as an example. It’s only with increased income that housing prices can rise. Suppose that each family with two working adults took one person out of the workplace. What would happen is, with reduced income, we would see housing prices go down sharply — similarly to what’s happened when credit dried up and unemployment increased. In other words, the market value of your home is not just what someone is willing to pay for it, but what they’re *able* to pay for it. The ridiculous rate of increase over the past years was clearly unsustainable, as income growth has not kept up at the same pace.
We now also have the growth of off-shore labor keeping domestic labor costs from growing. I work in information technology. In this decade my salary has not increased at the rate it did in the previous one.
Now let’s be clear about borrowing our way into the American Dream. Our government has been the most wreckless of the borrowers. Individuals have finally begun to increase their savings the past couple of years, realizing that borrowing and spending is dangerous. Our government keeps talking about reducing the deficit — but seriously, what about these ridiculous earmarks, and the special deals (i.e., Nebraska Medicaid) in the health reform legislation?
The Tea Party people basically believe that government is out of control with spending and future obligations. The debt is, what, $12 trillion these days? At what point would YOU say it’s at crisis levels? Let’s not eliminate regulation, but let’s realize that business — and yes, big, evil corporations — are the fuel for the economy, not an out of control congress ready to whip out the credit card.
I agree about strict term limits. Our congress is an absolute joke.
Полезно, спасибо
Интересно и позновательно, а будет еще что-то по этой теме?
“Классный пост”
“Класс”
Отличный пост, прочитав несколько статей на эту тему понял, что всё таки не посмотрел с другой стороны, а пост как-то очень заинтересовал.
“ваш блог у меня в фаворитах”
Есть две морали: одна – пассивная, запрещающая делать зло, другая – активная, которая повелевает делать добро. – П. Буаст
Добавил в свои закладки. Теперь буду вас намного почаще читать!
Портал просто замечательный, буду рекомендовать всем знакомым!
Да уж По-моему, об этом пишут уже на каждом блоге
трахаться порно
потрясающие идеи…нам перенять бы …великолепно.
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Думаю любому понравится!
что касается темы, то мне кажется актуальность будет известна только через некоторое время.
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Все просто и понятно…что ничего не понятно.
Не может такого быть
Очень рада, что возникло желание взять этот пост в цитатник!
Дискутировать по этому поводуможно бесконечно, поэтому просто поблагодарю автора. Спасибо вам!
Знакомый стиль.
видели видели)