You Are Not A Loan

In These Times
Rebecca Burns

Is a debt strike the future of Occupy?

Though the Occupy camps have disbanded, many organizers believe they’ve found the next big tent under which the year-old movement can regroup: debt. At the one-year anniversary celebration of Occupy Wall Street, members of the group Strike Debt distributed 5,000 free copies of a “Debt Resistors’ Operations Manual.”

Debt, Occupiers argue, is a new way of understanding what sets the 99% apart from the 1%. With wages remain- ing stagnant as the cost of living has increased, workers increasingly finance their day-to-day lives on a deficit. An estimated 75 percent of households now carry some amount of debt. And the problem goes even deeper: Creditors ranging from seedy sub-prime lenders to the International Monetary Fund have the power to compel cities, states and entire nations to forgo basic necessities in order to fulfill their promissory notes.

Could this new offshoot of Occupy reignite the movement? In These Times organized a dialogue about the prospect of a modern-day debtors’ revolt—and how the creditors might fight back. Participating were Pam Brown, an organizer with Strike Debt; Jodi Dean, professor of political science at Hobart and William Smith Colleges; Mike Konczal, a fellow at the Roosevelt Institute; and Peter Rugh, an organizer with theOccupy Wall Street Environmental Solidarity working group. 

Most Occupiers have been reluctant to organize the movement around any one overarching issue. What’s the potential benefit of focusing on debt?

Jodi: The issue of debt is typically embedded in the austerity agenda. Debt, whether our nearly unfathomable national debt or debilitating personal debt, supposedly signifies a will too weak to sacrifice present pleasures for future benefits. And in a country so punitive that weakness of any sort invites cruelty and condemnation, debt has given Republicans—and Democrats tripping over themselves in their race to the Right—an opportunity to inflict pain on “the 47 percent” by cutting much-needed benefits and services. So Strike Debt’s move to claim debt as a cause for the Left is a welcome change.

Pete: It would be a mistake to understand Occupy as a single-issue movement focused on debt. For example, OWS Environmental Solidarity is helping coordinate direct actions against fracking and other forms of extraction. But there is a symbiotic relationship between the exploitation of the planet and the exploitation of people, and debt is a useful lens for this. The question we ask by focusing on debt is “Who owes who?” We are all owed a future, but we aren’t going to get one if we accept that Wall Street is entitled to cash in on the investments it’s already made in wrecking the planet.

What are the challenges of organizing people as debtors—rather than as workers, women or others who have been the basis of mass movements?

Jodi: The individual quality of debt makes a collective response a big challenge. Unlike the factory, where worker encounter one another daily, debtors accumulate debt—and face the consequences of default—privately. That others are in the same boat may feel reassuring, but it doesn’t change one’s credit score. And because it’s often hard to figure out who actually owns a loan, it will be hard to organize and target debtors’ actions.

Pam: It’s true that debt is much harder to organize around than the collective grievances of the workplace. But that’s why, as the power of labor declines, figuring out how to build a debt resistance movement is so important.

During the Red Scare, federal support for increased home ownership was considered vital to the project of combating Soviet influence. While nothing longer than a five-year mortgage existed before the Great Depression, homeownership shot up once the government began insuring loans for home building and home buying. The 30-year mortgage was created, and it was an axiom of the time that a homeowner encumbered by years of mortgage debt was less likely to go on strike. So the acceleration of our indebtedness, and its erosion of collective action, was in many ways a response to the power of worker solidarity.

So what could a collective response to debt look like?

Mike: While the language of “striking debt” is important and provocative, there are a number of problems that a strike against paying debts to creditors would encounter.

In a factory strike, workers have leverage because the bosses and owners are losing money and want the factory to resume running. But creditors often want people to miss the first payment so they can charge fees and penalties, and third-party collection agencies get a windfall through defaults on student loans. This raises the question: If a debt strike takes the form of encouraging people to miss payments or default, how can it be effective in an industry that would likely cheer such a move?

There’s also the question of retribution. Your boss can’t work against your renting a house or getting a phone in a different city five years down the road because you went on strike, but your creditor can. So part of the project will be thinking of new ways of imagining a strike.

Pam: On the horizon is a Rolling Jubilee, where we will be purchasing defaulted debt and legally abolishing it. We are also in the process of building an international organization analogous to a union. In the same way factory strikes improved conditions, withdrawing from the debt system opens up space to reclaim our future. 

Pete: The fact that Pam is proposing an “organization analogous to a union” without fear that her bicycle will get keyed shows how far Occupy has come from a vehement fear of codifying anything. But this effort may require organization to a greater extent than we’ve seen so far. 

Is a campaign against debt in part an argument for a stronger welfare state?

Jodi: Debilitating medical and student debt are the result of a market approach to medicine and education. So if Strike Debt grows, we could see demands for free healthcare and free universities. Once people stop thinking of banks as entitled to interest and fees, then we may also decide as a society that public sector workers, pensions and basic infrastructures are more important than playing the bankers’ game.

Mike: Strike Debt could serve as the basis for a campaign to reestablish education, health, civic infrastructure and income maintenance as part of our basic commons, not to be auctioned off for the benefit of the few.

One challenge is that the government is also increasingly on the other side of these debts, and the same powers that make it a good provider of social insurance make it a vicious debt collector. The government can outwait even the most resistant of student loan debtors. There are more and more stories about senior citizens pushed into poverty or having their Social Security checks garnished to make student loan payments. Strikes work against factories because eventually the capital owners need the factory to start working again, but there’s no indication that this leverage exists with the debts governments stand behind. Factor in how law enforcement is increasingly acting as a front line of debt collection, and this is a poisonous combination.

Occupy has to this point resisted making demands. But could a broad demand for something like debt cancellation advance the movement at this stage?

Pam: Many of us believe that cancellation of some sort is inevitable; the question is who will have their debts canceled and who will not. But I don’t think we’ll see one demand, even as it relates to debt, coming out of Occupy.

Pete: One year into the movement, we need to sustain the bonds that have been forged between Occupiers working on different issues in different parts of the world. How do we do this without demands? We shouldn’t be afraid of raising “mini-demands” under the broad banner of Occupy, whether we are student debt resistors or environ- mental activists fighting nuclear power. Together, we are all demanding a more just and sustainable world.

America’s Descent into Poverty

Paul Craig Roberts

The United States has collapsed economically, socially, politically, legally, constitutionally, and environmentally. The country that exists today is not even a shell of the country into which I was born. In this article I will deal with America’s economic collapse. In subsequent articles, i will deal with other aspects of American collapse.

Economically, America has descended into poverty. As Peter Edelman says, “Low-wage work is pandemic.” Today in “freedom and democracy” America, “the world’s only superpower,” one fourth of the work force is employed in jobs that pay less than $22,000, the poverty line for a family of four. Some of these lowly-paid persons are young college graduates, burdened by education loans, who share housing with three or four others in the same desperate situation. Other of these persons are single parents only one medical problem or lost job away from homelessness.

Others might be Ph.D.s teaching at universities as adjunct professors for $10,000 per year or less. Education is still touted as the way out of poverty, but increasingly is a path into poverty or into enlistments into the military services.

Edelman, who studies these issues, reports that 20.5 million Americans have incomes less than $9,500 per year, which is half of the poverty definition for a family of three.

There are six million Americans whose only income is food stamps. That means that there are six million Americans who live on the streets or under bridges or in the homes of relatives or friends. Hard-hearted Republicans continue to rail at welfare, but Edelman says, “basically welfare is gone.”

In my opinion as an economist, the official poverty line is long out of date. The prospect of three people living on $19,000 per year is farfetched. Considering the prices of rent, electricity, water, bread and fast food, one person cannot live in the US on $6,333.33 per year. In Thailand, perhaps, until the dollar collapses, it might be done, but not in the US.

As Dan Ariely (Duke University) and Mike Norton (Harvard University) have shown empirically, 40% of the US population, the 40% less well off, own 0.3%, that is, three-tenths of one percent, of America’s personal wealth. Who owns the other 99.7%? The top 20% have 84% of the country’s wealth. Those Americans in the third and fourth quintiles--essentially America’s middle class--have only 15.7% of the nation’s wealth. Such an unequal distribution of income is unprecedented in the economically developed world.

In my day, confronted with such disparity in the distribution of income and wealth, a disparity that obviously poses a dramatic problem for economic policy, political stability, and the macro management of the economy, Democrats would have demanded corrections, and Republicans would have reluctantly agreed.

But not today. Both political parties whore for money.

The Republicans believe that the suffering of poor Americans is not helping the rich enough. Paul Ryan and Mitt Romney are committed to abolishing every program that addresses needs of what Republicans deride as “useless eaters.”

The “useless eaters” are the working poor and the former middle class whose jobs were offshored so that corporate executives could receive multi-millions of dollars in performance pay compensation and their shareholders could make millions of dollars on capital gains. While a handful of executives enjoy yachts and Playboy playmates, tens of millions of Americans barely get by.

In political propaganda, the “useless eaters” are not merely a burden on society and the rich. They are leeches who force honest taxpayers to pay for their many hours of comfortable leisure enjoying life, watching sports events, and fishing in trout streams, while they push around their belongings in grocery baskets or sell their bodies for the next MacDonald burger.

The concentration of wealth and power in the US today is far beyond anything my graduate economic professors could image in the 1960s. At four of the world’s best universities that I attended, the opinion was that competition in the free market would prevent great disparities in the distribution of income and wealth. As I was to learn, this belief was based on an ideology, not on reality.

Congress, acting on this erroneous belief in free market perfection, deregulated the US economy in order to create a free market. The immediate consequence was resort to every previous illegal action to monopolize, to commit financial and other fraud, to destroy the productive basis of American consumer incomes, and to redirect income and wealth to the one percent.

The “democratic” Clinton administration, like the Bush and Obama administrations, was suborned by free market ideology. The Clinton sell-outs to Big Money essentially abolished Aid to Families with Dependent Children. But this sell-out of struggling Americans was not enough to satisfy the Republican Party. Mitt Romney and Paul Ryan want to cut or abolish every program that cushions poverty-stricken Americans from starvation and homelessness.

Republicans claim that the only reason Americans are in need is because the government uses taxpayers’ money to subsidize Americans who are unwilling to work. As Republicans see it, while we hard-workers sacrifice our leisure and time with our families, the welfare rabble enjoy the leisure that our tax dollars provide them.

This cock-eyed belief, on top of corporate CEOs maximizing their incomes by offshoring the middle class jobs of millions of Americans, has left Americans in poverty and cities, counties, states, and the federal government without a tax base, resulting in bankruptcies at the state and local level and massive budget deficits at the federal level that threaten the value of the dollar and its role as reserve currency.

The economic destruction of America benefitted the mega-rich with multi-billions of dollars with which to enjoy life and its high-priced accompaniments wherever the mega-rich wish. Meanwhile, away from the French Rivera, Homeland Security is collecting sufficient ammunition to keep dispossessed Americans under control.

Bank's stimulus plan 'has lined pockets of the rich'

Editor's Note: Remember CNBC selling us on QE to keep stock prices high?

Report shows wealthy do 240 times better out of QE than the poor

Independent

Ben Chu

Mervyn King claims QE has boosted the economy by 2 per cent

The Bank of England's money-printing programme, intended to revive economic growth, has delivered a massive boost to the wealth of the most prosperous 10 per cent of households in Britain while delivering relatively scant returns for the poorest, a new analysis from the Bank indicated yesterday.

Click here to view the 'Quantitative Easing: How it works' graphic

In its report on the effectiveness of its controversial quantitative easing (QE) programme, the Bank said it successfully pushed up share prices and other asset values, delivering an overall boost to the net financial worth of UK households of around £600bn. The Bank said this worked out at an average benefit of around £10,000 per person.

However, financial assets are unevenly distributed around the population, meaning that the benefit was highly unequal. And an analysis by The Independent reveals that the wealthiest 10 per cent of households would have benefited from QE more than 240 times as much as the poorest 10 per cent.

The Bank's researchers suggested that the £325bn of sovereign-bond purchases enacted by the Monetary Policy Committee since March 2009 boosted asset prices across the economy by around 28 per cent. The most recent research on levels of wealth by the Office for National Statistics (ONS) in July showed that the wealthiest 10 per cent of British households held £2.5 trillion in pension wealth at the end of 2010, while the poorest 10 per cent held just £2bn.

The ONS also estimated that the richest 10 per cent of households held £569bn in financial assets at that time, as against the poorest 10 per cent, who, in contrast, owed around £9bn.

When The Independent applied the Bank's estimate that the monetary stimulus programme successfully boosted asset values by 28 per cent over the last two years to the ONS data, it showed that quantitative easing delivered a benefit to the wealthiest households of £870bn, while the poorest households benefited by just £3.5bn.

With 2.5 million households in the poorest 10 per cent and the same number in the wealthiest 10 per cent, that means the richest households gained by an average of £350,000 each from quantitative easing, while the poorest benefited by an average of £1,400 – more than 240 times less.

However, the Bank's analysis also said that the money-printing programme boosted the size of the economy by between 1.5 and 2 per cent, which, it claimed, had effectively boosted the income of everyone in the country by between £500 and £800 on average.

It also pointed out that many individuals benefited from the monetary stimulus programme because the economy did not shrink as much as it otherwise might have done, meaning that they did not lose their jobs.

The analysis further suggested that concerns quantitative easing had undermined the value of pension funds and hit retirees were misplaced. Campaign groups have complained that the asset-purchase programme has driven down sovereign-bond yields and, in turn, reduced annuity rates. An annuity is the income stream that people receive when they cash in their pension pot on retirement.

But the Bank pointed out that the programme had also boosted the value of the assets of pension funds (which invest mostly in shares and bonds) cancelling out the real impact of lower annuities on pensioners' incomes. "For typical fully-funded pension schemes, asset purchases are likely to have had a broadly neutral impact," the Bank concluded.

However this was disputed by the pressure group Saga. Its director general, Ros Altmann, said: "It is asserted, but not proven, that pension savers are no worse off due to QE gilt-buying. This assertion is simply not correct and the reality is very different for those recently or soon-to-be-retired." Ms Altmann said the Bank's assessment had not taken into consideration higher inflation, which has eaten into living standards in recent years. The Bank's analysis showed that the first round of QE had raised the Consumer Prices Index by between 0.75 and 1.5 per cent.

The Bank also examined the impact of its decision to slash interest rates to historic lows of 0.5 per cent in 2009 when the economy was deep in recession. It found this had cost savers around £70bn in interest that they would have collected if rates had been kept unchanged from their levels before the financial crisis. It also found that borrowers had benefited by around £100bn from lower rates.

US austerity: Genocide of 50 million people

PressTV
Webster Griffin Tarpley

No matter whether the next US president is named Obama or Romney, the Wall Street financier elite that dominates the United States is psychotically planning a series of tax increases for the middle class and working people, cuts in benefits and social services, and a transfer of wealth in favor of the top 1%, all of which will add up to a further cut of about 25% in the depleted US standard of living.

The mythical “fiscal cliff”

This outcome is being prepared right now by a demagogic propaganda campaign around the slogan that the United States faces a “fiscal cliff” at the end of the current calendar year. This alleged fiscal cliff is the result of two factors. First, the tax cuts enacted by George Bush the younger in the months before 9/11 are due to expire. If the Bush tax cuts are ended, the average family would pay a few hundred dollars more. But the tax rate for the richest earners would go from 35% to 39.6%, which, at high levels of income, can mean hundreds of thousands of dollars or more in taxes.

At the same time, stock speculators and hedge fund hyenas like Mitt Romney would no longer pay 15%, but rather 20%, on their profits. In other words, the Bush tax cuts were mainly a gift to the super-rich. The Republicans want to keep the Bush tax cuts for the rich, and if possible make people in the middle - earning between $48,000 and $80,000 per year - pay significantly more.;

The other aspect of the fiscal cliff are the automatic cuts in military spending and social services spending which were built in to the budget agreement of August, 2011 (popularly known as the “Satan Sandwich”) which allowed the United States to avoid default on necessary payments. Under these automatic cuts, the Pentagon budget would be cut by about 8% or $500 billion over 10 years. At the same time, doctors and hospitals working for Medicare, the government’s health insurance program for people over 65, will suffer a 2% payment cut across the board. The goal of all this is to reduce federal spending by $1.2 trillion over the next 10 years. Obama and the Congress both ignore that austerity cuts of this type have actually increased the budget deficit in Greece and other European countries where they have been tried.

The lame duck session and the grand bargain

The goal of reactionary Republicans and of Obama’s Wall Street Democrats is to negotiate a “Grand Bargain” of austerity and cuts sometime in the next few months. One possible time for this dirty deal to be made will come in December, after the US general election at the beginning of November. In December, significant numbers of defeated or retiring congressmen and senators will be leaving, and many will be looking for jobs on Wall Street. They will be eager to betray the economic interests of the American people to curry favor with the bankers they hope will hire them. Otherwise, pressure will build for a Grand Bargain during the early months of 2013.

Such a Grand Bargain of austerity will target in particular Social Security (government old-age pensions), Medicare (health care for seniors), and Medicaid (health care for the poor); only token sacrifices will be asked from the rich 1%. If this scenario actually occurs, the lives of up to 50 million Americans will be in grave danger.

This is first of all the case because of the long decline in the American standard of living, which has, according to some reckonings, been reduced by about two thirds since August 15, 1971, when Nixon and Kissinger abandoned the Bretton Woods international monetary system. There is no more margin for cuts without tragic consequences. During this same period, the social mobility in the United States - understood as the ability to go from being poor to being well-off - has declined markedly, and is now inferior to every country in Western Europe except for ossified Great Britain.

50 million Americans officially in dire poverty

Every 10 years, the United States government conducts a census of the population, and in the process collects important data about demographics and income. It is now expected that the official US poverty rate, which underestimates the real problem of poverty, will rise to almost 16% of the population. Poverty means an individual living on less than $11,170, or a family of three living on less than $19,090. This is truly dire poverty. By this estimate, about 50 million Americans will be poor, the highest rate since Medicare and Medicaid were enacted in 1965.

According to official statistics, the US unemployment rate rose slightly to 8.3% in July 2012. Once again, this figure understates the problem. The US Department of Labor publishes a data series called the U6 unemployment rate, which tries to reflect underemployment -- as in cases where a worker who wants to work full-time is forced to work part-time - and workers who have given up their job searches in despair.

By this measure, the US unemployment rate has been as high as 17.1% at the end of 2009, and is currently at 15%. These are depression levels. Assuming that the US workforce is about 155 million, this means that over 23 million Americans are actually out of work. If we add in elderly dependents and children, we will once again get close to the 50 million whose lives are now in danger.

Under Franklin D. Roosevelt’s original Social Security Act of 1935, the federal government could have provided benefits to one important category - impoverished mothers with dependent children. This was called welfare, but it no longer exists, having been abolished by Bill Clinton in 1995-96 as part of his reelection campaign. Currently it is estimated that about 15 million children - about 21% of all children in the United States - live below the official poverty line. Since an adequate standard of living requires about twice the federal poverty level income, it follows that 44% of US children are in reality stuck in low income families. They can thank Bill Clinton for their current situation.

That same Social Security Act of 1935 established a system of unemployment insurance, which is now being sorely tested. When the depression began in 2008-9, the Obama stimulus bill extended jobless payments to unemployed workers for 99 weeks in many states. Now, with the depression grinding on, more than 5 million people have been unemployed for more than six months, and most of these have joined the ranks of the 99ers - those who have been jobless for almost 2 years. Some 23 states, especially those governed by Republicans, have now cut eligibility by as much as five months, impacting a half million unemployed. Only three states still offer 99 weeks of benefits, and that will end in September 2012.

Food stamps for 46.5 million under attack

The one federal program that still contributes to keeping the endangered 50 million alive is the Food Stamp program of the US Department of Agriculture, which currently feeds 46.5 million Americans. In some cities, the food stamp allowance is about $130 per month, which translates into about $1.55 per person per meal. This is already too little to permit good nutrition.

Right now the debate in the Congress is whether this program should be cut by $16 billion as the Republicans demand, or by “only” $5 billion, the Democratic Party proposal. Once again, any cuts in the food stamp budget under the current conditions will inevitably lead to vitamin deficiencies, cognitive impairment, and large increases in morbidity and mortality.

As for health insurance, most sources estimate that about 46 million Americans have no way of paying for the services of a doctor, hospital, or pharmacy. This figure largely overlaps with the 50 million who are in dire poverty, and the 50 million who are living on food stamps. Any reduction in Medicaid, which is intended for low income people, will take a toll of lives. Republicans are demanding massive cuts to Medicaid, while Democrats argue that moderate cuts will be sufficient. In reality, any cuts at all will represent thinly disguised murder.

Neither Obama nor Romney has anything to offer the endangered 50 million. Indeed, Romney has already announced that he is “not worried about the poor.” This issue highlights the inhuman cruelty of the political process in the United States today. How long before a social explosion forces the ruling elite to confront these issues?

Study: Many Americans die with 'virtually no financial assets'

Phys
Peter Dizikes

It is a central worry of many Americans: not having enough money to live comfortably in old age. Now an innovative paper co-authored by an MIT economist shows that a large portion of America’s older population has very little savings in bank accounts, stocks and bonds, and dies “with virtually no financial assets” to their names.

Indeed, about 46 percent of senior citizens in the United States have less than $10,000 in financial assets when they die. Most of these people rely almost totally on Social Security payments as their only formal means of support, according to the newly published study, co-authored by James Poterba of MIT, Steven Venti of Dartmouth College, and David A. Wise of Harvard University. That means many seniors have almost no independent ability to withstand financial shocks, such as expensive medical treatments that may not be covered by Medicare or Medicaid, or other unexpected, costly events. “There are substantial groups that have basically no financial cushion as they are reaching their latest years,” says Poterba, the Mitsui Professor of Economics at MIT. However, the study — one of the first to examine Americans’ end-of-life finances — also reveals a diversity of outcomes among senior citizens. Between 1993 and 2008, it found, unmarried older individuals had median wealth of about $165,000 roughly a year before they died — a figure that includes current and future Social Security income, job-related pension benefits, home equity and financial assets. In the same period, the median wealth for continuously married senior citizens, roughly a year before they died, was more than $600,000. “There is a lot of divergence in how people are doing,” Poterba says. Those disparities also complicate the public-policy issues relating to the new findings. “One of the clear messages is that it is very hard to do a one-size-fits-all retirement policy,” Poterba says. “We need to recognize that, for example, if we were to substantially reduce Social Security benefits for those later in life, that there is a share of the elderly households for whom that would translate very directly into reduced income, because they seem to have accumulated little in the way of financial resources.”


The paper appears as a chapter in a book edited by Wise — “Investigations in the Economics of Aging” — newly published by the University of Chicago Press. The three pathways of retirement … While much attention has been paid to how much wealth people should aim to accumulate at the time of retirement, this study focuses on the evolution of that wealth during retirement, right up until death. The idea, as Poterba puts it, was “instead of looking at these people going into retirement, why don’t we try looking late in the game, and see how it all came out.” The research in question draws from data collected in the Health and Retirement Study (HRS), an ongoing survey that follows people throughout their retirement years, thus providing data on their wealth over time; it is sponsored by the National Institutes of Health and based at the University of Michigan. Poterba, Venti and Wise focused their study on people who were 70 and older in 1993, when the HRS began, and examined data running through 2008. This enabled them to track levels of wealth, prior to the participants’ deaths, over an extended period. People were surveyed every two years, which means that on average, those who passed away between 1993 and 2008 were last studied roughly one year before their deaths. The researchers identified three main “pathways,” running between the early years of retirement and death, for the households in the survey: those consisting of one person who remained single until death; married individuals who outlive their spouses and die single; and married individuals who die before their spouses. The three pathways tend to produce very different financial outcomes for the elderly. Married couples, for one thing, are better able to mitigate the financial burdens of old age. Among retirees in the study, 52 percent who were single had annual incomes of less than $20,000 and less than $10,000 in other financial assets; by contrast, just 36 percent of single people who started out in two-person households at retirement fell below those levels, and only 26 percent of people in two-person households fit that description.  “There really is a key distinction between what it looks like for the married [couples] and the singles,” says Poterba, who is also the current president of the National Bureau of Economic Research (NBER). The study also revealed a “strong correspondence” between wealth in 1993 and the length of time that people lived. That relationship held true across a variety of asset classes: People whose homes were worth more, who had larger retirement incomes, and who had more financial savings all tended to live longer than those who had fewer assets. While there is, Poterba observes, a “very active debate” among social scientists about the precise causal relationship between wealth and health, the study helps confirm, he notes, that “the patterns of health status in these years are quite persistent.” …

And at least two pathways for future research The paper, which Poterba presented at an NBER conference last week, has earned praise from other researchers. David Laibson, an economist at Harvard, calls it “a terrific paper, which should have a significant impact on our national conversation about savings adequacy.” Moreover, Laibson suggests that the replacement of defined-benefit retirement plans with 401(k) plans for many workers — investments that are subject to market fluctuations — means that the financial situation for some seniors “is likely to get even worse in the years ahead. … For many reasons, especially preretirement leakage and poor stock market returns, households are accumulating far too little wealth in their 401(k) plans.” For his part, Poterba agrees that this is an issue for further discussion, although he also notes that in the current study, many people “who end up in the bottom [tier] in terms of income when they are very old are folks who were probably not covered by defined-benefit plans during their working lives in any event.” Poterba also suggests that future research is needed to identify the mechanisms that financially struggling seniors use to pay for their needs late in life. “There may be other sources of support that are hard to track,” he says, citing informal help from family members as a way in which seniors likely supplement their incomes. Broadly, Poterba hopes that tracking the wealth of seniors as they move through retirement will add nuance to the policy dialogue.

“It’s a complicated problem,” he says. “Households that reach retirement differ widely in their financial circumstances, and that heterogeneity not only persists, but is accentuated as people go further into their retirement years.” The research was supported by a grant from the National Institute of Aging. Poterba serves as a trustee of the College Retirement Equity Fund and the TIAA-CREF mutual funds, which offer retirement savings products to consumers. Provided by Massachusetts Institute of Technology This story is republished courtesy of MIT News (web.mit.edu/newsoffice/), a popular site that covers news about MIT research, innovation and teaching.

The 86 million invisible unemployed

CNN
Annalyn Censky

As a result, the labor force is now at its smallest size since the 1980s when compared to the broader working age population.

"We've been getting some job growth and it's been significant, but it hasn't yet been strong enough that you start to get people re-engaging in the labor market," said Keith Hall, a senior research fellow at the Mercatus Center and former commissioner of the Bureau of Labor Statistics.

Job market dropouts

A person is counted as part of the labor force if they have a job or have looked for one in the last four weeks. As of April, only 63.6% of Americans over the age of 16 fell into that category, according to the Labor Department. That's the lowest labor force participation rate since 1981.

It's a worrisome sign for the economy and partly explains why theunemployment rate has been falling recently. Only people looking for work are considered officially unemployed.

Jason Everett, for example, wouldn't be counted.

Out of work for nearly three years now, Everett has given up his job search altogether.

Instead, the unemployed plumber and Air Force veteran takes a few community college courses and looks after his two children while his wife is the primary breadwinner.

"I'm not even totally convinced the college degree is really going to help at this point, but I figure at least I'll be doing something," he said

staying home with children or other relatives. Some may have gone back to school or retraining programs. Others could be disabled and unable to work, and some may have retired early.

"Even in the best of times, there are millions of people who don't want to work for a variety for reasons," Hall said.

But he suspects the number of "disengaged" Americans, like Everett, is higher than usual as a direct result of the recession.

About six million people claim they want a job, even though they haven't looked for one in the last four weeks. If they were to all start applying for work again, the unemployment rate would suddenly shoot up above 11%.

NEW YORK (CNNMoney) -- There are far more jobless people in the United States than you might think.

While it's true that the unemployment rate is falling, that doesn't include the millions of nonworking adults who aren't even looking for a job anymore. And hiring isn't strong enough to keep up with population growth.

Check the unemployment rate in your state

"At this point, the labor market is worse than people realize because people are discouraged. Certainly, a large number of workers have given up on the job market," Hall said.

That said, the decline in labor force participation is not a new problem. After peaking at 67.3% in early 2000, the rate has been falling ever since.

Researchers at the Chicago Federal Reserve attribute a large part of the decline to the recent recession and lackluster recovery, but the other half to long-term demographic trends.

For example, as more women entered the labor force between the 1960s and 1990s, the participation rate rose rapidly. That effect may have plateaued since then.

Meanwhile, as Baby Boomers entered their prime working years, they also drove the participation rate higher. Once they started hitting their 50s and 60s though, many started transitioning into retirement.

Finally, teenage jobs have been on the decline and college enrollment picked up in the last decade, leading more young people to not be counted in the labor force.

As these trends continue, the Chicago Fed expects the labor force participation rate will keep falling, hitting 62.4% by 2020.

That poses a problem for a variety of reasons.

It hits tax revenue and makes it harder to fund social safety nets like Social Security. Not to mention, it's likely to increase income inequality.

Most importantly though, it makes the U.S. economy less productive and weighs on growth. 

US poverty on track to reach 46-year high; suburbs, underemployed workers, children hit hard

Washington Post

The ranks of America’s poor are on track to climb to levels unseen in nearly half a century, erasing gains from the war on poverty in the 1960s amid a weak economy and fraying government safety net.

Census figures for 2011 will be released this fall in the critical weeks ahead of the November elections.

The Associated Press surveyed more than a dozen economists, think tanks and academics, both nonpartisan and those with known liberal or conservative leanings, and found a broad consensus: The official poverty rate will rise from 15.1 percent in 2010, climbing as high as 15.7 percent. Several predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965.

Poverty is spreading at record levels across many groups, from underemployed workers and suburban families to the poorest poor. More discouraged workers are giving up on the job market, leaving them vulnerable as unemployment aid begins to run out. Suburbs are seeing increases in poverty, including in such political battlegrounds as Colorado, Florida and Nevada, where voters are coping with a new norm of living hand to mouth.

“I grew up going to Hawaii every summer. Now I’m here, applying for assistance because it’s hard to make ends meet. It’s very hard to adjust,” said Laura Fritz, 27, of Wheat Ridge, Colo., describing her slide from rich to poor as she filled out aid forms at a county center. Since 2000, large swaths of Jefferson County just outside Denver have seen poverty nearly double.

Fritz says she grew up wealthy in the Denver suburb of Highlands Ranch, but fortunes turned after her parents lost a significant amount of money in the housing bust. Stuck in a half-million dollar house, her parents began living off food stamps and Fritz’s college money evaporated. She tried joining the Army but was injured during basic training.

Now she’s living on disability, with an infant daughter and a boyfriend, Garrett Goudeseune, 25, who can’t find work as a landscaper. They are struggling to pay their $650 rent on his unemployment checks and don’t know how they would get by without the extra help as they hope for the job market to improve.

In an election year dominated by discussion of the middle class, Fritz’s case highlights a dim reality for the growing group in poverty. Millions could fall through the cracks as government aid from unemployment insurance, Medicaid, welfare and food stamps diminishes.

“The issues aren’t just with public benefits. We have some deep problems in the economy,” said Peter Edelman, director of the Georgetown Center on Poverty, Inequality and Public Policy.

Elites Bilk Populace through Manipulation of Currency, Interest Rates and Precious Metals

J.T. Waldron

The mechanisms for transferring wealth from the majority to the elite involve a massive conspiracy to deceive with the primary goal of getting all to jump into tangled heaps of collapsing markets. 

Starting with the currency market, the Federal Reserve responds to increased public scrutiny and pending audits by posting a study extolling the virtues of  quantitative easing to keep high prices for the stock market.   As reported by CNBC, the Federal Reserve claims that stock market prices woud be 50% lower without the Federal Reserve.  The question should be, "So what?  Do the prices accurately reflect the value of the stocks or not? "  This inflation is fueled by the misconception that the price of stocks somehow reflect the state of the economy.  Stocks from companies that rely on cheap labor overseas, downsizing, consolidation, liquidation - anything that could dismantle the domestic labor force. 

Keeping news pundits with ample filler on their tele-prompters, one can often hear the excuse du jour for why indexes have slipped on any given day.  This becomes its own clever PR technique suggesting concerns with the war on terror, public trends less favorable to investors, or whatever the desired suggestion is laid out for those who've bought into the system. 

In the name of saving the market from dismal price performance on behalf of a handful of investors, U.S. currency has incurred a 97% loss in purchasing power since the Federal Reserve's formation in 1913.  

The Federal Reserve is directly accountable for an average of 10% inflation in the last 10 years.  The result is a population indirectly taxed through the reduction of real purchasing power, especially among those for whom purchasing power actually means something.  They are robbed to please an elite handful of investors depending upon inflated stock prices. 

But that is only one avenue for bilking the public.  Apparently, interest rates were manipulated to draw more unwitting families and individuals into financial traps like various credit lines and mortgages.   As a Barclay's employee reported to the New York Federal Reserve, “Our feeling is that Libors are again becoming rather unrealistic and do not reflect the true cost of borrowing.”. 

There was nothing ambiguous about what was communicated by the Barclay employee to the New York Fed:  “Where I would be able to borrow in the interbank market … without question it would be higher than the rate I’m actually putting in.”

Libor serves as a benchmark interest rate for trillions of dollars worth of loans to consumers and corporations.

Recollections of Geithner's handling of interest rate-fixing are no different from skilled bureaucracies at all municipal levels - make sure there is one memo or piece of paper to pull out of your ass for culpable deniability.  A sincere effort to restore credibility to the markets would have seen Geithner demanding an end to the practice, stating the implications for fraud at this scale, and threats to go public.   The staid approach in itself suggests that systemic deception is the norm, not the exception.
  

As much as 800 trillion dollars of financial products were were initially valued based on Libor rates.  The consistent pattern was to present lower interest rates to sell more loans and financial products.   This makes the market so inefficient, there is no reliance in determining the value of these debt instruments.  

Some analysts, like Bruce Kastling, make the claim that consumers enjoyed initial lower rates and, because they entered at a lower rate, they have no claim.  

How many people would have never qualified for or purchased mortgages or consumer loans had the cost truly reflected the market?  Setting aside the folly of variable interest rate loans, illegal rescission of various credit lines, and extreme interest rate hikes, what about the effects from a massive fraud of this scale on the economy?  

How many times have vast market corrections induced default and foreclosure among those who didn't see it coming?  Are we to blame the victim for not anticipating huge market volatility that results from mass conspiracy to commit fraud?  Probably not. 

And what's in store for those who choose precious metals as a means of protecting real purchasing power?   Are those investing in gold going to see an accurate reflection of their wealth over time? 

According to Ned Taylor-Leland, an investment director at Cheviot, "like interest rates, gold and silver reflect the true value of money the same way interest rates do."

"It is effectively an intervention in two ways; one would be the fact that for central banks, gold and silver going up doesn't make their currency look any good, and secondly a number of the big commercial banks have very large short positions which they like to manage and make easy money from."

Under the guise of a safe haven for value, smaller investors are finding their prices subject to an elite group of investors corrupting market accuracy in exchange for speculative profits and the concerted effort to keep the value of the U.S. dollar artificially high in the wake of massive Bernanke-style currency dumps.  

These conspiracies to deceive the public should open renewed dialog over U.S. taxpayer funded bailouts for institutions hiding behind the fascist concept of "too big to fail".  Bailouts are another example of how the majority is bilked into thinking they are somehow supporting the saviors of capitalism when they are actually handing more wealth over to the criminal elite.

This whole system relying  on  the "magic of the market place" needs to be dismantled.  Here are some additional statistics indicating this mass exodus of wealth from the majority to the criminal elite from an earlier article by J.D. Sayles:

#1 - The “corporate-tax-percentage” of all federal revenue plummeted from 32% to7% since 1960.

#2 - Two out of three U.S. corporations paid no federal taxes from 1998-2005 on sales of $2.5 trillion

#3 - Tax rates for the wealthiest plummeted from 91% to 36% - which goes far lower with loopholes.  All of which combined to cause a collapse in tax revenues from these sectors.  Our revenue this past decade was about $41 trillion.  Had we received just an additional 10% over this time period we could have our debt reduced by:  $4.1 trillion

#4 - Multi-Billion dollar corporate subsidies have doubled over the past decade to over 2000 programs.  Energy subsidies cost roughly $200 billion the past 20 years and farm subsidies over the same period of time cost taxpayers roughly $300 billion more:  $500 billion

#5 - Tax-payer bailouts for bankers, who provide 40% of all campaign donations:  $700 billion

#6 - More than one trillion tax dollars have been wasted on wars, subsidizing the corporate war machine with another $2 trillion predicted in future commitments resulting from these wars:  $1.167 trillion plus $45 billion for aid to repair the destruction that we caused.

#7 - Trillions of dollars were admittedly "misplaced" by the Pentagon, subsidizing the corporate war machine:  $2.3 trillion

#8 - Billions of tax dollars given in foreign “aid”, subsidizing the corporate war machine:  $200 billion

#9 - Trillions of dollars in salaries and bonuses for the political/corporate elite the past few decades

#10 - The corporate elite (top 1%) own almost 50% of America’s wealth and 23% of America’s income.  The last time these numbers happened were as we exited the "Guilded Age", the collapse of the stock market in 1929 and entered into the age of "The Great Depression".  Yet they push for more...

#11 - Politicians make fortunes legislating to the gain of their personal corporate stock portfolios

#12 - Politicians make fortunes in the political after-life with corporate lobbying income

#13 - An unfunded big PHRMA bill (03 modernization act) cost taxpayers another:  $534 billion

#14 - Due to market manipulations, pensions lost:  $3.3 trillion

#15 - Small investors and 401ks invested in the stock market lost:  $9.3 trillion

#16 - In addition to 3 million foreclosures, homeowners lost in home equity:  $9 trillion

Predatory Capitalism Failed

Global Research
Stephan Lendman

Independent observers knew it long ago. Today's global economic crisis provides added confirmation. In 2008, a staunch champion of the system expressed second thoughts. More on him below.

An ideology based on inequality, injustice, exploitation, militarism, and imperial wars eventually self-destructs or gets pushed. 

Growing evidence in America and Europe show systemic unaddressed problems too grave to ignore. They remain so despite millions without jobs, savings, homes or futures.

Imagine nations governed by leaders letting crisis conditions fester. Imagine voters reelecting them despite demanding change. OWS aside, one day perhaps rage will replace apathy in America. The latest jobs report alone provides incentive enough to try and then some.

On May 4, the Labor Department reported 115,000 new jobs. It way overstated the true number. Official figures belie the dire state of things. At most, two-thirds the headline total were created. Even that's in doubt. 

Most were low-pay, part-time, or temp positions with few or no benefits. Decades ago, workers would have avoided them. Today, there's no choice.

The report also showed economic decline. Expect much worse ahead. In 2008, Main Street Americans experienced Depression. It rages today. Poverty's at record levels. Real unemployment approaches 1930s numbers. Dire conditions are worsening.

Announced job cuts are increasing. Hiring plans are down. Compared to year ago levels, they're off 80%. Income is stagnant for those lucky to have work. The private diffusion index measuring growth fell sharply month-over-month.

The unemployment rate decline reflects discouraged workers dropping out. They want jobs but can't find them. The Labor Department considers them non-persons. They're not counted to make official figures look better. 

Moreover, the broad based Household Survey showed employment dropping 169,000. It was the second consecutive monthly decline. The Labor Department uses a "population and payroll concept adjusted" calculation. Doing so tries to compare monthly payroll and household figures.

There Are 100 Million Working Age Americans That Do Not Have Jobs

9/11 Inside Job

There Are 100 Million Working Age Americans That Do Not Have Jobs

The unemployment crisis in America is much worse than you are being told. Did you know that there are 100 million working age Americans that do not get up in the morning and go to work? No wonder why it seems like there are so many people that do not have jobs! According to the federal government, there are 12.6 million working age Americans that are considered to be "officially" unemployed, but there are another 87.8 million working age Americans that are not working either. The federal government considers those Americans to be "not in the labor force" so they are not included in the unemployment rate. In fact, this is one of the key ways that the government manipulates the unemployment numbers. The Obama administration would have us believe that the unemployment rate is going down and that that since the start of the last recession about as many Americans have left the labor force as we saw during the entire decades of the 1980s and 1990s combined. Of course that is a bunch of nonsense, but that is what the Obama administration would have us believe. The truth is that the percentage of working age Americans that are employed is just about the same right now as it was two years ago. It was incredibly difficult to get a job back then and it is incredibly difficult to get a job right now. So don't believe the hype that things are getting much better. If you still do have a good job, you might want to hold on to it tightly, because there is not much hope that things are going to improve significantly any time soon.

The first chart that I have posted below shows the total number of "officially" unemployed workers in America. According to the Federal Reserve, that number is currently 12,673,000. This chart makes it look like the employment picture in America is getting significantly better....

But if you dig deeper into the numbers you quickly see that this is not true. A lot of those workers that were formerly classified as "unemployed" have now been moved into the "not in labor force" category. Since the start of the last recession, the number of Americans not in the labor force has risen by more than 8 million according to the Obama administration. The total number of working age Americans not in the labor force now stands at 87,897,000....

So when you add 12,673,000 and 87,897,000, you get a total of 100,570,000 working age Americans that do not have jobs.

Yes, there are certainly millions upon millions of working age Americans that do not have jobs and that do not want jobs.

But you have to be delusional to believe that there are nearly 88 million working age Americans that do not have jobs and that do not want jobs.

Domestic violence rises in sluggish economy, police report

USA Today

Kevin Johnson

Police are encountering more domestic violence related to the sluggish economy, a national survey of law enforcement agencies finds. 

The review, part of a continuing examination of how economic conditions are affecting law enforcement by the Police Executive Research Forum, found that 56% of the 700 responding agencies reported that the poor economy is driving an increase in domestic conflict, up from 40% of agencies in a similar survey in 2010.

Domestic violence is not a separate category of crime tracked in the FBI's annual crime report, which has recorded a sustained decline in overall violence since the financial collapse in 2008. But the survey concludes that police are responding to more reports of domestic incidents, regardless of whether charges are filed.

In Camden, N.J., police responded to 9,100 domestic incidents in 2011, up from 7,500 calls in 2010.

Camden Police Chief Scott Thomson said it was "impossible'' to separate the economy from the domestic turmoil in the city where unemployment is 19%. 

Thomson said domestic-related aggravated assaults increased nearly 10% in 2011 from levels in 2010. The chief said the department has been tracking the calls closely because of the time and personnel they draw from a force that has been depleted in the past two years with layoffs of about 200 employees, another consequence of the poor economy.

"When stresses in the home increase because of unemployment and other hardships, domestic violence increases," Thomson said. "We see it on the street."

Greek pensioner kills himself at parliament to protest austerity

Canada
Paul Anast and Nick Squires

A mourner places a candle at the spot where a man committed suicide at Syntagma
square in Athens Wednesday, touching a nerve among ordinary Greeks feeling the
brunt of the country's economic crisis.

A cash-strapped Greek pensioner who said he feared having to "scrounge for food" shot himself dead in the main square of Athens yesterday in the latest in a series of suicides and attempted suicides triggered by European austerity measures.

The death of the 77-year-old retired pharmacist in the Greek capital's Constitution Square caused an outpouring of anger and grief and came after similar incidents in Italy.

The pensioner, named locally as Dimitris Christoulas, shot himself with a handgun a few hundred yards from the Greek parliament, which has been the focus of numerous violent protests against tough austerity measures in recent months.

Witnesses said he put a gun to his head and pulled the trigger after yelling: "I have debts, I can't stand this any more."

A passer-by told Greek television the man said: "I don't want to leave my debts to my children."
A suicide note found in his coat pocket blamed politicians and the country's acute financial crisis for driving him to take his life, police said.

London riots: A nation still waits for answers

Hindustan Times
Dipankar De Sarkar

Eight months on, we know a lot about the riots that swept parts of London and other cities across England. We know much about the social and economic background of the looters and arsonists. We know of family breakdown and disaffection.

We know what sparked it — the police killing of alleged black drug dealer Mark Duggan. But we don’t know why police killed him (his family calls it an execution). The police are stopped from telling us.

This month England has been debating and discussing the riots of the summer of 2011. At least two major studies have shed light on the over-3,000 people who were arrested on charges of rioting.

According to a joint study by The Guardian (a great example of media responsibility) and the London School of Economics, based on interviews with 270 rioters, they were mainly young unemployed men. Half were black but they didn’t consider the disturbances to be ‘race riots.’

A report by an independent panel set up by the government says there are 5,000,000 ‘forgotten families’ in England who “bump along the bottom of society.” It paints a grim picture of this ‘bottom’: broken communities with young jobless who crave the designer goods they see advertised all around but cannot afford to buy.

“When people don’t feel they have a reason to stay out of trouble, the consequences for communities can be devastating – as we saw last August,” said Darra Singh, chair of the panel. But the nub of the matter is this: why did police kill Duggan, the act that lit the fuse?

We don’t know because a law — the only one of its kind in the world apparently — stops police from revealing evidence gathered from phone tapping. This week calls grew for amending it — led by none other than the Independent Police Complaints Commission.

As a result of the provision, an inquest cannot be held. “We’re in the dark now as we were in the beginning,” said Carole Duggan, Mark’s aunt. One compromise – because there are security implications – is for judges to be given the power to rule on individual cases.