Turns out electing the first black President hasn’t helped the black community all that much.
Wall Street says thanks for the bailout.
From the Wall Street Journal:
The lowest state jobless rate for black workers in the country matches the highest rate for white workers in a new analysis.
Moore soon found himself two months behind on rent and at least 10 days from payday. In bed that night, he saw a TV ad for Future Income Payments, a company based in Irvine, Calif., that buys pensions in exchange for a lump sum. The company said it had worked with military personnel and government workers. Ten minutes later, he got up and made the call.
The next day, a company representative called Moore back and explained that he would receive a $5,000 cash advance for selling part of his pension. In exchange, Moore would have to pay the company $510 a month for five years — a total of $30,600.
If it were a typical loan, that would amount to $25,600 in interest — a rate of 512 percent.
Most of the companies advertise nationally on news sites and in military magazines, consumer advocates say. One ad highlighted in the recent congressional hearing on pension advances featured two smiling people in uniform below the words “This is our America.”
The effective interest rates charged by pension advance companies can be abusive, Cartwright said. But it is particularly “egregious” that the companies go after military retirees, targeting income streams that are backed by the federal government, he added.
– From the Washington Post article: Some Retirees are Making a Terrible Mistake with their Pensions
Welcome to the oligarch recovery. An economic rebound so robust that an ever increasing number of Americans are being forced to borrow money at usurious rates just to pay the bills. Today, I want to introduce you to the latest scheme to profit from poverty: Pension Advance Companies.
The ongoing oligarch theft labeled an “economic recovery” by pundits, politicians and mainstream media alike, is one of the largest frauds I’ve witnessed in my life. The reality of the situation is finally starting to hit home, and the proof is now undeniable.
Earlier this year, I published a powerful post titled, Use of Alternative Financial Services, Such as Payday Loans, Continues to Increase Despite the “Recovery,” which highlighted how a growing number of Americans have been taking out unconventional loans, not simply to overcome an emergency, but for everyday expenses. Here’s an excerpt:
Families’ savings not where they should be: That’s one part of the problem. But Mills sees something else in the recovery that’s more disturbing. The number of households tapping alternative financial services are on the rise, meaning that Americans are turning to non-bank lenders for credit: payday loans, refund-anticipation loans, pawnshops, and rent-to-own services.
According to the Urban Institute report, the number of households that used alternative credit products increased 7 percent between 2011 and 2013. And the kind of household seeking alternative financing is changing, too.
It’s not the case that every one of these middle- and upper-class households turned to pawnshops and payday lenders because they got whomped by an unexpected bill from a mechanic or a dentist. “People who are in these [non-bank] situations are not using these forms of credit to simply overcome an emergency, but are using them for basic living experiences,” Mills says.
Of course, it’s not just “alternative financial services.” Increasingly desperate American citizens are also tapping whatever retirement savings they may have, including taking the 10% tax penalty for the privilege of doing so. In fact, 30 million Americans have done just that in the past year alone, in the midst of what is supposed to be a “recovery.”
From Time:
The following article from the New York Times is shameful in many ways. While the paper is forced to cover the undeniable fact that real wages for the lowest income Americans have plunged during the so-called “economic recovery” over the past six years, it fails to actually pin blame on the undemocratic, oligarch institution most responsible for this humanitarian crisis: The Federal Reserve.
Of course, I and many others have been saying this for years, but now more than half a decade into what is supposed to be a recovery, people are finally being forced to admit what this really is — large scale theft.
In fact, Ben Bernanke and his crew of upward wealth distributing academics have pulled off the greatest wealth heist in American history. In its wake we have been left with a hollowed out, asset striped Banana Republic. Thanks for playin’ Main Street. Or more accurately, thanks for being played.
From the New York Times:
Despite steady gains in hiring, a falling unemployment rate and other signs of an improving economy, take-home pay for many American workers has effectively fallen since the economic recovery began in 2009, according to a new study by an advocacy group that is to be released on Thursday.
We were told we needed to bail out Wall Street in order to save Main Street. Well the results are in…
Wall Street has never done better, and Main Street has never done worse.
From the Huffington Post:
Low-income workers and their families do not earn enough to live in even the least expensive metropolitan American communities, according to a new analysis of families’ living costs published Wednesday.
The analysis, released by the left-leaning Economic Policy Institute, is an annual update of the think tank’s Family Budget Calculator that reflects new 2014 data. The Family Budget Calculator is a formula designed to determine the income “required for families to attain a secure yet modest standard of living” in 618 different communities across the country that the U.S. Census Bureau defines as metropolitan areas. The formula uses data collected by the government and some nonprofit groups to measure costs of housing, food, child care, transportation, health care, “other necessities” like clothing, and taxes for families of 10 different compositions in these specific locales.
Characterizing the upward transfer of virtually all American wealth to a handful of oligarchs a “recovery,” represents a grotesque insult to the english language as well as common sense.
The writing was on the wall from the very beginning. I knew as soon as TARP passed that we as society would regret the day we bailed out the bankers who destroyed the world economy. It didn’t take long.
Bailed out Wall Street banks went ahead and paid themselves record bonuses less than one year after the bailouts. Then, in early 2013, the financial community’s next scheme to feed off the carcasses of the American public became crystal clear. They wanted to become America’s slumlord by buying millions of foreclosed homes and then renting them back to former homeowners. When I realized what was happening I published the post, America Meet Your New Slumlord: Wall Street. Here’s the opening paragraph:
Five years into a national economic recovery that has further strained the poor working class, an entire industry has grown around handing them a lifeline to the material rewards of middle-class life. Retailers in the post-Great Recession years have become even more likely to work with customers who don’t have the money upfront, instead offering a widening spectrum of payment plans that ultimately cost far more and add to the burdens of life on the economy’s fringes
In some ways, the business harkens back to the subprime boom of the early 2000s, when lenders handed out loans to low-income borrowers with little credit history. But while people in those days were charged perhaps an interest rate of 5 to 10 percent, at rental centers the poor find themselves paying effective annual interest rates of more than 100 percent. With business models such as “rent-to-own,” in which transactions are categorized as leases, stores like Buddy’s can avoid state usury laws and other regulations…
By the next day, the Abbotts had a remade living room, two companion pieces, both of the same blended material, 17 percent leather. The love seat and sofa retailed, together, for about $1,500. Abbott would pay for hers over two years, though she still had paying the option to pay monthly or weekly. The total price if paid weekly: $4,158.
“I’ve never seen a customer base or an economy like this,” Gazzo said in a telephone interview from the company’s headquarters in Tampa.
– From the Washington Post article: Rental America: Why the Poor Pay $4,150 for a $1,500 Sofa
When you bail out financial criminals and predators, you get a criminal and predatory economy. If there’s one clear lesson from the 2008 crisis and its aftermath, that should be it.
Earlier this week, I published an article titled, Land of the Debt Serf – How “Auto Title Loan” Companies are Ruthlessly Preying on America’s Growing Underclass. In it, we saw how efficiently the Fed’s 0% interest rate policy trickles down to the poor. In fact, preying on the poor for profits has been one America’s most vibrant business models since the “recovery” took hold. We learned that:
Neoclassical economics and the trickle down policy framework that we have derived from it argues that there is a trade-off between fairness and growth. The general idea of trickle down economics is that the richer the rich get and the less constrained they are, less burdened in regulations, the more jobs they create, the better off everyone will be. It’s the concentrated accumulation of capital which is the principal driver of market capitalism.. So, rising economic inequality isn’t a bug, it’s a feature of the trickle down economics. It’s how you know things are getting better, right? Because the richer the rich get, the more jobs they create. This is a general principle of the thing.
– From Salon’s recent interview of Nick Hanauer: The 1 Percent Rigged Everything: Why No One Can End Ronald Reagan’s “Dead Wrong” Voodoo Economics
Just to give you a little sense of how all this wealth has been “trickling down” see…
More developers and investors are racing to build increasingly lavish homes on spec. Built on prime lots with master suites larger than most homes and spas and entertainment spaces comparable with those in hotels, many of these homes are also attempting to break new price records.
Real-estate agents say the surge reflects an ultraluxury housing market that is at an all-time high, fed in part by overseas buyers and house hunters looking to invest in trophy properties.
“These are people who are going to buy these homes to park money,” says Jeff Hyland, of Beverly Hills-based Hilton & Hyland.
Mr. Hadid declines to say what he’s spending on the home, but says the listing price will likely be in the $200 million range when the house is completed next year.
– From the Wall Street Journal article: The Race to the $100 Million Spec House
Before I get into the meat of this post, I want to highlight a recent insightful interview Nick Hanauer gave to Salon. In case you forgot, Mr. Hanauer is the billionaire who came out and publicly warned of pitchforks unless our corrupt economic system is reformed. I highlighted his article and provided my own thoughts in the piece: The Pitchforks are Coming…– A Dire Warning from a Member of the 0.01%. If you never read that, I suggest taking a look now.
A very poignant point made by Hanauer in his latest interview, concerns how fake liberals like Barack Obama will pay lip service to income inequality as if it is simply some unexpected moral tragedy which happened accidentally within a well functioning economic system. Hanauer correctly points out that the economic system itself is corrupted. That all wealth is being funneled to a tiny oligarchy isn’t a a flaw within this system, it’s a deliberate part of the design itself replete with its own elitist hedging mechanism.
For example, whenever oligarch wealth is threatened, such as in the 2008/09 time period, all resources are immediately mobilized to bail them out. The interests of all other segments of society are consistently thrown to the wayside, with the exception of welfare merely meant to just lessen the probability of civil unrest, as opposed to actually lifting people into the middle or upper classes.
Nowhere is the fraudulent and criminal “oligarch recovery” more on display than in my hometown of New York City. Despite benefitting more than any other community from an enormous taxpayer bailout of the industry that destroyed the economy, financial services, the vast majority of the wealth has been allocated to a handful of oligarchs.
To make matters even worse, American public policy, if you can even call it that, has been to encourage overseas oligarchs to park billions of dollars in U.S. real estate that largely sits uninhabited. Manhattan is a perfect example of this unproductive behavior and misallocation of capital. I covered this theme last year in the piece, Introducing Ghost Skyscrapers – NYC Real Estate Goes Full Retard, where it was noted that:
“When they first come in my door in the morning, the first thing I do is an inventory of immediate needs: Did you eat? Are you clean? A big part of my job is making them feel safe,” said Sonya Romero-Smith, a veteran teacher at Lew Wallace Elementary School in Albuquerque. Fourteen of her 18 kindergartners are eligible for free lunches.
She helps them clean up with bathroom wipes and toothbrushes, and she stocks a drawer with clean socks, underwear, pants and shoes.
From the Washington Post article: Majority of U.S. Public School Students are in Poverty
It’s a recovery so lopsided only Timothy Geithner or an oligarch could love it. Since 2008, U.S. economic policy has concentrated on funneling as much money as possible to billionaires, keeping the poor alive and submissive through government programs, and squeezing the middle class to death while at the same time holding out the carrot of hope that things will return to how they were before (they won’t).
The latest evidence of this monumental cultural theft was highlighted yesterday in the Washington Post. Here are a few excerpts: