Wednesday, August 11, 2010

Hungry? Buy your own cat food, no pension for you!

The markets didn’t take well to the Federal Reserve’s announcement that they will be buying sizable amounts of Treasury debt and possibility other paper to keep everything afloat. Equities markets fell close to 3% wiping out most of this year‘s gains. Commodities also fell despite the Obama Administration’s decision to eliminate tariffs on imported raw materials with the intention of stimulating industry, or possibility this move caused the drop of commodity prices as it destabilized the domestic market as well as pointing out that the bottom is falling out.

The US trade deficit continues to worsen, reaching 50 billion for the month, its getting especially bad with China. The talking point is that retailers are buying extra consumer goods from China with anticipation of a big fall season but wholesalers are down so this seems unlikely, not to mention the increasing number of jobless and the spreading poverty from the depressed wages and less hours worked. US exports are down across the board as well making the deficit worse from the other end. Oil prices have been sagging or the deficit would be truly staggering.

China has taken the bold move of eliminating 2000 old factories, steel and cement mills with an eye toward energy efficiency and cutting pollution but likely they also see an excess of capacity. China has also cut imports of raw materials as well as imports of manufactured goods.

Back in the US, record low interest rates on home mortgages did nothing to stimulate a lackluster housing market. Jobs available last month were only one fifth of the total of officially unemployed plus there are millions who no longer go to register with Job Service so they aren’t counted. Then there is an even bigger number of people trying to subsist on part time work that are vying for available jobs. A large number of people have dropped out of the job market to go back to school but they are starting to emerge to find no jobs.

Millions of workers have retired creating a surge in the Social Security system but these people are burning through their savings and would go back to work if given a chance. Social Security benefits have not been increased because of an official lack inflation but the prices of things the elderly need to buy continue to rise.

Viral emails are being circulated to convince people that Obama has frozen their Social Security payments but of course the benefits are determined by a formula put into law by Ronald Reagan with a cost of living formula intended to slowly cut real dollar benefits. So the new retirees who have been paying double payroll taxes for the last 25 years find they can’t begin to live on the benefits that would be 70% higher if a realistic method had been used. The

Republicans have been telling them for three decades that “you can’t live on Social Security” but of course the money they put in their 401k’s has largely disappeared so they can‘t live on that either and god help anybody with a private pension plan who is getting pennies on the dollar if anything at all. The Republicans are also pressing hard to eliminate all publicly funded  pensions, painting retired government workers as greedy and lazy, they should be working at Walmart to pay for their cat food entrees like the other poor people.

Charitable organizations are crying foul over the move by Congress to eliminate 12 billion dollars from the Food Stamp program pointing out that is as much as charities provide in food bank and meal services in an entire year. Democrats did this to fund an emergency jobs bill as the tax loop hole they closed on outsourcing jobs wasn‘t enough money for Pay/Go requirements. Republicans are crying foul as the Democrats want to put the funding for Food Stamps back in the budget by closing still more tax loop holes. To add yet one more straw to the camel’s back, even if the Bush tax cuts for the rich are allowed to expire, the average person with a million dollar income will still pay 1500 dollars less taxes than in 2001. That would buy a lot of canned goods.


Andrea Friedell said...

But you're not telling us exactly WHY the corporations are doing this. They can't be benefiting in the long run. Nobody can buy their stuff anymore, all the shopping centers are dead, even the Galeria in Dallas looks like a ghost town. And I'm holding onto my cash like everybody else. Lessees are abandoning their shops, as landlords raise rates on those still open until they, too, fold. Makes no sense.

patricia walsh said...

As a retired dept. of correction Lt. and current full time visual artist/part time substitute teacher, I have been watching and listening to the current vitriolic assault by the right against the pensions of the lazy public employees like me. I wish I could say that I wasn't worried but I cannot. For a time, it was a bit fashionable to applaud law enforcement (though corrections was always a stepchild of sorts) but in the past couple of months, the attack has become less completely focused on teachers and has spread to every public employee that has any type of benefit. Despite the fact that most people would be terrified to do the job that I used to do or would refuse to teach in a inner city school classroom of 30 children, they continue.......on and on and on. I (and all public employees) paid into the pension fund for my entire career and that money is completely seperate from the state budget; a fact that seems to be lost on the listeners of right wing radio. Yet, in Rhode Island, there have already been attempts by the state legislature to reduce or cancel retirement benefits of state employees. So far these attempts have failed but what will happen in the future when the right wingers have convinced the unemployed that the pensions of the state retirees are excessive and are causing the collapse of the entire world? As public employees we do not pay into social security and our pensions are our only source of income when we retire.

Well, enough of that...........I just wanted to tell you that I find your blog to be some of the most insightful commentary out there and would love to add your blog as a link on my own blog. My blog is just a small time art blog and probably wouldn't do you any good but I would love to add it anyway. Keep thinking because you are quite good at it. Thanks, Patty Walsh

Trebissky said...

So who said anything the cons and capitalists do had to make sense?