The U.S. Economy: Stand by for more worse news

That's a nice chart Michael, but it has absolutely nothing to do with "Helicopter Ben" or the Federal Reserve. You should notice the inequality disparity began with Ronald Reagan's tax bills. He gave huge tax reductions to the nation's wealthiest citizens while raising the tax burden on middle and low income wage earners.

The time has come to reverse that fiscal paradigm. The uber wealthy will need to pick up more of the tax burden. Your solution, letting the uber wealthy make all the decisions just doesn't work for the middle class.

 

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Speaking of Ben Bernanke, now that Bernanke is no longer with the Federal Reserve Bernanke can speak freely about the Great Recession. It's refreshing to hear that kind of honesty from a public figure. It's tragic they have to leave office before they can express that kind of candor in public. If congressional Republicans had the guts to put the fate of the nation above their partisan interests our recovery would have occurred much faster and would have been much more robust and our economy would be much stronger.

Below is an interview with Bernanke published in US News.

"It's the stupid economics. That's why he's no longer a Republican, former Federal Reserve Chairman Ben Bernanke tells us in his new memoir. Bernanke says he "lost patience with Republicans' susceptibility to the know-nothing-ism of the far right." Here's part of his indictment:

They saw inflation where it did not exist and, when the official data did not bear out their predictions, invoked conspiracy theories. They denied that monetary or fiscal policy could support job growth, while still working to direct federal spending to their own districts. They advocated discredited monetary systems, like the gold standard.

Bernanke's right; these views aren't conservative – they're kooky. Members espousing them may have made Bernanke's interactions with Congress uncomfortable, but they couldn't stop the Fed from using extraordinary monetary policy measures to try to pull the economy out of the Great Recession.

In Bernanke's harsh but accurate judgment, "fiscal policymakers, far from helping the economy, appeared to be actively working to hinder it." He's talking about Republican congressional efforts to use "must pass" legislation – e.g., raising the legal limit on total federal debt or approving annual spending bills to fund the government – as bargaining chips to achieve deep cuts in government spending, even when the economy is weak.

Like anyone who understands the issue, Bernanke notes that refusing to raise the debt limit isn't about controlling spending, it's about government not paying its bills: "It is like a family running up large credit card bills and then refusing to pay." We can forgive the public for not understanding this, but not its elected representatives. To Bernanke, nothing justifies taking the economy hostage by refusing to raise the debt limit. He's right; the best thing to do with the debt limit is scrap it so that government can pay its bills on time, unimpeded by political shenanigans.

President Barack Obama and the Congress resolved the 2011 debt-ceiling crisis by enacting the Budget Control Act, which imposed tough spending limits and required further "sequestration" spending cuts when Congress couldn't agree on a deficit-reduction plan. Bernanke "was relieved to see a resolution of the crisis, but worried about whether the fragile economic recovery could withstand the austerity measures that Congress seemed intent on imposing."

In Bernanke's diagnosis, reflecting his mainstream economic thinking, fiscal policymakers put the recovery at risk when, after enacting Obama's stimulus package in early 2009, they shifted into austerity mode. At the same time, state-level balanced-budget requirements forced a sharp drop in public-sector employment. (Typically, government employment rises in a recovery.) Tight fiscal policies, Bernanke wrote, "were arguably offsetting much of the effect of our monetary efforts" and making it difficult to achieve the Fed's full employment goal.

Nevertheless, Republicans continued to advance discredited "expansionary austerity" arguments. Bernanke advanced the mainstream view: Congress needed to focus its deficit fighting on the long-term fiscal challenge; too much austerity too soon "would only slow the recovery without solving the longer-run problem."

Republican budget proposals reflected hard-right priorities that, if enacted, would have derailed the recovery. Obama's and the Senate Democrats' budget proposals, in contrast, never reflected far-left policy priorities. Rather, they looked like centrist proposals that would emerge from good-faith bargaining between the two parties. They were more timid on both short-term stimulus and longer-term deficit reduction than what Bernanke and other mainstream analysts hoped to see, but at least they went in the right direction.

It wasn't pretty, and the economic recovery is taking much longer than it needed to. But the recovery wasn't derailed, partly because Republican leaders haven't wanted another debt-ceiling showdown or government shutdown for fears that it would hurt them at the polls.

But who knows what this week's meltdown among House Republicans over their next set of leaders portends?" - US News

http://www.usnews.com/opinion/econo...bernanke-has-had-it-with-stupid-gop-economics

 

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I don't know this source, so will not defend it, but suspect same facts are stated else where as Microsoft is quoting it. No wonder rich Chinese are buying up property and businesses all over the world - they like to "diversify" there assets too.

 

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If you can't speak to the veracity of the report, then why have you chosen to post it? The article you referenced noted there are huge differences between China's numbers and those reported by Forbes, which is usually considered the gold standard for wealth measuring. That's just more Chinese advocacy on your part.

 

Neither you nor I can "speak to the veracity of reports." We can only trust the source to be accurate if we know it. If we don't know the source, that is only an indication that we don't often see their reports.

I did not know the original source, so acknowledged that fact; but do know that when MSN (micro soft network) re-quotes an article, that is normally an indictation they believe the report and may even know the original source well.

SUMMARY: if MSN re-quotes some news, I feel OK with doing the same but I fully expected you to do as you often do: attack the source and me, rather than give any evidence the report is false.* As I said in first post I epected there would be other sources telling the same facts. Here is one I do know and trust: http://www.cnbc.com/2015/10/15/us-dethroned-as-worlds-billionaire-capital.html

It is little wonder and no surprise that you attack posters and their sources as you routinely do when they give facts you do not like. Telling the truth is not: "just more Chinese advocacy." It is in fact more of my truth telling effort to get the US's collective heads out of the sand. US needs to know its enemy - not pretend it is a backward nation - nothing to worry about. The Chinese are winning WWIII, a long term, economic war.

* If you can provide creditable, current, evidence that China has not become the home to more billionaires than the US, please do so, other wise, STFU. I'm tired of your personal attacks on my character and motives.

 

China is now claiming it has unseated the US with wealth creation....gee it's not like China manipulates and exaggerates its numbers?

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As I pointed out, there are serious discrepancies between the numbers Forbes reports and your Chinese source.

 

Unlike most of your stuff, this is a very serious issue and a direct threat to world order and the fate of the US. The question is will Republicans in congress raise the US debt ceiling? Will Republicans shut down government again? Once again, Republican are a clear and present danger to the health and well-being of not only the US but the world.

Now, despite the chaos in the Republican controlled House, I think most Republicans realize it would be stupid and not in their interest to cause a debt default and throw the country into a deep recession at anytime but especially during an election year. So I don't think that will happen. They tired that a few years ago and it didn't work out real well for them. They backed down. They thought they could excuse their recklessness by blaming Obama. It didn't work. So it's difficult to see how they would think it would be better for them during an election year.

My guess is they get a debt ceiling and budget deal done before Boehner leaves office.

 

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When you can't afford to buy, you rent or live at home still. This adversely effects much of the economy - not buying furniture, dish washers, etc. A large part of why rents are going up fast. The rich (owners of rental property, anyway) get richer and the young and poor get poorer. US economy is an "inverted funnel" many at bottom send their money to the 1% at the top via it. This has the makings of a revolution - lets hope only the one Bernie Sanders wants to lead, not a violent one.

 

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On average, rent is up 23% this year (or so I read). It's a great day to be a retired ex-banker SlumLord. But don't worry, there'll come a day when that SlumLord has to live in a nursing home run by functionally illiterate millennials and refugees whom, I'm sure, will treat them in kind. So, that will be their day to day existence for the last 10 - 15 years of their lives. Just long enough to become 'normal' and quite probably the only memories they'll have of life in this world.

Funny that.

 

Well, you read wrong. Inflation is zero this year...oops.

Additionally, why do have a grudge against slumlords? It seems you free market capitalism anti-government spiel applies to everyone but slumlords. Do you think poor people should be turned into the streets? Is that what you are advocating? Who rents to poor people if not the so called slumlords?
http://money.cnn.com/2015/05/21/real_estate/rent-prices-rising/

 

Below is a link to the real Bloomberg Millennial Housing Index.

http://www.bloomberg.com/graphics/2015-millennial-affordability/table.html

 

How about looking at the real data. You know, the correct data.

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http://www.bls.gov/news.release/pdf/empsit.pdf

If you want state detail:

"Regional and state unemployment rates were little changed in September. Thirty-seven
states and the District of Columbia had unemployment rate decreases from August,
six states had increases, and seven states had no change, the U.S. Bureau of Labor
Statistics reported today. Forty-one states and the District of Columbia had
unemployment rate decreases from a year earlier, seven states had increases,
and two states had no change. The national jobless rate was unchanged from August
at 5.1 percent and was 0.8 percentage point lower than in September 2014." - BLS

http://www.bls.gov/news.release/laus.nr0.htm

http://www.bls.gov/lau/

http://www.jec.senate.gov/public/index.cfm/democrats/statebystatereport

http://www.bls.gov/lau/news.htm

 

That is a strange index - it assumes the home buyer does not need to eat, get medical care, send kids to college. etc. I.e. can use ALL his income to buy house.
For example:
The first "affordable house" of the table is in Salt Lake City, UT and on average costs: $229,35033.
According to the table, the millenial needs an income of $30,590 to buy it and in Salt Lake City the average millenial's annual income is $33,698 so he can buy according to that index as his income exceeds that necessary to buy by: $3,108. (Or monthly, 3108/12 = 259 per month to live on.) Making the problem worse is the purchasing power of his income has been stagnate or declining for a decade and home prices have been climbing several times faster than general inflation!

For example, using Joe's post 1434 link for Utah (http://www.jec.senate.gov/public/index.cfm/democrats/statebystatereport ) we seen that the annual increase in Utah home prices was 5.4% and for salaries was only 3.3% . Things are tough for middle class / millenials and getting tougher.

Wonderful!

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He has $259 dollars each month left over for food, clothing, transportation, heating/cooling, buying the furniture, repair bills, school expenses, medical expenses, and saving for old age or emergencies. etc.

This is a good example of how to lie with data - The typical millenial can not actually afford to buy a house, so few "starter homes" are being built.* This is pretty much true nation wide - why demand for rental units and their rents are soaring up by 20 or more percent annually! He will not be building his assets, as his parents did via home ownership. He will be helping the wealthy do that with his rent payments.

* I don't know, but bet the house trailer industry is booming with most trailer homes going up on blocks immediately!

 

A couple of things, first, it is the real Bloomberg data published on the real Bloomberg website rather than the specious websites you and Michael so love. Two, it assumes no such thing. It doesn't assume the home buyer does not need to eat, receive medical care or send the kids to college. Additionally, it's a little early for millennials to be thinking about sending the kids to college, assuming they have kids and haven't purchased a home.

You are misrepresenting Bloomberg's data. First, the Bloomberg table references "median" not average income. Let's look at the real numbers.

Salt Lake City is number 14 on Bloomberg's list of 50 major cities. That means there are 36 major cities which are more affordable than Salt Lake City.

Median Millennial Monthly Income: 2,808.17 dollars
Median Monthly Mortgage Based on Median Home Prices with Average 30 Year Mtg Rate Reported by Zillow: 1,203.37 dollars
Monthly Remainder: 1,604.8 dollars (not the 259 dollars you asserted)

That's far from your 259 dollars/month. It helps if you get your numbers straight. The only things strange here are your numbers. Additionally, most families are two income families, not one income families as represented above. The numbers above are based on the income of one millennial.

 

You are correct. I remembered "average" but both incomes and home prices were "median" so their relationship /ratio should at most be a few percent different.

Yes your 2,808.17 monthly is same as my 33,698 annual and again only the Utah data. I think your 30 mortgage monthly charge, 1,203.37 dollars, is some national average on a national median home price not on a Utah home. If so, it is not correct to subtract that from medium monthly income in Utah, but even so, there would be much more than my 259 dollars left over each month for non- mortgage expenses. The table is not clear if the median income given is for a millenial family or a single millenial. Since the subject is affordability of a home, I assumed it was the family medium income.

I admit to these errors, but my point still stands. With declining purchasing power of salaries, rapid inflation of home prices, it is ever becoming increasingly harder from millenials to buy their first home even, with both working especially if paying one one or more student loans. Quite a different story than when their parents bought their first home on one salary, usually.
With the rapid transfer of wealth from the middle class to the very rich, it is little wonder that every more young couples must rent a place to live.

First time in US history that the younger generation is economically worse off than their parents were. You seem pleased with this "progress" - not outraged as I am. It is bad enough that we are leaving them a world uninhabitable for their children to die of old age in instead of heat stroke.

 

The mortgage payment was based not on national but on median Salt Lake City home prices referenced in Bloomberg's index.

 

Maybe for buying your Depends Joe, but as for the working poor, they're paying 23% more in rent to their SlumLords.

There is a time and place to rent, someone moving to a new city, kids off to college, etc... The SlumLordish the Banksters have turned American into, OTOH is undermining the fabric of society. But that's okay, Americans will just have to normalize to their lower standing of living and then elect a Demagogue who will promise to 'redistribute' the 'wealth of the Nation' for the 'Good of the Roads'. Just think of all the jerbs there will be handing out SlumLord flavored soylent green nutri-bars.

 

Then you should be able to prove it with credible data. But you can't because per the previously referenced data, your assertion is a lie.

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So your free market stuff applies to everyone and everything but slumlords? Then socialism is A OK.

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