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The Sociopathology Of Wealth

I don’t know if you’ve heard, but there’s a drought in California, and there are only a years worth of water reserves on hand. As a result, water prices have skyrocketed and residents have been asked (nicely) to reduce their consumption by 25%. Since that request to lower water consumption came from the governor, a charming town in southern California called Rancho Santa Fe has increased its water consumption by 9%.

Why? Because they have golf courses that need to stay lush and green, and a population who feels they’re entitled to live in the pretty, green place they signed on for. You may have guessed by now, that this is a very affluent area, where the median income is $189,000 per year (compared to the national median income of $50,000 a year). Earning four times more than the average American isn’t enough to keep the residents of Rancho Santa Fe happy if they can’t have all of the water in California too. They feel that, since they can afford to pay for all the water they need, they shouldn’t have to conserve a drop.

Steve Yuhas, a charming resident of  Rancho Santa Fe says, “If you can pay for it, you should get your water.” He’s impervious to being shamed for his flagrant disregard for his state’s state of water emergency because, “[people] should not be forced to live on property with brown lawns, golf on brown courses or apologize for wanting their gardens to be beautiful”. He said something that particularly inflamed my bitchy muscle, but let’s hear what some other people had to say before I get to that.

Gay Butler (another resident of Rancho Santa Fe) said (from atop her show horse), “I think we’re being overly penalized, and we’re certainly being overly scrutinized by the world. It angers me because people aren’t looking at the overall picture. What are we supposed to do, just have dirt around our house on four acres?”

Awwww, you poor baby with your four acres.

Brett Barbre, who lives in a very affluent part of Orange County said, “I call it the war on suburbia”.

No asshole, it’s called a drought.

Because that last comment wasn’t douchey and clueless enough, he added, “California used to be the land of opportunity and freedom. It’s slowly becoming the land of one group telling everybody else how they think everybody should live their lives.”

Let me repeat; it’s called a drought, you idiot.

Jurgen Gramckow, a farmer in Ventura county agrees with Barbre’s douchey assessment and adds (comparing water to buying gasoline), “Some people have a Prius; others have a Suburban. Once the water goes through the meter, it’s yours.”

Until the water runs out because of the drought, asshole.

Let’s get back to Steve Yuhas, the first douche in this piece. Here’s another gem from him:

“I’m a conservative, so this is strange, but I defend Barbra Streisand’s right to have a green lawn. When we bought, we didn’t plan on getting a place that looks like we’re living in an African savanna.”

So much douchey in just two sentences. First of all, if you think that defending someone with different political beliefs than yours is strange, you have a humanity problem that you need to deal with immediately. Secondly, she has cut back her water usage because she’s capable of feeling shame and (I hope) recognizing that she’s part of a larger community, so you’re defending nothing other than your own abhorrent behavior. Thirdly, people whose homes are hit by tornadoes didn’t sign up for being the proud owners of a pile of rubble, but nature happens and grownups deal with it. Petulent children whine about their entitlement.

But here is the most obnoxious thing that Yuhas had to say;

“We pay significant property taxes based on where we live. And, no, we’re not all equal when it comes to water.”

I’m not going to address the second sentence in that pile of poop he hurled at us. But that first part about the property taxes really steams my beans. Since that asshole lives in California, he’s getting away with property tax highway robbery because of Prop 13. This motherfucker’s property tax rate is capped at 1%, and his increases are capped at 2% regardless of the valuation of his estate. Compared to NJ, where property taxes are 1.89%, NH, where they’re at 1.86% or Texas, where they’re 1.81%.

So spare me the whining about how much you’re being taxes, you greedy fuck. You live in a mansion, and you have a great public education system funded by your property taxes (has anyone ever heard of a failing public school in a wealthy neighborhood?). You’re getting more than what you’re entitled to.

But let me move on before I get myself too worked up. I have a point here, beyond putting rich assholes on display. In listening to them and hearing what they think, it’s clear that there really are two Americas, and that these people don’t feel like members of society at all. There’s no sense of community and no sense of duty going on among the rich. They really live in a dog eat dog world where nothing matters beyond their desires. There is a fucking drought happening in their state, and they really think that if they’re paying for the water, they can use all of it they want. The less water the state has, the more everyone will be paying for it. That means that the cost also goes up for households making $15,000 a year.

The rich don’t care about their state, country, or community beyond protecting what they feel they’re owed.

In a study published last year, The Chronicle of Philanthropy found that wealthy people give less (as a percentage) of their income than low income people do, especially in times of recession. Here are the key points (from the Forbes article);

  • Americans who earned at least $200,000 gave nearly 5% less to charity in 2012 than in 2006.
  • Unlike their wealthier counterparts, low- and middle-income Americans — those who made less than $100,000 — gave 5% more in 2012 than in 2006.
  • The poorest Americans — those who took home $25,000 or less — increased their giving by nearly 17%.

Why? Because when times are tough, people with less think about their communities and others who may be suffering. Wealthy people think less about their communities and more about hoarding. Dog eat dog.

Studies have shown that wealthy people are less compassionate. From the article;

The researchers asked participants to spend a few minutes comparing themselves either to people better off or worse off than themselves financially. Afterwards, participants were shown a jar of candy and told that they could take home as much as they wanted. They were also told that the leftover candy would be given to children in a nearby laboratory. Those participants who had spent time thinking about how much better off they were compared to others ended up taking significantly more candy for themselves–leaving less behind for the children.

This is the psychopathy of entitlement.

More from the article;

In a second study, participants were asked to watch two videos while having their heart rate monitored. One video showed somebody explaining how to build a patio. The other showed children who were suffering from cancer. After watching the videos, participants indicated how much compassion they felt while watching either video. Social class was measured by asking participants questions about their family’s level of income and education. The results of the study showed that participants on the lower end of the spectrum, with less income and education, were more likely to report feeling compassion while watching the video of the cancer patients. In addition, their heart rates slowed down while watching the cancer video—a response that is associated with paying greater attention to the feelings and motivations of others.

This is a text book demonstration of psychopathy:

psy·chop·a·thy

a mental disorder in which an individual manifests amoral and antisocial behavior, lack of ability to love or establish meaningful personal relationships, extreme egocentricity, failure to learn from experience, etc.

Greed is good. More from the article;

But why would wealth and status decrease our feelings of compassion for others? After all, it seems more likely that having few resources would lead to selfishness. Piff and his colleagues suspect that the answer may have something to do with how wealth and abundance give us a sense of freedom and independence from others. The less we have to rely on others, the less we may care about their feelings. This leads us towards being more self-focused. Another reason has to do with our attitudes towards greed. Like Gordon Gekko, upper-class people may be more likely to endorse the idea that “greed is good.” Piff and his colleagues found that wealthier people are more likely to agree with statements that greed is justified, beneficial, and morally defensible. These attitudes ended up predicting participants’ likelihood of engaging in unethical behavior.

Given the growing income inequality in the United States, the relationship between wealth and compassion has important implications. Those who hold most of the power in this country, political and otherwise, tend to come from privileged backgrounds. If social class influences how much we care about others, then the most powerful among us may be the least likely to make decisions that help the needy and the poor. They may also be the most likely to engage in unethical behavior. Keltner and Piff recently speculated in the New York Times about how their research helps explain why Goldman Sachs and other high-powered financial corporations are breeding grounds for greedy behavior. Although greed is a universal human emotion, it may have the strongest pull over those of who already have the most.

This disconnection from society is why wealthy people are seen as pariahs. Because they see themselves that way. People don’t hate the wealthy for being rich. People hate the wealthy for being entitled and selfish, particularly when that wealth was gained by winning the lucky sperm lottery.

If rich people would stop being so douchy, and start giving a damned about the society that makes their wealth possible, the chairman of Cartier wouldn’t have to worry about the poor rising up and starting a class war.

I’m sorry, did I say starting? I meant finishing.

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American Poverty Is Awesome

The right wing keeps saying that. Fox routinely points out that poor people in America have refrigerators, so they’re clearly not suffering enough to actually feel any kind of sympathy for. In a post earlier this month, I talked about lead paint in poor neighborhoods, and the neurological damage it does. I framed that piece around Baltimore, but it’s true of any poor neighborhood in the US.

Being poor in America really isn’t the leisurely life of strip clubs and lobster dinners republicans would have you believe it is. Our poor people aren’t actually the lucky ones compared to poor people around the world. Let’s take a look at some statistics for Baltimore, which has a diverse array of income levels and neighborhoods.

Roland Park is a wealthy Baltimore neighborhood. The life expectancy of  residents of Roland Park is eighty-four years old. That would be five years above the national life expectancy of seventy-nine years. Three miles away from Roland Park is one of Baltimore’s poorest neighborhoods, downtown/ Seton Hall. The life expectancy of a resident there is sixty-four. That’s twenty years (or 31%) less life, just for being born poor. These gaps in life expectancy are not unique to Baltimore. They exist all over the US although twenty years is one of the biggest gaps. Here’s a little perspective on life expectancies around the world. Countries with a lower than sixty-four year life expectancy are largely in Africa, and all third world. Afghanistan has a life expectancy of sixty-one years. Ethiopia, Rwanda, and Namibia all have life expectancies of sixty-four years. Turkmenistan has a life expectancy of sixty-five, and India comes in at sixty-six. If you’re born in Pakistan, you can expect to live three years longer than someone born in a poor neighborhood in Baltimore. Iraqis can expect to live five years longer than poor people in Baltimore. If you’re born in Mexico, you can expect to live thirteen years longer than a poor person in Baltimore. I can go on, but you get the point.

Let me stop you before you get to thinking that higher crime and homicide rates are the primary drivers of the life expectancy gap. 70.1% of deaths in downtown/ Seton Hall are “avertable deaths”, meaning that if access to health care were the same as in the wealthy neighborhoods, they wouldn’t be happening. Here are the biggest causes of death in downtown/ Seton Hall:

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We have approximately 15% of our population living at or under the poverty line. That 15% number represents 46.5 million Americans. The way the poverty line is defined in the US is basically at $16 per day, per person. Of that 46.5, 20.4 million live at less than half of poverty (so less than $8 per day per person).  Mind you, that’s supposed to cover rent, utilities, food, and everything else you need.

You know how $2 a day is the global poverty number that’s usually used? Well, Brookings tried to figure out what the percentage of Americans living on $2 a day is. It turns out that this isn’t so easy to do. The income of extremely poor people in the US doesn’t remain fixed for long periods of time. In other words, they can average $2 a day for a month or two, but any tiny amount of income puts them at an average of $3, $4, or $6 a day. You should read the study for a more detailed explanation, but Brookings came up with a range of 0% – 5% of households in America who live in $2 a day. 0% doesn’t appear to me to make much sense, since the method used to get there is by using consumption surveys as opposed to income surveys, the way the World Bank counts poverty all around the world. The problem is that when graphing both consumption and income surveys, the correlation between the two diverges significantly in the US compared to third world countries. In other words, at an income of $2 a day, the consumption survey doesn’t diverge proportionally to the income survey compared to someone with an income of $20 a day. It’s complicated, but it basically doesn’t seem like a reliable measure. So 0% doesn’t seem accurate, but neither does 5%.

But that’s okay because the actual percentage isn’t as important as the trend. Let’s say for arguments sake that 2% of American households are living on $2 per day, per person. Since 1996, that $2 a day global poverty rate has been reduced by 1/3. In the US, it’s going in the opposite direction. The factor that keeps Americans above that $2 a day line are SNAP, welfare (which can only be collected for a total of five years over the course of a lifetime), social security, and medicare. First world programs. That’s the only thing keeping our “$2 a day” population under 5%.

Why is the extreme poverty class in the US growing, while it’s shrinking in the rest of the world? Republicans. They keep cutting life saving social programs in an effort to end all that high living that we all know is happening in slums all across the country. All of that welfare, food stamp, medicare, and medicaid fraud they can’t find must be stopped! By the way, any retail business would be fucking overjoyed with a loss rate of under 10%. Relative to the private sector, these loss (fraud is less than 4% in each program) numbers are a freaking miracle. But nonetheless, they need to stop the poor people from bleeding us all dry with their eating and such. Plus, if the don’t have food, they can sell those awesome refrigerators and air conditioners that came with their mold and lead riddled apartments, thereby enabling us to cut welfare even more because they would be living large on that pawned refrigerator money. It all makes perfect sense if you think about it.

Republicans are literally turning this country into the slums of Ibadan, where you can expect to live longer than you can if you grow up in Baltimore. That’s actually not true, and I must apologize for the hyperbole. Adolescents in Ibadan are actually more hopeful and healthy than adolescents in Baltimore so I apologize for the unfair comparison.

Poverty in the US is getting worse, and contrary to what the right wing is telling you, being poor in America isn’t awesome sauce. In fact, it won’t be long before people living in the slums of New Delhi aren’t professing their gratitude that they don’t live in the US.

The richest country in the world should not contain poor neighborhoods that are comparable to third world slums. That just shouldn’t fucking happen.

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Your Estate Is Now Safe

By "your", I don’t actually mean yours. I guess I do, but only if you own one of the top .2% of the biggest American estates who have been suffering under the onerous and tyrannical estate tax system. It’s tyrannical because the government actually claims that your heirs should have to pay taxes on money they inherit from you. You know, like they would have to pay on lottery money or unemployment benefits that they’ve been contributing to their whole working lives. If you ever need to take advantage of that unemployment insurance you’ve paid for, you have to pay federal taxes on that money. But dammit, taxing your heirs for receiving money they didn’t earn is a bridge too far!

I am a firm believer that if you had the forethought to be born into a filthy rich family, you shouldn’t be penalized for having better boot straps than the poor bastard who thought that being born to poor people was a good life plan. Why the fuck should you pay taxes on the money that you didn’t earn, but watched (when you weren’t at your tennis lesson) your parents earn. Or worse yet, weren’t around when your grandparents earned it, but are clearly bootstrapped to. I mean, being born to wealthy people is hard work. Why should a rich person have to pay taxes on money that drops out of the sky for them, the way you pay taxes on the money you spend 40 – 60 hours a week working for? I mean, it’s not the rich guy’s fault that you’re the kind of sucker who obtains money by working for it. Why are we punishing the innovation of being born rich?

We all know that the best way to stimulate the economy and create jobs is to let Paris Hilton have her grandfather’s money for free. She’s obviously going to spend it in a much smarter way than the government, who will probably squander it on a road or a republican war that even republicans don’t want to pay for.

Let me explain how the estate tax works for the 99.8% of you lazy moochers who aren’t familiar with it. In 2015, any inheritance you (again, I don’t mean you, you fucking loser) get is tax free for the first $5.43 million dollars. I’m sorry, when I said $5.43 million dollars, I mean per person. So if you’re inheriting from Mummy and Papaaa, you get $10.86 million dollars of free money. Just to give you a little context, the amount that was free in 2001 was $650k per person.

To recap, right before we launched two wars, heirs of large estates got $1.3 million dollars of free money from Mamaaa and Papaaa. Today, since we’re still paying for those wars, they get $10.86 million dollars of free money. That’s today, but don’t worry because republicans in the house just voted to make things more fair. They want to make the entire estate free for the heirs. They really are a party of the people. There are precisely 5,500 people whose estates will be affected by this bold move to fight the power and stand up for the middle class.

Obviously, the estate tax is an attempt to loot money from hard working children of billionaires, and it must not stand! Let’s review the origins of the estate tax. The estate tax was born in 1916, and it was proposed and passed under the auspices of fair taxation. Cordell Hull, who sponsored the legislation said,

"I have no disposition to tax wealth unnecessarily or unjustly, but I do believe that the wealth of the country should bear its just share of the burden of taxation and that it should not be permitted to shirk that duty."

Representative William Cox, who supported the estate tax said,

"It is the first successful attempt to make wealth bear its just and proportionate burden of taxation."

At its original implementation in 1916, the estate tax was set at 10% of all estates worth over $5 million dollars. It went up very quickly. For 1917, it was 15% on all estates worth over $5 million dollars. But in 1917, it was raised again to 15% of net estate in excess of $5 million plus war estate tax 10% of net estate tax in excess of $10 million. Huh. So because we were at war, the legislators at the time thought that raising taxes would be the prudent and fiscally responsible thing to do. Oh, but we’re just getting started on the increases. By 1932, the estate tax was 45% of net estate in excess of $50 million. And then here a’come FDR to raise it to 60% of net estate in excess of $50 million in 1934, but that didn’t last long. By 1935, he increased it to 70% of net estate in excess of $50 million. And then came 1940, where there was another war to pay for. He increased the estate tax to 70% of excess of net estate over $10 million plus a defense tax of 10% of the total tax computed under the basic and additional estate taxes (in effect, maximum tax was 77%). From 1941 until 1977, they decided not to fuck around with all that language and just set the estate tax at 77% of excess of net estate over $10 million. Can someone remind me when the golden era of economic expansion in the US was again? Jimmy Carter came in and changed the tax to 70% of excess over $5 million. And then Ronny, patron saint of the wealthy, set it at 65% of excess over $4 million for 1982, 60% of excess over $3.5 million for 1983 , and 55% of excess over $3 million for 1984 – 1988. For 1987 – 1998, the rate was set at 55% of excess over $3 million (effectively 60% for estates in excess of $10 million but less than $21,040,000 because of a surtax to phase out benefits of the graduated rates and unified credit). That was as low as Ronald Reagan could conceive of dropping it. But fear not, Buckley v Valeo was starting to being in dividends. For 1998 – 2001, Bill Clinton set the rate at 55% of excess over $3 million (effectively 60% for estates in excess of $10 million but less than $17,184,000 because of a surtax to phase out benefits of the graduated rate).

To be clear, the intention behind an estate tax was twofold. It was the best way to pay for things because what better time to tax someone, than when it’s on money they didn’t break their backs earning? The second purpose was to prevent oligarchy. FDR correctly said,

"Great accumulations of wealth cannot be justified on the basis of personal and family security. In the last analysis such accumulations amount to the perpetuation of great and undesirable concentration of control in a relatively few individuals over the employment and welfare of many, many others."

I don’t care if you like that or not. FDR was right, and there’s nothing you can say to change that empirical fact.

Huh. As soon as we lowered the Paris Hilton tax, wealth started to become mega-concentrated in the hands of a smaller and smaller number of people. Today. 400 people own the same wealth as 50% of Americans. That is not a fucking accident. Taxation is always a redistribution of wealth. It always had been, and it always will be. First worlds have never been built in any way other than through an involuntary taxation system. The question is, do we want to redistribute across, or up?

During the time when the top estate tax was set at 77%, the top corporate and income tax rate was higher (at 91%). This forced reinvestment in companies and the country. There was no incentive to loot money from your company or your country because you were just going to pay it all out in taxes. That’s what created the greatest economic expansion in the history of our country. Again, I don’t care if you don’t like it. It is what it is and all of your theorizing and quantum physics, parallel universe nonsense isn’t going to change the empirical facts of what happened.

So let me share some estate tax fun facts so that you can really see (in case you’ve been confused for fifty years) who republicans champion.

  • In 2013, among estates that paid any tax at all, the effective tax rate was 16.6%. To put that into perspective, if you make 40k per year, your federal tax rate is 25%.
  • In 2013, a total of one hundred and twenty (that is the largest nonpartisan number I could find) small businesses and small farms paid any estate tax at all.
  • The largest estates are comprised of 55% in unrealized capital gains. This is money that has never been taxed. Not once. Capital gains become "realized" when you sell them. That’s when you pay taxes on them. If you’ve never sold stocks, that your parents bought for you when you were born, taxes have never been collected on that wealth. So a billionaire would have a very large amount stashed in unrealized capitalized gains, since they’re never really having to face a situation where they have to sell the stock they’ve been sitting on for generations, so that they can buy a sandwich.
  • Repealing the estate tax entirely, as republicans want to do, will cost $269 billion dollars over the next ten years.

So you decide: is the GOP the party of the people? Are you the person they’re fighting for? Let’s be clear, someone is going to have to pay that missing $269 billion dollars. Just like someone has been paying for every top tax rate cut. That unicorn republicans keep referring to, where spending less is an option has never happened. Remember, they never paid for their last two wars. Wars that will cost us money until their invention ISIS, and every other terrorist group that forms as a result of destroying Iraq are completely eradicated. And bomb, bomb, bomb, bomb, bombing Iran isn’t free either. So if you’re opposed to negotiating with Iran, you’d better get ready to pony up your share of that war plus the $269 billion dollars you want Paris Hilton and the Walton miscreants to have.

Someone has to pay. Who do you want that someone to be?               

           

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All Bootstraps Are Not Created Equal

That should seem like an obvious statement, but it’s one that doesn’t seem obvious at all to republican voters. The "pick yourself up by your bootstraps" crowd simply refuse to acknowledge that bootstraps come in different shapes, sizes, and are made of vastly different materials.

Republicans and libertarians live in a utopia where everyone starts off equal, so there’s no reason for any attempt at leveling the playing field in order to ensure that some of us don’t fall off. Actually, that’s not true. Republican operatives and politicians know. The clueless ones are their voters, who are being played and bootstrapped into voting against their own self interest. They need their Horatio Alger fantasy more than they need a living wage and an opportunity to get an affordable education.

How unequal is the playing field? There was an interesting piece in the New York Times that took a closer look at how the circumstances of your birth affect the outcome of your success.

Here are some of the statistics they came up with. The author only looked at male baby boomers, and the probability that they would achieve the same level of success as their fathers. The sexism made looking at just the men seem like the most accurate way to examine the situation. He looked at the presidency and calculated that the son of a president is 1.4 times more likely to become a president, than others in his peer group. That’s obviously based on too small a sample size, but it’s a fun fact nonetheless. The more statistically sound thing to look at is governors. He estimated that one in fifty sons of governors became governors themselves. That’s a rate 6,000 times higher than that of non-gubernatorial bootstrap owners. But if you really want a career in government, you need to make sure that your bootstraps are born to a senator, which would make your odds of becoming a senator 8,500 times more likely than sons with non-senatorial bootstraps. Here are some more statistics;

  • The son of a basketball player in the NBA has a 1 in 45 chance of getting into the NBA. That’s an 800x advantage over the non-NBA bootstrap. He didn’t provide numbers, but he said that they were much lower for baseball and football players (probably because of the height factor in basketball).
  • The son of an army general is 4,582 times more likely to become a general. So much for the military being a true meritocracy.
  • The son of a CEO is 1,895 times more likely to become a CEO.
  • The son of a Pulitzer Prize winner is 1,639 times more likely to become a Pulitzer Prize winner.
  • The son of a Grammy winner is 1,497 times more likely to become a Grammy winner.
  • The son of an Oscar winner is 1,361 times more likely to become an Oscar winner.
  • The son of a billionaire is 28,000 times more likely to become a billionaire.

People think of the US as the land of opportunity. Those people would be wrong. Compared to other large economy, developed countries, the US second to last in upward mobility, after the UK. If you want the best shot at upward mobility, that filthy bastion of socialism, Denmark is where you want to be. Your next best bet is Norway, where the socialism also runs rampant. The next most desirable place to live if you want a chance at upward mobility is Finland. Wanna guess what it costs to get higher education in Finland? Yep, just like Denmark and Norway, Finland’s higher education system is plagued with socialism.

Seventy percent of the people born into the lower economic quintile in the US, don’t make it to the middle class. The good news is that upward mobility hasn’t gotten worse in the past 30 years. It’s just always been shitty.  

Huh. It almost seems like giving everyone an equal opportunity at an education creates more opportunity for upward mobility. Weird. Could it be that the most common use of bootstraps are to bitch slap poor people into staying in their economic lane?   


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Greece Vs Wall Street

So this is going to get interesting. The results of the election in Greece are in. The Greeks voted for killing austerity and renegotiating their debt with (basically) Wall Street vultures. This also puts the new Greek government at odds with Angela Merkel, who basically is the EU. But I believe that the Merkel clash is being overestimated and won’t be the standoff that some media outlets are predicting.

Here’s a recap of what happened in Greece. The country incurred massive debt. This is very different from what happened in Spain or the US, where the people incurred massive debt even though the result was the same, and the creditors were the same. In Greece’s case, it was the government who borrowed massively. Here’s how banking worked in the olden days of Glass Steagall: banks would assess a borrower’s ability to repay debt and decide whether extending a loan was viable, and setting the percentage rate based on viability. This made banks more prudent in who they loaned to because the goal was to get repaid with a little interest. See the interest was calculated using a formula whose two primary goals were to cover the bank’s total exposure (meaning all they loans they had made) and to create a profit for the bank. But then something horrible happened that wasn’t unforeseen, since it had happened before; banks assigned value to debt. And yes, that’s as crazy as it sounds. They took the projected profit (if everything went swimmingly) from the debt and let investors buy a piece of of that imaginary profit in the form of securities. In the interest of keeping things simple and getting to the point of this post, securities are basically trade-able debt. So now this money that doesn’t actually exist is worth something. Glass Steagall used to separate the banking assets of a bank from their investment assets. The need to do this should not have to be explained. If a bank puts these securities on its balance sheets as assets, they can sell them and still be insured against those losses in the form of the FDIC insurance that real assets (your deposits) have. When a bank can inflate their assets by making insane loans without worrying if those loans are actually viable, what do you think happens? If you guessed that they make loans to anyone and everyone they can, with no regard to viability so that they can sell those "assets" and create a profit stream out of literally nothing, you win a cookie because you’re right.

The Wall Street vultures did this anywhere they could. To the government of Greece, the homeowners in Madrid and the US, and all over south America. They did not care if the loans they made were viable because it didn’t matter to them at all. There was nothing to lose. The money that was repaid became profits, and the money that wasn’t repaid became either someone else’s problem, a repossession, or a fixed (meaning nonnegotiable) debt. That’s what happened in Argentina. A crooked judge made a chunk of Argentina’s debt nonnegotiable when the vultures decided they weren’t going to to along with all of the other creditors who accepted a certain percentage on the dollar (I can’t remember what the percentage was). These vultures demanded 100 cents on the dollar, plus all of the interest on the incredibly risky loans they had made. When only the profit, but none of the risk is an investor’s concern, they’re no longer an investor. They’re a vulture. Argentina subsequently overrode the corrupt judge’s ruling, cleared all of their debt, and are doing just fine now, after a decade of dicking around with the vultures

Greece is still wrestling with the vultures. Since they don’t control their own currency, the EU (Germany, really) decided that they were going to "belt tighten" Greece by implementing austerity measures. Here’s the thing about austerity; when you take money away from people who can’t afford to have it taken away, the whole economy suffers. You can’t shrink the consumer base and think it’s going to work out well for the economy. So Germany, who makes and sells a lot of stuff, austered the shit out of both Greece and Spain. And predictably, there were far fewer people in Spain and Greece who had the money to buy Germany’s stuff. Neither Greece nor Spain have really "recovered" financially, despite the pain that was foisted on the poorest among them. Who could have seen that coming?

Anyway, back to the newly elected government. They were elected on a platform of ending austerity and renegotiating the debt, which is exactly what fucking needs to happen in order for them to ever recover. I don’t think that Merkel is going to be as big an obstacle to all of this, as some people think. She did fuck Germany a little with the loss in sales with the austerity crap she insisted on. No, the big showdown is going to be between the Greek government and the Wall Street vultures. Needless to say, I’m rooting for Greece.

Here’s the thing; you can’t be allowed to do business without accepting any liability for your risks. Some people think that the homeowners, and the governments are to blame for over borrowing. Those people would be republicans, libertarians, or idiots. But I repeat myself. This would be like putting a box of cookies out on the counter and blaming the children who ate them all for being irresponsible. Of course they ate the cookies. They’re not in charge of cookie portioning. Knowing how many cookies should be consumed is not their area of expertise any more than knowing how much money to borrow is the expertise of the borrower. No, that’s the job of the bank. And when the bank is spinning a load of crap telling you that you’re totally within reasonable parameters of debt, you listen to them because that is their area of expertise and you want the money. There is no reason to become a subject matter expert when the experts are telling you that you can have what you want. Creating amortization tables for debt is not something that most people know, or should be expected to know how to do. It’s incumbent on the person with the cookies to determine how many cookies they should give out. I cannot believe this needs to be explained. When a kid pukes from eating too many cookies, the bank needs to clean that shit up. They overloaded Greece with debt, and they should write down their losses.

Not just because it’s the right thing to do, but because it’s the right thing to do for you. Why you? What do you have to do with the debt in Greece, or your neighbor’s upside down mortgage? When Greece or your neighbor are working their assess off to pay the vultures with their money, they’re not putting money into the economy, which puts your job in jeopardy. Let me put it to you another way: paying off the vulture debt means giving your paycheck over to the 1% instead of to the 99%. That’s how this fucking income inequality happens. The dumbest and the greediest among us will have you believe that you need to buck up and bootstrap all of your money over to the people who stacked the deck against you.

That’s bullshit. The 1% will not own a full fifty percent of all of the global wealth this year because they’re all that. This happens when the game is rigged, and anyone with an iota of sense can see that.

So I say, GO GREECE! We need your money more than the vultures do so go get em!  

           

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We’re SO Not #1

Good news Americans! Trickle down economics is finally moving toward it’s intended goal. No no, not the bullshit fantastical republican goal of making everyone prosper, but the real goal of redistributing all of the country’s earnings up to the top 1% and creating bonafide Russian style American oligarchs. If you’re paying any attention at all, you’re aware that wages have remained flat for the past thirty years, while productivity has exploded. From 1989 – 2009, the hourly wage of the median worker grew by 10.1%, while productivity grew by 80%. The lion’s share of that wage growth happened in the mid to late 90s.

Still, we’re the "wealthiest nation in the world" because of all that productivity, but you’re not getting wealthier. Your kids probably won’t get wealthier, but the the wealthy are getting wealthier at an accelerated pace. What does that mean in relative terms? It means that as a nation, we’re getting wealthier but our median per capita income is no longer the highest in the world. Wanna take a guess who’s #1 now? If you’re a republican, still clinging on to the massive amount of bullshit that you’ve been fed for the past thirty years, I guarantee that you’ll never guess. Why? Because the answer demolishes everything you’ve been told about both trickle down economics, and "socialism".

Canada now has a higher average per capita median income than the United States does. Seems like that socialist health care hasn’t turned Canada into an impoverished post apocalyptic hellscape after all. The per capita median income in the US hasn’t changed at all since 2000 (when adjusted for inflation). The per capita median income in Canada has gone up twenty percent over that same period.

income

What happened? I thought the Bush/ Obama tax cuts on the top earners was supposed to create a utopia of economic prosperity, what with the trickling down and all? How long am I supposed to wait for my prosperity? It’s been thirteen fucking years? Where’s mine?

Why is this happening? From an article in the New York Times yesterday;

Americans between the ages of 55 and 65 have literacy, numeracy and technology skills that are above average relative to 55- to 65-year-olds in rest of the industrialized world, according to a recent study by the Organization for Economic Cooperation and Development, an international group. Younger Americans, though, are not keeping pace: Those between 16 and 24 rank near the bottom among rich countries, well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

But that’s not all;

A second factor is that companies in the United States economy distribute a smaller share of their bounty to the middle class and poor than similar companies elsewhere. Top executives make substantially more money in the United States than in other wealthy countries. The minimum wage is lower. Labor unions are weaker.

And because the total bounty produced by the American economy has not been growing substantially faster here in recent decades than in Canada or Western Europe, most American workers are left receiving meager raises.

And;

Governments in Canada and Western Europe take more aggressive steps to raise the take-home pay of low- and middle-income households by redistributing income.

Janet Gornick, the director of LIS, noted that inequality in so-called market incomes — which does not count taxes or government benefits — “is high but not off the charts in the United States.” Yet the American rich pay lower taxes than the rich in many other places, and the United States does not redistribute as much income to the poor as other countries do. As a result, inequality in disposable income is sharply higher in the United States than elsewhere.

But we’re doing the opposite in the US. We’ve made an education harder to obtain by allowing colleges to jack up tuition exponentially faster than the rate of inflation. We’ve kept the minimum wage so low that it’s worth (in terms of buying power) about 60% of what is was worth in 1968 when it was at its peak. We keep cutting social safety nets because we’re told that we need to in order to save our economy, while countries that spend more money on helping the poorest citizens are passing us by in median income.

One big country in Europe is also experiencing stagnating wages; Germany. Why? Because Germany exports a lot of crap and in order to keep the cost of their crap low, they’ve taken a number of measures to keep wages down. They’re trying to compete with the sweat shops in China. Why? Because as long as you can buy cheap crap, it’s easier to maintain the illusion of wealth. When you can buy a blu ray player for $50 bucks, you’re not really poor because you don’t feel the poorness. 

The stagnating wages in the US and in Germany aren’t an accident or an unintended consequence. This is happening by design. And while republicans are telling you that "government can’t do anything", they’ve created a government that is robbing you blind.

I created this meme last year;

Tax Distribution copy

I spent days getting the corporate subsidy numbers together. I left out a metric ton of corporate subsidies because I wasn’t confident I was able to find all of them. They’re insidiously buried in thousands of bills that ostensibly have nothing to do with the industry that the bill is about. I know I didn’t get all of the big agra subsidies, or the big pharma subsidies so I left them out. I didn’t include these subsidies either since they come out of your state taxes, rather than your federal taxes;

Walmart

I used the smallest number I could fine in every category I listed. I explained how I came up with these numbers ad nauseam and yet, I got more push back for this meme than anything else I’ve ever said or posted. I wrote about a report that Oxfam published a few months ago, where they found that the 85 richest people in the world possess the same wealth as the bottom 3.5 billion people. I write about income inequality and how the game is rigged a lot. And every time I do, I get push back from a small minority of people that just don’t want to believe what their own lying eyes are telling them. Fortunately, these people are "special" (by special, I mean touched). They’re a small minority. Only 30% of Americans think that we’re on the right path. This number isn’t low because of Obama, it’s been low for fifteen years now. The most disengaged and uninformed American knows that something is horribly wrong here, even if they don’t specifically know that the Dow has doubled since the economic collapse, while we still have a much higher than ideal unemployment rate.

Our poor are more poor than the poor in other countries. From the Times article;

More broadly, the poor in the United States have trailed their counterparts in at least a few other countries since the early 1980s. With slow income growth since then, the American poor now clearly trail the poor in several other rich countries. At the 20th percentile — where someone is making less than four-fifths of the population — income in both the Netherlands and Canada was 15 percent higher than income in the United States in 2010.

Our rich are much richer than the rich in most other countries;

By contrast, Americans at the 95th percentile of the distribution — with $58,600 in after-tax per capita income, not including capital gains — still make 20 percent more than their counterparts in Canada, 26 percent more than those in Britain and 50 percent more than those in the Netherlands. For these well-off families, the United States still has easily the world’s most prosperous major economy.

Fortunately, more and more Americans are realizing this because they see it every day. I’m going to keep writing about this because I believe that the income inequality in America is going to be our downfall. I’m going to keep pointing out the thousands of ways the game is rigged against you, and I’m going to look forward to the day when I don’t get any stupid comments from the touched ones that can’t accept the reality in which they live because the Ayn Rand fantasy in their heads is much more appealing than actually doing something to improve their lot in life.

The game is rigged. It’s rigged, it’s rigged, it’s rigged and you’re on the wrong side of the rigging.       

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