The U.S. Middle Class Is Being Wiped Out:The U.S. Middle Class Is Being Wiped Out

[Misthos]

Quote from MarketMasher:

After WWII people had money. It took 1 wage earner to take care of a household.

Then it took 2 wager-earners.

Then jobs went overseas because it was better for us.

Now the government has to keep hiring because the private sector was given tax breaks to move to cheaper labor offshore. This is efficient. For those in charge.

Now people are complaining about the way things are structured - that the incentives are to move jobs overseas, leaving only the government to hire the slack it creates.

These complainers are anti-capitalist.

In an efficient, profit-maximizing world, ALL labor would be from overseas.

Would you like Purina or Alpo tonight?

You want capitalism? Liquidate the Fed's balance sheet of 1.5 Trillion of crap loans and raise rates above inflation. Mark to market - everything. Remove all stimulus from the economy.

Then we'll see what capitalism looks like.

Interesting that last year the federal budget deficit was about 10% percent of gdp, yet overall, 2009 gdp was - 2.4%. Imagine what it would have been without the 1.4 trillion in deficit spending.

 

[Martinghoul]

Quote from Misthos:
Do you have any idea of the size of an ostrich omelet? It can feed a family of four!

In the post armageddon collapse, my ostrich will be the envy of the neighborhood.

I hear ostriches can get quite violent and they kick hard... If you train your ostrich to defend you and yours in the post armageddon collapse, you might just kill two birds with one stone .

 

[dtan1e]

Quote from Martinghoul:

I hear ostriches can get quite violent and they kick hard... If you train your ostrich to defend you and yours in the post armageddon collapse, you might just kill two birds with one stone .

f***, this world has some really funny people!!!

 

[PocketChange]

One part of an overall solution strategy is to require all government purchases to be 100% made in the USA. currently products qualify if 51% of the cost is American. This is a huge loophole and sham allowing cheap imports to be marked up over 51% and relabled as made in America.

Sure our hammers will cost $278 and the general cost of all purchases will increase 200% but the money will circulate and change hands between Americans.... creating jobs.

The Govt has to take action to curb independent contracting. As an employer I much prefer to 1099 workers then hire workers. If I hire them I have a plethora of taxes and liabilities to manage versus paying a service invoice. Service are generally sales tax free in most states and no unemployment claims, insurance.

Contracting workers outside of the US is even more advantageous to my company but in the long run we are robbing peter to pay patel.

The common sense solution is to make as much money circulate and exchange hands locally. Until this is the norm again the ditch will keep getting deeper.

The next fix is to eliminate settlements between the government and corporations. They are essentially bribes because a corporation can not be incarcerated and its officers and directors are at the mercy of lawyers who just bleed everything and grease the wheels.

If the government brings any criminal charge the corporation should be placed in a receivership, dissolved and liquidated. They can simply resume under a new name.... ie BP 2 with what ever assets remain. The main thing is it allows competitors to pick up assets and employees at discounts to become stronger while properly punishing a criminal enterprise by essentially a death and dissolve penalty. Much rather have all the pain at once upfront than drawn out over 30 years like the Exxon settlements and big tobacco settlements.

GS committed fraud and should have been dissolved and broken up. If these penalties are severe then the shenanigans will stop.
One strike and your out... After all these are not living beings but artificial entities designed to shield personal liability. If these entities are committing crimes just kill it and let it start over.

The last big glaring hole are these banking charters... they are a sham. Since 2002 banks are able to use deposits to trade backed by the full force of the US treasury and FDIC insurance leveraged up to 30/1. Banks can not lose trading any martingale scheme... Their margin call is a bail out.. an unlimited loan at insignificant interest but in reality this conspiracy between the banks, SEC, FDIC, Treasury has changed the dynamics of the open and free market.

No bank is going to get back in the lending business as long as they can trade risk free with virtually unlimited funds. The market price action will always follow their positions because they have no breaking point.

If your going to provide such preferential treatment to these bank charters than place both a transaction tax and a tax on their trading profits at 90%. This is worse than an insider game... Your playing high stakes poker against a table of opponents with unlimited chips.
In the old west you would get up and shoot them for being cheats.

 

[achilles28]

You guys have idea how much Greek debt was held by commercial banks, as a percentage of total debt?

 

[Martinghoul]

Quote from achilles28:
You guys have idea how much Greek debt was held by commercial banks, as a percentage of total debt?

Which country's commercial banks? Total stock of Greek debt outstanding is arnd €300bn, including bills, if I remember correctly. So if you look at the aggregate balance sheet of the world's banking systems, the percentage should be insignificant.

 

[MarketMasher]

Quote from Misthos:

You want capitalism? Liquidate the Fed's balance sheet of 1.5 Trillion of crap loans and raise rates above inflation. Mark to market - everything. Remove all stimulus from the economy.

Then we'll see what capitalism looks like.

Interesting that last year the federal budget deficit was about 10% percent of gdp, yet overall, 2009 gdp was - 2.4%. Imagine what it would have been without the 1.4 trillion in deficit spending.

It appears that you are a bit thick. However, not to worry, as I was also before someone explained it to me over beers.

Fed does QE (more money) -> gives cheaply to member banks (who use profits to give bonuses and lobby monies) -> lobby for agenda/buy Treasuries -> you pay tax/gov't borrows to pay interest in Treasuries to member banks.

That is capitalism.

 

[Misthos]

Quote from MarketMasher:

It appears that you are a bit thick. However, not to worry, as I was also before someone explained it to me over beers.

Fed does QE (more money) -> gives cheaply to member banks (who use profits to give bonuses and lobby monies) -> lobby for agenda/buy Treasuries -> you pay tax/gov't borrows to pay interest in Treasuries to member banks.

That is capitalism.

You misunderstood my point.

Look I agree with you - it's crony capitalism. I do not support what has been happening so far. My argument is that if we install pure laissez faire capitalist policies - the system is toast.

What you describe is not true capitalism. It is socialism for the few - the profits are privatized, the losses are socialized. It is the current system.

 

[1prometheus]

It is not just wage arbitrage but a general price level arbitrage. 8 years ago I was told by and Indian (getting trained by the very USA workers he would soon displace when back in India) that in India $1 a day was more than enough to purchase all the food one needed.

These low wages DO NOT mean the Indian workers are in poverty. They actually do quite well because the general price level is so low.

What we in fact need is a huge, huge fall in the price level.

The debt bubble has badly, badly distorted the American economy beyond what most people seem to fathom.

But of course we can't have falling prices, because the debt pyramid-scheme economy (which replaced the productive economy) is based on rising asset prices. Perhaps Keynes was right after all?

 

[PocketChange]

$1 a day is rs 45. Street Food in India is rs 5 - 10. Fresh produce is cheaper. $1 a day can feed a family of 4 but still at impoverish conditions.

Call Center operator start at rs 4000 and with experience earn 8000-12000 a month. Engineers start at 8000 and can earn 25000

These wages are not poverty level wages but are wages establishing India's new middle class. In the US $500 a month won't cover benefits... actually can't even hire the 12 year old baby sitter next door to watch your kids from 3 - 5.

If you want to open a call center in the US you pay $25K to start and up to $45K. It's close to a 20/1 advantage to outsource typical middle class jobs overseas.

Call Centers, Medical billings, collections, inside sales, support... Even lawyers were being sacked for $12 an hour offshore attorneys until they passed regulations to protect their industry.

Quote from 1prometheus:

It is not just wage arbitrage but a general price level arbitrage. 8 years ago I was told by and Indian (getting trained by the very USA workers he would soon displace when back in India) that in India $1 a day was more than enough to purchase all the food one needed.

These low wages DO NOT mean the Indian workers are in poverty. They actually do quite well because the general price level is so low.

What we in fact need is a huge, huge fall in the price level.

The debt bubble has badly, badly distorted the American economy beyond what most people seem to fathom.

But of course we can't have falling prices, because the debt pyramid-scheme economy (which replaced the productive economy) is based on rising asset prices. Perhaps Keynes was right after all?