If This Doesn't Make You Angry Enough, You're Willfully Allowing The Death of the Middle Class To Continue...

There's another chart or three detailing just how f-cked a majority of Americans are right now in this ongoing - yes, this ain't over kids - recession.

Here, take a look at this (via the Washington Post):

The dark blue line represents what we'd consider the Middle AND Lower Class here in the U.S.  Essentially the botton 90 percentile of families based on real average wealth (with wealth defined by income, equity, et al).  Starting off at the post-WWII spot of 1945, you'll see the three tiers of income - Bottom 90, Top 10, Top 1 Percent - all going upward during the 1950s and even improving for the Bottom 90 in the late 1980s and 1990s (when Reagan's income tax reforms kicked in, property values went up, new technology jobs started).

Up until about 2005-06, near about the start of the Great Recession that we're still in.

Everybody dropped.  Every market got hit - stock market, commodities, property market - and there was a massive downturn.  It looks like the downturn took a two-year, three-year dive before flattening out for the three years following... except for the 1 Percenter track.  Where the Bottom 90 AND the Top 10 Percenters flattened, the 1 Percenters went up, and went up sharp.

What the hell happened there?  Referring to that Washington Post article:

...The problem was that middle class doesn't own that much in stocks, but went into debt to buy lots of housing. So the housing crash turned their biggest financial asset into an albatross, wiping out their equity but not their debt. And the housing recovery hasn't done much to fix this, since it's struggled to move beyond the "nascent" stage.

Stocks, meanwhile, collapsed during the crisis, but came back soon thereafter. The middle class, in other words, missed out on the big bull market in stocks, but not on the even bigger bear one in housing. That's why the recovery has restored so little of the wealth that the recession destroyed. In fact, the bottom 90 percent have actually kept losing net worth the past few years, in large part, due to rising student loan debt...

Not all recoveries were made equal: the stock market flourished, the investment population flourished, the rest of us got screwed with debt up to our ears.

One thing I keep seeing from the hate-the-poor tweeters and Facebook posters on the Intertubes is how it's the poor people's fault they don't invest in the obviously-successful, will-always-go-up stock markets.  I keep replying when I can to let them know that not everyone can play the market: even a MENSA member like me can't make heads or tails of stock profiles and investment surveys.  Every poor person simply can't afford to pay into stock ownership, no matter how smart they are, because stocks themselves get expensive.  And most middle-class Americans didn't have much free money on hand to dabble either.  If the middle class invested in anything, it was in something tangible and focused: their homes, and they left the stock market stuff to their pension plans and 401(k)s.  For the 1980s and 1990s, the system worked after all: property values increased, and most Americans thought themselves well-off regardless of how much wealth they really controlled.

Which leads to the second chart from that Post article:

The Bottom 90 Percenters - 90 percent of ALL Americans - saw their percentage of the nation's overall wealth drop from over a 1/3 (37 percent) of everything down to less than a 1/4 (23 percent) of everything.  We never really had all that much, but we had enough to spread around and feel secure.  Now 90 percent of us aren't getting as much of the pie as we used to get.

Meanwhile, look at the Top 10 Percenters.  Sure, the 10-to-1 Percenters dropped as well, but not as sharp as the Bottom 90.  And the Top 10-to-1 holds 35 percent of the share.  Add that to the Top 1-to-.1 Percenters who hold 20 percent, and add again to the .1-to-.01 Percent (the REALLY rich) also 11-12 percent and then add the .01 Percenters themselves (the UBER rich) at 11 percent share and you've got 77 PERCENT of total wealth held by the Top 10 Percenters.  The Top .1 Percenters at roughly 42 percent - nearly double of 90 PERCENT OF ALL AMERICANS - of all total wealth.

We haven't seen income disparity like this since the days of the Great Depression, when the poor were REALLY poor and the rich were REALLY rich.

And this recession - where wages for the middle classes and the poor have stagnated for years, even more than a decade by now - isn't over yet.  Debt for lower-income families- for even what we'd still consider the middle class - remains crushing and getting worse.  We've taken some of the debt woes from healthcare finances out of the equation but not by much, and we're looking at increased debt woes from higher education costs.  Piling on-top of that is the fact our housing industry hasn't improved and the foreclosure problems - with banks still bad-faith actors - remain a threat.

So what if anything are we doing as a nation about the massive personal debts - mortgages, college costs, other costs - we have threatening what's left of our middle class?

Nothing.  Not a goddamn thing.

Angry yet?

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Congress Still Not Getting It, Pt. DCCIV

that's the Roman numeral for Pt. 704, by the by, yeah I'm exaggerating but I'm trying to make a point here...

It took some doing, but the Senate passed a resolution today to get some benefit extensions to the long-term unemployed:

The move means that lawmakers are now wrangling about whether -- and how -- the cost of the $6.4 billion program should be offset.

Senate Majority Leader Harry Reid told reporters Tuesday afternoon that the White House has indicated it will "run the traps" on "reasonable" proposals to pay for the jobless aid extension but that Democrats believe the program should be extended without offsets. His Republican counterpart, Senate Minority Leader Mitch McConnell, said "there may be a way forward here" if Democrats allow some GOP amendments to be considered.

The bad news: it's for just a measly three months.  We're talking about long-term unemployed who are having a difficult time finding work after six months no wait two years no even worse five years of getting overlooked by HR departments for being too old, too overqualified, too dusty.

The worse news: the House - oh yeah, them - still has to take up this issue.

If the final bill does pass the Senate, it's not clear that the GOP-led House will take it up. House Republican leaders have painted the current proposal as fiscally irresponsible.

In a statement, House Speaker John Boehner said that any extension of the program must be paid for and contain House-backed job creation plans.

"One month ago I personally told the White House that another extension of temporary emergency unemployment benefits should not only be paid for but include something to help put people back to work," he said. "To date, the president has offered no such plan."

By the by, the "House-back job creation plans?"  To ease regulations on onshore and offshore oil and gas drilling (with no guarantees it will create more jobs), to cut regulations overall, and cut taxes on small businesses that economists note won't do much to encourage any increase in hirings.

And when Boehner claims Obama isn't offering any jobs bill, just remember Boehner is lying through his ass.

The worser news: the most obvious way to pay for this - reforming the tax code to close tax loopholes for the uber-rich, or raising the tax rate on capital gains which most rich people live off of and which rates are lower than income tax rates - will be off the table because God Help Us the modern GOP will NEVER raise taxes as long as Grover Norquist and the Club for Greed crowd are around to throw their goddamn hissy fits.

There's a good amount of talk about how income inequality and GOP failure to take unemployment seriously is making the Republicans look bad.  That's not the issue.  The issue is that GODDAMMIT we need to make job creation a top priority in our nation, and that involves getting government (Congress, HELLO WAKE UP) to pass the economic programs we know create jobs: construction and bridge repair, to top the list.  But if we're stuck with a House GOP that refuses to do a damn thing to help the lower classes (this is including what's left of the middle class), then by all means let's make the Republicans look as bad as they deserve, so that when November 2014 rolls around we can get Americans to vote the bums out and vote in people who WILL do something about creating good jobs at good wages.

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Presidential Character: Week Thirty-One, the Peter Principle Applied to Presidents

While this year-long attempt at documenting Presidents relies on James David Barber's seminal work Presidential Character, I do rely on the occasional outside reference to highlight a point.

For example, bringing up the Peter Principle.  To wit:

...in a hierarchy every employee tends to rise to their level of incompetence.

Now, an elective office like the Presidency doesn't work as a hierarchy.  As a rule, people are not hired and promoted upward into the Oval Office (well, outside of the Vice Presidents on those rare painful exceptions).  Thing is, people vote for experience: they vote for political figures, military leaders, governors and captains of industry because such candidates have proven themselves in some fashion.  So in a way, a President can be a man who's done wonders at a lower level of prestige and excites the populace into thinking they can do just as well as Leader Of the Free World.

Herbert Hoover was just such a man by 1928.  One of the self-made success stories of the early 20th Century: became a mining engineer in youth, then a mining consultant and leading business figure on the global stage, organized American evacuation from Europe on the outbreak of World War I and turned right around to lead relief effort and food aid for war-stricken Belguim, when the United States entered the war he was put in charge of food administration and effectively managed homeland rationing to ensure priority food supplies got overseas, and he oversaw relief efforts for post-war Germany and war-torn Russia (during the Bolshevik takeover) which were suffering massive famines.  By 1920 Hoover was considered one of the greatest humanitarians the world had seen.

Actively becoming a Republican when politics proved the next challenge in his life, Hoover was placed in Harding's Cabinet as Secretary of Commerce.  Taking control of what was a minor office at the time, Hoover used his initiative to establish a department dedicated to business growth and control of economic affairs.  When confronted with a problem that was lapsing in someone else's Cabinet, Hoover worked it so that Commerce became responsible for its oversight and fixes.  Where previous Presidents Roosevelt, Taft and Wilson were adversarial to corporations, Hoover - being a businessman himself - preferred the "soft power" approach of making business leaders allies instead of enemies.  He worked with banks and savings and loans to rework home mortgaging to promote home ownership to Americans, increasing home construction.  It all culminated in one massive economic boom of the Roaring Twenties.

Hoover was one of the incorruptible men under Harding's administration, and became one of the indispensable men under Coolidge's.  When 1928 rolled around and Coolidge refused to run for another term (well within the unofficial two-term limit), Hoover was practically the only choice the Republicans had for the Presidential nomination.  Despite personal concerns from Coolidge - they apparently didn't get along, the Passive-Negative Coolidge finding Hoover's aggressive personality abrasive at best - Hoover got the nom, easily won against the Democratic challenger Al Smith, and settled into the White House in 1929 under the belief that "no one can rightly deny the fundamental correctness of our economic system."

1929 is traditionally the year the Great Depression started.

There's still an argument about what caused it.  Considering the size and scope of what that Depression was, there had to be a variety of factors culminating in one perfect storm of an economic disaster.  Also, put a hundred economists into a debate room and you'll get a hundred different answers to the simple question "what caused it?"

It could have been any of these things.  The failure of Midwestern farms leading to foreclosures, and then bank failures in the wake of that.  The U.S. government commitment to the gold standard, which kept interest rates too high and limited monetary policy.  Wealth disparity during the 1920s which fed money into investments for the rich rather than spending income for the poor and middle classes.  Massive personal and financial debt across the board, another reason for the bank failures.  Land speculation, especially in Florida (hi again!), and a housing bubble related to that.  Growing unemployment caused by a decline in population numbers due to fewer families and fewer immigrants, which paradoxically made it harder for the flesh-and-blood unemployed to find jobs (it has something to do with the lack of demand in a growing consumer economy).

The infamous Stock Market Crash of October 1929 isn't viewed by the experts as a cause, but a symptom exposing to the world just how bad the economy was getting and turning the economic mood from positive to negative.  (Also, anyone else notice how a good number of those causes are similar to the problems we're facing today...?)

Almost one thing most of the economists would agree on was that the Great Depression wouldn't have been as bad as it had gotten (to some economists, in 1929 it was just a regular recession or panic) if the response to it had not been so badly bungled.

This is where Hoover's personality traits become part of the problem.  This is where being an Active-Negative at heart turned Hoover from one of the 20th Century's greatest men into one of history's greatest failed Presidents.

The defining trait of an Active-Negative President is Uncompromising.  The A-N operates by certain principles or beliefs that cannot bend in the face of "enemies" or those opposed to his work.  To quote Barber about A-Ns:

But the most pervasive feeling in the Active-Negative makeup is "I must."  He is a man under strict orders, required to concentrate, to produce, to follow out his destiny as he sees it.  At any given moment, he feels bound by what he has already undertaken, already promised, already committed...  He finds it hard even to see alternatives to the course he "must" follow, much less change that course when it proves unproductive...  From the inside... the Active-Negative type generates tremendous energies for political domination.  From the outside, he seems at first extraordinarily capable and then extraordinarily rigid, become more and more closed to experience, including the advice of his ardent allies... (p. 82)

Hoover's "I must" moment was the handling of the Depression.  Previous experience as a businessman and Commerce Secretary told him how to react (not act) to the economic crises of 1929: Let the market correct themselves.  Let the businesses fail that are going to fail, and the industries will recover on their own.    Hoover's Treasury Secretary Andrew Mellon infamously deemed that to "liquidate labor, liquidate stocks, liquidate the farmer, liquidate real estate..." and that it would make people "work harder and live a more moral life."  However, that meant one thing: liquidate everything in the economy because too many factors were failing all at once.  It also failed to consider the possibility that there was nothing in the economy people could work harder for, as unemployment went up and kept going up during Hoover's tenure.

In this regard, Hoover was a lot like other A-N Presidents - Van Buren, Cleveland, and Buchanan are good examples - when faced with a financial panic.  They too preferred to let the markets correct themselves.  And under normal circumstances, Hoover wouldn't have been far wrong: a brief recession in 1921 corrected itself by letting liquidation do its thing and redistribute capital.  Hoover's failing was thinking that all this economic panic was came from the financial markets re-adjusting itself.  It never occurred to him that parts of the economy were literally disappearing and never coming back.

Hoover instead focused on keeping the federal government solvent: he abhorred the trending Keynesian theories of government spending to "buy out" the economic crisis, and focused instead on keeping the budget balanced (again, sounds a bit familiar don't it).  The Depression cut into those attempts to budget, however, making Hoover even more reluctant to create massive spending projects to fix the Depression first.

This is partly where the Peter Principle comes into play as well.  Hoover, once one of the most competent men on the planet - great organizer, driven, focused on tasks and finishing them - became as President one of the most incompetent leaders at a time of need.  It wasn't so much that Hoover failed to respond - he actually did respond, a good number of government programs started between 1930 to 1932 formed the basis of much of the New Deal of the 1930s, famously with the Hoover Dam construction project - it was that he failed to organize on the scale that the crisis demanded, and for a man once driven to succeed he suddenly looked like he was just sitting there.

His previous jobs - engineer, mine owner, businessman, relief organizer, Commerce Secretary - were ones that did not necessarily require him to "think outside the box" as it were.  Respond to a problem and fix it with the tools at hand (not considering new tools may need to be invented).  Manage something already working and making sure it stays working (keeping the engine going while ignoring the fact the train is charging off a cliff).  Reforming government and adding regulations where needed (but drawing the line at where the private sector must remain free of the public sector).

Being President means making decisions, something that Hoover had done often before and usually successful at it.  But being President also means creating compromise solutions when the situation demands it, making decisions that a President will be uncomfortable making yet would recognize as necessary (an Active-Positive, for example, making a deal he knows will suck for himself or his personal allies but will make life easier for 100 million others).  And in Hoover's case, it meant making decisions (making the public sector more aggressive in job creation, for example) he wouldn't - and didn't - make.

As President, he was faced with a situation - the Great Depression - the size and scope of which was larger than anything seen before, especially in terms of job losses and mass unemployment.  Hoover was being asked by the desperation of the times - the Bonus Army marching on Washington for financial relief, the failure of businesses and banks to reinvest capital to spark a stalled economy - to make the hard decisions and compromises that could have relieved the crisis.  Asking an A-N President like himself to "think outside the box" and consider other economic models as possible fixes would have been akin to asking a whale to try walking on land instead of swimming in water.

Basically, Hoover had gotten promoted to a job he wasn't suited for.  The Presidency was something outside of his temperament.  If he had been Treasury Secretary or still Commerce Secretary in 1929, and the President was an Active-Positive sort calling on Hoover to solve some of the economic woes within his range of influence, I wouldn't doubt that Hoover would have resolved the matter within that term: doing so on the orders and direction of a man more capable of making the decisions Hoover couldn't make.

And we wouldn't have called homeless towns "Hoovervilles".  Hoover's reputation as a humanitarian would have remained intact: the image of him feeding children replacing the images of starving families in the history textbooks.

Remember the evil banker character from John Ford's Stagecoach?  At one point, he rails against the federal government and insists everything would work if there was a businessman in charge of government.  It was Ford's (and Hollywood's) rude judgment on the Hoover administration.  Which wasn't entirely unfair, but harsher than it deserved to be.

(P.S.: I wouldn't put the Smoot-Hawley Tariff Act on Hoover's shoulders.  That was more a protectionist effort by Congress... which essentially started a trade war/boycott with the rest of the planet that made the Great Depression worse, thanks a bunch Smoot and Hawley)

Next: For this President, I might have to make two separate entries for two thematically different historical eras.

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The Real Scandal In DC: No One Cares

For all the yelling and screaming we've heard about Benghazi... for all the yelling and screaming we're gonna hear about the IRS investigating Tea Party groups... the real problem in Washington DC is that no one in power really gives a crap about the long-term unemployed and even the lucky-for-now employed average Americans struggling through this austerity-cramped "recovery".

To wit, from Derek Thompson at The Atlantic:

On April 24, Minnesota Sen. Amy Klobuchar scheduled a hearing. Fun story, right? A hearing in Washington is like a fern in the rainforest. But this hearing was notable for both its subject and its attendance. It was a meeting about the most important economic crisis facing America today: long-term unemployment. At 10:30am, the hearing began. She was the only attendant...I have two stories for you about Washington and the economy. Both true. But very different.The first story is called: How Washington Saved the Economy. You might begin in 2008, when the Federal Reserve went on an unprecedented spree of asset-buying to un-gunk the banks, push down interest rates, and spur investing in mortally weakened economy. This was followed, in 2009, with an equally historic stimulus package aimed at filling holes in state budgets and sending cash back to families and businesses... There is little question that monetary and fiscal stimulus blunted the recession -- and saved the economy.The second story is called: How Washington Permanently Scarred the Labor Market. You might begin this story in 2011, when Congress (led by Republican obstructionism) embarked on a historic quest to crush deficit spending by any means necessary. Hold the economy hostage over the debt ceiling? Check. Kill the American Jobs Act while scheduling a too-awful-to-be-a-real-law sequester? Check. Allow the too-awful-to-be-a-real-law sequester to become a real law? Checkmate... The deficit fell fast. As unemployment ebbed, the ranks of long-term jobless calcified, creating two separate job markets. One broken market for people out of work for more than six months. And another slowly healing market for everybody else. But the combination of a thermostatic recovery and a deep aversion to stimulus crushed any hope that the long-term unemployed would get the help they needed. Long-term unemployment isn't special just because it's longer; it's special because it's self-perpetuating. Skills atrophy, networks dry up, and employers discriminate, creating a vicious cycle of joblessness that can't be cured by normal economic growth...

Enough to make one rage, don't it?  Pity of it is, there's no lobby group for unemployed people.  It costs money to hire a lobbying firm: unemployed people by sheer fact of no job/no money means they can't afford one.  Meanwhile, banks and anti-union business owners and rich people can afford lobbyists by the limo load, meaning they can drown out the local echo chamber to their hearts' content.  Without dedicated political activism in the place where it really matters - the halls of Congress - the unemployed are screwed.

To the seven people reading this blog: Swear upon your personal honor to find and support any and all political candidates pledged to pass a jobs stimulus bill campaigning for 2014.  Swear it!  Not to me.  Swear it to the millions of unemployed and underemployed Americans who need our help.

.

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The Difference Between a Recession and a Depression

The truism is that when your neighbors lose their jobs, it's a recession: when YOU lose your job, it's a depression.

The last 5 years, however, has kind of skewed that joke.  Which really isn't all that funny when you consider the hell you and your neighbors are going through trying to find solid work.

The normal turn-around on losing a job and finding a new one tended to be less than six months (if you couldn't find anything in six months you were looking in the wrong places).  This prolonged economic downturn, however, saw a turn-around rate averaging a year, maybe more.  I personally knew of fellow unemployed who were struggling to find even part-time employ (no benefits, not enough income) for more than a year.

I personally struggled to find full-time employment for more than 4 years.  Part-time work came and went and was hard to find (and keep): for all of 2011 I had no employment at all.  And I was putting in for five to ten jobs a week.  The simple reason was that there were few jobs being created in the first place... with each new opening getting swarmed with 60 to 150 applicants within two days of the posting.  I once handed my resume to an HR person speaking at the Career Center for a position that my research background fit to a tee that the HR person mentioned just opened the day before... only to have her tell me she'd already gotten 75 applicants for that spot.

So, from where I was sitting - where my family was coping along with me, doing what they could to help out, and all the burdens they've had to bear - this Great Recession felt like a Depression.

This is a very long-winded setup for the good news.  I finally found a full-time job.  They really liked my resume: they really liked me.  I'll be doing what I like: helping people find books and research materials and getting into computer usage.

I would joke - and I have, elsewhere - that our long national nightmare... is over.  Except, well, it's not over.

We're still a nation mired in a jobless economic recovery.  Unemployment may be hovering around 7.9 percent (official number: the unofficial unemployment numbers are always a lot worse... and always more accurate) which is better than the 10 percent and worse that it had been at the deepest part of the 2009 valley, but that's not normal.  Unemployment should ever be around 4 percent for the economy to be chugging along just fine: an unemployment rate of 2 percent is a strong economy.

We need more action from government to spur businesses to use their profits to grow and hire on more people.  We need to stop the wave of cutbacks in the public sector which is hurting that job sector: if our states, counties, and federal government weren't cutting back on their workforce, the unemployment rate would be a full percent less than it is now.  We need a jobs bill.

Meantime, to all my fellow job-seekers.  I may be employed but I stand with you.  Good luck finding work.  Really good luck to you all.

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Current Political Mood

I'm just not inclined to think much about politics these days.

Even with the sudden uptick in the Occupy Wall Street news - and the Far Right blowback to something that can successfully counter their Teabagger movement - for some reason I'm neither thrilled nor contemplative.

There's still a lot of protesting and military action going on in the Middle East for example.  Meh.

There's the economic meltdown in Europe still happening in slow motion.  Meh.

There's the anti-voting BS the Republicans are attempting at the state level to suppress minorities, the poor, and college-age voters.  Meh.

Just not feeling connected to the world at the moment, that's all.

Too much outrage burn-out?  Too much stress coping with unemployment?  Dunno...

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