From Forbes.com:
With interest rates on federal student loans set to double on July 1, Congress is considering new legislation that would prevent the increase. But there’s a problem—no one seems to know how much the student loan program costs in the first place.
According to the official accounting ledgers, the federal government earns tens of billions of dollars in profit from running the student loan program. But economists, including those at the Congressional Budget Office (CBO), strongly disagree.
Government accounting standards dramatically underestimate the cost of student loans, and Congress appears happy to go along...
But student loans are not the only government programs with costs obscured by faulty accounting. Federal loan programs for homeowners, farmers, and businesses are all priced in ways that disregard market risk.
The biggest offenders are public pensions. Whereas the federal government treats its student loan assets (the expected loan repayments) as guaranteed even though they are uncertain, state and local pensions treat their liabilities (the future pension payments they must make) as uncertain even though they are guaranteed. Both errors have the effect of making costs to the government appear lower than they really are.
Public pensions are infamous for claiming they can lower their costs simply by taking on more risk with their investments. Fair value accounting exposes this fallacy. Pensions are not reducing costs by taking more risk. They are shifting costs away from today’s taxpayers and on to future ones, who must pay the difference if the risky investments fall short.
Fair value accounting is sometimes seen as a partisan issue, with Republicans in favor and Democrats more skeptical. Among academic economists, however, there is no serious debate. The CBO, the Federal Reserve, and even the editorial board of the Washington Post agree that the government should value its assets at market prices.
Fair value accounting is a prerequisite for a healthy debate over any federal credit program. Rather than continue to conceal costs—in a student loan bill or any other spending measure—Congress should mandate fair value accounting across the board.
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Link: http://www.forbes.com/sites/realspin/2013/06/20/how-government-uses-accounting-tricks-to-hide-the-student-loan-swindle/
Sunday, June 23, 2013
Sunday, June 16, 2013
Suddenly, Retiree Nest Eggs Look More Fragile
From the New York Times online:
...the median financial net worth of American households of all ages, excluding homes and cars, is $10,890, as estimated by Edward N. Wolff, an economics professor at New York University.
For households headed by those in the 55-to-64 age bracket, it’s $61,300. A large majority of Americans are in far worse straits than the millionaire households.
Some readers asked how to protect their financial nest eggs. Others observed that in this economy, saving more and spending less wasn’t always possible. I’ll return to challenges like these in future weeks.
But first, it’s worth examining some of the systemic issues that led to this state of affairs. My previous column didn’t directly address the big picture — and that picture is troubling.
As Jack VanDerhei, research director of the nonprofit, nonpartisan Employee Benefit Research Institute, puts it, “very large numbers of people are at risk of running out of money in retirement.”
In a recent study, the institute found that roughly 44 percent of households in the baby boom and Gen X generations — those born from 1948 to 1975 — were likely to run short of cash in their retirement years.
And forthcoming research from the institute finds that low bond yields are worsening the situation. These low rates are unlikely to continue indefinitely; global markets last week were in disarray over speculation that the Federal Reserve might take action that could lead to higher rates.
But if current low yields did persist indefinitely, Mr. VanDerhei has found, 56.7 percent of boomer and Gen X households would find themselves at risk of running through all their assets in their lifetimes.
Many people sense that they’re heading toward danger.
In an October survey by Pew Research, 38 percent of adults said they were “not too” or “not at all” confident that they would have enough income and assets for retirement, up from 25 percent in late February and March of 2009.
Strikingly, more than half of those in their late 30s were in the not-confident categories, compared with only about one-third of those in their early 60s...
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Link: http://www.nytimes.com/2013/06/16/your-money/suddenly-retiree-nest-eggs-look-more-fragile.html
...the median financial net worth of American households of all ages, excluding homes and cars, is $10,890, as estimated by Edward N. Wolff, an economics professor at New York University.
For households headed by those in the 55-to-64 age bracket, it’s $61,300. A large majority of Americans are in far worse straits than the millionaire households.
Some readers asked how to protect their financial nest eggs. Others observed that in this economy, saving more and spending less wasn’t always possible. I’ll return to challenges like these in future weeks.
But first, it’s worth examining some of the systemic issues that led to this state of affairs. My previous column didn’t directly address the big picture — and that picture is troubling.
As Jack VanDerhei, research director of the nonprofit, nonpartisan Employee Benefit Research Institute, puts it, “very large numbers of people are at risk of running out of money in retirement.”
In a recent study, the institute found that roughly 44 percent of households in the baby boom and Gen X generations — those born from 1948 to 1975 — were likely to run short of cash in their retirement years.
And forthcoming research from the institute finds that low bond yields are worsening the situation. These low rates are unlikely to continue indefinitely; global markets last week were in disarray over speculation that the Federal Reserve might take action that could lead to higher rates.
But if current low yields did persist indefinitely, Mr. VanDerhei has found, 56.7 percent of boomer and Gen X households would find themselves at risk of running through all their assets in their lifetimes.
Many people sense that they’re heading toward danger.
In an October survey by Pew Research, 38 percent of adults said they were “not too” or “not at all” confident that they would have enough income and assets for retirement, up from 25 percent in late February and March of 2009.
Strikingly, more than half of those in their late 30s were in the not-confident categories, compared with only about one-third of those in their early 60s...
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Link: http://www.nytimes.com/2013/06/16/your-money/suddenly-retiree-nest-eggs-look-more-fragile.html
Monday, June 10, 2013
How America Lost Its Way - Niall Ferguson
From the WSJ.com:
Not everyone is an entrepreneur. Still, everyone should try—if only once—to start a business. After all, it is small and medium enterprises that are the key to job creation. There is also something uniquely educational about sitting at the desk where the buck stops, in a dreary office you've just rented, working day and night with a handful of employees just to break even...
We are assured by vociferous economists that economic growth would be higher in the U.S. and unemployment lower if only the government would run even bigger deficits and/or the Fed would print even more money. But what if the difficulty lies elsewhere, in problems that no amount of fiscal or monetary stimulus can overcome?
Nearly all development economists agree that good institutions—legislatures, courts, administrative agencies—are crucial. When poor countries improve their institutions, economic growth soon accelerates. But what about rich countries? If poor countries can get rich by improving their institutions, is it not possible that rich countries can get poor by allowing their institutions to degenerate? I want to suggest that it is...
Why is it getting harder to do business in America? ....You don't have to be opposed to tighter financial regulation or universal health care to recognize that something is wrong with laws so elaborate that almost no one affected has the time or the will to read them.
Who benefits from the growth of complex and cumbersome regulation? The answer is: lawyers, not forgetting lobbyists and compliance departments. For complexity is not the friend of the little man. It is the friend of the deep pocket. It is the friend of cronyism.
We used to have the rule of law. Now it is tempting to say we have the rule of lawyers, which is something different. For the lawyers can also make money even in the absence of complex legislation....
Whatever the root causes of the deterioration of American institutions, smart people are starting to notice it. Last year Michael Porter of Harvard Business School published a report based on a large-scale survey of HBS alumni. Among the questions he asked was where the U.S. was "falling behind" relative to other countries. The top three lagging indicators named were: the effectiveness of the political system, the K-12 education system and the complexity of the tax code. Regulation came sixth, efficiency of the legal framework eighth.
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Link: online.wsj.com "How America Lost Its Way" June 7, 2013
Not everyone is an entrepreneur. Still, everyone should try—if only once—to start a business. After all, it is small and medium enterprises that are the key to job creation. There is also something uniquely educational about sitting at the desk where the buck stops, in a dreary office you've just rented, working day and night with a handful of employees just to break even...
We are assured by vociferous economists that economic growth would be higher in the U.S. and unemployment lower if only the government would run even bigger deficits and/or the Fed would print even more money. But what if the difficulty lies elsewhere, in problems that no amount of fiscal or monetary stimulus can overcome?
Nearly all development economists agree that good institutions—legislatures, courts, administrative agencies—are crucial. When poor countries improve their institutions, economic growth soon accelerates. But what about rich countries? If poor countries can get rich by improving their institutions, is it not possible that rich countries can get poor by allowing their institutions to degenerate? I want to suggest that it is...
Why is it getting harder to do business in America? ....You don't have to be opposed to tighter financial regulation or universal health care to recognize that something is wrong with laws so elaborate that almost no one affected has the time or the will to read them.
Who benefits from the growth of complex and cumbersome regulation? The answer is: lawyers, not forgetting lobbyists and compliance departments. For complexity is not the friend of the little man. It is the friend of the deep pocket. It is the friend of cronyism.
We used to have the rule of law. Now it is tempting to say we have the rule of lawyers, which is something different. For the lawyers can also make money even in the absence of complex legislation....
Whatever the root causes of the deterioration of American institutions, smart people are starting to notice it. Last year Michael Porter of Harvard Business School published a report based on a large-scale survey of HBS alumni. Among the questions he asked was where the U.S. was "falling behind" relative to other countries. The top three lagging indicators named were: the effectiveness of the political system, the K-12 education system and the complexity of the tax code. Regulation came sixth, efficiency of the legal framework eighth.
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Link: online.wsj.com "How America Lost Its Way" June 7, 2013
Saturday, June 8, 2013
Employment in U.S. Lags Where It Was in 2007
From the New York Times online:
The American economy may be the world’s biggest, but when it comes to job creation since the recession hit at the end of 2007, it is far from a leader.
Indeed, contrary to the widespread view that the United States is an island of relative prosperity in a global sea of economic torpor, employment in several other nations has bounced back more quickly, according to a new analysis by the Bureau of Labor Statistics....
But overall employment in the United States remained 2.1 percent below where it was at the end of 2007, according to the statistics bureau. By comparison, over the same period, between December 2007 and March 2013, the number of jobs was up 8.1 percent in Australia; Germany, the biggest economy in the troubled euro zone, has managed a 5.8 percent gain in employment.
“The United States is way below where it should be,” said Lawrence F. Katz, a professor of economics at Harvard. “We had a massive downturn and a tepid recovery.”
....The fitful recovery that began in 2009 is also different from the trend that prevailed after the deep recession of the early 1980s, said Laurence M. Ball, a professor of economics at Johns Hopkins University in Baltimore. While economic growth has struggled to top 2 percent in recent years, annual gains in output briefly topped 7 percent [Blogger Note: the Ronald Reagan recovery was superior in every aspect] when the economy bounced off the bottom three decades ago.
....Another sign of distress is the persistence of long-term unemployment four years into the recovery. While the number of workers who have been out of a job for less than five weeks is almost unchanged from 2007 levels, there are roughly 4.4 million Americans who have been unemployed for more than six months, a 257 percent increase since 2007.
“As the economy recovers, we are going to see growth,” said Alexandre Mas, a professor of economics at Princeton and a former chief economist at the Labor Department. “But we haven’t fully recovered yet.”
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Link: http://www.nytimes.com/2013/06/08/business/employment-in-us-lags-where-it-was-in-2007.html
The American economy may be the world’s biggest, but when it comes to job creation since the recession hit at the end of 2007, it is far from a leader.
Indeed, contrary to the widespread view that the United States is an island of relative prosperity in a global sea of economic torpor, employment in several other nations has bounced back more quickly, according to a new analysis by the Bureau of Labor Statistics....
But overall employment in the United States remained 2.1 percent below where it was at the end of 2007, according to the statistics bureau. By comparison, over the same period, between December 2007 and March 2013, the number of jobs was up 8.1 percent in Australia; Germany, the biggest economy in the troubled euro zone, has managed a 5.8 percent gain in employment.
“The United States is way below where it should be,” said Lawrence F. Katz, a professor of economics at Harvard. “We had a massive downturn and a tepid recovery.”
....The fitful recovery that began in 2009 is also different from the trend that prevailed after the deep recession of the early 1980s, said Laurence M. Ball, a professor of economics at Johns Hopkins University in Baltimore. While economic growth has struggled to top 2 percent in recent years, annual gains in output briefly topped 7 percent [Blogger Note: the Ronald Reagan recovery was superior in every aspect] when the economy bounced off the bottom three decades ago.
....Another sign of distress is the persistence of long-term unemployment four years into the recovery. While the number of workers who have been out of a job for less than five weeks is almost unchanged from 2007 levels, there are roughly 4.4 million Americans who have been unemployed for more than six months, a 257 percent increase since 2007.
“As the economy recovers, we are going to see growth,” said Alexandre Mas, a professor of economics at Princeton and a former chief economist at the Labor Department. “But we haven’t fully recovered yet.”
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Link: http://www.nytimes.com/2013/06/08/business/employment-in-us-lags-where-it-was-in-2007.html
Friday, June 7, 2013
Bulk of U.S. Payroll Gain in Jobs Paying Less-Than-Average Wages
From Bloomberg.com:
Occupations paying below-average wages accounted for more than half of last month’s U.S. payroll increase, a dynamic that may restrain consumer spending and the economic recovery.
Retailers, the hospitality industry and temporary-help agencies accounted for 96,300, or 55 percent, of 175,000 jobs added in May, figures from the Labor Department showed today in Washington.
“It’s not just jobs, it’s the kinds of jobs we’re creating,” said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc. “We need to see more broad-based and even growth in the economy to see better jobs return. We’re still relying too much on the part-time and contingent workforce.”
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Link: http://www.bloomberg.com/news/2013-06-07/bulk-of-u-s-payroll-gain-in-jobs-paying-less-than-average-wages.html
Occupations paying below-average wages accounted for more than half of last month’s U.S. payroll increase, a dynamic that may restrain consumer spending and the economic recovery.
Retailers, the hospitality industry and temporary-help agencies accounted for 96,300, or 55 percent, of 175,000 jobs added in May, figures from the Labor Department showed today in Washington.
“It’s not just jobs, it’s the kinds of jobs we’re creating,” said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc. “We need to see more broad-based and even growth in the economy to see better jobs return. We’re still relying too much on the part-time and contingent workforce.”
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Link: http://www.bloomberg.com/news/2013-06-07/bulk-of-u-s-payroll-gain-in-jobs-paying-less-than-average-wages.html
WSJ: The Hidden Jobless Disaster
The U.S. is not getting back many of the jobs that were lost during the recession. At the present slow pace of job growth, it will require more than a decade to get back to full employment defined by prerecession standards.
The striking deficiency in jobs is borne out by the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey. Despite declining unemployment rates, the number of hires during the most recent month (March 2013) is almost the same as it was in January 2009, the worst month for job losses during the entire recession (4.2 million then, 4.3 million now)...
The Fed may draw two inferences from the experience of the past few years. The first is that it may be a very long time before the labor market strengthens enough to declare that the slump is over. The lackluster job creation and hiring that is reflected in the low employment-to-population ratio has persisted for three years and shows no clear signs of improving.
The second is that the various programs of quantitative easing (and other fiscal and monetary policies) have not been particularly effective at stimulating job growth. Consequently, the Fed may want to reconsider its decision to maintain a loose-money policy until the unemployment rate dips to 6.5%.
Edward Lazear, chairman of the president's Council of Economic Advisers from 2006-2009, is a Hoover Institution fellow and a professor at Stanford University's Graduate School of Business.
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Link: http://online.wsj.com/article/SB10001424127887323728204578514183323171670.html
The striking deficiency in jobs is borne out by the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey. Despite declining unemployment rates, the number of hires during the most recent month (March 2013) is almost the same as it was in January 2009, the worst month for job losses during the entire recession (4.2 million then, 4.3 million now)...
The Fed may draw two inferences from the experience of the past few years. The first is that it may be a very long time before the labor market strengthens enough to declare that the slump is over. The lackluster job creation and hiring that is reflected in the low employment-to-population ratio has persisted for three years and shows no clear signs of improving.
The second is that the various programs of quantitative easing (and other fiscal and monetary policies) have not been particularly effective at stimulating job growth. Consequently, the Fed may want to reconsider its decision to maintain a loose-money policy until the unemployment rate dips to 6.5%.
Edward Lazear, chairman of the president's Council of Economic Advisers from 2006-2009, is a Hoover Institution fellow and a professor at Stanford University's Graduate School of Business.
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Link: http://online.wsj.com/article/SB10001424127887323728204578514183323171670.html
Tuesday, June 4, 2013
Fed’s Raskin Bemoans Quality of New Jobs
A trip to a job fair exposed another concern about the weak recovery to Federal Reserve governor Sarah Bloom Raskin — those who do find employment often must accept low paying positions.
After finding mostly security, restaurant and life guard positions at a job fair held at community college near her home, Ms. Raskin said Tuesday that she investigated the type of jobs that have been gained since the economy emerged from recession.
She found half of all those hired received low pay jobs, but two-thirds of the jobs lost in the recession were middle income jobs like factory and construction workers.
Ms. Raskin said she is concerned about “the quality of jobs available,” while speaking on a panel at a conference on joblessness hosted by the Roosevelt Institute, a self-described progressive policy organization.
“I didn’t think life guard was a job that required an advanced degree,” she said.
The low quality of jobs added in the recovery explains why wages have mostly stagnated even while unemployment has declined in recent years.
Ms. Raskin said the phenomenon suggests there is a disconnect between education and the skills employers need.
She also said the current unemployment rate, which still remains high despite its gradual improvement, underestimates the true scope of the unemployment problem.
The “real risk” of long-term unemployment is that the longer a worker stays unemployed, the more unemployable they grow. Firms are increasingly reluctant to hire people who have been out of the workforce for long stretches, which leads to those workers losing skills and ultimately the ability to ever reenter the workforce, she said.
She didn’t address monetary policy in her remarks.
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Link: http://blogs.wsj.com/economics/2013/06/04/feds-raskin-bemoans-quality-of-new-jobs/
After finding mostly security, restaurant and life guard positions at a job fair held at community college near her home, Ms. Raskin said Tuesday that she investigated the type of jobs that have been gained since the economy emerged from recession.
She found half of all those hired received low pay jobs, but two-thirds of the jobs lost in the recession were middle income jobs like factory and construction workers.
Ms. Raskin said she is concerned about “the quality of jobs available,” while speaking on a panel at a conference on joblessness hosted by the Roosevelt Institute, a self-described progressive policy organization.
“I didn’t think life guard was a job that required an advanced degree,” she said.
The low quality of jobs added in the recovery explains why wages have mostly stagnated even while unemployment has declined in recent years.
Ms. Raskin said the phenomenon suggests there is a disconnect between education and the skills employers need.
She also said the current unemployment rate, which still remains high despite its gradual improvement, underestimates the true scope of the unemployment problem.
The “real risk” of long-term unemployment is that the longer a worker stays unemployed, the more unemployable they grow. Firms are increasingly reluctant to hire people who have been out of the workforce for long stretches, which leads to those workers losing skills and ultimately the ability to ever reenter the workforce, she said.
She didn’t address monetary policy in her remarks.
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Link: http://blogs.wsj.com/economics/2013/06/04/feds-raskin-bemoans-quality-of-new-jobs/
NYT: The Fed and Inequality (oh! you mean the 1% are getting most of the benefits in this economy?)
....It is certainly true that inequality, in terms of both income and wealth, has widened since the recession. A study by the lauded economist Emmanuel Saez of the University of California, Berkeley, found that the top 1 percent of earners have accounted for all of the income gains in the first two full years of the recovery. Their incomes have climbed about 11.2 percent. The incomes of the 99 percent have declined by about 0.4 percent.
...many financial experts consider the Fed’s policies a driving force behind the surge in the stock market. Since the depths of the crisis, the Dow Jones industrial average has more than doubled, increasing about 16 percent this year alone. Such gains have helped to lift the earnings and the net worth of the half of Americans who own stocks. But the wealthy have benefited disproportionately...
[Note: the NYT writer fails to remind her readers regarding the unemployment numbers that most new jobs are low-paying, part time jobs.]
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Link: http://economix.blogs.nytimes.com/2013/06/03/the-fed-and-inequality
...many financial experts consider the Fed’s policies a driving force behind the surge in the stock market. Since the depths of the crisis, the Dow Jones industrial average has more than doubled, increasing about 16 percent this year alone. Such gains have helped to lift the earnings and the net worth of the half of Americans who own stocks. But the wealthy have benefited disproportionately...
[Note: the NYT writer fails to remind her readers regarding the unemployment numbers that most new jobs are low-paying, part time jobs.]
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Link: http://economix.blogs.nytimes.com/2013/06/03/the-fed-and-inequality
Monday, June 3, 2013
WSJ: Risk-Averse Culture Infects U.S. Workers, Entrepreneurs
Americans have long taken pride on their willingness to bet it all on a dream. But that risk-taking spirit appears to be fading.
Three long-running trends suggest the U.S. economy has turned soft on risk: Companies add jobs more slowly, even in good times. Investors put less money into new ventures. And, more broadly, Americans start fewer businesses and are less inclined to change jobs or move for new opportunities.
The changes reflect broader, more permanent shifts, including an aging population and the new dominance of large corporations in many industries. They also may help explain the increasingly sluggish economic recoveries after the past three recessions, experts said.
"The U.S. has succeeded in part because of its dynamism, its high pace of job creation and destruction, and its high pace of churning of workers," said John Haltiwanger, a University of Maryland economist who has studied the decline in American entrepreneurship. "The pessimistic view is we've lost our mojo."
Companies that gamble on new ideas are more likely to fail, but also more likely to hit it big. Entrepreneurs face long odds, but those that achieve success create jobs for many others.
As important, say economists, are small acts of risk-taking: workers who quit their jobs to find better ones, companies that expand payrolls and families that move from sluggish economic regions to ones with low unemployment rates.
Multiplied across the U.S. economy, these acts of faith and ambition help speed money, talent and resources to where they are needed....
...economists said this decline in risk-taking—both by companies and individuals—has coincided with a broader slowing of the U.S. economy, particularly for new jobs.
In the eight recessions from the end of World War II through the end of the 1980s, it took the U.S. a little more than 20 months, on average, for employment to return to its prerecession peak. But after the relatively shallow recession of the early 1990s, it took 32 months for payrolls to rebound fully.
After the even milder recession of 2001, it took four years. Today, nearly four years after the end of the last recession, employment has yet to reach its precrisis peak....
----
Link: http://online.wsj.com/article/SB10001424127887324031404578481162903760052.html
Three long-running trends suggest the U.S. economy has turned soft on risk: Companies add jobs more slowly, even in good times. Investors put less money into new ventures. And, more broadly, Americans start fewer businesses and are less inclined to change jobs or move for new opportunities.
The changes reflect broader, more permanent shifts, including an aging population and the new dominance of large corporations in many industries. They also may help explain the increasingly sluggish economic recoveries after the past three recessions, experts said.
"The U.S. has succeeded in part because of its dynamism, its high pace of job creation and destruction, and its high pace of churning of workers," said John Haltiwanger, a University of Maryland economist who has studied the decline in American entrepreneurship. "The pessimistic view is we've lost our mojo."
Companies that gamble on new ideas are more likely to fail, but also more likely to hit it big. Entrepreneurs face long odds, but those that achieve success create jobs for many others.
As important, say economists, are small acts of risk-taking: workers who quit their jobs to find better ones, companies that expand payrolls and families that move from sluggish economic regions to ones with low unemployment rates.
Multiplied across the U.S. economy, these acts of faith and ambition help speed money, talent and resources to where they are needed....
...economists said this decline in risk-taking—both by companies and individuals—has coincided with a broader slowing of the U.S. economy, particularly for new jobs.
In the eight recessions from the end of World War II through the end of the 1980s, it took the U.S. a little more than 20 months, on average, for employment to return to its prerecession peak. But after the relatively shallow recession of the early 1990s, it took 32 months for payrolls to rebound fully.
After the even milder recession of 2001, it took four years. Today, nearly four years after the end of the last recession, employment has yet to reach its precrisis peak....
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Link: http://online.wsj.com/article/SB10001424127887324031404578481162903760052.html
Sunday, June 2, 2013
Joel Kotkin: Economy needs more than tech sector - middle class jobs disappear
We are entering a domain where looms a lost decade of income, growth and opportunity – and maybe it's time to address that fact.
Yes, the stock market is high, social-media types are rolling in billions, and asset inflation now extends to the residential home, the one investment where the middle and upper-middle classes can make a "killing." But, overall, everyone but the wealthy – the top 7 percent – are continuing to get pummeled, notes a recent Pew study.
Actually, it's worse than that in terms of the great progressive value, "equality." Hurt particularly has been the middle class – whatever the ethnicity – whose jobs have been decreasing most rapidly, while much of the new employment is in very low-paid work.
In reality, many of the major metro regions with the greatest degree of inequality are in deep-blue states like California, New York or, in the belly of the beast, Washington D.C.
But, outside of pontificating, neither political party is ready to address this issue.
Under an alliance of the ostensible "party of the people" and the corporate serfs of the Republican Party, Wall Street, arguably the primary felon of the Great Recession, has been protected from any serious reform.
Indeed, with Federal Reserve Chairman Ben Bernanke essentially giving it free money, the financial industry gets to party on, while middle-class incomes stagnate or fall....
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Link: http://www.ocregister.com/articles/tech-510810-people-jobs.html
Yes, the stock market is high, social-media types are rolling in billions, and asset inflation now extends to the residential home, the one investment where the middle and upper-middle classes can make a "killing." But, overall, everyone but the wealthy – the top 7 percent – are continuing to get pummeled, notes a recent Pew study.
Actually, it's worse than that in terms of the great progressive value, "equality." Hurt particularly has been the middle class – whatever the ethnicity – whose jobs have been decreasing most rapidly, while much of the new employment is in very low-paid work.
In reality, many of the major metro regions with the greatest degree of inequality are in deep-blue states like California, New York or, in the belly of the beast, Washington D.C.
But, outside of pontificating, neither political party is ready to address this issue.
Under an alliance of the ostensible "party of the people" and the corporate serfs of the Republican Party, Wall Street, arguably the primary felon of the Great Recession, has been protected from any serious reform.
Indeed, with Federal Reserve Chairman Ben Bernanke essentially giving it free money, the financial industry gets to party on, while middle-class incomes stagnate or fall....
----
Link: http://www.ocregister.com/articles/tech-510810-people-jobs.html
Obama Economy: A Rise in Wealth for the Wealthy; Declines for the Lower 93%
From Pew Research:
During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%, according to a Pew Research Center analysis of newly released Census Bureau data.
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Link: http://www.pewsocialtrends.org/2013/04/23/a-rise-in-wealth-for-the-wealthydeclines-for-the-lower-93/
During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%, according to a Pew Research Center analysis of newly released Census Bureau data.
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Link: http://www.pewsocialtrends.org/2013/04/23/a-rise-in-wealth-for-the-wealthydeclines-for-the-lower-93/
Disaster: Millions Of Middle-Class Jobs Killed By Machines In Great Recession's Wake
Five years after the start of the Great Recession, the toll is terrifyingly clear: Millions of middle-class jobs have been lost in developed countries the world over.
And the situation is even worse than it appears.
Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What's more, these jobs aren't just being lost to China and other developing countries, and they aren't just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.
They're being obliterated by technology....
The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000.
But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in mid-pay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well....
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Link:http://www.huffingtonpost.com/2013/01/23/middle-class-jobs-machines_n_2532639.html
And the situation is even worse than it appears.
Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What's more, these jobs aren't just being lost to China and other developing countries, and they aren't just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.
They're being obliterated by technology....
The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000.
But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in mid-pay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well....
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Link:http://www.huffingtonpost.com/2013/01/23/middle-class-jobs-machines_n_2532639.html
Pimco, Vanguard hit by U.S. government debt selloff
(Reuters) - It has been an ugly month for some major bond fund managers, including the reigning king of bonds, Bill Gross.
The sudden sell-off in Treasuries and government-guaranteed mortgage debt has taken a big bite out of the performance of the Pimco Total Return Fund, the world's largest bond fund, which Gross oversees.
As of May 30, Pimco Total Return, with about $293 billion in assets, was down 0.15 percent for the year, according to data collected by mutual fund tracking firm Morningstar. For the month of May, Pimco Total Return is down 1.9 percent.
The performance for the Pimco fund comes at a time when the yield on the 10-year Treasury has risen to 2.2 percent on Friday from 1.63 percent on May 1. Treasury yields have risen amid concerns that the U.S. Federal Reserve could reduce its monthly purchases of $85 billion in Treasuries and agency mortgage debt due to signs of an improving economy....
The selling in Treasuries and agency mortgage debt began soon after Federal Reserve Chairman Ben Bernanke told Congress on May 22 that the central bank could begin slowing its monthly purchases of securities. The Fed launched the bond-buying program last September to provide a jolt to the economy.
The Vanguard Total Bond Market Fund has had an even tougher time than Pimco Total Return. The fund, with $117 billion in assets, is down 0.82 percent for the year....
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Link: http://www.reuters.com/article/2013/05/31/us-funds-investing-pimco-idUSBRE94U18S20130531
The sudden sell-off in Treasuries and government-guaranteed mortgage debt has taken a big bite out of the performance of the Pimco Total Return Fund, the world's largest bond fund, which Gross oversees.
As of May 30, Pimco Total Return, with about $293 billion in assets, was down 0.15 percent for the year, according to data collected by mutual fund tracking firm Morningstar. For the month of May, Pimco Total Return is down 1.9 percent.
The performance for the Pimco fund comes at a time when the yield on the 10-year Treasury has risen to 2.2 percent on Friday from 1.63 percent on May 1. Treasury yields have risen amid concerns that the U.S. Federal Reserve could reduce its monthly purchases of $85 billion in Treasuries and agency mortgage debt due to signs of an improving economy....
The selling in Treasuries and agency mortgage debt began soon after Federal Reserve Chairman Ben Bernanke told Congress on May 22 that the central bank could begin slowing its monthly purchases of securities. The Fed launched the bond-buying program last September to provide a jolt to the economy.
The Vanguard Total Bond Market Fund has had an even tougher time than Pimco Total Return. The fund, with $117 billion in assets, is down 0.82 percent for the year....
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Link: http://www.reuters.com/article/2013/05/31/us-funds-investing-pimco-idUSBRE94U18S20130531
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