Friday, January 20, 2012
Going Backward is not Going Forward
A growing number of Americans are not only not saving for the future but are borrowing against it. In this faux recovery, we see American workers borrowing against retirement accounts as if they are the new version of equity lines of credit.
Just as Americans used to borrow against the value of their homes before the property crash, now many are taking out loans from their 401(k) retirement savings plans.
On top of that-more people today are using credit cards just to live, paying mortgages, utility bills, food and medical expenses. Is this how a "recovery" is supposed to work?
At the same time, college students are borrowing twice as much as they did a decade ago when adjusted for inflation, according to the College Board, and Americans now owe more on student loans than on credit cards.
Household borrowing on cards, car loans, student loans and other installment debt jumped almost 10 percent from October to November, according to the Federal Reserve, its biggest jump in a decade.
Welcomed by some as a sign of confidence in the economic recovery, others worried it was really a reflection of desperation.
But why-- if we are in a recovery would people still feel so desperate? You don't have to be a rocket scientist to read between the lines offered by main stream media to know that the so-called recovery is just another big ass lie.
Since so many people still can't fathom the fact that they are so broke, they are resorting to credit card use to live day to day, and personal savings are now lower than they were in 2007- before the crash, down to a pathetic 3.5%
Loans taken from retirement savings accounts jumped 20 percent last year across all demographics, according to a survey to be published in March. Among lower earners they leapt by as much as 60 percent. The vast majority of borrowers, need the money for essential expenses like bills, car repairs and college tuition.
The non-profit Employee Benefit Research Institutes (EBRI) annual retirement confidence survey hit a new low in 2011 with 27 percent of workers saying they're "not at all confident" they'll have enough for a comfortable retirement. Almost 15 percent expect to work until at least the age of 70, up from 11 percent in 2006.
In another sign of Americans struggling to make ends meet, EBRI found that more than 20 percent of those aged 50 or older changed their medical prescriptions to save money and almost as many had skipped or postponed doctor appointments for the same reason. Almost 28 percent reported having difficulty paying their monthly bills.
It’s quite amusing when articles say the economy is going through a modest recovery. Sure people aren’t getting laid off in droves, but everyone knows that there is no actual recovery and it appears as if the economy is at great risk. House prices continue to tumble, and foreclosures are spiking once again. Wages are low and millions are beginning to lose unemployment benefits. America has vastly inferior social systems to help people in need. And the majority of the nation’s wealth has been hoarded and locked up by less than one percent of the population. The increase in foreclosures alone could create a new recession this year, let alone Europe and other factors.
Is this the American exceptionalism Republicans crow about?
The low interest rate policy of the Fed discourages saving. Who would want to put money in a bank at a 0.25% rate? Shorter term savings rates need to be closer to the inflation rates to encourage any real build in bank deposits. The policy forces investing in riskier assets so the savings rate will be lower.
And this sad fact was engineered on purpose to drive up the stock market where the majority of gamblers are the 1% Wall Street trickle - up tycoons. When the Federal Reserve decides to turn off the interest rate faucet for savers in order to enrich the crooks on Wall Street- you know America is operating more like a gambling casino economy than a serious economy.
The money you used to earn from saving has been deliberately stolen to keep those that live off of capital gains happily insulated from any economic woes, all the while seniors living on fixed incomes, who planned their retirements by investing in low risk savings plans are finding themselves forced to live off their puny Social Security checks alone. And Republicans like Newt and Romney have the nerve to intimate these folks are envious.
Mitt Romney and the rest of the GOP super rich are now calling class war the war of envy. In his let them eat cake moment, Romney becomes the mouth piece for the 1%, who see nothing morally wrong with a corrupt system so deregulated that what was a crime yesterday has become legal today.
"It may not be moral-- but it isn't illegal " seems to be the mantra of the GOP.
But it isn't just republicans who have been bitten by the greed bug-- the fact is both sides of our two party mockery are guilty of political corruption. We truly have the best government money can buy. From 2004 to 2010 members of Congress have seen their net worth grow 15% while the average American saw theirs fall 8% . The fact that members of Congress presided over the Wall Street plundering of the middle class and income inequality never before seen in the history of the U.S. really goes to show we have been hijacked by the plutocrats.
The rich hired by the super-rich to protect the interests of the mega-rich
Does it come as any real surprise that these folks can't relate to the plight of the 99% ? All they offer is empty slogans and insults to the real hardship average Americans suffer. It's no wonder Congress now boats a 1% approval rating.
But what can you expect from a serial wife swapper, and corporate vulture.
Plutocracy rocks if you are a billionaire.