Follow the money . . .

THE WASHINGTON POST has an excellent interview with Elizabeth Warren, Chairman of the Congressional Oversight Committee that is tasked with scrutinizing how the Treasury Department has spent $700 billion to shore up failing American financial institutions. The interview, titled "Voices of Power: Elizabeth Warren", by Lois Romano, is worth the read. It may not tell you anything you don't already know, but it will give you a perspective on how some at the heart of the maelstrom feel about the situation.

ROMANO: So, the first thing I want to ask you is you are about to become a household name. You are-you are one of the heroines, you're being described of, of Michael Moore's new movie which derides capitalism and goes after our economic structures.

WARREN: Well, I'd have to say, you know, I did an interview with Michael Moore and now I'm just astonished. I never thought I would be in 9 million television commercials, so it's been pretty amazing.

ROMANO: There's a wonderful moment when he asks you where the $700 billion is, and you look at him and you say, "I don't know." So the question is: why don't you know?

WARREN: Well, we don't know where the $700 billion is because the system was initially designed to make sure that we didn't know.

ROMANO: Do you agree with Michael Moore's basic premise that capitalism as it is now has destroyed the country's middle class?

WARREN: Well, I believe that the middle class is under terrific assault. And I don't want to play this as a capitalism issue. When we compare middle-class families today with their parents a generation ago ¿ we have basically flat earnings-a fully employed male today earns on average about $800 less, adjusted for inflation- than a fully employed male earned a generation ago. The only way that houses could increase or families could increase their household income was to put a second earner into the workforce, and, of course that's now flattened out because there aren't any more people to put into the workforce. So you've got, effectively, flat income in this time period ¿ with rising core expenses; housing; health insurance; child care; transportation, now that it takes two cars to get everywhere, two jobs to support; and taxes, because you've got two people in the workforce and we have a somewhat progressive taxation system. So that families are spending a lot more on what you describe as the basic nut.

The third leg to the triangle, and that is families, to deal with this, stopped saving and started going into debt.

And the debt side of where families both spend more money and are made much more vulnerable on mortgages, on credit cards, on check overdraft fees, all this side of it, the credit side of it really means that we have a middle class that a generation ago we would have described as solid, secure, dependable. If you could just get into the middle class, you could pretty much count on a fairly comfortable life and all the way through to a comfortable retirement.

That's been hollowed out. Sure, there are people who are going to make it through just fine, but the vulnerability of families in the middle class has just, it has gone up enormously.