first against the wall when the revolution comes

Stop the presses!

The President had a beer with a professor and a policeman! Why is it that I can't read these stories without this song going through my head?

Meanwhile, back in the American heartland, in the shining city on a hill, there is good news as the the latest minimum wage increase kicked in last week. The federal minimum wage is now $7.25 per hour (about $15,000 a year based on a 40 hr week) Of course some states don't even have minimum wage laws. About 13 percent of the population of the United States lives below the poverty line (set in 2001 at $18,000/year for a family of four).

There are about 45 million americans without health insurance of any kind and millions more with wholly inadequate insurance. Kids are dying of toothache because their family doesn't have the money to take them to a doctor. The current health care proposal in front of congress now is estimated to cost $1 trillion to $1.5 trillion over the next ten years and some people oppose it because it would be funded by a one percent increase in income taxes for people making more than $200,000 a year. That's in addition to the roughly 3% income tax hike Obama already has proposed for the top tax bracket, bringing their tax rate to 38%.

Handing over 38% of your taxable income to the government sounds like a lot until I see stories like this:

Bank Bonus Tab: $33 Billion

Nine Lenders That Got U.S. Aid Paid at Least $1 Million Each to 5,000 Employees

By SUSANNE CRAIG and DEBORAH SOLOMON

Nine banks that received government aid money paid out bonuses of nearly $33 billion last year -- including more than $1 million apiece to nearly 5,000 employees -- despite huge losses that plunged the U.S. into economic turmoil.
(snip)
Wall Street has shown little sign of slowing down the pay train this year. Goldman Sachs Group Inc. and Morgan Stanley recently disclosed that they have set aside $11 billion and $6 billion in compensation and benefits, respectively, for their employees so far this year. Goldman's second quarter was among its best ever. Morgan Stanley lost money for its third straight quarter.Goldman and Morgan Stanley declined to
comment on the report.Meanwhile, some big banks that received government bailouts, including Citigroup Inc. and Bank of America Corp., are offering handsome pay packages to lure stars. Citigroup -- which received about 25% of the aid going to the nine banks -- has the No. 1 pay recipient. Andrew Hall, who heads Citigroup's energy-trading unit Phibro LLC, received $98.9 million in 2008, according to a government official. Citigroup CEO Vikram Pandit, by comparison, received more than $38 million last year."

Poor Vikram, he's the CEO and he has to struggle along on a paltry $38 million a year.

The U.S. government in the past year has spent about $1.8 trillion on bailing out and proping up the banking industry: $31.1 billion on bank takeovers, $117.9 billion on bailing out AIG, $1.4 trillion on Fed financial rescue efforts including the Bear Stearns bailout effort, $40 on the capital investment in Citigroup and Bank of America, $20.4 billion on the Capital Purchase Program to bail out banks, and another $5 billion in assest guarantees for BoA and Citi. This is money spent, not just money committed or earmarked for bailout programs - those numbers are even higher. And it doesn't include the more than $1 trillion spent on the GM bailout or the stimulus plan or the money spent on Fannie Mae and Freddie Mac and mortage relief for homeowner facing foreclose. Nope, that $1.8 trillion is just what has been forked over to shore up the banking industry. (figures from here)

And that's just the financial sector payoff. How about the military industrial complex?

They say if you aren't angry, then you aren't paying attention.

People often wonder why the French Revolution and the Russian Revolution were so brutal. How could ordinary French peasants and townsfolk cheer to see people they formerly respected as their "social betters" being marched to guillotine? How could the Bolsheviks be so hardhearted as to machine-gun to death the Tsar and his family, even the young children?


I think I might understand it.

Big Darkness soon come

About 1,500 people live in this shantytown, huddling in tents and makeshift shelters built of scrap lumber and plastic tarps, cooking meagre meals over communal fires less than a mile away from wealthy property owners who are barricaded in walled compounds protected by a private army of a hired security guards. The police, who have become increasingly violent in recent years, cruise the shantytown hoping to keep a lid on drugs, gangs and violence and to make sure the have-nots don't wander off to trouble the haves. The shantytown is growing by about 50 residents a week. It's not in some distant underdeveloped third world hellhole -- it's Sacramento, California.


The divide between rich and poor grew faster in the last 35 years than at any point in recorded economic history, certainly since the 1920s and probably since the industrial revolution - but we don't have the facts and figures for that. But we do know a lot of homes have been lost to foreclosure, a lot of people have lost their jobs (more than a million jobs lost this year so far) and the market crash has wiped out a lot of middle class portfolios intended to as retirement savings. People are ending up on the street while abandoned homes are left to rot. In Georgia alone, 1 in 8 mortgages are in foreclosure or 90 days past due in payments.



How bad is it? According to Consumer Reports, pretty bad:

The number of U.S. homeowners with mortgages whose homes are worth less than their loans is 8.3 million, according to an analysis by First American CoreLogic that was reported on by CNN. The number means that about 20 percent of mortgages are underwater.
Eight percent of all mortgages are delinquent, and 6,600 homes go into foreclosure each day, says the Center for Responsible Lending; foreclosures could total 8.1 million by 2012. Some banks suspended foreclosures, but the moratoriums are set to expire this month.

And while all this is going on, all we seem to hear about is Rush Limbaugh's takeover of the Republican party, whose economic policy at this point in time is damn the torpedoes, full speed ahead on tax cuts for the wealthy. I keep hearing the same old upper middle class spoiled white man's refrain: "I got mine Jack. If you make me pay another couple of percent in tax on the money I make over a quarter million dollars, me and the other five percent of Americans priviledged enough to be making the big money are gonna take out ball and move to Galt's Gultch."

More factual fun from the esteemed R.Porrofatto in comments at the Alicublog post linked above:

The total tax rate (including all federal, state and local taxes) for the top 80% of the country is essentially flat. According to the Tax Foundation, here is the effective total tax rate in the U.S. by income quintile:

Highest income quintile: 35%

Second-highest income quintile: 31%

Middle-income quintile: 28%

Second-lowest income quintile: 23%

Lowest income quintile: 13%

More fun:

- The average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years.[IRS]

- The top 1% of wage earners have more wealth than the entire lowest 95% of wage-earners.

- The top 1 percent of households saw income gains of over 45% in the last eight years. The bottm 90% saw gains of less than 4%. Since 1976, average income of the top 1% grew by 232%, average income of bottom 90% grew by 10% [IRS]

- The share of the nation's income flowing to the top 1 percent has increased sharply, rising from 15.8 percent in 2002 to 22.1 percent of all adjusted gross income for 2006. Not since 1928, just before the Great Depression, has the top 1 percent held such a large share of the nation's income[IRS]

- The 400 U.S. taxpayers with the highest incomes pay income taxes worth only 18 percent of their income on average, compared to 25 percent for the typical American. Because of reduced capital gains taxes, the top 400 taxpayers cumulatively saved $10 billion between 1995 and 2005. [CBPP]

- The campaign to repeal the federal estate tax was financed by 18 of the richest
families in America-including 23 billionaires-who spent nearly $500 million on it.

According to a recent study 1 in 50 American kids experiences homelessness at some point. The study is based on figures from 2005 and 2006 - anyone want to bet that the situation has improved during the current crisis? I didn't think so.

In Japan, all of the senior excutives of these bank and financial institutions that are failing would have resigned in ignominous shame by now and several would have probably had the decency to hang themselves. Meanwhile at AIG et al, it's bonuses all around while the U.S. taxpayer is left holding the bag.

I've said it before and I'm sure I'll say it again: The only surefire investments right now are in pitchforks, torches, tar and feathers.
Other Recommended Reading.

Crossposted from the Woodshed

A thought to ponder for the weekend

When it comes to a financial meltdown, after dire predictions from economists governments around the world scramble to cooperate, the G7 calls emergency meetings, the doors to various national treasuries are flung open. The attitude among politicians and pundits by and large is "Do something! Costs to the taxpayers be dammed, we must solve this problem before it get worse, no matter what it takes.The government tells you about different ways to save money to weather the crisis and tell you "Times are hard and we all have to pull together!" Handing over $700 billion with little or no oversight is something that must be done.
When it comes to global warming on the other hand, after 25 years of studies and dire predictions from scientists, there are still many politicians, bonehead and corporate lackies who claim the whole thing is a matter of opinion and the best thing to do is burn more coal and oil and drive your SUV to the corner store. Equiping factories with antipollution gear and forcing the auto industry to build more hybrids would be socialism and would cost too much.
When it comes to genocide in Darfur, thousands are dying, but it might be too expensive to divest or to pay some bills for the African Union or send some of our own soldiers. Besides, Sudan has some oil and you never know when that might come in handy.
The government of the United States is willing to fork over $700 billion in one fell swoop to the very people who lead the finanacial industry into disaser, but when experts say it might cost as much aas $150 billion to bring unversal health care to the country, all we hear about is "personal responsibility" and "fiscal restraint."

Nice to know where our priorities lay as a society.

Crossposted from the Woodshed.