Robert Reich on America's Economic U-Turn and How to Move Forward Again
America has forgotten how we came to economic prosperity: working together.


March 10, 2014 |





This article originally appeared in RobertReich.org, and is reprinted here with their permission.

Do you recall a time in America when the income of a single school teacher or baker or salesman or mechanic was enough to buy a home, have two cars, and raise a family?

I remember. My father (who just celebrated his 100th birthday) earned enough for the rest of us to live comfortably. We weren’t rich but never felt poor, and our standard of living rose steadily through the 1950s and 1960s.

That used to be the norm. For three decades after World War II, America created the largest middle class the world had ever seen. During those years the earnings of the typical American worker doubled, just as the size of the American economy doubled. (Over the last thirty years, by contrast, the size of the economy doubled again but the earnings of the typical American went nowhere.)

In that earlier period, more than a third of all workers belonged to a trade union — giving average workers the bargaining power necessary to get a large and growing share of the large and growing economic pie. (Now, fewer than 7 percent of private-sector workers are unionized.)

Then, CEO pay then averaged about 20 times the pay of their typical worker (now it’s over 200 times).

(snip)
http://www.alternet.org/news-amp-politics/robert-reich-americas-economic-u-turn-and-how-move-forward-again

how do we get there from here?

The Obscenely Wealthy didn't earn their money...they either inherited or stole it or both. And then they bought a government that wouldn't dare tax them for the services they require: armies, wars, cost plus contracts, pointless subsidies, let alone the highway system, the educational system, the environment, basic research....

I could go on, but what's the point? As they say in New England...Yeh cain't get thear from hear...

https://www.youtube.com/watch?feature=player_detailpage&v=W0rZ2CPCYBQ

The 1% and fascists really put the screws on through the jobs offshoring, the jiggering of all govt. databases and formulas, and the NSA/CIA/FBI, etc. And St. Ronnie, destroying the unions and the anti-trust enforcements.

Even so, We did make change. Just not enough for Regime Change, or Balance of Power Change to be permanent.

is not that useful and often collaborates with the enemy.

Maybe our best hope, if we can't figure it out on our own, is to just try and stay alive and slow them down until help arrives.

Likely, however, there's no help coming.

when other nations, or just other populations, stymie the 1% steamroller.

Help may look like a combination of boycott/embargo from without, and French Resistance from within.

I think we're too far gone to reverse course in my lifetime.

https://news.yahoo.com/fannie-freddie-could-send-179-2-billion-taxpayers-175239683--sector.html

- U.S. government-owned mortgage financiers Fannie Mae and Freddie Mac could send about $179.2 billion in profits to taxpayers over the next 10 years if the terms of their bailout remain intact, the White House budget office said on Monday.

The amount is more than triple the estimated 10-year payments calculated last year in the White House budget proposal, driven by the companies' increased profitability.

Fannie Mae and Freddie Mac have operated under federal conservatorship since 2008, when regulators agreed to inject capital into the companies to keep them afloat.

They received $187.5 billion in taxpayer funds, but they have returned to profitability and by the end of March they will have had paid $202.9 billion in dividends to the U.S. Treasury.

No one expected them to become profitable again so quickly, but when home prices surged in 2012, they were able to recover more money than expected on soured loans....

http://news.yahoo.com/mt-gox-files-u-bankruptcy-protection-145753981--sector.html

Mt. Gox, once the world's largest bitcoin exchange, received U.S. bankruptcy protection on Monday to temporarily halt U.S. legal action against the Japanese company by traders who allege the operation was a fraud. Judge Harlin Hale in Dallas granted temporary bankruptcy protection to Mt. Gox, which had filed for bankruptcy protection in Japan in February. Attorneys for Mt. Gox said without bankruptcy protection the company would be irreparably harmed by a proposed class action in Chicago federal court and a breach of contract case in Seattle federal court. Mt. Gox filed for bankruptcy in Japan last month after it said it may have lost 750,000 of its customers' bitcoins as part of an attack by hackers.

The plaintiff leading the Chicago lawsuit was scheduled on Tuesday to ask a federal judge to freeze Mt. Gox's U.S.-based servers and other computer equipment and to set up a trust over Mt. Gox's assets. Mt. Gox's founder, Mark Karpeles, was scheduled to be deposed later this month in the Seattle lawsuit. The attorney leading the class action blasted the bankruptcy as a ruse.

"This case involves a massive fraud," said Steven Woodrow, an attorney leading the class action, told Hale. "They claim incredibly that they will preserve assets and protect assets by entrusting the servers and other property to Mr. Karpeles. Respectfully, your honor, that is the definition of the fox guarding the henhouse."

Mt. Gox said in papers filed with the Dallas court that the hacking attack was the subject of an intense investigation that indicated so far the bitcoins were lost as a result of a flaw in the software algorithm that underlies bitcoin, the digital currency. An attorney for Coinlab Inc, which sued Mt. Gox in Seattle for breaching a contract last year, said her client was troubled by what appeared to be fraudulent behavior by Karpeles in the days leading up the U.S. bankruptcy filing.

"We don't have proof yet but we do have concerns about the movement of hundreds of millions of dollars in bitcoins over the weekend, moved by Mr. Karpeles," said Jane Pearson, an attorney with Foster Pepper.

Mt. Gox's attorney, David Parham, denied there was any fraud and said he believed Karpeles and Mt. Gox were complying with the Japanese bankruptcy proceeding. The Chapter 15 filing allows Mt. Gox to ask the U.S. Bankruptcy Court to recognize its foreign bankruptcy and to assist in the Japanese proceedings by protecting its U.S.-based assets. Hale's order protects Mt. Gox's U.S. assets until April, when the parties will return to court and Mt. Gox will seek a permanent stay of U.S. litigation. Hale said his order staying litigation did not apply to non-debtors, presumably Karpeles.

AY CARUMBA! WHAT A MESS! MORE AT LINK

http://uk.reuters.com/article/2014/03/10/usa-court-securities-idUKL2N0M70WG20140310

The U.S. Supreme Court on Monday agreed to consider whether class action claims against underwriters of securities issued by a unit of the now-defunct IndyMac Bancorp Inc should be able to proceed. The court will rule on whether the three-year window for filing certain securities claims is suspended if investors can show they would have been parties in a previously filed class action lawsuit had it not been dismissed. Lower courts are split on the question.

Various institutional investors, including the Wyoming state retirement fund, sued over what they said were untrue statements and omissions concerning mortgage-backed securities issued by IndyMac subsidiary IndyMac MBS Inc. The bank failed in July 2008. The defendants in the case are banks that were underwriters for the offerings. They are units of Credit Suisse Group AG , Deutsche Bank AG, Goldman Sachs Group Inc and Morgan Stanley. A federal district judge in New York and the 2nd U.S. Circuit Court of Appeals, in a June 2013 ruling, both ruled for the defendants.

The public employee retirement system of Mississippi, the plaintiff seeking high court review, was not part of the lawsuit at the time it was dismissed, but said it could revive the case because it would have been a member of the class if the litigation had been allowed to continue. The fund cites a 1974 Supreme Court case, American Pipe & Construction Co v. Utah, which said that the filing of a class action lawsuit before the deadline keeps the claims of all potential class members alive. The banks counter that the 1933 Securities Act states that the specific claims at issue in the case cannot be brought more than three years after the securities were offered to the public.

The court will hear oral arguments and issue a decision in its next term, which starts in October and ends in June 2015.

http://in.reuters.com/article/2014/03/07/italy-derivatives-trial-idINI6N0LT02L20140307

An Italian appeals court acquitted four international banks including Deutsche Bank and UBS on Friday, overturning a previous verdict that had found them guilty of fraud for mis-selling derivatives to the city of Milan.

Depfa, Deutsche Bank, JPMorgan and UBS had appealed against a landmark verdict from December 2012 ordering the seizure of 89 million euros ($123 million) and fines for each of 1 million euros. Nine bank employees had also been handed suspended jail sentences of up to eight months, but the appeals court said there was no case to answer.

Milan prosecutor Piero De Petris last month asked for the individual fines and the seizure to be upheld with only a small reduction for JPMorgan. He also asked for jail sentences of around six months for four of the nine bank employees.

The case relates to a swap contract signed by the city of Milan council when it issued a 1.68 billion euro, 30-year bond in 2005.

NOT A GOOD THING

THAT BASTARD!

http://www.investmentnews.com/article/20140307/FREE/140309935

President Barack Obama's 2015 budget proposal has targeted one of the best retirement income planning tools on advisers' shelves: Social Security-claiming strategies.

Buried on the 150th page of the 214 page, $3.9 trillion budget for 2015, which was released on Tuesday, is a sentence spelling out the plan to prevent duplicative or excessive benefit payments (!) through the disability insurance program and Social Security. “In addition, the budget proposes to eliminate aggressive Social Security-claiming strategies, which allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits,” the budget reads.

The proposal, if it could be passed in the present divided Congress, could throw a monkey wrench at advisers who are crafting retirement income plans for their clients. Essentially, Social Security provides retirees with a guaranteed stream of income for the remainder of their lives without any of the complexity or hassle of an annuity. It's also income that can grow if the client is able to delay receipt of those Social Security benefits. If you claim at 62, you get 75% of your benefits. If you wait until the retirement age of 66, you collect full benefits. By delaying until 70, the income stream grows by 8% per year for the four years after 66 — a rate that advisers won't be able to duplicate with any product.

Lo and behold, there's a growing demand for tactics on maximizing those Social Security income streams. For instance, there's the “claim now and claim more later” strategy: The older spouse takes advantage of the delayed retirement credits that boost his income stream by waiting until 70 to claim Social Security. His wife, who is a few years younger, then claims a spousal benefit for several years until she reaches age 70. At that point, the wife then claims the income stream she is entitled to, which will be based on her own work history.

The Social Security Administration appears to have become hip to these strategies and their growing popularity. The administration already has eliminated a provision that allowed “do-overs,” where someone would claim at 62 and receive the income. At age 70, that person could change their mind, repay the benefits received without interest and take on the higher income stream they would receive at age 70 — as if they hadn't filed the previous claim. The phrasing of the provision in the budget is vague enough that there is no clear procedure by which the Social Security Administration would eliminate these claiming strategies. As a result, policy experts differ on whether the administration could use institute an internal rule change or if it would have to go through Congress. The administration used an internal rule change to curtail use of “do-over” strategies, and it could do the same for what it deems aggressive claiming strategies, noted Andrew G. Biggs, a resident scholar at the American Enterprise Institute and former principal deputy commissioner at the Social Security Administration.

“I don’t think they need Congress to do this,” he said.

On the other hand, Jason Fichtner, a senior research fellow at the Mercatus Center at George Mason University and a former deputy commissioner for Social Security, believes the proposal is specifically targeting spousal claiming strategies. Any change to the formula for spousal benefits would require congressional approval. “I’m inferring they’re going after the spousal benefit, and they can do that through a legislative change,” said Mr. Fichtner...From a planning perspective, it's still up in the air whether this provision becomes a reality or how it'll be executed. But in the meantime, Mr. Tomlinson believes that single-premium immediate annuities can step in if clients become unable to use their claiming strategies.

“It's still a good deal, but not a super deal,” he said. “Social Security is a little bit of a government giveaway — you'd like to take advantage of it for your clients. The annuity is almost priced at a fair-market rate, and the Social Security delay is giving you an above-market rate.”

I have no problem with that.

When you watch someone collect SS they don't need and just have it deposited in an account where it draws interest, then they turn around and pay back the principal but keep the interest -- sorry, I have no sympathy.

Try being a surviving spouse when both paid into the system but only one collects, and reduced benefits at that, while others collect enhanced benefits they don't need? Bullshit.

they will screw it around so that nobody BUT the 1% benefit, and the rest of us are reduced to dog food, which is cheaper than cat food, btw.

the only people who are benefiting from it now are those who can afford to do so.

Those who depend on SS benefits -- whether retirement, survivor, disability -- can't take advantage of these "planning" strategies. None of this, as far as I can see, addresses anything the 99% are currently doing with their retirement, survivor, or disability benefits.

If it targets those who are finagling the system to profit, I'm okay with it.

If they (whoever "they" are) want to target the 99% in some way, this isn't the way to do it.

The worst that can be done with this particular scenario is to leave it alone so the 1% can continue to finagle. While that's still disgusting, at least it isn't hurting the 99% any more.

http://uk.reuters.com/article/2014/03/11/uk-philippines-southchinasea-idUKBREA2A0FY20140311

(Reuters) - Manila protested on Tuesday against Beijing's blockade of civilian supply ships in disputed waters of the South China Sea, saying China's latest actions "constitute a clear and urgent threat to the rights and interests of the Philippines".

China's coast guard ships had driven away two Philippine vessels which had tried to approach a shoal in the South China Sea on Sunday, sparking the latest flare-up in a long-running territorial dispute.

The Department of Foreign Affairs summoned China's charge d' affaires Sun Xiangyang on Tuesday to hand over a strongly worded protest over the incident in the waters around the Second Thomas Shoal, which the Philippines refers to as the Ayungin Shoal.

In a statement, the foreign ministry "urged China to desist from any further interference with the efforts of the Philippines to undertake rotation and resupply operations at the Ayungin Shoal."

http://uk.reuters.com/article/2014/03/11/uk-cyprus-cenbank-governor-idUKBREA2A0NP20140311

(Reuters) - Cyprus said on Tuesday it had appointed technocrat Chrystalla Georgadgi as its central bank governor, replacing Panicos Demetriades who resigned unexpectedly on Monday.

Georgadgi, 58, is Cyprus's auditor-general, a post she has held since 1998. She assumes her duties on April 11, a statement from the presidency said.

http://uk.reuters.com/article/2014/03/11/uk-portugal-economy-idUKBREA2A0OL20140311

Reuters) - Portugal's gross domestic product grew a revised 0.6 percent in the fourth quarter, accelerating from the previous quarter's 0.3 percent growth as consumer demand rebounded and exports rose, data showed on Tuesday.

The data showed the economy is speeding up even though for all of 2013 GDP still contracted 1.4 percent compared with a slump of 3.2 percent in 2012, the National Statistics Institute said.

In the fourth quarter, GDP rose 1.7 percent from a year earlier compared with a contraction of 0.9 percent in the third quarter.

The full-year GDP data beat the government's forecast of a 1.8 percent contraction in 2013. The economy should return to full-year growth of 1.2 percent in 2014 - the year Lisbon's EU/IMF bailout ends.

http://uk.reuters.com/article/2014/03/11/uk-greece-budget-idUKBREA2A0MQ20140311

(Reuters) - Greece's central government posted a primary budget surplus, before interest payments, of 2.1 billion euros (£1.75 billion) in the first two months of the year, compared to a surplus of 487 million euros in the same period last year, deputy finance minister Christos Staikouras said on Tuesday.

This is far above an interim target for a surplus in Jan-Feb of 1.047 billion euros. The figure excludes the budgets of social security organisations and local administration.

BLESS YOU, OF COURSE THEY DO! IT TAKES MONEY TO RAPE AN ECONOMY.

http://www.reuters.com/article/2014/03/05/us-britain-boe-haldane-idUSBREA241TP20140305

The International Monetary Fund needs more money to become a better bulwark against financial crises spreading, a senior Bank of England official said on Wednesday. Andy Haldane, the central bank's executive director for financial stability, said the Group of 20 leading economies (G20) lamented when they met in Sydney last month that U.S. Congress had still not approved an increase for IMF funds. The meeting coincided with a surge of volatility in emerging markets after selloffs triggered by worries about current account deficits in some emerging economies and the turn in U.S. monetary policy.

"The IMF does not have the fuel in the tank it needs to meet the respective needs of countries," Haldane told students at the University of Manchester. A well-funded IMF could help it step intervene as an international lender of last resort to underpin an increasingly interconnected global financial system that allows contagion to spread more quickly, he added.

"It remains to be seen if their quotas will be improved and what the future fortunes of the IMF might be, but it's one ingredient of a reform program if we are to put global finance on a somewhat stronger footing than it appears to be on today."

Another flaw in the global financial system is that foreign exchange reserves are too concentrated in countries that are unlikely to need them.

"This leaves us with a not altogether comfortable position of a more joined up global web and therefore somewhat more fragile global web than previously, and we have not accumulated the additional insurance that might be needed," Haldane said.

Other ways to shield the global financial system from shocks would be for countries to issue sovereign bonds linked to national economic growth, as Bulgaria has done, Haldane said.

In a crisis the interest paid to holders of debt linked to gross domestic product would fall and ease the strain on government finances, he said.

International rules for the use of macro prudential tools to cushion busts and moderate booms would also bolster the global financial system.

Haldane is a member of the BoE's Financial Policy Committee, which sets the tone for financial regulation in Britain and has macro prudential powers, such as forcing banks to hold more capital to dampen credit. He cited South Korea as an example of where a macro prudential regime has been effective in moderating the housing market, to limit booms and cushion busts...Haldane said the Korean regime has made the housing market become self-stabilizing to some degree and offer a predictability, allowing markets to do the work of regulators to some extent.

MAYBE THEY DON'T NEED THE RESERVES, BECAUSE THEY HAVE THEM? IT'S A DETERRENT EFFECT...

http://www.reuters.com/article/2014/03/06/basel-banks-capital-idUSL6N0M31XU20140306

The world's top banks have nearly met new capital rules in full five years ahead of a 2019 deadline set by regulators, global banking supervisors said on Thursday.

The Basel Committee, made up of regulators from nearly 30 countries, said the world's top 102 banks had a combined shortfall of 57.5 billion euros by June 2013, half the 115 billion euro shortfall seen at the end of 2012.

The committee's new, tougher capital rules known as Basel III, a core global response to the 2007-09 financial crisis, are being phased in and must be complied with in full by the start of 2019.

Market and regulatory pressure has meant that banks have moved early to build up their capital buffers to dispel doubts about their health.

http://www.bbc.com/news/business-26523833

The US state of Colorado collected $2m (£1.2m) in taxes from newly legalised recreational marijuana businesses in January.

Colorado became the first US state to legalize the commercial sale of cannabis in 2012, and stores opened for business on 1 January 2014.

In total, 59 marijuana firms filed tax returns on an estimated $14m in sales.

Overall, the state collected a total of $3.5m in marijuana taxes if medical marijuana firms are included.

http://www.bbc.com/news/business-26524507

Internet firms Alibaba and Tencent have been shortlisted as pioneers of a pilot scheme to set up private banks in China, as the country takes steps to open up its financial sector.

A total of ten companies have been selected to set up private banks.

The first five banks will be established in Tianjin, Shanghai as well as Zhejiang and Guangdong provinces.

No timetable has been given for when they need to be operationally ready.

http://www.bbc.com/news/business-26524505


The Bank of Japan (BoJ) says the country's exports have levelled off recently, a reversal of the recovery the central bank saw in February.

The BoJ cited disappointing external demand for the change of assessment.

However, the central bank is confident of economic expansion at home to help maintain its growth momentum.

Companies are pouring more money into their businesses, and factory activities are rising at a slightly faster pace.

If nobody wants to buy your shit, there's no sense in shipping it.

THERE GOES THE GROCERY STORE...

http://www.reuters.com/article/2014/03/06/us-safeway-deal-idUSBREA252AD20140306

Safeway Inc (SWY.N), the second-largest U.S. mainstream grocery store operator, said private equity firm Cerberus Capital Management would acquire the company in a deal valued at about $9.4 billion. The offer price of $40 per share represents a premium of 1.3 percent to Safeway's Thursday closing stock price of $39.47 on the New York Stock Exchange...Safeway shareholders will receive $32.50 per share in cash plus other distributions with a value of $3.65 per share...

The deal combines Safeway with Cerberus' Albertsons chain, creating a dominant grocery franchise on the West Coast. It also creates a grocery network of more than 2,400 stores and 250,000 employees. No store closures are expected, according to the company...

Cerberus is a seasoned investor in the supermarket sector. Last March, a Cerberus-led investor group acquired a group of grocery chains from Supervalu Inc, including Albertsons and Jewel-Osco, for $3.3 billion. Cerberus previously owned 650 Albertsons locations as a result of a 2006 deal under which the chain was acquired and its stores broken up between the private equity investor, Supervalu and CVS Caremark Corp. Safeway has been in the hands of private equity before. KKR & Co LP (KKR.N) took Safeway private in 1986, and then sold its stake in 1999...

Probably go bankrupt first

thanks for the chuckle!

http://www.businessinsider.com/january-jolts-report-2014-3

The January JOLTS report is out.
Job openings came in at 3.974 million, below the 4.015 million expected but up from December's revised print of 3.914 million.

The hire rate and separation rate were basically unchanged at 3.3% and 3.2%, respectively.

The Bureau of Labor Statistics' "JOLTS Report" may not be as market moving as monthly nonfarm payrolls, but it does gives key insights into the labor market on hires, quits, layoffs, and job openings.

In fact, the Federal Reserve's new chair Janet Yellen has cited JOLTS as one of her favorite reports. As the unemployment rate edges toward the Fed's targets over the next few years, JOLTS could possibly play a larger role when the central bank determines interest rate policy.



Read more: http://www.businessinsider.com/january-jolts-report-2014-3#ixzz2vfEWEh5c

I'm headed to the golf course.

$649 in car repairs. The 100K mile renovation....

http://www.businessinsider.com/california-budget-2014-3

In November 2012, I was interviewed by Joe Weisenthal at Business Insider. One of my comments during our discussion on state and local governments was:
I wouldn’t be surprised if we see all of a sudden a report come out, “Hey, we’ve got a balanced budget in California.”

At the time that was way out of the consensus view. And a couple of months later California announced a balanced budget, see The California Budget Surplus

The situation has improved since then. Here is the most recent update from California State Controller John Chiang: Controller Releases February Cash Update

State Controller John Chiang today released his monthly report covering California's cash balance, receipts and disbursements in February 2014. Revenues for the month totaled $5.6 billion, surpassing estimates in the 2014-15 Governor's Budget by $968.9 million, or 20.9 percent.



Read more: http://www.calculatedriskblog.com/2014/03/update-on-california-budget-revenue.html#ixzz2vfH9Tq7g