The top 1 percent of Americans raked in 95 cents out of every dollar of increased income from 2009, when the Great Recession officially ended, through 2012. Almost a third of the entire national increase went to just 16,000 households, the top 1 percent of the top 1 percent, Piketty and Saez’s analysis of IRS data shows.
By contrast, in 1934, the year after the Great Depression officially ended, the 1 percent of the 1 percent saw their incomes slip by 3.4 percent.
The income changes for the vast majority are just as revealing. The bottom 90 percent saw their average incomes rise 8.8 percent in 1934 over the prior year, while in 2012 the same statistical group had to get by on 15.7 percent less than in 2009.
In showing the crucial role of government policy in the distribution of wealth and income, Piketty throws the proposals by many conservatives and billionaires to end all taxes on capital into proper perspective. The Steve Forbes flat tax, for example, would levy wages and business profits, but not capital gains, dividends or interest, meaning that the already rich could live tax-free while workers would bear the full burden of government....
Balzac, who famously wrote that “behind every fortune lies a great crime,”
2---Foreclosures down 500K from last year---Non-current loans down by almost 1 million, HW
Black Knight Financial Services' "First Look" at February 2014 data
Black Knight, formerly Lender Processing Services, report on mortgage performance in February include the following highlights:
- The number of loans in foreclosure has dropped by more than 500K since last year (1.24M as of Feb.)
- There are now nearly 1 million fewer non-current mortgages since last February (4.1M as of Feb).
- The roughly 92K foreclosure starts in February marked a 30% year-over-year decline....
"Borrowers with FICO scores below 620 accounted for 0.35% or mortgages in January, down from about 13% in February 2003 and a peak of 17% during the frothiest peaks of the housing bubble. The best borrowers, with scores above 780, have taken their place, swelling from about 13% or originations in 2003 to a little less than 30% today."3---Secular Stagnation and Wealth Inequality, House of Debt
The basic idea and implications have been fleshed out by many: here is some backround reading by Ryan Avent, John Cassidy, Gavyn Davies, and Paul Krugman. A brief summary of the hypothesis goes something like this: A normally functioning economy would lower interest rates in the face of low current demand for goods and services in order to induce households and businesses to borrow and spend. When interest rates fall in a normally functioning economy, households borrow to buy cars or re-do their kitchens, and businesses find it profitable to invest. A lower interest rate helps boost demand.
But what if the interest rate needed to generate sufficient demand is negative? In other words, what if the economy needs to charge people for saving in risk-free assets such as U.S. Treasuries in order to get them to spend? Many find this idea counter-intuitive: real interest rates are basically zero, but this argument says they are still too high.
Why would interest rates be stuck at too high a level? Why can’t they become negative? Nominal interest rates can never be negative because of currency — the U.S. government promises a nominal return of 0% if you hold cash and so no one would accept a nominal interest rate below 0% on another government security. Of course, real interest rates can become negative if we have inflation. But inflation may be hard to get, especially if a central bank has built a reputation for fighting inflation. If real interest rates need to be very negative to boost demand, but prevailing interest rates are around zero, then we will have too much savings in risk-free assets — what Paul Krugman has called the liquidity trap. In such a situation, the economy becomes demand-constrained.
The liquidity trap helps explain why recessions can be so severe. But the Summers argument goes further. He is arguing that we may be stuck in a long-run equilibrium where real interest rates need to be negative to generate adequate demand. Without negative real interest rates, we are doomed to economic stagnation. (Krugman presumes the problem is credit not incomes)
4---The 100 Best Economics Books of All Time, list muse
5---Britons Rate Russia More Favorably Than European Union, Israel, zero hedge
6---15 years on: Looking back at NATO's ‘humanitarian’ bombing of Yugoslavia, RT
(Same old, same old: US support for terrorists on US state dept list) Back then, Slobodan Milosevic's forces were engaged in armed conflict with an Albanian rebel group, the Kosovo Liberation Army (KLA), which sought the province’s separation from Yugoslavia. Former US President Bill Clinton's special envoy to the Balkans, Robert Gelbard, had earlier described the KLA as “without any questions, a terrorist group.” (The KLA was later repeatedly accused of being involved in the organ trafficking of Serbs in the late 1990s.)
7---Home Sales Usually Pick Up in Spring, but This Year May Disappoint , WSJ
(Worst spring ever)
8---Number of the Week: Only Best Credit Scores Getting Mortgages , WSJ
755: The average FICO score for a conventional mortgage
Mortgage credit continues to loosen up, but getting a loan to buy a house is still difficult for the average American. This is especially true for people without top credit scores.
The average FICO score for a conventional mortgage – one that’s sold to mortgage giants Fannie Mae and Freddie Mac — was 755 in February, according to Ellie Mae’s latest mortgage origination report.
The average FICO score for FHA loans – which are backed by the government and attract buyers with lower credit in part because FHA loans require down payment as low as 3% – was 686.
9---US plan to Get rid of Putin, Raimondo
After the bombing campaign, which strengthened support for Milosevic and weakened his opponents, the US poured cash into rebuilding the Serbian opposition. The funding was contingent on the disparate opposition groups agreeing to work together and attending regular coordination meetings held in Budapest, Hungary, and run by people whom participants understood to represent the State Department. The plan for the anti-Milosevic revolution was worked out in these meetings down to the smallest detail, including where the leaders of each of the 18 participating political organizations would be if mass protests broke out in Belgrade. They did, in October 2000, and Milosevic didn’t seem to know what hit him."
This is a very Soviet plan: a revolutionary project, directed by a foreign power "down to the smallest detail," aiming to subvert an elected government. Looks like Gessen couldn’t avoid her Russian heritage even if she wanted to. Yet she and many of her fellow expatriates despise their old homeland with a hot passion: Julia Ioffe’s Russia-hating tirades in The New Republic are typical of the genre. They blithely liken Putin to Stalin, ignoring that the latter killed as many as 60 million people, and also blanking out the great progress Russia has made in its long journey to democracy since the fall of Lenin’s heirs.
The Gessen plan, I fear, is already in operation: Gessen is merely describing what has already been occurring after the fact. Millions of US taxpayer dollars went into the forging of the Ukrainian
The United States government has been trying to get rid of Vladimir Putin ever since he was elected President the first time: the passage of Russian laws forbidding foreign-funded NGOs from operating was designed to head off Gessen’s preferred strategy at the pass. But there are ways around this, and no one should be in any doubt that the US is taking them: after all, how do you think "Pussy Riot" manages to travel all over Russia posing for Western photographers without any visible means of support? How does a political movement with more fans outside of Russia than inside manage to survive in spite of being held in contempt by most Russians?
10--The collapse of capitalism: The OECD’s “Society at a Glance” report: a portrait of a failed system, wsws
(When bakers rule)
Particularly devastating are the figures relating to the United States, the center of world capitalism, the heart of the financial crisis and the “richest country in the world”—in which poverty, hunger and social inequality have grown more than nearly any other country surveyed....
Some of the indices include:
Inequality: Income inequality has grown sharply in nearly all of the countries surveyed, but nowhere near as rapidly as the United States. In the US, the top 1 percent of the population earned 19.3 percent of all income in 2013, more than double its earnings in 1985.
In the United States, the top 0.1 percent receive a larger share of income than the top 1 percent received three decades ago, while the top one percent now receive the same share of income as the top 5 percent did at the time. The top one percent takes in a higher share of income in the United States than in any other OECD member.
Joblessness: The report notes that, since 2007, the number of unemployed people in the OECD member countries increased by a third, to 48 million. Of those, more than a third have been out of work for more than a year. It adds, “The number of people living in households without any income from work has doubled in Greece, Ireland and Spain, and risen by 20% or more in Estonia, Italy, Latvia, Portugal, Slovenia and the United States.”
Hunger: The United States had the fifth-highest number of people who said they could not afford food, following Mexico, Turkey, Hungary, Chile and Estonia. The percentage of people in the US who said they could not afford food for themselves and their family in the past twelve months increased from 13.4 percent in 2006 to 21.1 percent.
Youth: Conditions for young people are particularly dire. The report noted, “More than 20% of all youth aged 16-24 were unemployed or inactive, and neither in education nor in training in Greece, Italy, Mexico and Turkey.”
Birth rates: As a result of worsening economic security, fertility rates have plummeted across the OECD, led by the United States, which had the most significant drop in fertility rates of any of the countries surveyed.
Poverty: Poverty rose significantly in most of the countries surveyed as a result of mass unemployment and falling wages...
The report, presented by an organization that is among the leading advocates of “structural reform” and attacks on social programs, includes a warning to the ruling class that the astronomical growth of poverty and inequality inevitably must result in enormous social upheavals.
“Deep economic crises can be expected to have profound knock-on effects on people’s...trust in others and in institutions. Understanding these is important not only for monitoring societal well-being, but also because social tensions and a shifting social fabric can trigger and drive fundamental social, cultural and political change.” The OECD concludes that “urgent action” is needed “to tackle rising inequality and social divisions.”
It is indeed true that the impact of the capitalist crisis is leading to major shifts in popular consciousness and a collapse in trust for the existing “institutions.” The ruling class and the capitalist system, however, have nothing to offer.
12---LIBOR: The World’s Most Dishonest Number, Big Picture
The FDIC has sued 16 of the largest banks in the world plus the British Bankers Association (BBA) alleging that they engaged in fraud and collusion to manipulate the London Inter-bank Offered Rate (LIBOR). BBA called LIBOR “The most important number in the world.”...
According to the FDIC investigation, the three largest banks in America (including the world’s two largest banks), the four largest banks in the U.K, the largest bank in German, the largest bank in Japan (plus one of the handful of surviving “main banks”), the third largest bank in France, the two largest Swiss banks, the second largest bank in Canada, and the second largest bank in the Netherlands conspired together to manipulate LIBOR and not only lied about it but also covered up the cartel and the fraud scheme it used. The 15 surviving banks’ total assets were nearly twice as large as the U.S. GDP as of September 30, 2013.
Here are the data on the banks sued by the FDIC
|Bank||($ billions, IFRS, as of 9/30/13)|
|Bank of America Corp||3063^|
|Credit Suisse Group AG||1643^|
|Deutsche Bank AG||2420|
|HSBC Holdings PLC||2723|
|JPMorgan Chase & Co||3678^|
|The Royal Bank of Scotland Group PLC||1829|
|Lloyds Banking Group PLC||1409|
|Royal Bank of Canada||825|
|Bank of Tokyo-Mitsubishi UFJ||2469|