Walker Opposes Raising the Minimum Wage

In a year-end interview on national television Scott Walker was asked if he supports raising the minimum wage. He answered a definitive No! He responded saying that the nation should instead follow his Wisconsin footsteps in job creation. What alternate universe does the Governor live in?

Quarterly data rank Wisconsin 37th in private-sector job growth

By John Schmid and Kevin Crowe of the Journal Sentinel 12/18/13

The nation’s most recent employment report, which examines job creation in all 50 states, raises a familiar question with renewed urgency: Why is Wisconsin a chronic laggard?

According to Wednesday’s report from the U.S. Bureau of Labor Statistics, Wisconsin gained 23,963 private-sector jobs in the 12 months from June 2012 through June 2013, a 1.0% increase that ranks the state 37th among the 50 states in the pace of job creation during that period.

The state’s ranking slid from a revised rank of 32nd three months earlier, which covered the 12 months through March 2012.

Wisconsin continued to trail the national rate of job creation, as it has since July 2011. The United States created private-sector jobs at a rate of 1.9% in the latest 12-month period, nearly double Wisconsin’s 1.0% rate, the data show.

“It’s like déjà vu all over again,” said Dale Knapp, director of research at the Wisconsin Taxpayers Alliance, a nonpartisan pubic policy group in Madison.

While management of the economy and job creation are politically charged issues in Wisconsin, not least ahead of next year’s governor’s race, Knapp and others were quick to point out that Wisconsin’s subpar performance is hardly a new phenomenon.

“These are persistent patterns we’ve seen over a long period of time,” said Charles Franklin, a social scientist and data specialist at Marquette University.

Since the turn of the century, Wisconsin appears to have a natural “speed limit” in its private-sector job creation that is capped at about 35,000 jobs per year, regardless of political leadership, Franklin said. That compares to many years in the 1990s when the state’s annual job-creation number was closer to 60,000, Franklin said.

According to Knapp, hiring in the state under Republican Gov. Scott Walker, who took office in January 2011, has shown a virtually identical pattern to 2004-’07 — the non-recession period that fell during the two terms of his Democratic predecessor, Jim Doyle.

Separately, last month the Wisconsin Taxpayers Alliance published a long-term study, which examined a 13-year period from 2000 to 2012, showing that sluggish job creation has characterized the state since the start of the millennium.

Most credible figures

Economists consider Wednesday’s job creation figures, known as the Quarterly Census of Employment and Wages, to be the most credible and comprehensive available. The report breaks out data for the nation as a whole as well as each of the 50 states. It tracks the economy in rolling 12-month increments, measured every three months.

The quarterly data are based on a census of 96% of the nation’s employers in the public and private sectors. That makes the figures far more reliable than monthly jobs data, which are based on a sample of only about 3% of employers, leaving monthly estimates prone to large margins of error.

Because the quarterly data are comprehensive and time-consuming to compile, they are released with a half-year time lag. In the past, the lagging schedule meant the quarterly data got less attention than monthly numbers.

However, job creation has emerged as a politically potent issue in Wisconsin. And ever since the special gubernatorial recall election in June 2012, when economic management emerged as a central political issue, the quarterly report has been closely watched by the state’s politicians and economic policy strategists.

When he ran for office, Walker framed his economic program around a vow that Wisconsin would add 250,000 private-sector jobs by the end of his four-year term.

Under the pace of job creation since he took office, Wisconsin is unlikely to achieve Walker’s job creation goals during his first term, Franklin and others pointed out.

Walker’s target would be ambitious under almost any circumstances. To hit it, the state would need to sustain a pace of job creation for four years similar to the best years of the 1990s — prior to the bursting of the dot-com bubble, China’s 2001 membership in the World Trade Organization, and the insecurities that accompanied the post-9-11 era of security jitters, Franklin said. Even in the 1990s, however, the state didn’t consistently spawn the 62,500 private-sector jobs per year that would be needed to create a quarter million new jobs in a single four-year period, Franklin said.

“It’s worth noting that the state shows stable job growth,” nothing spectacular but also not a reverse into job losses, Franklin said.

Franklin analyzes Wisconsin’s long-term employment and demographic data to complement the statewide public opinion polls that he routinely conducts for the Marquette Law School.

Reading data differently

In a news release Wednesday, Walker’s office focused on the absolute number of jobs created, which would place Wisconsin 25th out of the 50 states. Wisconsin ranks 20th in population, however, so its job-creation ranking didn’t quite match its size. And even under that ranking, Wisconsin slid from its non-population-adjusted job-creation ranking of 22nd in the previous quarterly report.

“Our economic and fiscal reforms are working and Wisconsin continues to move forward in the right direction with a growing economy and more jobs,” Walker said in the statement.

Democrats jumped on the quarterly report. “Again today, Wisconsin received bad news on job creation,” said Peter Barca (D-Kenosha), Democratic leader in the state Assembly. Barca emphasized that Wisconsin’s ranking of 37th compared to 15th for neighboring Minnesota, and that “Minnesota has created more than twice as many private sector jobs as Wisconsin.”

For short-term political purposes, both parties routinely “cherry pick” the numbers that suit their needs, Franklin said. But neither party appears to deal honestly with Wisconsin’s persistent underperformance in job creation compared to the 1990s, Franklin said.

Apart from partisanship, economists have cataloged the non-political reasons why the state is a chronic laggard in job creation — reasons that have little or nothing to do with whatever party controls the Statehouse and governor’s mansion.

Those observers point out that the state is saddled with some aging industries such as paper mills, printing plants and metal foundries that often date back more than a century; neither entrepreneurship nor venture capital funding is as abundant in Wisconsin as in many other states; and Wisconsin’s schools don’t generate as many college-educated residents as other states.

“The structure of this economy is playing a role, regardless of partisan control,” Franklin said.

Also read PolitiFact’s rebuke of Walker’s claim that “minimum wage jobs are overwhelmingly for young people” at:

http://www.jsonline.com/news/politifact-testing-scott-walker-claim-minimum-wage-jobs-overwhelmingly-for-young-people-b99181803z1-239685231.html

Yes Magazine:10 Hopeful Things That Happened in 2013 to Get You Inspired for What’s to Come

Beyond the headlines of conflict and catastrophe, this year’s top stories offered us some powerful proof that the world can still change—for the better.

by Sarah van Gelder posted Dec 27, 2013

There was something almost apocalyptic about 2013. Typhoon Haiyan slammed into the Philippines, the strongest storm ever recorded on land. It killed more than 6,000 people and affected millions. But it was just one of the 39 weather-related disasters costing $1 billion or more in 2013.

 

In Australia, record high temperatures forced mapmakers to create a new color on the weather map. Massive wildfires swept through California, historic flooding took out bridges and roadways in Colorado, and tornadoes swept through the Midwest, destroying towns like Moore, Okla. Millions of people are on the move, seeking to escape the effects of climate-related disasters.

 

CO2 concentrations passed 400 parts per million for the first time this year, and yet governments have done little to curb emissions. Meanwhile, hundreds of millions of dollars—much of it from secret sources—flow to climate-denier think tanks and advocacy groups.

 

Pop culture often explores a change before politicians do, and 2013 saw a rash of post-apocalyptic movies—from World War Z to Oblivion—and zombie apocalypse role-playing games.

 

Much happened that was hopeful this year—a new pope focused on inequality, successful minimum wage campaigns spread across the country, and the number of states allowing gay marriage doubled.

 

But responses to the threat of the climate crisis lead off this year’s top stories as we look at seeds sown this year that could make 2014 transformational.

 

1. We saw surprising new leadership on the climate issue

 

In northeast Nebraska, Native Americans and local ranchers formed a new alliance to resist the Keystone XL pipeline. Seven thousand activists gathered in Pittsburgh to press for action on a wide range of environmental justice issues. Students across North America persuaded nine colleges and universities to divest from fossil fuel companies. Hundreds of climate activists walked out of the COP19 climate talks in Poland to hold their own climate talks.

 

The governors of California, Oregon, Washington, and the Canadian province of British Columbia have committed to taking action on the climate crisis. But Congress remains deadlocked and in denial, and climate scientists—when they let down their careful professional demeanor—express astonishment that world governments have failed to act on what is fast becoming a global emergency.

 

A new potential ally is coming from an unexpected source. Some investors are beginning to worry that fossil fuel companies may not be a good bet. Investors worry about a “carbon bubble.”

 

The reserves of oil, gas, and coal counted as assets by the big energy corporations would be enormously destructive to life on Earth if they were allowed to burn. Many believe that new regulation or pricing will keep a large portion of those reserves safely in the ground.

 

If that happens, the companies’ reserves, and thus their stock, may be worth far less than believed. Savvy investors are placing their bets elsewhere: Warren Buffett, for example, is investing $1 billion in wind energy, which, along with solar energy, is looking better all the time.

 

2. Native peoples took the lead in the fossil fuel fight

 

In response to Canadian Prime Minister Stephen Harper’s attempt to ramp up fossil fuel extraction on Native lands, Idle No More blossomed across Canada this year. First Nations people held flash mob round dances, blockaded roads, and appealed to government at all levels to protect land and water.

 

And it’s not just Canada. In Washington state, the Lummi Tribe is among those resisting massive new coal transport infrastructure, which would make exported coal cheap to burn in Asia.

 

In Nebraska, the Ponca Tribe is teaming up with local ranchers to resist construction of the Keystone tar sands pipeline. Indigenous peoples in the Amazon, the Andes, Malaysia, the Niger Delta, and elsewhere are also at the front lines of resistance to yet more dangerous fossil fuel extraction. Many are turning to the United Nations Declaration on the Rights of Indigenous peoples and the new Rights of Nature movement for support.

 

Indigenous peoples developed ways of life that could sustain human life and the natural environment over thousands of years. The rest of the world is starting to recognize the critical importance of these perspectives, and there is growing willingness to listen to the perspectives of indigenous peoples.

 

3. The middle and lower classes fought for economic justice

 

Income inequality is reaching levels not seen since the Roaring Twenties. People stuck in long-term unemployment are running out of options, and those who do find work often can’t cover basic living expenses. The issue is now getting attention from mainstream media, becoming one of the defining issues of our time, as President Obama said.

 

Now a movement is building to create a new economy that can work for all. Voters this year passed minimum wage laws in SeaTac, Wash., ($15 an hour) and the state of New Jersey. An overwhelming majority favors raising the minimum wage to $9 an hour. Domestic workers won the right to a minimum wage after years of organizing.

 

The message was also clear in the election of Bill de Blasio, a founder of the Working Families Party, as mayor of New York City. Inequality is a top plank of his platform and his public record. At the national level, Senator Elizabeth Warren’s defense of the rights of student borrowers and her proposal to strengthen Social Security (instead of weaken it, as leaders in both party are discussing) is winning widespread support. There is even talk of drafting Warren to run for president.

 

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4. A new economy is in the making

 

At the grassroots, National People’s Action and the New Economy Institute are leading new conversations about what it takes to build an economy that works for all and can function in harmony with the environment. Thousands of people are taking part.

 

And a growing cooperatives movement is linking up with unions and social movements. Some are working with large “anchor” institutions, like hospitals and universities, that can provide a steady market for their products and services. Credit unions, too, are proving their value as they keep lending to local businesses and homeowners as Wall Street-owned banks pulled back.

 

And a new DIY sharing economy is taking off, as people do peer-to-peer car-sharing, fundraising, and skill-sharing, and bring open-source technology to new levels.

 

5. U.S. military strikes didn’t happen

 

The big news of the year may be the two wars the United States refused to instigate.

 

The United States did continue its drone strikes, and the civilian casualties are causing an international uproar, with some calling for an outright ban on drones. And military spending continues to devastate the country’s budget. (The United States spent more on the military in 2013 than China, Russia, the United Kingdom, Japan, France, Saudi Arabia, India, Germany, Italy, and Brazil combined.) Few dared to call for the same fiscal discipline from the military and its many contractors as they expect from schools and services for the poor.

 

On the other hand, the United States stepped back from the brink of military strikes against Syria and Iran—a step in the right direction.

 

6. Pope Francis called for care and justice for the poor …

 

…and for an end to the idolatry of money and consumerism. He also criticized “ideologies which defend the absolute autonomy of the marketplace and financial speculation.”

 

In his “Evangelii Gaudium” he says: “Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills.”

 

This call is provoking outrage from Rush Limbaugh and Fox News commentators, but elsewhere, it’s leading to a new questioning of the moral foundation for a system that concentrates wealth and power while causing widespread poverty.

 

7. Gays and lesbians got some respect

 

On June 26, the Supreme Court struck down key provisions of the 1996 Defense of Marriage Act. Today, married gay couples are entitled to federal benefits once reserved for straight couples. The year saw a doubling of the number of states allowing gay marriages, and a third of all Americans now live in such states.

 

Support for gay marriage has flipped from a slight majority opposing it to a majority now supporting the rights of gay and lesbian couples to marry. As a wider range of gender identities has become acceptable, men and women, gay and straight, are freer to shed gender stereotypes without fear of bullying and humiliation.

 

8. There were new openings for a third party

 

Just 26 percent of Americans believe the Democratic and Republican parties are doing “an adequate job,” according to an October Gallup poll; 60 percent say a third party is needed. Eighty-five percent disapprove of the job Congress is doing. Even cockroaches (along with zombies, hemorrhoids, and Wall Street) have a higher approval rating according to a recent poll by Public Policy Polling.

 

But it’s not the Tea Party that Americans are looking to as the alternative. Support for the Tea Party has fallen: In an October NBC/Wall Street Journal poll, only 21 percent of respondents had a favorable view of the party.

 

New space has opened for independent political work. The Working Family Party (see #3 above) is an especially interesting model.

 

9. Alternatives to Obamacare are in the works

 

Democratic leadership believed that the big profits the Affordable Care Act guaranteed to private insurance companies would make the act popular with conservatives.

 

But the resulting system, with all its complications and expenses—and requirements—is frustrating millions. There are features that benefit ordinary people, but it compares poorly to the simpler and more cost-effective systems that exists in most of the developed world. Canadian-style single-payer health care, for example, had the support of a majority of Americans. Some jurisdictions are still looking for alternatives. Cooperative health insurance is available in some states and others are working to establish statewide single-payer healthcare.

 

10. An education uprising began

 

The momentum behind the education reform agendas of Presidents Bush (No Child Left Behind) and Obama (Race to the Top) is stalling. The combination of austerity budgets, an ethic of blame directed at teachers, high-stakes testing, and private charter schools has stressed teachers and students—but it has not resulted in improved performance.

 

Get Apocalyptic: Why Radical Is the New Normal

 

Seattle’s Garfield High School teachers, students, and parents launched an open rebellion last spring, joining a handful of others in refusing to administer required standardized tests. The movement is spreading around the country, with more rebellions expected in the spring of 2014 (stay tuned for an in-depth report in the Spring issue of YES!)

 

We live in interesting times, indeed. The growing climate emergency could eclipse all the other issues, and the sooner we get on it, the more we can use the transition for innovations that have other positive spin-offs.

 

There’s not a moment to lose.

Economic Development in Milwaukee Falls Far Short of Meeting Our Needs

Laborers vote with their feet when firms offer no security

By Michael Rosen Dec. 3, 2011 Milwaukee Journal Sentinel

Wisconsin’s manufacturers are facing a skilled labor shortage of machinists, operators, craft workers, distributors and technicians. In response, the Milwaukee 7, southeastern Wisconsin’s regional development organization of business and community leaders, has announced a public relations campaign.

News flash: It will take a lot more than branding to solve these labor shortages.

Any solution must start with defining the scope of the problem. Why is there a shortage of the kind of skilled workers that for decades made Milwaukee a destination for manufacturers?

Outsourcing is a huge part of the answer. One day after the M-7’s announcement, Dana Corp. announced it was closing its Milwaukee operations and moving more than 150 jobs to low-wage Kentucky.

Similarly, the Thermo Fisher Scientifica in Two Rivers, which already had moved hundreds of jobs to a Reynosa, Mexico, plant, announced it may shut down entirely.

The list of companies that have offshored or outsourced production reads like a who’s who of Wisconsin’s manufacturing: Briggs & Stratton Corp., A.O. Smith, Rockwell, Badger Meter – and many more.

The loss of family-supporting manufacturing jobs has been going on since the early 1980s. Milwaukee’s working families have had their lives turned upside down by plant closings, downsizings, outsourcings and offshoring. Their experience in manufacturing has meant job loss, declining wages and benefits and economic insecurity.

Take my former student, John. He did everything we ask young workers to do, earning two journeyman cards while working and attending Milwaukee Area Technical College full time. John left Briggs when it began moving jobs to low-wage states and Mexico. But his new employer, Rockwell, began outsourcing to nonunion, low-wage plants even before it eliminated all hourly workers last year. So John started over again at Harley-Davidson. But, a year and a half ago, Harley laid John off.

John’s experience is unfortunately not unique. Almost everyone with roots in this community has a father or mother, aunt, cousin or uncle who has experienced the instability that characterizes manufacturing employment. Nationally, manufacturers shed 2 million jobs during the Great Recession. Wisconsin lost 58,300 manufacturing jobs, 11.6% of its total, between December 2007 and June 2009, the official end of the recession. The state continued to lose manufacturing jobs for several months even after the recession ended. By September 2010, Wisconsin had lost 69,800 manufacturing jobs, 14% of its total.

Laid-off manufacturing workers have summed up this experience with their kids, nieces and nephews. As Mario, a nursing student now after being laid off from a foundry after 16 years, told me, “I have a family, and I need a job with security.”

His attitude is reinforced by the occupational programs at MATC that are most popular and have waiting lists: culinary arts, automotive, heating and air-conditioning, physical therapy, barber and cosmetology, occupational therapy and nursing.

What do they all have in common? These are jobs that cannot be offshored.

Our working-class students are voting with their feet by choosing careers that provide more secure employment. They’ll continue to do so until manufacturers offer the same level of security they find in other occupations or sufficient compensation to justify the insecurity that has characterized manufacturing employment.

What can be done to address this? Manufacturers need to:

• Abandon human resource strategies that treat employees like variable costs instead of the strategic assets they are. Offering security will attract students to skilled manufacturing careers.
• Revive apprenticeship programs that were eliminated or downsized in the 1980s under the illusion that automation would result in workerless factories.
• Insist that state government restore the 30% slashed from Wisconsin’s technical colleges in the last budget. Technical colleges train the very skilled and technical workers that manufacturers need. Yet, over the past 20 years, their state funding has been cut by more than 50%.
• Support public school investments in reviving technical education and participate in the state’s youth apprenticeship program.
• End free trade deals that provide countries that do not have or enforce labor and environmental laws, an unfair advantage over responsible American manufacturers.

Solving labor shortages requires more than public relations.

Henry Ford recognized this when he doubled his hourly workers wages to $5 a day. Ford’s 400% turnover rate and 10% absentee rate vanished as hard, undesirable work was transformed into desirable employment and at the same time created a market for his cars when his workers finally could afford them.

Wisconsin had a similar experience in the 1990s when hospitals were facing acute nursing shortages. In response, they increased nurses pay and instituted incentives such as signing bonuses. Enrollments in nursing programs soared, technical colleges invested in nursing education and students flocked to occupations that promised employment security and decent compensation.

It’s ironic that the area’s business leaders, who are among the fiercest proponents of market solutions to most problems, are reluctant to use pricing to solve the skilled worker shortage. Any Econ 101 student knows that pricing efficiently allocates resources.

John Schmid of the Journal Sentinel recently blogged that prices should rise in response to shortages – causing quantity supplied, in this case skilled labor, to increase. Think about crude oil, nurses or Green Bay Packers tickets in the secondary ticket market.

As Melanie Holmes, a vice president at Manpower Group, said, “The No.1 reason why employers are having trouble filling these positions is they’re not offering pay that the candidates are demanding.”

I applaud the M-7’s decision to focus on advanced manufacturing. But it will take more than glossy brochures and television ads to persuade the next-generation workforce that becoming a skilled manufacturing worker is a stable and secure career path.

Michael Rosen is an economics professor at Milwaukee Area Technical College.

At least 25 top United States companies paid more to their CEO’s in 2010 than they did to the federal government in taxes

Where Pay for Chiefs Outstrips U.S. Taxes

By DAVID KOCIENIEWSKI Published: August 31, 2011

Verizon’s chief, Ivan Seidenberg, earned $18.1 million in 2010; the company got a tax refund.

John Donahoe, eBay’s chief, collected a compensation package over $12 million, while eBay got a $113 million federal refund.

The companies — which include household names like eBay, Boeing, General Electric and Verizon — averaged $1.9 billion each in profits, according to the study by the Institute for Policy Studies, a liberal-leaning research group. But a variety of shelters, loopholes and tax reduction strategies allowed the companies to average $304 million each in tax benefits — which can be taken as a refund or used as write-off against earnings in future years.

The chief executives of those companies were paid an average of more than $16 million a year, the study found, a figure substantially higher than the $10.8 million average for all companies in the Standard & Poor’s 500-stock index.

California Representative Maxine Waters Makes Demands on President Obama

President Obama: Please Come Out Swinging, Call Congress Back and Start with a Plan to Rebuild Our Infrastructure

The American people are suffering and are asking for leadership . The present strategy toward  Congress just isn’t working. If Republicans won’t cooperate or compromise then isolate them for all to see.  Last week Rep. Maxine Waters set the tone demanding action now.

On Sunday David Axelrod, President Obama’s political advisor speaking on ABC, muddled through a defense of the President’s present lack of action. Axelrod was embarrassingly without vision or a plan.  We need a jobs plan that the American people can wrap their arms around. If Republicans won’t support it, take the fight to the American people.

Following is a video of Rep. Maxine Waters calling on  President Obama to take action.

http://www.youtube.com/watch?v=VP44ngv9hZI

Anarchy in the UK

London

Maria Margaronis August 9, 2011 from the Notion, a blog of the Nation magazine

Perhaps the whole point of a riot is to defy explanation: it’s an eruption of the irrational, a shattering of glass and boundaries, a testosterone-fueled roar that briefly flips anger and emptiness into something like ecstasy. What’s in the minds of the young men (and women, too) in London, Birmingham, Bristol and Liverpool who’ve sent great sheets of flame rising into the August night, devouring local businesses that it took years to build; who’ve turned plate glass to spiderwebs with one crack of a brick; who’ve gone home with their backpacks stuffed with cell phones, Nike trainers, X-boxes and Wiis? Well, wouldn’t we like to know, we middle-class types with access to a blog and an analysis, a “network” and a future?

Today Prime Minister David Cameron and London Mayor Boris Johnson returned reluctantly from their  vacations to confront the arson and looting that have spread through Britain’s cities over the last three nights, like a pair of Eton prefects summoned to contain the fifth form. Parliament has been recalled for the second time this summer (the first was over phone hacking by Murdoch’s News International); 450 people have already been arrested; Cameron has promised 6,000 more police on London’s streets this evening. But will it be enough?

Missy, who works at a small shop selling jeans and sneakers down the road from where I live, shrugs when I ask her what she’s going to do tonight. The metal grille was down and properly locked yesterday; “they” trashed the place anyway. “They know the shop,” she says. “They went straight upstairs where we keep the expensive stuff, the £300 jeans.” A few blocks on, outside a smashed-up cycle shop where twisted bikes lie like skeletons on the pavement, a forensic expert carefully dusts glass with fingerprint powder. Does she think she’ll find anything? Another shrug. In Dalston, next to Hackney which saw some of the worst rioting, the Turkish Kurdish community have taken charge themselves, standing guard outside their shops, some of them with baseball bats.

The blue touchpaper that lit the conflagration was the killing of Mark Duggan, a 29-year-old black father of four, by armed police in Tottenham, one of London’s poorest boroughs, as he rode in a minicab; he had a handgun but there’s been no claim that he made a move to fire it. A small crowd of local residents gathered at the police station to demand explanations; though the protesters were peaceful, the police were not forthcoming. By nightfall, against the wishes of Duggan’s relatives, rioting had broken out in Tottenham and elsewhere. Police cars and a double decker bus were set on fire and shop windows were smashed, mostly by teenage boys.

What began as an outburst of anger against police violence soon morphed into an orgy of nocturnal “shopping” as kids broke into sports and electronics shops, cellphone stores and supermarkets. A brave woman in Hackney gave a streetcorner sermon amid heaps of litter, excoriating the rioters for turning grief to greed: “This is about a fucking man who got shot in Tottenham. This isn’t about having fun on a riot and busting up the place. Get real, black people, get real. If we’re fighting for a cause let’s fight for a fucking cause.” But in the deprived neighbourhoods of Britain’s crumbling cities, consumerism is a more accessible dream than commitment or community.

And so it has gone on, night after night since then, frightening, unpredictable and uncontainable. The police are overwhelmed; the politicians nervously continue to plough their furrows. “Sheer criminality,” says Home Secretary Teresa May, as if any attempt to understand what’s at the root of all this rage would imply condoning it. Labour politicians flirt with the temptation to blame government spending cuts, as if such fury could build up in a matter of mere months. Of course the cuts don’t help: they are the final straw, the irrefutable evidence that the poor are now dispensable, outside society. Nor does the larger sense that nobody’s in charge, that the economy’s in freefall, that bankers have been looting the public purse for years, and that our leaders have no idea what to do about any of it. There is a doomsday feeling on the streets of London: time to grab what you can, burn it down and live for now, because who knows what’s coming for us all tomorrow.

But it’s taken years to brew the toxic mix of hopelessness, frustration and disenfranchisement, envy, anger and boredom, greed and selfishness, humiliation and recklessness that’s erupted in Britain this week–years in which the gap between rich and poor grew wider, racism was allowed to fester, consumerism and celebrity culture replaced community. While we in the middle classes got on with our oh-so-busy lives, averting our eyes from the poverty just a few blocks away, sending our kids to schools where there are other “motivated parents,” talking politics, we allowed the rifts in our own neighbourhoods to deepen until they became almost unbridgeable.

This morning, down the road, people stared at the broken shops, shaking their heads in disbelief. “It’s mad,” they said. “Just mad.” Small groups of women set out with brooms and dustpans to sweep up the broken glass. There is a kind of solidarity taking shape, a wish to protect what we have, now that it’s under threat. People are talking to each other, asking if everything’s all right. The challenge, when all this dies down, will be to stay awake, to keep on doing that, until solidarity spreads.

 

Present Economic Crisis and Subprime Mortgages

Subprime Contagion

Christopher Hayes August 10, 2011 Nation magazine

I moved to Washington in July 2007, at a time when what was then quaintly referred to as the “subprime crisis” was starting to cause some consternation on Wall Street and Capitol Hill. With housing prices falling, banks found themselves holding on to packages of subprime loans that were hemorrhaging value. Every day, it seemed, another bank announced it was writing down a bunch of these loans, which were just starting to be called toxic assets, and the total of such write-downs was, by July, already tens of billions of dollars.

One of the first stories I wrote for The Nation from DC was a dispatch from a Joint Economic Committee hearing, at which Federal Reserve chair Ben Bernanke sought to calm the nerves of lawmakers made anxious by the cascade of worrying headlines. Bernanke acknowledged that some of the trends in the subprime market were worrying, but he said that the problems were, at least for the moment, contained. There was, he told the committee, “scant evidence of spillovers from housing to other components of final demand.” In other words: yes, there are some clouds on the horizon, but no, the sky isn’t falling.

But Maryland Representative Elijah Cummings, whose Baltimore district was facing as many as 12,000 foreclosures a month, found Bernanke’s tone just a bit too calm for his liking: “As I sat here and I listened to you, it seems like you have painted a very rosy picture…but if you came and walked through my district, Mr. Chairman, I think people would be surprised that you seem so calm.”

Bernanke was defensive: “Congressman, first, I don’t know how you got the impression that I was unconcerned about foreclosures.”

“I didn’t say you were not concerned,” Cummings shot back. “I just said you seem to be pretty calm about it.”

We now know Cummings was right: Bernanke and everyone else at the helm in Washington and Wall Street should have been a lot more panicked. But our governing and financial elites’ removal from the on-the-ground ravages of the subprime market meant they were very slow to recognize the magnitude of the unfolding disaster. The ship sprang a leak in the lower decks, flooding the servants’ quarters, and no one up top much cared. The cocktails continued to flow, the band continued to play and the party rollicked on Wall Street throughout the housing bubble, even as working-class homeowners in Baltimore drowned, as their lives and wealth and equities and homes were destroyed. But the water kept coming in, rising deck by deck, until eventually the music stopped, the party ended and, even if only briefly in retrospect, it looked like the entire thing might go down.

Given what a close call it was for those on that top deck, you would think the most important lesson they would take away from the near miss is this: you ignore the fate of those on the bottom deck at your peril. An economy divided into “subprime” and “prime” is dangerously precarious. The predations tolerated in the former will, sooner or later, come to wreak havoc on those who inhabit the latter.

And yet, astonishingly, four years later this lesson has gone almost entirely unheeded. Our governing institutions responded with nearly unprecedented swiftness and force to save, and then revive, the pillars of the prime economy—the banks and corporate America. Yet they are leaving the subprime economy to fend for itself, to suffer through the worst privation in seventy years. “If your personal wealth is predominantly in capital markets,” says Damon Silvers, a lawyer at the AFL-CIO who served on the TARP Congressional Oversight Panel, “well, then, you had a hell of a scare, but you’re 70 percent of the way back to where you were in 2007. If your personal wealth is predominantly in your home, you’re fucked. And approximately 80 percent of people in the US, their only asset is in their home.”

The bet that those who run the prime economy are making is the same one they made during the years that preceded the crash: that they can continue to profit enormously even as the broader economy fails to deliver for the majority of its participants. The last time around, this produced a housing and credit bubble that ended in ruin and almost took the financial elite with it. It’s very difficult to imagine this latest iteration producing a better result.

In fact, it was precisely this ominous thought that largely drove the panicked August selling on Wall Street. Even financial markets and the investor class are waking up to the fact that there’s only so much that corporate profits can grow if American consumers don’t have jobs or assets and are still neck deep in debt. Much as they may wish to finally and definitively detach the prime economy from the subprime one, the two remain stubbornly tethered.

The market panic was the first inkling of what, for our elites, is a long-overdue realization, one they’ve done everything in their considerable power to avoid in the post-crisis age: that extreme inequality isn’t just bad for those on the bottom; in the long run, it’s ruinous for those on the top as well.

Stock Market Nose Dive: Response to Republican Policies Cause Markets to take Worst Dive Since 2008

“…uncertainty created by the debate in the United States to raise the debt ceiling had unnerved European markets as United States investors had become increasingly reluctant to lend to European banks.

Stocks Dive on Fears of Global Slowdown

By GRAHAM BOWLEY Published: August 4, 2011 NYTimes

Stocks around the world fell sharply Thursday on intensifying investor fears about a slowdown in global economic growth and worries about Europe’s ongoing debt crisis, which is centered now on Italy and Spain.

Stock market indexes in the United States and Europe dropped more than 4 percent as Japan intervened to weaken its currency and the European Central Bank began buying bonds to try to calm markets.

At the close, the Standard & Poor’s 500-stock index was down 60.27 points, or 4.78 percent, to 1,200.07. The Dow Jones industrial average was off 512.76 points, or 4.31 percent, to 11,383.68, and the Nasdaq was down 136.68, or 5.08 percent, to 2,556.39.

There have been 17 days since the beginning of 2008 with single-day drops of 4 percent or more – 13 in 2008 and 4 in 2009.

Following accelerating falls over the past two weeks, the stock market is now officially in “correction” territory, defined as a drop of 10 percent to 20 percent since the latest peak.

The S.&P. 500 has fallen 10.6 percent since its recent high of 1,363.61 on April 29, underlining the new negative investment sentiment about the economy and Europe.

“We are now in correction mode,” said Sam Stovall, chief investment strategist at Standard & Poor’s. “We could have another couple of weeks to go before it bottoms.”

The last time the market was in a correction was last summer, when it fell 16 percent before recovering.

A fear haunting markets is that the United States economy may be heading for a double-dip recession. And even after a second major rescue package for Greece and the agreement to raise the debt ceiling in the United States, investors are concerned that world leaders have not done enough to address fragile underlying economic growth, while Europe’s debt problems have moved on to the much bigger economies of Italy and Spain.

Mohamed El-Erian, chief executive of the bond giant Pimco, said investors were selling risky assets like stocks “globally prompted by concerns about the weakening economic outlook, spreading contagion in Europe and insufficient policy responses.”

With Thursday’s dive, the three major American indexes had erased all of the gains made so far in 2011, with the S.&P. and Nasdaq markedly below the start of the year.

In afternoon trading, the Dow, an index of 30 blue-chip stocks, was about 9.4 percent off of its most recent closing high of 12,810.54, reached on April 29. But it was 18 percent below its all-time high of 14,164.53, on Oct. 9, 2007.

Unnerved by policymakers’ apparent inability to get ahead of Europe’s festering debt crisis, European stock markets turned sharply negative across the board.

In Britain, stocks closed down 3.43 percent. In Germany, the DAX index dropped 3.4 percent. In France, the CAC 40 closed down 3.9 percent.

“This is the worst it has been in Europe,” said Jens Nordvig, currency economist at Nomura Securities in New York. “The current rescue package was not enough to cope with the size of the problems posed by Italy and Spain. We need a new framework that can cope with those two countries, and without it markets are on their own and are falling.”

Major indexes in Italy, Spain, France and Switzerland all closed Thursday more than 20 percent below their 2011 highs, while Germany was off nearly 15 percent and Britain’s decline was more than 11 percent.

The selling has extended to many other markets. Mexican stocks are off almost 14 percent from their highs earlier this year, and Brazil’s major index has lost more than a quarter of its value.

Yields on Italian government bonds, already above 6 percent, rose sharply, adding to concerns that the nation’s current debt position is unsustainable. Yields on Spanish debt also increased. This was despite large-scale intervention by the European Central Bank, which for the first time since March began buying bonds in an apparent attempt to prevent the region’s sovereign debt crisis from engulfing Italy.

The markets had expected some concrete action from Prime Minister Silvio Berlusconi on Italian’s worsening debt situation in public remarks late Wednesday. But they were disappointed when he defended the country’s fundamentals and said current packages were enough to foster economic growth. The Italian stock market opened up but then slipped sharply.

Since many of Europe’s banks hold the bonds of countries like Italy and Spain, concern is turning to the health of the banking system as these bonds drop in value. With warning signs flashing that some European banks are struggling to fund themselves in increasingly expensive credit markets, the E.C.B. also moved to help weaker banks by expanding its lending to institutions in the euro area at the benchmark interest rate. Bank stocks nevertheless fell sharply in Europe.

Jean-Claude Trichet, the president of the E.C.B., said the bank had acted in response to “renewed tensions in some financial markets in the euro area.”

He said that uncertainty created by the debate in the United States to raise the debt ceiling had unnerved European markets as United States investors had become increasingly reluctant to lend to European banks. “It’s clear the entire world is intertwined,” he said. “What happens in the U.S. influences the rest of the world.”

But the E.C.B.’s steps were not enough to help Europe’s bond markets.

Laurent Bilke, an analyst at Nomura in London, said the E.C.B. had been buying government debt of Portugal and Ireland in order to calm these markets. But it had not been buying Italian and Spanish government debt, and that had unnerved investors.

He said the E.C.B. council had also not been united in its decision to take extraordinary measures to intervene in the markets, and that fact had spooked markets.

Minnesota State Government Shuts Down

Republicans Fight for Corporate Power Grab Following Wisconsin, while the poor and middle class are hurt.

The post and live blog below are a collaboration between Patch and HuffPost reporters.

Minnesota Governor Mark Dayton (D) and top Republican state lawmakers failed to reach a budget deal to avert a government shutdown ahead of a midnight (CST) deadline.

“I really believe I’ve done everything I possibly could and offered everything I could possibly think of,” said Dayton addressing the state of the negotiations from his office on Thursday night. “This is a night of deep sorrow for me because I don’t want to see this shutdown occur.”

The Democratic governor and state GOP lawmakers had been engaged in contentious talks to close the state’s $5 billion budget gap — much of it left behind by GOP presidential candidate Tim Pawlenty, who declined to seek a third term in the 2010 election.

To see the full Huffington Post report go to:

http://www.huffingtonpost.com/2011/07/01/minnesota-shutdown-2011_n_888363.html

The Rich Get Richer

More for Millionaires

By Al Lewis Wall Street Journal

Just what America needs: richer rich people.

Collectively, U.S. millionaires are going to go from $39 trillion to $87 trillion in wealth by 2020, according to a study the Deloitte Center for Financial Services and Oxford Economics released last week.

Not a word about what happens to hundredaires, thousandaires or even hundred-thousandaires. Perhaps they’ll keep looking for jobs, losing homes to foreclosure and filing for bankruptcy. Or maybe all those trillions will one day trickle down.

Meantime, there has got to be at least one bespectacled, brainiac problem-solver in Washington thinking, “Hmm, trillions? We only need $14 trillion to end the nation’s debt crisis. Thanks, Deloitte.”

Deloitte, however, is not pointing this out for the tax man. This is for bankers, insurance peddlers and wealth managers, so they can find the trillions and collect a fee.

For all the economic misery in the news, there remain nearly 7.8 million households in America with $1 million to $5 million in assets, 2.3 million households with $5 million to $30 million and 496,000 households with more than $30 million, according to the study.

Deloitte projects the assets of these millionaire households will more than double by 2020. Why? Simple compounding of reasonable investment gains.

“There’s a lot of accumulated wealth already,” Andrew Freeman, one of the study’s co-authors, explains. “The existing pot just carries on growing. It’s a bit like a supertanker that keeps on moving.”

The rich get richer. The income gap widens. And pretty soon there’s a totally unjust disparity between the millionaires and the billionaires.

“Being a ‘millionaire’ in the U.S. is no longer viewed as the milestone of success that it was in the past,” the study notes.

So if you’re in one of those $52,000-a-year-median-income households, you really need to get with it.

America’s definition of rich is so rich, it isn’t funny. It only took $100 million to land on the Forbes 400 list of richest Americans in 1982. Bob Hope got on it for cracking jokes. Today, you need $1 billion. And not even Jerry Seinfeld makes that cut with his paltry $800 million.

I already know two words some of you are thinking of emailing me: class envy.

Let’s be clear: I don’t hate the rich. The rich hate me. They hole themselves up in gated communities. They join exclusive clubs. They buy their own planes so they don’t have to sit next to me in coach. And they often pay a lower tax rate than me. Yet I am rooting for them.

I had feared that by 2020, most of the world’s millionaires would be in China. First goes the manufacturing, then the services, then the jobs, then the millionaires, then the nation. But not according to Deloitte.

In 2000, 55% of the wealth held by the world’s millionaires were held by U.S. millionaires. That figure dropped to 42% this year. But Deloitte sees the number rising slightly to 43% by 2020.

China, Brazil and Russia may fuel the growth of millionaire wealth, but the single largest population of millionaires stays here.

I’d much rather envy our own millionaires than some other country’s millionaires.

—Al Lewis is a columnist for Dow Jones Newswires in Denver. He blogs at tellittoal.com; his email address is al.lewis@dowjones.com