Is the Middle Class Disappearing?

From the zerohedge blog. Read the whole thing.

I don't consider myself a class warrior - successful people deserve their rewards; they have earned it (at least that's the way it used to be). It's the risk-reward dynamic that fuels a healthy economy and lifts our standard of living.

But I think it's legitimate to ask whether or not we are rewarding the right activities appropriately and whether or not the link between risk and reward have been broken.

The same article at zerohedge points out that the CEOs of the top-20 recipients of bailout money made more money, on average, than the CEOs of the S&P 500. I cannot see the logic in rewarding the CEOs of companies that are failing (and taking us with them) more richly than the CEOs of companies that (for the most part) are getting by.

In 2007, the year for which figures are available from the Federal Reserve Board, the richest 1% of U.S. households owned 33.8% of the nation’s private wealth. That’s more than the combined wealth of the bottom 90 percent. (from zerohedge)

The increasingly lopsided distribution of wealth is dangerous. I don't think the US, as we know it, can exist with a rapidly increasing (and more desperate) lower class and a disappearing middle class.

One cause of the Great Recession may be that reality is catching up with the middle class: we ain't worth what we used to be.

Is it possible that the free market has failed us?

I don't know - I don't think we've ever seen an actual free market. But what we have seems to be failing.

I am no economist (and being one doesn't seem to grant you any special ability to figure out what is going on). Nor am I inclined to fill this post up with lots of facts and figures which all seem to come from biased sources… all of us have an agenda to push and axes to grind.

What has occurred to me is that deregulation, free trade, globalization - what have you - hasn't worked out. If deregulation meant removing barriers to businesses run by ethical people with some base level of patriotism and sense of civic duty then I think things would have worked out well.

The thing we got, instead, is an oligarchy of politicians, government workers and their NGO clients, and business leaders who seem hell-bent on lining their pockets and pressing their agendas regardless of the actual costs and outcomes. The people that make the policies that have brought us to the abyss are wholly-owned subsidiaries of financial companies that subsist on government handouts and enrich themselves no matter what happens.

Back in the old days (pre-regulation), it seems to me that the United States did pretty well. People made decent livings working in busy factories and offices.

The stock market was just something that most people heard about on the news - the brief mention of the Dow Jones averages somewhere near the end of a newscast. It wasn't all that interesting and few people really cared.

To most people, "saving and investing" meant passbook savings accounts that paid actual interest (around five percent). If you accumulated some wealth, you bought certificates of deposit (CDs) that paid a tad more interest to compensate for the depositor's agreement not to draw out the money before the maturity date.

From these savings, money was loaned for small business expansion, cars, and homes. Banks made a reasonable profit, savers got a reasonable return, and borrowers paid nominal rates of interest. This scheme didn't fuel booms but we got by. I knew a couple of bankers when I was a kid… they lived well but nothing like what we see now.

Sometime in recent years, we began to fixate on investors - the rate of return, profit and loss, bond yields, LIBOR, quantitative easing… and all the rest of the financial arcana we hear about. Constantly.

We became greedy. We all began to think that we could "earn" ten percent forever.

Banks became the destroyers of worlds. There was a time (before megabanks) where it was in the banks interest to keep customers from going under. Sure there were penalties for being late on a payment or overdrawing your account but the banker didn't stand there handing you lead bricks as you sank. Now, banks regularly impose death-spiral fees and interest rates on customers in trouble - ruining people that, otherwise, might have recovered. They're like sharks and vultures circling their prey. Who would have thought that a giant like Bank of America would make so much money screwing some poor slob who's lost a low-paying job due to an economy brought to ruin by the likes of BofA?

Now, "greed" is a favorite term of the left. To the left, it means "having more than you deserve… what you deserve being determined by your betters".

I don't mean that. What I mean is living for the moment: people in their 20s wanting the same lifestyle their parents worked 20 years for; older people wanting retirements they haven't paid for; investors demanding high growth and profits no matter what; employers wanting more and more for less and less.

What other term do you apply to the masses of people who bought houses in overheated markets with the intent of flipping them? To people who cashed out the "equity" in over-valued properties to spend on short term pleasures? To businessmen who hire illegal immigrants in order to pay low wages and skirt labor laws? To companies like Wal-Mart that squeeze suppliers to the point that manufacturing has all but abandoned the US (while scheming to take every government handout they can grab)? To bankers who award themselves multimillion-dollar bonuses for coming up with novel schemes for gambling with other peoples' money? To government workers who, all be damned, demand retirements that private-sector workers can only dream about? To we-the-people who want dirt cheap merchandise as long as it's not OUR job on the next boat to China or India.

It's clear that the prosperity of the past couple of decades was an illusion; faery gold that is now disappearing before our eyes. Wealth that can disappear overnight wasn't real to begin with.

I don't know what the answer is.

San Diego Paper Drinks H1B Kool-Aid

A recent op-ed in the San Diego Union-Tribune borders on nauseating.

In this piece (which reads like H1B body shop propaganda), they assert that the US needs more immigrant guest workers.

What crap. And the piece is offensive. I will deconstruct it here.

Legal immigrants who play by the rules to get to the United States often find it difficult to stay here.

People from around the world come to study in U.S. universities on temporary visas. [Just so. What about "temporary" is hard to understand. They are granted student visas exactly so they can study here and return home. Are our universities now tasked with training our replacements?] They often excel in their studies and earn their degrees with ease. [Because they're so much smarter than we are? Are there any statistics to back this up?] After graduation, many of them beat a path back to their home countries to help improve the lives of the people who live there. [As it should be. If these people are so brilliant then their hellhole countries will benefit from their massive intellects, won't they.] There's nothing wrong with that. What's wrong is that, for those who want to find a legal way to remain in the United States and earn a living here, the deck is stacked against them. [See current unemployment numbers - the deck is stacked against a lot of us] Just when these individuals are about to enter their high-productivity years — when they generate income, consume goods and pay taxes — the United States ships them home.

According to a recent article in USA Today, only about 65,000 H-1B visas are granted to allow high-skilled foreigners to come legally each year. Not only is that number pathetically low [How so? How high is high enough?], considering the demand [what demand? Engineering unemployment is heading up - past 7% by some accounts], but the quota is also filled on a first-come, first-served basis without so much as a nod to what jobs need to be filled. Those who oppose increasing the cap on visas for foreign professionals often do so in the name of preserving well-paying jobs for American workers. [God forbid we have well-paid American workers. After reading this, I don't feel so bad when I read that more and more newspaper reporting and editing is being off-shored.]

That makes no sense. These jobs may be on U.S. soil, but they are not an entitlement for U.S. workers. In the international marketplace, American workers have to compete for jobs with the international community. [So we should look forward to a Third World standard of living in order to compete. And Third World overpopulation and environmental damage. And Third World labor regulations. Next, the U-T will come out in favor of child-slave labor and sweat shops.]

As the article points out, employers in the United States have been saying this for some time. High-tech companies have been pleading with Congress for many years to raise the number of H-1Bs to meet increased demand. [Asinine. Trans-national companies want cheap labor. By this logic, we can ask what can be done to satisfy the demand for luxury homes that everyone can afford... I'd like a new Lexus for $10,000. So as companies throw away more STEM workers, the remaining taxpayers can look forward to bearing the social costs imposed by rising unemployment and lower job quality. Socialize the cost, privatize the profit - that's now the American Way] That cause has been taken up by Microsoft co-founder, Bill Gates, who has made many trips to Washington to ask lawmakers to let in more software engineers. [Who cares what Bill Gates thinks? What - he wants more money? The US market made him wealthy and this is the thanks we get? M$ is already replacing US workers with imports (several thousand this year). I wonder if that has anything to do with the number of bugs in their software.]

Closer to home, the issue is on the mind of Paul Jacobs, CEO of Qualcomm. In a recent meeting with the Union-Tribune editorial board, Jacobs suggested that, aside from raising the cap on H1B visas, the U.S. government — as an additional enticement to get highly skilled foreigners to stay — could also speed up the process for some these individuals to become U.S. citizens. It's a great idea. Local members of Congress should take it up. [Greedy SOB. Did anyone at the Union-Tribune ask him how many US workers he's fired in the last few years? Did they bother to see if he's made any real effort to recruit US workers? There's a whole industry that exists to assist companies in skirting the law. There's a notorious YouTube video where a law firm boasts of helping companies hire imports even when qualified US workers are available.]

Globalization is a fact of life for the United States. So is the idea of competition. If we don't find new ways to update the current immigration system, we can expect to keep up this foolish trend of losing the most-highly skilled immigrants in the world to other countries. And if that happens, we stand to lose much more than that in the years to come. [What would that be?]

Senator Kennedy

What else is there to say? I regret that he suffered from a brain tumor and knew for a long time that the gig was up (most of us would much rather pass quietly in our sleep - never having any idea that the clock had run out).

On the other hand, he was one of the most harmful politicians in our history (on top of the Chappaquiddick cover-up). It's a good bet that Mary Jo Kopechne also had time to contemplate her mortality in between desperate attempts to get another breath and escape the sinking car).

The one question I have for the hagiographers in the media is this: what made Kennedy a great man? Spending decades in the Senate as a liberal demagogue, undermining our country and spending other people's money doesn't seem all that great.

Give me access to unlimited money belonging to other people and I, too, would be considered great using the Washington standard.

Why do they hate us?

No, no - not Arab Muslims. Why do our elected leaders hate us?

The passage of the "Cap and Trade" bill in the US House brings this question up (again). I used to think that liberals (as in progressives) were just misguided. And then I thought that they were simply cynical: anything for a vote.

What else would explain the election of a president and a congress who actively seek our destruction? Our economy is in the tank due mostly to government meddling coupled with politically well-connected con-men who lined their pockets peddling financial snake oil in cahoots with idiots being compassionate with other peoples' money. (Compassion isn't the right word unless you think it compassionate to put people into homes they will certainly lose in foreclosure and laying waste to entire cities like Detroit and certain places in the sand states).

We're shedding jobs at unimaginable rates; states are having to borrow to pay mountains of unemployment claims and no end is in sight. The only sector hiring is the federal government.

We've surrendered manufacturing to China - all in the interest of saving pennies here and there (apparently ignorant of the cost of putting our financial futures into the hands of an enemy state that certainly does not have our interests in mind other than to keep the money coming - and they're starting to think that's worthless). This is one of the reasons we're impotent in the face of North Korea, Iran, et al - we can't offend our patrons in Beijing and Moscow. How can we deal with an enemy state that could send what's left of our economy over the cliff with some well chosen words at a treasury auction?

In the interest of "energy security", we refuse to produce our own energy. Instead, we kneecap ourselves with "cap and trade" and all manner of environmental baloney and chimeras like wind power to mitigate a non-existent threat. We retain our reliance on the Middle East and Venezuela - host to tyrants and madmen. As with China, our foreign policy is hamstrung by our reliance on these states - fearing to offend some wife-beating, gay-stoning mullah. Of course, our Manchurian president can't be counted on to project our values and interests regardless of risk.

As we lose job after job, our politicians are hot for another amnesty. Just what we need is to reward millions of people here illegally and who, via the miracle of chain migration, will bring millions more third-world denizens with them. They can then sign up to vote for more liberals and sign up for government healthcare.

For those dumb enough to get jobs up the skill ladder a bit, Tribune of the Workers Sen. Chas. Schumer (D-NY) does the bidding of his big-money Wall Street contributors - laboring tirelessly to increase the number of H1-B workers who come to take technical jobs and to enable off-shoring of work by companies who lined up at the TARP trough.

And then there's health care reform. Just because it's a failure everywhere else in the world is no reason to not try it here. We'll just throw even more money at it. (Britain's National Health Service is the largest employer in the EU. Not the UK - the EU! There's no end to the horror stories from the NHS).

I can't wait for the American version which, no doubt, will be suffused with the same politically-correct drivel common in other government operations. Who thinks that we won't wind up with medical care allocated to equalize disparate outcomes among various racial groups? It may sound ridiculous but is it so hard to imagine that, say, little old white ladies will be denied care so as to divert resources to increase life expectancies among black males (who shoot each other with awful regularity). Remember, it was just a few months ago that anyone who thought we'd hand blank checks to bankers so they could pay themselves millions in bonuses for taking a wrecking ball to the world economy would be thought delusional.

Can it be that all free societies reach a point where people no longer appreciate their liberty? Are we decadent? Are we destined to self-destruct?

I now think our leaders actually hate our guts. I now believe that they think we're living above our station and who need to be put in our proper places.

And worst of all - maybe they're right.

Another victim of open borders

A Denny's in Albuquerque was the scene of a robbery (Fox News) on Saturday morning when four masked banditos burst into the crowded restaurant (9:30am) and demanded money. In the course of the robbery, they scared the hell out of restaurant patrons and shot dead a teenage girl who worked there. Manly men.

Two of the robbers were arrested a short time later. Two more are being sought. It is thought that these bandits have committed TEN similar robberies in the last year.

The two suspects are from South America. Local police are working with ICE to figure out the identities of the suspects and their county of origin.

You see, we just don't produce enough criminals in this country so we have to import them.

Post Zero

This blog is from the "gloomy conservative" perspective. Too many conservatives in the USA are just too darn optimistic.

So, now and then, I will post an item designed to stamp out any unwarranted optimism.

You know what they say: A pessimist is seldom disappointed.