FOLLOW-UP: Obama Wants to Reengineer Your Neighborhood

Posted on July 8th, 2015

Single Family HomeBy Marc A.Thiessen

This is what you get when you put a community organizer in the White House — he tries to reorganize your community from Washington.

Apparently, President Obama thinks your neighborhood may not be inclusive enough, so he has instructed his Department of Housing and Urban Development to issue a new rule called Affirmatively Furthering Fair Housing, which is designed to force communities to diversify.

According to the Obama administration, in too many neighborhoods “housing choices continue to be constrained through housing discrimination, the operation of housing markets, [and] investment choices by holders of capital.” (Yes, that is a quote from an actual HUD document, not a bad undergraduate thesis on Karl Marx.)

Under Obama’s proposed rule, the federal government will collect massive amounts of data on the racial, ethnic and socioeconomic makeup of thousands of local communities, looking for signs of “disparities by race, color, religion, sex, familial status, national origin, or disability in access to community assets.” Then the government will target communities with results it doesn’t like and use billions of dollars in federal grant money to bribe or blackmail them into changing their zoning and housing policies. Read More..

NASA Signals Crisis: “California Has About One Year of Water Left”

Posted on March 19th, 2015

California drought map

By Max Slavo

The California drought has already been alarming enough not only for residents of the state – whose water supply was never secured, and has constantly been the source of heated controversy – but those across the country and globe who depend up on its agriculture for survival.

As SHTF reported back in November, NASA scientists have already warned that California’s groundwater supplies are at critical low points, and threatening the food supply:

A new Nature Climate Change piece, “The global groundwater crisis,” by James Famiglietti, a leading hydrologist at the NASA Jet Propulsion Laboratory, warns that “most of the major aquifers in the world’s arid and semi-arid zones, that is, in the dry parts of the world that rely most heavily on groundwater, are experiencing rapid rates of groundwater depletion.”

The most worrisome fact: “nearly all of these underlie the word’s great agricultural regions and are primarily responsible for their high productivity.”

Now, Jay Famiglietti – the same NASA hydrologist who led the previous report – is sounding an all-out alarm that California has less than one year of water remaining based on satellite image data:

Data from NASA satellites show that the total amount of water stored in the Sacramento and San Joaquin river basins — that is, all of the snow, river and reservoir water, water in soils and groundwater combined — was 34 million acre-feet below normal in 2014. That loss is nearly 1.5 times the capacity of Lake Mead, America’s largest reservoir.

Statewide, we’ve been dropping more than 12 million acre-feet of total water yearly since 2011. Roughly two-thirds of these losses are attributable to groundwater pumping for agricultural irrigation in the Central Valley. Farmers have little choice but to pump more groundwater during droughts, especially when their surface water allocations have been slashed 80% to 100%. But these pumping rates are excessive and unsustainable.

As difficult as it may be to face, the simple fact is that California is running out of water — and the problem started before our current drought. NASA data reveal that total water storage in California has been in steady decline since at least 2002, when satellite-based monitoring began, although groundwater depletion has been going on since the early 20th century.

Right now the state has only about one year of water supply left in its reservoirs, and our strategic backup supply, groundwater, is rapidly disappearing. California has no contingency plan for a persistent drought like this one (let alone a 20-plus-year mega-drought), except, apparently, staying in emergency mode and praying for rain.

Famiglietti makes no hesitation in calling for mandatory water rationing and other measures to cut water uses:

First, immediate mandatory water rationing should be authorized across all of the state’s water sectors, from domestic and municipal through agricultural and industrial. The Metropolitan Water District of Southern California is already considering water rationing by the summer unless conditions improve. There is no need for the rest of the state to hesitate.

And he further claims that public support, at over 94% in polls, is sufficient to support massive state intervention in residential water usage, and even back mandatory restrictions.

If the claims of California’s water shortage are not overstated for effect, it may be tough times coming for the Golden State.     (my emphasis)

By Max Slavo for SHTF Plan

By permission Max Slavo

www.shtfplan.com

http://www.shtfplan.com/commodities/nasa-signals-crisis-california-has-about-one-year-of-water-left_03132015

How Long Can the Top 10% Households Prop Up the “Recovery”?

Posted on November 4th, 2014

Recovery SignBy Charles Hugh Smith

The question of “recovery” really boils down to this: how much longer can the top 10% prop up the expansion?

A flurry of recent media stories have addressed housing unaffordability, for example Why Middle-Class Americans Can’t Afford to Live in Liberal Cities.

The topic of housing unaffordability crosses party lines: Housing Ownership Back to 1995 Levels (U.S. Census Bureau).

Other stories reflect an enduring interest in the questions, what is a living wage? and what is a middle-class income? These questions express the anxiety that naturally arises from the sense that we’re sliding downhill in terms of our purchasing power–a reality that is confirmed by this chart:

Real Household Income Declines from Peak Year

Here’s a recent story that delves into the question of “getting by” versus “middle class”: How Much Money Does the Middle Class Need to Get By?

“Just getting by” in costly coastal cities requires an income in the top 20%: around $60,000 for individuals and $100,000 for households.

The article references MIT’s Living Wage Calculator, which I found to be unrealistic in terms of the high-cost cities I know well (Honolulu and the San Francisco Bay Area). It appears the calculator data does not represent actual rents or food prices; the general estimates it uses woefully under-represent on-the-ground reality.

Current market rents in the S.F. Bay Area far exceed the estimated housing costs in this calculator, and that one line item pushes the living wage from $36,000 for two adults closer to $45,000 in my estimate–roughly the average wage in the U.S. (not the median wage, which is $28,000).

If you want to know where you stand income-wise, here is a handy calculator: What Is Your U.S. Income Percentile Ranking?

Here are the data sources:

Wage Statistics for 2013 (Social Security Administration)

2013 Household Income Data Tables (U.S. Census Bureau)

There are many complexities in these questions. For example, Social Security data does not include food stamps, housing and healthcare subsidies provided by the government, etc., so lower-income households’ real (equivalent) income is much higher than the published data.

Then there are the regional differences, which are considerable; $50,000 in a Left or Right Coast city is “just getting by” but it buys much more in other less pricey regions.

As for what household income qualifies as “middle class”–it depends on your definition of middle class. In my view, the definition has been watered down to the point that “middle class” today is actually working class, if we list attributes of the “middle class” that were taken for granted in the postwar era of widespread prosperity circa the 1960s.

In What Does It Take To Be Middle Class? (December 5, 2013), I listed 10 basic “threshold” attributes and two higher qualifications for membership in the middle class. Please have a look if you’re interested.

I came up with an annual income of $106,000 for two self-employed wage earners and the mid-$90,000 range for two employed wage earners, the difference being the self-employed couple have to pay 100% of their healthcare insurance, as there is no employer to cover that staggering expense.

$90,000 puts a household in the top 25%, and $101,000 places the household in the top 20%. $150,000 a year qualifies as a top 10% household income.

If we set aside income and consider net worth, net worth (i.e. ownership of assets and wealth) of most households is modest:

Household Average Net Worth by Quartile

This shows the decline in household wealth since 2003:

Wealth Of American Household

Can an economy in which the majority of households are “just getting by” experience robust growth, i.e. “recovery“? If we discount the millions of households who are paying for today’s consumption with tomorrow’s earnings, i.e. credit cards, auto loans, student loans, etc., I think it’s self-evident that only the top 20% (and perhaps really only the top 10%) have the income and net worth to expand a $16 trillion economy.

By definition, the top 10% cannot be “middle class.” Yet it seems that these top 12 million households are propping up the “recovery”–dining out at pricey bistros, paying $200 a night for hotels, buying homes that cost $500,000 and up, paying slip fees for their boats, funding their children’s college education with cash rather than loans, etc.

The question of “recovery” really boils down to this: how much longer can the increasing debt of the bottom 90% and the wealth of the top 10% prop up the expansion?     (my emphasis)

By Charles Hugh Smith for Of Two Minds

By permission Charles Hugh Smith

www.oftwominds.com

http://www.oftwominds.com/blogoct14/top10-10-14.html

Wall Street Admits That A Cyberattack Could Crash Our Banking System At Any Time

Posted on September 5th, 2014

CyberattackBy Michael Snyder

Wall Street banks are getting hit by cyber attacks every single minute of every single day.  It is a massive onslaught that is not highly publicized because the bankers do not want to alarm the public.  But as you will see below, one big Wall Street bank is spending 250 million dollars a year just by themselves to combat this growing problem.  The truth is that our financial system is not nearly as stable as most Americans think that it is.  We have become more dependent on technology than ever before, and that comes with a potentially huge downsideAn electromagnetic pulse weapon or an incredibly massive cyberattack could conceivably take down part or all of our banking system at any time.

This week, the mainstream news is reporting on an attack on our major banks that was so massive that the FBI and the Secret Service have decided to get involved.  The following is how Forbes described what is going on…

The FBI and the Secret Service are investigating a huge wave of cyber attacks on Wall Street banks, reportedly including JP Morgan Chase, that took place in recent weeks.

The attacks may have involved the theft of multiple gigabytes of sensitive data, according to reports. Joshua Campbell, supervisory special agent at the FBI, tells Forbes: “We are working with the United States Secret Service to determine the scope of recently reported cyber attacks against several American financial institutions.”

When most people think of “cyber attacks”, they think of a handful of hackers working out of lonely apartments or the basements of their parents.  But that is not primarily what we are dealing with anymore.  Today, big banks are dealing with cyberattackers that are extremely organized and that are incredibly sophisticated.

The threat grows with each passing day, and that is why JPMorgan Chase says that “not every battle will be won” even though it is spending 250 million dollars a year in a relentless fight against cyberattacks…

JPMorgan Chase this year will spend $250 million and dedicate 1,000 people to protecting itself from cybercrime — and it still might not be completely successful, CEO Jamie Dimon warned in April.

Cyberattacks are growing every day in strength and velocity across the globe. It is going to be continual and likely never-ending battle to stay ahead of it — and, unfortunately, not every battle will be won,” Dimon said in his annual letter to shareholders.

Other big Wall Street banks have a similar perspective.  Just consider the following two quotes from a recent USA Today article

Bank of America: “Although to date we have not experienced any material losses relating to cyber attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future.”

Citigroup: “Citi has been subject to intentional cyber incidents from external sources, including (i) denial of service attacks, which attempted to interrupt service to clients and customers; (ii) data breaches, which aimed to obtain unauthorized access to customer account data; and (iii) malicious software attacks on client systems, which attempted to allow unauthorized entrance to Citi’s systems under the guise of a client and the extraction of client data. For example, in 2013 Citi and other U.S. financial institutions experienced distributed denial of service attacks which were intended to disrupt consumer online banking services. …

“… because the methods used to cause cyber attacks change frequently or, in some cases, are not recognized until launched, Citi may be unable to implement effective preventive measures or proactively address these methods.”

I don’t know about you, but those quotes do not exactly fill me with confidence.

Another potential threat that banking executives lose sleep over is the threat of electromagnetic pulse weapons.  The technology of these weapons has advanced so much that they can fit inside a briefcase now.  Just consider the following excerpt from an article that was posted on an engineering website entitled “Electromagnetic Warfare Is Here“…

The problem is growing because the technology available to attackers has improved even as the technology being attacked has become more vulnerable. Our infrastructure increasingly depends on closely integrated, high-speed electronic systems operating at low internal voltages. That means they can be laid low by short, sharp pulses high in voltage but low in energy—output that can now be generated by a machine the size of a suitcase, batteries included.

Electromagnetic (EM) attacks are not only possible—they are happening. One may be under way as you read this. Even so, you would probably never hear of it: These stories are typically hushed up, for the sake of security or the victims’ reputation.

That same article described how an attack might possibly happen…

An attack might be staged as follows. A larger electromagnetic weapon could be hidden in a small van with side panels made of fiberglass, which is transparent to EM radiation. If the van is parked about 5 to 10 meters away from the target, the EM fields propagating to the wall of the building can be very high. If, as is usually the case, the walls are mere masonry, without metal shielding, the fields will attenuate only slightly. You can tell just how well shielded a building is by a simple test: If your cellphone works well when you’re inside, then you are probably wide open to attack.

And with electromagnetic pulse weapons, terrorists or cyberattackers can try again and again until they finally get it right

And, unlike other means of attack, EM weapons can be used without much risk. A terrorist gang can be caught at the gates, and a hacker may raise alarms while attempting to slip through the firewalls, but an EM attacker can try and try again, and no one will notice until computer systems begin to fail (and even then the victims may still not know why).

Never before have our financial institutions faced potential threats on this scale.

According to the Telegraph, our banks are under assault from cyberattacks “every minute of every day”, and these attacks are continually growing in size and scope…

Every minute, of every hour, of every day, a major financial institution is under attack.

Threats range from teenagers in their bedrooms engaging in adolescent “hacktivism”, to sophisticated criminal gangs and state-sponsored terrorists attempting everything from extortion to industrial espionage. Though the details of these crimes remain scant, cyber security experts are clear that behind-the-scenes online attacks have already had far reaching consequences for banks and the financial markets.

In the end, it is probably only a matter of time until we experience a technological 9/11.

When that day arrives, will your money be safe?    (my emphasis)

By Michael Snyder for Economic Collapse

By permission Economic Collapse Blog

http://theeconomiccollapseblog.com

http://theeconomiccollapseblog.com/archives/wall-street-admits-that-a-cyberattack-could-crash-our-banking-system-at-any-time

Government Is Destroying Net Worth (Wealth)

Posted on August 8th, 2014

Uncle Sam You Cant Handle The Truth

By Monte Pelerin

Finally, statistics regarding the changes in net worth have made the mainstream media. These statistics, as reported in the NY Times, are horrific, as are the implications for the future of the country.

Net worth may be the best single measure of a country’s well-being. Median net worth is a reasonable marker for the standard of living. Medians (or averages) are not good measures to capture what is happening at the lowest or highest ends. (More about that below.)

In the simplest terms, net worth is the value of a person’s assets minus his liabilities. If this measure is growing, a person is becoming better off. If it is shrinking then that person is becoming worse off, at least in terms of wealth.

Shocking Drop In Net Worth

Conditions economically (and politically) may be getting so indefensible that even the NY Times may feel compelled to report them. Either that or this article was an accidental swerve into the truth that government would prefer you not be aware off. What eventually happens to author, Anna Bernasek, in the article’s aftermath might provide a clue as to the intent of the Times.

Here is what Ms. Bernasek reported:

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

She does not go out of her way to shield the Obama Administration:

… much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.

She also noted:

The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,” said Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.

This report is damaging to any notion that there has been an economic recovery or that economic matters are back to normal. That its headline blared out “The Typical Household, Now Worth a Third Less” was especially noteworthy.

The Original Report

The Russel Sage Foundation financed the original study. I think it is fair to say that this foundation is left of center, although that doesn’t imply the research is tainted. Their focus is more oriented to highlighting the effect on income inequality. This graph shows the effects on various percentiles of the population since 1984:

Change in Wealth Since 1984 for Various Percentiles

All percentiles show declines since 2007. The declines are greater the lower the percentile group. This graph captures the concern over increasing economic inequality. While these divergences are important, there is a more important point to be made – America is becoming poorer.

The Country Is Getting Poorer

Discussion regarding income or wealth inequality and their causes are important, especially in that they appear to be a worsening problem. However, what should be obvious to all regardless of political persuasion is the fact that the US is getting poorer and has been doing so over a sustained period. That is a first in the history of this country, and it has all kinds of dire consequences, including an inability to continue funding the level of welfare currently promised. Unless this trend can be reversed, there is little point in talking about income inequality, at least in terms of taking more from the doers and providing it to the less well-off.Atlas Shrugged” showed where that leads.

The Great Recession had a serious impact on all percentiles in the graph above.  All are down from 2007. Liberals want to focus on how much better the “rich” are doing versus how poorly the “poor” are doing. The implication is that the rich are getting richer at the expense of the poor. This ideological nonsense is politically convenient and diversionary. There is no fixed pie where someone who gets a larger piece does so at the expense of someone receiving a smaller piece. That nonsense is only possible where government determines who the winners are.

The mindset of the loony left is that those at the bottom are not getting their fair share. The reality is that the government dole has locked them into this position. Ben Franklin recognized the corrosive effects more than two centuries ago:

I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.

Human nature has not changed since Old Ben made his observation. What has changed is the ability of politicians to buy votes with taxpayer money. The poor are merely collateral damage in their quest for office and greater power.

The distribution at the top is not independent of government. The more government controls the economy, the more important it is to “have a friend in government.” It used to be what you knew enabled you to succeed. Today, it is increasingly who you know. Crony capitalism (there is no such thing, but there is “crony government”) adds to whatever differences in income distributions are due to ability, occupation, luck, risk-taking and motivation.

Anyone who believes that government helps the poor need only look at the effects on the 25th percentile. Even before the Great Recession hit, this group was the only one failing to keep up. This result should not be interpreted as the need for more help, but the need to re-examine the entire structure of the Welfare State.

Matters Are Actually Worse Than They Appear

Were the economy and its components growing at a real rate of 2 – 3%, then median net worth presumably would be growing at a similar rate. Let’s do some quick arithmetic based on the graph above. According to the report, median net worth in 2003 was $88,000. From the graph, it is approximately 25% higher than it was in 1984. That would mean that median net worth in 1984 was approximately 88,000/1.25 or  $70,400. Compounding that forward 29 years would produce what one might expect the median net worth to be at the end of 2013. At 2% that number would be $137,500; at 3%, $182,400. Instead, it is only $56,300.

Based on these quick calculations, American’s median net worth has been reduced by 60% to 70% from what might have been expected. How is this possible?

There are several reasons. I would argue that all are attributable to government:

  • Government is taking a much bigger share of the economy than in the past.
  • Government understates inflation which results in an overstatement of real GDP.
  • Taxes are higher, especially on capital gains which are unadjusted for inflation and taxed as if they were true gains.
  • Government interventions have destroyed the economy’s ability to grow.
  • Government transfer payments have reduced the workforce, spreading the inevitably reduced output over more people.
  • Government’s encouragement of the use of debt has created behavior not in the best interests of unsophisticated citizens.

There are other reasons, probably some that are not related to government although I suspect they have minimal effect. Regardless, the fact is that the US is becoming poorer by the day. For much of this period, people maintained their spending levels by borrowing or consuming capital. The good times of the last twenty years were nowhere near as good as we pretended they were. Now we must pay the piper and hope that government can be reduced back to an affordable level of spending and regulation.

This Knowledge Is Not New

Economists, particularly at the Federal Reserve, are fond of saying their models no longer work. That is the one of the most disingenuous statements ever made by the economics profession. Unfortunately this profession has the same integrity as their masters, the politicians, who basically bought them lock, stock and barrel.

There is nothing new in economics. The fundamentals of human behavior have not changed over time. Econometric models evolved to describe history. They were deliberately constructed in a way that correlated with outcomes. That was the measure of a “good” model.  Using them to try and “manage” an economy goes beyond their intent or capabilities. Doing so assumes not correlation but causation.

The economy is not some large machine whose output can be manipulated by altering inputs. The economy is millions and millions of individual decision-makers. They respond to the incentives and disincentives they face in everyday life. If these incentives and disincentives remain reasonably constant, the aggregate results tend to remain in relationship with each other. Once incentives/disincentives change materially at the individual level, the correlations between aggregates become suspect. The model is no longer descriptive of reality. The model is then declared “broken” and new correlations are sought by those pretending to manage the economy.

The fallacies of macro-economics were known and rejected long before John Maynard Keynes. His contributions were not new. What gained his efforts acceptance was the desperation of the political class to do something that might end the Great Depression. That is not science. It is the same desperation that characterizes some terminally ill patients who will try anything, no matter what science says, looking for a cure. Quacks then take on undeserved importance.

Ludwig von MisesLudwig von Mises warned about the destructive policies that got us to this point. Here are a few pertinent quotes all of which were ignored by governments and the economics profession:

If it were really possible to substitute credit expansion (cheap money) for the accumulation of capital goods by saving, there would not be any poverty in the world.

The worst evils which mankind has ever had to endure were inflicted by bad governments. The state can be and has often been in the course of history the main source of mischief and disaster.

History does not provide any example of capital accumulation brought about by a government. As far as governments invested in the construction of roads, railroads, and other useful public works, the capital needed was provided by the savings of individual citizens and borrowed by the government.

The boom produces impoverishment. But still more disastrous are its moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration.

The political class used to despise economists because they recognized and criticized their political dreams. The description “dismal science” emanated from economics realistic treatment of political fantasies. Now the political class has co-opted the economics profession to the point where bribery can get them whatever opinion they want. Economists, at least those in any way dependent upon government largess, will support any political scheme, no matter how harebrained.

Unfortunately reality is not optional. It may be ignored but it cannot be escaped. Economic problems will worsen from here.   (my emphasis)

By Monte Pelerin for Economic Noise

By permission Monte Pelerin

www.economicnoise.com

http://www.economicnoise.com/2014/07/29/net-worth-fatal-statistic/

RETAIL DEATH RATTLE GROWS LOUDER

Posted on July 15th, 2014

Retail Signs of the TimesEDITOR’S COMMENT: Here is another well-researched commentary from Jim Quinn for his Burning Platform website, in which he highlights the coming dramatic changes in the U.S. retail industry and its many significant ramifications on our economy, which was largely built upon a foundation of debt, credit card purchases and easy auto and home purchases. Clearly, this is another MUST READ!

By Jim Quinn

The definition of death rattle is a sound often produced by someone who is near death when fluids such as saliva and bronchial secretions accumulate in the throat and upper chest. The person can’t swallow and emits a deepening wheezing sound as they gasp for breath. This can go on for two or three days before death relieves them of their misery. The American retail industry is emitting an unmistakable wheezing sound as a long slow painful death approaches.

It was exactly four months ago when I wrote THE RETAIL DEATH RATTLE. Here are a few terse anecdotes from that article:

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.

Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun.

The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end.

Retail store results for the 1st quarter of 2014 have been rolling recently. It seems the hideous government reported retail sales results over the last six months are being confirmed by the dying bricks and mortar mega-chains. In case you missed the corporate mainstream media not reporting the facts and doing their usual positive spin, here are the absolutely dreadful headlines:

Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%

Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%

Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%

JC Penney Thrilled With Loss of Only $358 Million For the Quarter

Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%

Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%

Staples Profit Plunges by 44% as Sales Collapse and Closing Hundreds of Stores

Gap Income Drops 22% as Same Store Sales Fall

American Eagle Profits Tumble 86%, Will Close 150 Stores

Aeropostale Losses $77 Million as Sales Collapse by 12%

Best Buy Sales Decline by $300 Million as Margins Decline and Comparable Store Sales Decline by 1.3%

Macy’s Profit Flat as Comparable Store Sales decline by 1.4%

Dollar General Profit Plummets by 40% as Comp Store Sales Decline by 3.8%

Urban Outfitters Earnings Collapse by 20% as Sales Stagnate

McDonalds Earnings Fall by $66 Million as US Comp Sales Fall by 1.7%

Darden Profit Collapses by 30% as Same Restaurant Sales Plunge by 5.6% and Company Selling Red Lobster

TJX Misses Earnings Expectations as Sales & Earnings Flat

Dick’s Misses Earnings Expectations as Golf Store Sales Plummet

Home Depot Misses Earnings Expectations as Customer Traffic Only Rises by 2.2%

Lowes Misses Earnings Expectations as Customer Traffic was Flat

Of course, those headlines were never reported. I went to each earnings report and gathered the info that should have been reported by the CNBC bimbos and hacks. Anything you heard surely had a Wall Street spin attached, like the standard BETTER THAN EXPECTED. I love that one. At the start of the quarter the Wall Street shysters post earnings expectations. As the quarter progresses, the company whispers the bad news to Wall Street and the earnings expectations are lowered. Then the company beats the lowered earnings expectation by a penny and the Wall Street scum hail it as a great achievement.  The muppets must be sacrificed to sustain the Wall Street bonus pool. Wall Street investment bank geniuses rated JC Penney a buy from $85 per share in 2007 all the way down to $5 a share in 2013. No more needs to be said about Wall Street “analysis”.

It seems even the lowered expectation scam hasn’t worked this time. U.S. retailer profits have missed lowered expectations by the most in 13 years. They generally “beat” expectations by 3% when the game is being played properly. They’ve missed expectations in the 1st quarter by 3.2%, the worst miss since the fourth quarter of 2000. If my memory serves me right, I believe the economy entered recession shortly thereafter. The brilliant Ivy League trained Wall Street MBAs, earning high six digit salaries on Wall Street, predicted a 13% increase in retailer profits for the first quarter. A monkey with a magic 8 ball could do a better job than these Wall Street big swinging dicks.

The highly compensated flunkies who sit in the corner CEO office of the mega-retail chains trotted out the usual drivel about cold and snowy winter weather and looking forward to tremendous success over the remainder of the year. How do these excuse machine CEO’s explain the success of many high end retailers during the first quarter? Doesn’t weather impact stores that cater to the .01%? The continued unrelenting decline in profits of retailers, dependent upon the working class, couldn’t have anything to do with this chart? It seems only the oligarchs have made much progress over the last four decades.

Income Inequality Achieves Escape Velocity After the 1 Percent Graph

Retail CEO gurus all think they have a master plan to revive sales. I’ll let you in on a secret. They don’t really have a plan. They have no idea why they experienced tremendous success from 2000 through 2007, and why their businesses have not revived since the 2008 financial collapse. Retail CEOs are not the sharpest tools in the shed. They were born on third base and thought they hit a triple. Now they are stranded there, with no hope of getting home. They should be figuring out how to position themselves for the multi-year contraction in sales, but their egos and hubris will keep them from taking the actions necessary to keep their companies afloat in the next decade. Bankruptcy awaits. The front line workers will be shit canned and the CEO will get a golden parachute. It’s the American way.

The secret to retail success before 2007 was: create or copy a successful concept; get Wall Street financing and go public ASAP; source all your inventory from Far East slave labor factories; hire thousands of minimum wage level workers to process transactions; build hundreds of new stores every year to cover up the fact the existing stores had deteriorating performance; convince millions of gullible dupes to buy cheap Chinese shit they didn’t need with money they didn’t have; and pretend this didn’t solely rely upon cheap easy debt pumped into the veins of American consumers by the Federal Reserve and their Wall Street bank owners. The financial crisis in 2008 revealed everyone was swimming naked, when the tide of easy credit subsided.

The pundits, politicians and delusional retail CEOs continue to await the revival of retail sales as if reality doesn’t exist. The 1 million retail stores, 109,000 shopping centers, and nearly 15 billion square feet of retail space for an aging, increasingly impoverished, and savings poor populace might be a tad too much and will require a slight downsizing – say 3 or 4 billion square feet. Considering the debt fueled frenzy from 2000 through 2008 added 2.7 billion square feet to our suburban sprawl concrete landscape, a divestiture of that foolish investment will be the floor. If you think there are a lot of SPACE AVAILABLE signs dotting the countryside, you ain’t seen nothing yet. The mega-chains have already halted all expansion. That was the first step. The weaker players like Radio Shack, Sears, Family Dollar, Coldwater Creek, Staples, Barnes & Noble, Blockbuster and dozens of others are already closing stores by the hundreds. Thousands more will follow.

This isn’t some doom and gloom prediction based on nothing but my opinion. This is the inevitable result of demographic certainties, unequivocal data, and the consequences of a retailer herd mentality and lemming like behavior of consumers. The open and shut case for further shuttering of 3 to 4 billion square feet of retail is as follows:

  • There is 47 square feet of retail space per person in America. This is 8 times as much as any other country on earth. This is up from 38 square feet in 2005; 30 square feet in 2000; 19 square feet in 1990; and 4 square feet in 1960. If we just revert to 2005 levels, 3 billion square feet would need to go dark. Does that sound outrageous?US Retail Square-Footage Per-Person 1960-2005
  • Annual consumer expenditures by those over 65 years old drop by 40% from their highest spending years from 45 to 54 years old. The number of Americans turning 65 will increase by 10,000 per day for the next 16 years. There were 35 million Americans over 65 in 2000, accounting for 12% of the total population. By 2030 there will be 70 million Americans over 65, accounting for 20% of the total population. Do you think that bodes well for retailers?Annual Consumer Expenditures by those over 65 years old
  • Half of Americans between the ages of 50 and 64 have no retirement savings. The other half has accumulated $52,000 or less. It seems the debt financed consumer product orgy of the last two decades has left most people nearly penniless. More than 50% of workers aged 25 to 44 report they have less than $10,000 of total savings.Average and Median Retirement Account Balance of People Ages 50-64
  • The lack of retirement and general savings is reflected in the historically low personal savings rate of a miniscule 3.8%. Before the materialistic frenzy of the last couple decades, rational Americans used to save 10% or more of their personal income. With virtually no savings as they approach their retirement years and an already extremely low savings rate, do retail CEOs really see a spending revival on the horizon?Personal Savings Rate Chart
  • If you thought the savings rate was so low because consumers are flush with cash and so optimistic about their job prospects they are unconcerned about the need to save for a rainy day, you would be wrong. It has been raining for the last 14 years. Real median household income is 7.5% lower today than it was in 2001. Retailers added 2.7 billion square feet of retail space as real household income fell. Sounds rational.Medium Household Income in the 21st Century
  • This decline in household income may have something to do with the labor participation rate plummeting to the lowest level since 1978. There are 247.4 million working age Americans and only 145.7 million of them employed (19 million part-time; 9 million self-employed; 20 million employed by the government). There are 92 million Americans, who according to the government have willingly left the workforce, up by 13.3 million since 2007 when over 146 million Americans were employed. You’d have to be a brainless twit to believe the unemployment rate is really 6.3% today. Retail sales would be booming if the unemployment rate was really that low.Household Real Estate Percent Equity thru 2014 Graph
  • With a 16.5% increase in working age Americans since 2000 and only a 6.5% increase in employed Americans, along with declining real household income, an inquisitive person might wonder how retail sales were able to grow from $3.3 trillion in 2000 to $5.1 trillion in 2013 – a 55% increase. You need to look no further than your friendly Too Big To Trust Wall Street banks for the answer. In the olden days of the 1970s and early 1980s Americans put 10% to 20% down to buy a house and then systematically built up equity by making their monthly payments. The Ivy League financial engineers created “exotic” (toxic) mortgage products requiring no money down, no principal payments, and no proof you could make a payment, in their control fraud scheme to fleece the American sheeple. Their propaganda machine convinced millions more to use their homes as an ATM, because home prices never drop. Just ask Ben Bernanke. Even after the Bernanke/Blackrock fake housing recovery (actual mortgage originations now at 1978 levels) household real estate percent equity is barely above 50%, well below the 70% levels before the Wall Street induced debt debacle. With the housing market about to head south again, the home equity ATM will have an Out of Order sign on it.
  • Household Real Estate Percent Equity thru 2014 Graph
  • We hear the endless drivel from disingenuous Keynesian nitwits about government and consumer austerity being the cause of our stagnating economy. My definition of austerity would be an actual reduction in spending and debt accumulation. It seems during this time of austerity total credit market debt has RISEN from $53.5 trillion in 2009 to $59 trillion today. Not exactly austere, as the Federal government adds $2.2 billion PER DAY to the national debt, saddling future generations with the bill for our inability to confront reality. The American consumer has not retrenched, as the CNBC bimbos and bozos would have you believe. Consumer credit reached an all-time high of $3.14 trillion in March, up from $2.52 trillion in 2010. That doesn’t sound too austere to me. Of course, this increase is solely due to Obamanomics and Bernanke’s $3 trillion gift to his Wall Street owners. The doling out of $645 billion to subprime college “students” and subprime auto “buyers” since 2010 accounts for more than 100% of the increase. The losses on these asinine loans will be epic. Credit card debt has actually fallen as people realize it is their last lifeline. They are using credit cards to pay income taxes, real estate taxes, higher energy costs, higher food costs, and the other necessities of life.Consumer Credit Components in Past 12 Months from 2014 Graph

The entire engineered “recovery” since 2009 has been nothing but a Federal Reserve/U.S. Treasury conceived, debt manufactured scam. These highly educated lackeys for the establishment have been tasked with keeping the U.S. Titanic afloat until the oligarchs can safely depart on the lifeboats with all the ship’s jewels safely stowed in their pockets. There has been no housing recovery. There has been no jobs recovery. There has been no auto sales recovery. Giving a vehicle to someone with a 580 credit score with a 0% seven year loan is not a sale. It’s a repossession in waiting. The government supplied student loans are going to functional illiterates who are majoring in texting, facebooking and twittering. Do you think these indebted University of Phoenix dropouts living in their parents’ basements are going to spur a housing and retail sales recovery? This Keynesian “solution” was designed to produce the appearance of recovery, convince the masses to resume their debt based consumption, and add more treasure into the vaults of the Wall Street banks.

The master plan has failed miserably in reviving the economy. Savings, capital investment, and debt reduction are the necessary ingredients for a sustained healthy economic system. Debt based personal consumption of cheap foreign produced baubles & gadgets, $1 trillion government deficits to sustain the warfare/welfare state, along with a corrupt political and rigged financial system are the explosive concoction which will blow our economic system sky high. Facts can be ignored. Media propaganda can convince the willfully ignorant to remain so. The Federal Reserve can buy every Treasury bond issued to fund an out of control government. But eventually reality will shatter the delusions of millions as the debt based Ponzi scheme will run out of dupes and collapse in a flaming heap.

The Economy Sit Back and Enjoy the Flames

The inevitable shuttering of at least 3 billion square feet of retail space is a certainty. The aging demographics of the U.S. population, dire economic situation of both young and old, and sheer lunacy of the retail expansion since 2000, guarantee a future of ghost malls, decaying weed infested empty parking lots, retailer bankruptcies, real estate developer bankruptcies, massive loan losses for the banking industry, and the loss of millions of retail jobs. Since I always look for a silver lining in a black cloud, I predict a bright future for the SPACE AVAILABLE and GOING OUT OF BUSINESS sign making companies.     (my emphasis)

By Jim Quinn for The Burning Platform

By permission Jim Quinn

www.theburningplatform.com

http://www.theburningplatform.com/2014/05/25/retail-death-rattle-grows-louder/

The Generational Short: Banks, Wall Street, Housing and Luxury Retail Are Doomed

Posted on July 9th, 2014

Generation Y in word collageBy Charles Hugh Smith

If Gen-Y cannot afford to buy Boomers’ houses at bubble-level prices, then what will keep housing prices at these elevated levels?

Mish recently posted excerpts of a Brookings Institution study on changing generational values: How Millennials Could Upend Wall Street and Corporate America. The gist of the report is that Gen-Y (Millennials) view money, prestige, adversarial confrontation and managerial methods differently from the Baby Boom and Gen-X generations, and that this set of values will change Corporate America, the economy and the culture as Boomers exit managerial positions and their peak earning/spending years.

Though we have to be careful in characterizing tens of millions of individuals as all reflecting one set of generational values, the basic idea is simply one of context: people who grow up in a specific milieu are naturally prone to sharing broadly similar perceptions and values.

The Brookings authors claim that Millennials do not favor the adversarial style of the Boomers (competition and confrontation as means of advancing one’s cause/position) nor do they place great value on luxury goods as evidence of exclusivity. They actively distrust/loathe the banking sector and are financially conservative, preferring cash to investing in Wall Street.

Asked to choose their ideal (corporate/state) job, their choices reflect preferences for a mix of security, idealism and technology. The big flaw in this career questionnaire (as far as I can discern) is that it did not offer the alternatives of self-employment/ entrepreneurship. Anecdotally, it seems clear that there is a strong entrepreneurial drive in Gen-Y–for example, What I’ve learned in my first year as a college dropout.

One factor the report did not address fully is real estate/housing, which depends on bank-issued debt (mortgages) and the belief that a lifetime of paying a mortgage will magically result in financial security, based on the greater fool notion that someone in the future will be willing to pay more for an asset that hasn’t changed either qualitatively or quantitatively (other than needing more maintenance as it ages).

This raises two issues: if Gen-Y cannot afford to buy Boomers’ houses at bubble-level prices, then what will keep housing prices at these elevated levels? Answer: nothing. Without strong demand for housing at sky-high prices, valuations will drop to whatever level demand can support. That level can be far lower than conventional housing analysts believe possible because they are still extrapolating Baby Boomer preferences and earnings into a future which will be quite different from the housing bubble decades.

The second issue is a question: how much of the Boomers’ housing wealth will trickle down to Gen-Y when they actually need housing, i.e. when they’re starting families?

The answer may well be: very little. If Gen-Y is unwilling or unable to take on enormous mortgages to buy bubble-priced housing, we can project a housing market in which Boomers are unloading millions of primary homes as they seek to downsize/raise cash for retirement but there aren’t enough Gen-Y buyers willing or able to buy these millions of homes at bubble valuations.

In this scenario, home prices must decline to align with Gen-Y’s salaries (i.e. their ability to qualify for huge mortgages) and their willingness to shoulder bank-based debt.

If Gen-Y essentially opts out of the belief that financial security depends on buying a house with a large mortgage, then the U.S. housing market will have no sustainable foundation for price appreciation. Housing could easily decline by 50% in highly inflated markets.

The same dynamic will shred stock market valuations. If Gen-Y opts out of supporting the banks and Wall Street, the demand for Wall Street’s products will plummet, bringing stocks back down to historical levels–once again, perhaps 50% of the current bubble valuations.

The funny thing about core values is that they are resistant to arguments such as “you should get a mortgage and invest all your money in Wall Street.” Once people opt out of the fantasy that buying a house and entrusting one’s capital with Wall Street leads to guaranteed financial security, no amount of cajoling or propaganda will change their values-based decisions.

For example, those who have decided to eschew debt will never take on debt, even if the banks (or the banks’ pusher, the government) offer debt at 0% interest. Those who have lost trust in Wall Street or actively hate it and everything it stands for (neofeudalism, unbridled greed, the corruption and collusion of the revolving door between the state and Wall Street, etc.) will never change their minds and hand their money to Wall Street to play with.

If the primary assets held by Boomers (houses and stocks) both decline for these fundamental reasons, there may be relatively little wealth left to pass on to Gen-Y. There is a peculiar irony in this: if Gen-Y avoids bank debt/mortgages, buying conspicuous consumption luxury goods on credit and investing in Wall Street’s scams and skims, this generational lack of demand for housing, stocks and luxury goods will effectively crash the sky-high valuations of these assets.

That will reduce the value of whatever generational wealth the Boomers have left to pass on. Since many Boomer households are currently paying for three generations–soaring college costs for their Gen-Y offspring, care for their elderly Silent Generation parents and their own expenses–how much wealth they will have left once Gen-Y is dominant is an open question.

These factors suggest a generational bet against banks, Wall Street, housing and luxury retail stocks. I am not recommending such a bet, mind you; it’s just one potentially interesting speculative consequence of the changing of the generational guard.    (my emphasis)

By Charles Hugh Smith for Of Two Minds

By permission Charles Hugh Smith

www.oftwominds.com

http://www.oftwominds.com/blogjune14/generational-short6-14.html

Congress Needs To Step Up

Posted on July 3rd, 2014

The Reason We Have A ConstitutionBy Monte Pelerin

As regular readers of this site or readers of my book Flimflam Man know, I have little regard for Barack Obama or anything that he stands for. Both this site and the book suggest he is open to impeachment. All that stands in the way is a corrupt Congress, unwilling to jeopardize their comfort in the government trough, living and stealing at the expense of productive tax-paying Americans.

The Supreme Court came down hard on this fakir last week. For the sake of the nation, Congress should follow through and bring charges against the most illegal and immoral President of my lifetime. Yes, I lived through the Richard Nixon years. In comparison, Nixon was a saint.

As I pointed out in my book, all of this could have been predicted before Obama was elected. David Solway, in his argument for impeachment, makes the same case:

Much has been and continues to be written about what is probably the most mendacious administration in American political history. The fact that so many of Obama’s vital records are sealed or problematic should have raised alarm bells and disqualified his candidacy in the years before he assumed office — or at least have alerted a sentient electorate to the ethical and political travesty his presidency would become. Many are now experiencing buyer’s remorse, spasms of retrocognition, but the slightest degree of early attention to Obama’s defective résumé would have avoided such metaleptic regret or rueful hindsight. So insidious a burlesque as his presidency would become should have been obvious to any serious voter. When one follows the trajectory of Obama’s career, one knows that one is dealing with a man who is a liar from the egg, a man for whom suppressing the truth or lying outright is the daily fare of his existence — indeed, tracking the president’s innumerable lies has become something of an Internet sport.

It is past time for Republicans to show some courage and for Democrats to show some integrity. This nation is going down rapidly and will continue to do so unless both parties honor their oath to the Constitution.    (my emphasis)

By Monte Pelerin for Economic Noise

By permission Monte Pelerin

www.economicnoise.com

http://www.economicnoise.com/2014/06/27/congress-needs-step/

After Chicago, The Deluge

Posted on June 25th, 2014

Chicago Photo

By Wendy McElroy

Chicago dances on the edge of a fiscal cliff. 

It is the third largest city in the US with a population of 2,714,856 as of mid-2012. It is the economic engine of Illinois. If Chicago falls, especially into bankruptcy, then the entire state is likely to do so as well. Illinois won’t declare bankruptcy because federal law prohibits the option. But insolvency would raise many of the same questions as bankruptcy. For example, who gets paid first, or at all? And how much on the dollar? If other cities stumble, as they would, then whether Illinois officially declares bankruptcy may be a matter of semantics.

The fiscal land mine of Chicago 

In early March, Moody’s Investors Service downgraded Chicago’s credit rating from A3 to Baa1. The rating is just three rungs above “junk-bond.” With the exception of Detroit, Chicago now has the worst credit rating of any large US city. The reason cited by Moody’s: unfunded pension liabilities for city employees. 

A March 7th Wall Street Journal article announced that Chicago’s 2015 balloon payment on its $19.4 billion pension debt will be $1.07 billion. The payment is one-third of Chicago’s entire operating budget. According to WSJ, “The pension payment could cover salaries for 4,300 police officers or the resurfacing of 16,000 blocks of roads in the city… Meantime, the required pension contribution for Chicago schools this year is tripling to $613 million… Chicago’s pension funds are only half as well-funded as even Detroit’s, if you can believe it, and could run dry by 2020.” The pension shortfall amounts to $7,100 per Chicagoan.

Moody’s is threatening another downgrade unless Chicago ‘fixes’ the pension fiasco; a lower rating would mean higher interest on the city’s debt. There are two ways out: cut expenses or raise revenues.

Cutting expenses means cutting jobs or reducing benefits, or both. The average city employee receives wages and benefits that the average private worker only dreams about. The watchdog Illinois Policy Institute reported that “teachers who retired between July 1, 2011, and June 30, 2012, after 30 or more years on the job could expect starting average annual benefit payments of $72,693… After 10 years of cost-of-living adjustments, this pension is $97,693 annually.”

Bankruptcy Painting On BuildingJob and benefit reductions are rigidly opposed by public sector unions, especially by the power-wielding teachers’ union. Union support makes or breaks political careers in Illinois. That means the legislators who set the pensions through Illinois law are not likely to take the political risk of reducing them; they face an election in November and Democrats would like to maintain their current two house super-majority. It means Chicago Mayor Rahm Emanuel who could cut jobs is reluctant to do so; he is up for re-election in February. Politicians are more likely to bleed taxpayers and investors instead.

Raising revenues is what remains. On March 12th, Breitbart ran the headline, “Mayor Rahm Emanuel Warns of Doubled Property Taxes to Fund Spiraling Pension Costs.” Emanuel added, “if something else isn’t done.”

A variety of “something else” has already been tried; the situation gets worse. For example, in February, Chicago’s city council approved a $500 million issuance of commercial paper and $900 million of general-obligation bonds. The WSJ article commented, “There’s little to stop politicians from pouring the proceeds into pensions – or later reneging on this unsecured debt if it were to file for bankruptcy.” There is precedent; Detroit intends to repay similar bonds at 20 cents on the dollar.

As Chicago goes, so goes Illinois

Illinois Risk of Unfunding of Pension FundsChicago is only one of many cash-strapped cities in Illinois, which are choking on their pension liabilities. According to an Illinois Policy Institute report the capital city of Springfield now dedicates all property taxes to pay the pensions of police, teachers and other city workers; and that after slashing its police department by almost 15 percent. Other cities are raising taxes. Peoria, for example, added new water and utility taxes, and doubled its garbage fees.

Quite apart from the cities of Illinois, there is the state as a whole. A February 8th, 2013 article in Business Insider explained, “Illinois’s five state-level pensions…report current accrued liabilities at $146 billion, but the state has set aside only $63 billion to cover future benefits… [T]he $83 billion shortfall in unfunded liabilities leaves the state’s pensions only 43% funded, on average. Unfortunately, the real numbers are far worse.”  (Note: those official estimates are a year old and the situation worsens daily.)

Moody’s recently adopted a new methodology by which to assess debt and risk. When it “discounts future liabilities using the more reasonable rate of return on high-grade corporate bonds (about 4% today), current accrued liabilities tally to more like $272 billion. These figures drop the official 43% funding ratio to only 24%.” This means  Illinois has the most underfunded pension system in America. Dividing the total liabilities by the number of Illinois residents, every person is liable for $22,294.

Illinois tops various other lists as the worst state in the Union, or close to it. Illinois’ dubious distinctions include:

Illinois: Run Far, Run Fast

According to Forbes (Feb. 8, 2013), Most of the top-10 states people are leaving are located in the Northeast and Great Lakes regions, including Illinois (60%), New York (58%), Michigan (58%), Maine (56%), Connecticut (56%) and Wisconsin (55%).” Illinois is first in the raw numbers of people leaving and second to New Jersey in the ratio of those leaving to total population. This ranking occurred in 2012 as well.

Southern and western states are the most popular destinations for a variety of reasons including greater economic opportunity and personal freedom, lower taxes and better climate. But those leaving should ask themselves: is anywhere in the US far enough away from Chicago if the city and then the state collapse financially? Taxpayers United President Jim Tobin predicts, ““Illinois will be the first state to go bankrupt, unless pension reforms are implemented.” Only it cannot legally declare bankruptcy and escape its debts. Whatever will happen, Tobin believes will occur sometime about 2015.

Whatever the timing, whichever patches are slapped on the system, Chicago’s economic meltdown would affect not only Illinois but all of America. Chicago is also the economic engine of the MidWest. The federal government is unlikely to abandon an entire region, especially one dominated by Democrats. Obama is unlikely to abandon Chicago as long as Emanuel, his former White House Head of Staff and close friend, is mayor. What does “unlikely to abandon” mean in specific terms? Probably bailouts, in some form. The flood of money and legal privilege will be a further drag on those islands of opportunity to which economic refugees have fled. Other cities teetering on the same fiscal cliff will fall.

It is an exaggeration, but not an outrageous one, to say: as Chicago goes, so goes America.

In any case, if something else isn’t done, Mayor Emanuel is warning that he’ll have to double property taxes to fund the payment.

The municipal pension fund isn’t the only pension in failure in Chicago. The city’s teachers’ pensions are also widely understood to be one of the worst funded in the country. The teachers’ pension fund will require a tripling of its required contribution.

Michael Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago, though, warns that just raising taxes and cutting services won’t fix the problem.

“I don’t think either one is even a possibility. Everybody’s going to have to give something,” Pagano said in December.

Meanwhile, the State of Illinois already comes in at second place in the number of citizens moving out of state. Outward migration for The Land of Lincoln ranked second only to New Jersey in 2013.     (my emphasis)

By Wendy McElroy for The Dollar Vigilante

By permission The Dollar Vigilante

http://dollarvigilante.com

http://dollarvigilante.com/blog/2014/5/2/after-chicago-the-deluge.html

Wendy McElroy is a regular contributor to the Dollar Vigilante, and a renowned individualist anarchist and individualist feminist. She was a co-founder along with Carl Watner and George H. Smith of The Voluntaryist in 1982, and is the author/editor of twelve books, the latest of which is “The Art of Being Free”.

Half The Country Makes Less Than $27,520 A Year And Other Signs The Middle Class Is Dying

Posted on June 11th, 2014

Depressed Youth DreamsBy Michael Snyder

If you make more than $27,520 a year at your job, you are doing better than half the country is.  But you don’t have to take my word for it, you can check out the latest wage statistics from the Social Security administration right here.  But of course $27,520 a year will not allow you to live “the American Dream” in this day and age.  After taxes, that breaks down to a good bit less than $2,000 a month.  You can’t realistically pay a mortgage, make a car payment, afford health insurance and provide food, clothing and everything else your family needs for that much money.  That is one of the reasons why both parents are working in most families today.  In fact, sometimes both parents are working multiple jobs in a desperate attempt to make ends meet.

Over the years, the cost of living has risen steadily but our paychecks have not.  This has resulted in a steady erosion of the middle class.  Once upon a time, most American families could afford a nice home, a couple of cars and a nice vacation every year.  When I was growing up, it seemed like almost everyone was middle class.  But now “the American Dream” is out of reach for more Americans than ever, and the middle class is dying right in front of our eyes.

One of the things that was great about America in the post-World War II era was that we developed a large, thriving middle class.  Until recent times, it always seemed like there were plenty of good jobs for people that were willing to be responsible and work hard.  That was one of the big reasons why people wanted to come here from all over the world.  They wanted to have a chance to live “the American Dream” too.

But now the American Dream is becoming a mirage for most people.  No matter how hard they try, they just can’t seem to achieve it.

And here are some hard numbers to back that assertion up.  The following are 15 more signs that the middle class is dying…

#1 According to a brand new CNN poll, 59 percent of Americans believe that it has become impossible for most people to achieve the American Dream…

The American Dream is impossible to achieve in this country.

So say nearly 6 in 10 people who responded to CNNMoney’s American Dream Poll, conducted by ORC International. They feel the dream — however they define it — is out of reach.

Young adults, age 18 to 34, are most likely to feel the dream is unattainable, with 63% saying it’s impossible. This age group has suffered in the wake of the Great Recession, finding it hard to get good jobs.

#2 More Americans than ever believe that homeownership is not a key to long-term wealth and prosperity…

The great American Dream is dying. Even though many Americans still desire to own a home, they are losing faith in homeownership as a key to prosperity.

Nearly two-thirds of Americans, or 64%, believe they are less likely to build wealth by buying a home today than they were 20 or 30 years ago, according to a survey sponsored by non-profit MacArthur Foundation. And nearly 43% said buying a home is no longer a good long-term investment.

#3 Overall, the rate of homeownership in the United States has fallen for eight years in a row, and it has now dropped to the lowest level in 19 years.

#4 52 percent of Americans cannot even afford the house that they are living in right now…

“Over half of Americans (52%) have had to make at least one major sacrifice in order to cover their rent or mortgage over the last three years, according to the “How Housing Matters Survey,” which was commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation and carried out by Hart Research Associates. These sacrifices include getting a second job, deferring saving for retirement, cutting back on health care, running up credit card debt, or even moving to a less safe neighborhood or one with worse schools.”

#5 According to the U.S. Census Bureau, only 36 percent of Americans under the age of 35 own a home.  That is the lowest level that has ever been measured.

#6 Right now, approximately one out of every six men in the United States that are in their prime working years (25 to 54) do not have a job.

#7 The labor force participation rate for Americans from the age of 25 to the age of 29 has fallen to an all-time record low.

#8 The number of working age Americans that are not employed has increased by 27 million since the year 2000.

#9 According to the government’s own numbers, about 20 percent of the families in the entire country do not have a single member that is employed at this point.

#10 This may sound crazy, but 25 percent of all American adults do not even have a single penny saved up for retirement.

#11 As I noted in one recent article, total consumer credit in the United States has increased by 22 percent over the past three years, and 56 percent of all Americans have “subprime credit” at this point.

#12 Major retailers are shutting down stores at the fastest pace that we have seen since the collapse of Lehman Brothers.

#13 It is hard to believe, but more than one out of every five children in the United States is living in poverty in 2014.

#14 According to one recent report, there are 49 million Americans that are dealing with food insecurity right now.

#15 Overall, the U.S. poverty rate is up more than 30 percent since 1966.  It looks like LBJ’s war on poverty didn’t work out too well after all.

Sadly, it does not appear that there is much hope on the horizon for the middle class.  More good jobs are being shipped out of the country and are being lost to technology every single day, and our politicians seem convinced that “business as usual” is the right course of action for our nation.

Unless something dramatic happens, it is going to become increasingly difficult to eke out a middle class existence as a “worker bee” in American society.  The truth is that most big companies these days do not have any loyalty to their workers and really do not care what ends up happening to them.

To thrive in this kind of environment, new and different thinking is required.  The paradigm of “go to college, get a job, stay loyal and retire after 30 years” has been shattered.  The business world is more unstable now than it has been during any point in the post-World War II era, and we are all going to have to adjust.

So what advice would you give to people that are struggling out there right now?  Please feel free to share your thoughts by posting a comment below…     (my emphasis)

By Michael Snyder for Economic Collapse

By permission Economic Collapse Blog

http://theeconomiccollapseblog.com

http://theeconomiccollapseblog.com/archives/half-the-country-makes-less-than-27520-a-year-and-15-other-signs-the-middle-class-is-dying

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