Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
BREWING FINANCIAL CRISIS 2.0 Suggests RECESSION 2022 - 28th Jan 22
Financial Stocks Sector ETF XLF $37.50 Continues To Present Opportunities - 28th Jan 22
Stock Market Rushing Headlong - 28th Jan 22
The right way to play Climate Change Investing (not green energy stocks) - 28th Jan 22
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

In Third World America, You Can't Buy a Ream of Paper on Minimum Wage

Politics / US Politics Dec 18, 2010 - 12:10 PM GMT

By: Janet_Tavakoli

Politics

Best Financial Markets Analysis ArticleIn 2010, every one of my work-related conversations turned to personal wealth management. The money-class wants to preserve and increase their considerable wealth, and they are terrified of losing it. Elsewhere in America, those that don't have money are terrified of the rising cost of necessities like food and energy not captured in the consumer price index calculation.


As of July 24, 2009, minimum wage in the United States was $7.25/hour (before taxes). At the beginning of 2010, minimum wage barely bought you a pre-tax $6.79 ream (500 sheets) of paper at Office Depot. By the end of 2010, that cost had skyrocketed to $9.49 per ream, nearly a 40% increase. But printer paper isn't a necessity for those who need to feed and clothe their families. Official unemployment is at 9.8%, and many "new" jobs are part-time jobs that replaced former full-time jobs. Counting underemployment, the misery soars above 20%.

Arianna Huffington's latest book, Third World America, explains how those with the least power and money have been getting squeezed for decades:

[The median middle class American] in September 1979 was earning (in constant, inflation-adjusted dollars) $25,896 a year. In September 1995, that same man or woman was earning $24,700 a year -- a 5 percent cut in salary over the intervening decade and a half. (P. 54)

Meanwhile, the financial system has strangled U.S. growth by parasitically growing from 3% of GDP in 1965 to 7.5% of GDP currently. Money was diverted from capital investment, the most important stimulus generator for our economy, to save corrupt financial institutions. Financial services now account for 35-40% of all corporate profits in the U.S. That number should be less than 5% in an honest economy. CEOs of bailed-out banks earn more than they did before the bailout.

Sanders: The U.S. Is a Banana Republic

Senator Bernie Sanders (I. Vermont) explained to the Senate during his tax cut filibuster on December 10 that the gap between the wealthiest Americans and the poorest is the greatest it has been in U.S. history. The bottom 50% of Americans own just 2% of the wealth. The top 1/10th of 1% takes home 12 cents of every dollar earned in America. The top 1% earned 23.5% of all income, more than the combined income of the bottom 50%.

Yet, the lust for money and power by the financial elite knows no limits. Over 10 years, the top 2% of the wealthy in this country will get $700 billion in tax cuts. Meanwhile, the country chokes on a $13.7 trillion national debt.

Deflation and Inflation: Where It Hurts You Most

The disappearing middle class is dying of stranguflation. Nominal income is falling; yet debt-loaded consumers have to meet usurious consumer loan payments, while prices for staples like energy, school tuition, and food rise. Despite a rising stock market, most Americans still feel a negative wealth effect, particularly due to depressed housing prices.

The coming year will be worse for too many Americans. They face the quadruple threat of the weak recovery, the astronomical government debt load, price inflation for necessities, and the fear of future overall inflation.

Congress has blocked meaningful financial reform. It approved the Great Bailout, followed by the Great Cover-Up and the Great Recession. If Congress continues its sham investigations, culprits will never be brought to justice.

As the economy struggles in 2011, expect most of Congress to again protect its cronies in the financial elite, instead of the interests of the average voter. It is a bi-partisan betrayal of the nation's economic health. If Americans don't pay attention and vote out corrupt members of Congress, we'll sink further into a banana republic, and this time it's in English.

On December 8, I presented an analysis to the Federal Housing Finance Agency (FHFA) in Washington D.C. of key causes of our current financial crisis: "Repairing the Damage of Fraud as a Business Model." Since I was speaking on issues of public interest and policy, I took more latitude with my remarks than I would in a typical presentation:

Audio version: Please click here.
Presentation notes: Please click here.

(There are a couple of obvious misspeaks. When control fraud occurs, financial institutions often lose a lot of money and often collapse. Losing money -- as Citigroup, Merrill, and others did -- is sometimes not an indication of innocence, but of managements' fraud. When I said risk managers had the authority without the responsibility, I obviously meant to say they had the responsibility without the authority.)

By Janet Tavakoli

web site: www.tavakolistructuredfinance.com

Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago's Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008). Tavakoli’s book on the causes of the global financial meltdown and how to fix it is: Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (Wiley, 2009).

© 2010 Copyright Janet Tavakoli- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in