Another Day Older and Deeper in Debt

Okay, there is no company store anymore, so maybe the headline is a little outdated. But there has been much chest-beating by Republicans over the rise in the Gross Domestic Product (GDP) showing how strong the American economy is.

Today, CNN released a study that showed Americans have increased productivity by 20% over the past 7 years and are the most productive in the industrialized world. So, of course, the wages of the American worker has increased the same as their productivity and their buying power must have done the same.

But, wait! American workers have remained stagnant for 7 years, for all practical purposes. So this increased productivity has gone to shareholders as dividends or to executive salaries (VP and above) as their income has increased 348 times in that same period.

As an average consumer, there has been roughly a 3.25% increase in Consumer Price Index every year for the past 7 years. This should account for a raise in wages of almost 21%. Stand with me if your income has not increased by 21% over the past 7 years. And keep in mind that the CPI is a little slanted as included in the CPI has been the cost of housing as it appreciated almost 70% over the past ten years. That means you have a bunch more assets (not liquid and spendable of course) to offset the higher energy, car and food prices. Many consumers did the second mortgage against their assets to keep afloat routine.

Now, you are expected, as a worker, to have that 20% greater work output. You have more debts against your housing (if you have a house anymore). And wages are flat. So where did all that money go? Keep in mind the national debt has steamrollered the past 7 years.

Shareholders have it. CEOs have it. Workers do not. Who received the tax breaks in the past 6 years? Was it the workers, who are busting their asses? No, it is the upper 1/2 of 1% who control over one-half of the money in the country. And please keep in mind that over 70% of all the national debt has been caused by 3 presidents--Bush 1, Bush II and Reagan--the monsters and poster boys of free market economy. They did NOT practice "pay as you go" but rather said that and ran up debts that were astronomical. Don't have money for something--PRINT MORE MONEY. Sell the treasury bonds to the highest bidder (how much American debt is owned by China and Saudi is topic for another essay probably entitled "Short hairs" of "Bend Over".)

What has happened is that the average American has has their respective purchasing power drop 20% in the past 7 years, where the ruling class (economically and pragmatically, remember the haves and the have-mores) have had their earnings increase exponentially. Housing costs have gone up. And in order to pay for the workings of the American government, social programs have been cut and the average taxpayer now picks up most of the tab. I don't know about you, but having to pay more tax that Dick Cheney, while he is on a retainer from Halliburton and in public office angers me.

Remember the Preznut stating that the economy had to be healthy because so many Americans now owned houses under his leadership? Guess what? That is coming home to roost too. There were lending schemes that were somewhat risky applied to the now lower-income workers to make that happen. That is falling apart. And to help home owners in need. NO! But there will be bailouts (remember the simpler days of hate and welfare queens driving Cadillacs--like that ever really happened) for the mortgage companies and banks. And they will be called necessary for the economy, not CORPORATE welfare. And the average American taxpayer who may recently have been booted from their homes will have to foot the bill through taxes.

What this will create is a buyer's market. For example, Bank of America bailing out Consolidated Mortgage network. Oh yes, they will own it. and this happened the same week Bank of America raised their credit card rates, coincidentally. Again, the average American that needs credit cards will pay for wealth consolidation. You will see a bull market, with the weaker firms being bought by healthier firms and the "Good will" (aka bad investments that are going to be written off) costs being passed on to the consumer.

Not a pretty picture, as safety regulations, health care, etc. that typical Americans rely on will be booted to the roadside as wealth is rearranged into the hands of fewer and fewer.

However, never underestimate the spirit of the American people to rally and recover. America is the land of Hot Rods and innovation. All the populace needs is a leader and a fair tax plan and we are on the road to recovery. (if your salary increases 348 times in the next seven years would you be adverse to giving maybe one-half of that to the government in taxes? or would a further tax cut be better for America as a a whole?) It doesn't always take that long. Look what happened to the National Debt under Clinton.

So here is hoping for real leader soon. And perhaps some good, common sense fiscal policies.

rojo