In case you missed it, a very sobering report on last night's Dateline NBC in terms of what is happening in the underbelly of American society.
NBC's Ann Curry travels to Ohio where the hardworking poor, with deep traditions in mining, manufacturing and military service, are increasingly seen in food pantry lines ashamed and angry.
Many of the themes intersect with stories I've been posting for 3 years - the loss of jobs via global wage arbitrage [Sep 14, 2009: Global Wage Arbitrade at the Micro Level: Marvell Technology] [Nov 5, 2009: Blue Coat Systems - More Global Wage Arbitrage] , the dependence on huge swathes of America on food stamps (now 1 in 8 Americans, including 1 in 4 children) [Nov 29, 2009: 1 in 4 Children, and 1 in 8 Americans Now on Food Stamps], the distress at food banks, etc. [Jan 18, 2008: One Lonely Voice Agrees with Me on Food Inflation - Food Bank Needs Surging] [Nov 14, 2008: Wall Street Journal - A Run on (Food) Banks] [Feb 20, 2009: NYT - Newly Poor Swell Lines at Food Banks Nationwide] There are many dogmatic "reasons" (people just want to rely on the government!) and/or "solutions" proposed (everyone needs to get more education!) that make great talking points for certain political parties, but the reality in my set of eyes is it is not so simple. Most people would like to fend for themselves in my view, not rely on government (of course there is a subset of society happy to suck a the government teat forever). And not everyone in a society is going to be an accountant, investment bankers, government subsidized healthcare worker, or government worker.
You need to have jobs for the lower third... increasingly the U.S. no longer has these jobs as they have been shipped overseas. The housing bubble hid this for fact for half a decade as a mass influx of construction jobs was created by a Fed induced misallocation of capital into the housing sector. Without that crutch things are being exposed. Hence the inability for more and more to support themselves, and an increasing reliance on government for support. A government which is technically "broke" of course - hence the irony in this piece for "Obama should do something". Let us be thankful the federal government simply can borrow more and more (and more) (and more) because if it was constrained, things would truly be epic. No easy solutions, but a good eye opening account of what is happening "out there". I liked how Ann Curry mentioned a few times these are conditions you'd expect in a 3rd world country.
*one additional comment: in this series of profiles, I thought one did not fit in well with the others and that was the 21 year old female who had 3 children. The other profiles were more people of circumstances, whereas I felt the 21 year old made many bad decisions and essentially if you have 3 dependents at age 21 you are going to be behind the 8 ball. Ironically, at the end of the story she had the best outcome as the government came in and provided her with the best living situation.
I think those of us who follow what is happening in the real economy have an especially difficult time reconciling the "stock market" economy versus the core economy. But you must remember, (a) many S&P 500 corporations derive much of their income/profits overseas i.e. America means less to less to them, (b) the same factors causing massive distress to the U.S. employment base is a boon to multinationals [lower cost basis for labor], (c) the government has stepped in with never seen before levels of borrowing to mitigate the ugly reality of what is happening under the surface, [May 25, 2010: 1 in 5.5 Dollars of American Income Now Via Government; All time High] (d) despite cries of onerous tax rates for US corporations the reality is with tax loopholes, U.S companies are paying a lower tax rate as % of GDP than in any time in history, (e) income stratification is at all time highs - even surpassing the Gilded Age of the late 1920s, (f) a massive gulf is developing betwen those in the private sector and public sector in terms of wages, benefits, and job security (g) the upper 5% income earners now make up 30% of all spending in Cramerica. I could go on, but you get the point. Hence, the dichotomy can stand and in fact continue for a very long time. I suppose until some point the underclass goes the French route and demands the top "eat cake"... we'll see how long government borrowing and handouts can forestall this.
[Feb 6, 2010: Jobless Rates Across Post WW2 Recessions]
[Sep 22, 2009: BusinessInsider - The Real Problem is the Economy Does not Need you Anymore]
[Aug 14, 2009: No New Normal Say Some Economists, Prosperity Without Jobs?]
[Dec 15, 2008: The Economic "Recovery"]
Each video below is about 9 minutes - I encourage the full viewing. Foreign readers might be especially interested as it might shake up your thoughts on what the 'richest country on Earth' is like for many.
Monday, July 26, 2010
[Video] Dateline NBC: America's Increasing Ranks of Poor
Best Of FMMF
- 1: Warren Buffet Piles on Europe
- 2: [Video] Jim Chanos Returns from Europe, Even More Bearish on China
- 3: A Chart to Open Our Eyes - Staggering Changes by Multinationals in Employment Behavior 00s vs 90s
- 4: Futures Blasted on Dexia Woes... and Poor Preliminary China Data
- 5: Market Working to Worst Thanksgiving Since 1932
- 6: Et Tu, German Bonds? Poor Auction Raises Eyebrows