Goodbye, middle class

“The middle class is finding itself struggling to keep what was once seen as staples of a burgeoning working class in our country. Part of this battle has come from a system that has rewarded easy finance on the backs of the working class. Take for example residential real estate. For decades, this was probably one of the most boring and dull sectors of the economy. Residential real estate, if you were lucky, only tracked the overall inflation rate. That was the case until the banking system figured out a way to securitize bread and butter mortgages and turn them into securities for global consumption. Yet that game is now coming to a quick end. The middle class are literally being squeezed out of their homes. Healthcare costs are also cutting deeper into the wallets of most American families and many are finding that they have no coverage as unemployment is still at record levels. This decade will be a struggle for the middle class to save and prosper.”

[ My Budget 360 ]

Related:

America, the fragile empire [ latimes ]

Over the last three years, the complex system of the global economy flipped from boom to bust — all because a bunch of Americans started to default on their subprime mortgages, thereby blowing huge holes in the business models of thousands of highly leveraged financial institutions. The next phase of the current crisis may begin when the public begins to reassess the credibility of the radical monetary and fiscal steps that were taken in response.

American manufacturing sucessfully exported to China! [ American Prospect ]

Since 2001, the U.S. has lost 42,400 factories — and its technical edge. “

“Something has gone radically wrong with the American economy. A once-robust system of “traditional engineering” — the invention, design, and manufacture of products — has been replaced by financial engineering. Without a vibrant manufacturing sector, Wall Street created money it did not have and Americans spent money they did not have.

“Americans stopped making the products they continued to buy: clothing, computers, consumer electronics, flat-screen TVs, household items, and millions of automobiles.

“America’s economic elite has long argued that the country does not need an industrial base. The economies in states such as California and Michigan that have lost their industrial base, however, belie that claim. Without an industrial base, an increase in consumer spending, which pulled the country out of past recessions, will not put Americans back to work. Without an industrial base, the nation’s trade deficit will continue to grow. Without an industrial base, there will be no economic ladder for a generation of immigrants, stranded in low-paying service-sector jobs. Without an industrial base, the United States will be increasingly dependent on foreign manufacturers even for its key military technology.



“All this talk about “free markets” and the virtues of “private market disciplines” go out the window should the actual discipline of markets impose losses on these institutions.” -Marshall Auerback

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