Real Wages Still DECLINING - Tilted Forum Project Discussion Community

unlawflcombatnt · 03-10-2006, 02:18 PM

Though nominal wages have increased 3.5% over the last year, when adjusted for inflation they have DECLINED 0.6%. January's real (inflation-adjusted) hourly wage was $8.18/hour (in 1982 dollars). This is a -0.6% change since January 2005's $8.23/hour. Worse still, this is a DECLINE of 1.1% since January 2004's $8.27/hour. This information can be found at the United States Bureau of Labor Statistics at http://data.bls.gov/PDQ/servlet/Surv...=CES0500000049.

Despite Bush Administration spin, American workers are losing ground. They're ability to purchase production through wages is steadily declining. Since consumer spending is 2/3 of all economic activity, this erosion in purchasing power spells trouble for our economy.

Over the last 2 years, consumer spending increases have been sustained through increased borrowing alone. Home equity extraction for 2005 was $243 billion, according to Bloomberg News http://www.bloomberg.com/apps/news?p...d=aE50ss.wrOM0

Home equity extraction would account for 63.3% of our economic growth in 2005. As such, home equity extraction could account for nearly all of the 66.7% (2/3) fraction attributable to consumer spending. of the consumer spending increase in Thus it is increased home equity extraction, not wages, that have maintained consumer spending, consumer demand, and GDP growth.

Consumer spending increases are necessary for continued economic growth. According to Bloomberg News, home equity extraction is expected to DECLINE $126 billion from $243 billion down to $117 billion in 2006. This would be a 52% decline, and a 52% decline in consumer spending power. This source of spending is nearly equal to all of our spending growth. With a 52% reduction in consumer spending power, spending would also decline 52%. If 2006 consumer spending remains 2/3 of of economic activity (and GDP), it would reduce our GDP growth by the same 52%. A 52% reduction in this year's 3.2% GDP growth would leave a 2006 GDP growth of only 1.54%.

Considering 2 straight years of declining real wages, there is no reason to think real wages will rise in 2006. As such, wages won't make up for the spending loss from decreased home equity extraction. Less consumer spending will result in less consumer production demand, less demand for workers to provide that production, and declining wages and employment as a result.

It definitely looks like we're in for a year of significantly slower economic "growth." How much slower remains to be seen. With a December Durable Goods Order decline of 10%, the biggest decline in 5 years, the economy is not looking good.

pandaman87 · 03-12-2006, 01:55 AM

this isn't good, seriously in many areas of the states, the cost of living is becoming outrageous compared to the minimum wage. It needs to be revised, and badly.

tecoyah · 03-12-2006, 02:43 AM

The minimum wage was not designed to make life comfortable, but rather as a way to guarantee a "Minimum" income to those entering the workforce. Current attempts (relatively successful) to increase the Min. have addressed the worst of the discrepency, though it will never be enough to rise above the poverty level.
Though it can be said that the current Administration did not help the situation for the most part, they certainly did not cause it, nor in my opinion, have they made it significantly worse. This is simply the reality of our economics at this time, and I am not smart enough to figure out how to make it better.

aceventura3 · 03-13-2006, 07:35 AM

I assume many see this as a failure of the Bush administration. He certainly has to take a share of the blame. But the lack growth in real wages is a part of a long-term trend.

We are not saving and investing in the future at the rate we should.
Government spending is wasteful and out of control.

Bill O'Rights · 03-13-2006, 08:42 AM

Quote:

Originally Posted by aceventura3

We are not saving and investing in the future at the rate we should.
Government spending is wasteful and out of control.

No...we are not. Instead we run up debt and continue to spend. Champagne tastes on a beer budget, if you will. Gotta keep up appearances, y'know.
So, it's not just governmental spending that is wasteful and out of control. Question is...are we a reflection of the government, or is the government a reflection of us?

flstf · 03-13-2006, 08:53 AM

Our local paper had an article in it this Sunday that claimed incomes were flat and the reason the economy did so well last year was due in large part to people getting equity out of their houses. They were speculating that if there is a housing bubble this year that people wouldn't have the money to spend and the economy would take a dive.

aceventura3 · 03-14-2006, 07:07 PM

Quote:

Originally Posted by flstf

Our local paper had an article in it this Sunday that claimed incomes were flat and the reason the economy did so well last year was due in large part to people getting equity out of their houses. They were speculating that if there is a housing bubble this year that people wouldn't have the money to spend and the economy would take a dive.

It's kind of strange. If wages are not going up, what is driving up the price of real estate? It has to be low interest rates and low inflation. But that has to be wrong since we are talking about "real" wages. Problem is that nobody knows for sure. What we really have is the theory of unintended consequences at work.

I think what we have is no "real" wage growth because people don't see the real after tax benefit of wage increases. If a person is in a 50% tax bracket, fed/state/fica/medicare/local/ATM/loss of child tax credit/etc/etc (for some earning that extra dollar may actually cost them more than a dollar in additional tax) they are 50% less motivated to make an extra dollar in wages. On the otherhand if you speculate in real estate, you can make money tax free (up to the $500k cap gain on a personal home), or you at least get to deduct mortgage intrest from taxable income. It becomes very rational for people to bid up the price of real estate and use their homes as an ATM.

The government - always trying to help, but in the end always screwing things up.

host · 03-15-2006, 02:28 AM

Quote:

Originally Posted by aceventura3

It's kind of strange. If wages are not going up, what is driving up the price of real estate? It has to be low interest rates and low inflation. But that has to be wrong since we are talking about "real" wages. Problem is that nobody knows for sure. What we really have is the theory of unintended consequences at work.

I think what we have is no "real" wage growth because people don't see the real after tax benefit of wage increases....

No "mystery" as to the transfer of the 1999-2000 tech stock bubble into the residential real estate bubble. Record lowering of U.S. interest rates, (intended to mitigate effect of the sudden decline in stock prices, dot com, and telecom busts). No down-payment and "interest only" variable rate mortgages, along with a confluence of speculators (flippers) descending upon the home realty market, created "froth" which allowed sellers at the bottom of the "chain"("starter homes"), to "trade up".

Buyer mentality leaned toward buying "now" because price and interest rates would rise, and there would be a future buyer to unload to at an ever higher price. Speculators created artificial demand, and off we went....

Imagine how much of the job "growth" since 2000 has been in realty sales jobs, mortgage brokering, realty apparaisal, home construction, home improvement, building supplies, and home appliance and home furnishing supply chains. What happens when the "one trick pony" momentum of Americans selling their houses to each other, at ever increasing prices, financed by borrowed Asian money, ends? Has it "ended", already?

Here's a "hint" of what is coming:

Quote:

http://www.citizen-times.com/apps/pb.../51223046/1071
More WNC families depend on food stamps
by Leslie Boyd, STAFF WRITER
published December 24, 2005 6:00 am

....The number of working families receiving food stamps in Buncombe County has risen by nearly 40 percent since 2002. [Buncombe County contains the relatively prosperous and higher growth, Asheville, NC metro area...]

Even with the numbers so high — 362,579 of the 1.1 million families in North Carolina used assistance as of September, state Department of Health and Human Services records show — officials estimate only about 65 percent of people who are eligible actually are receiving food stamps.......

........Rhodes cited a 2005 study by the N.C. Budget & Tax Center of the N.C. Justice Center, “Failing Jobs, Falling Wages: The 2005 North Carolina Living Income Standard.”

The center calculated what families pay in seven categories: food, housing, health care, child care, transportation, taxes and miscellaneous items. It does not include money for extras such as entertainment, cell phone or cable television service, debt payments or meals out of the home. On average, its calculations show, North Carolinians need to earn 231 percent of the federal poverty level to meet expenses.

For a family of four, the federal poverty level is $19,350. To be eligible for food stamps, a family can earn no more than 130 percent of that. The Budget & Tax Center report calculates that on average, a family of two parents and two children in North Carolina needs to earn just under $45,000, what it calls a Living Income Standard. Nearly half of the 1.1 million families in the state live below that standard.........

Quote:

http://www.pimco.com/LeftNav/Late+Br...ember+2005.htm
....But in determining whether or not the sun is rising or beginning to set on our economy and its markets, perhaps it is

best to return to the maestro himself for a hint on the timing of this affair. "Any onset of increased investor caution,"

he wrote at Jackson Hole, "elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation

of the debt that supported higher prices. This is the reason that history has not dealt kindly with the aftermath of

protracted periods of low risk premiums."............

...Take a gander at the remarkable Chart II displayed below. It shows that real estate, not manufacturing, has been the

economic impetus in recent years in terms of net growth. Once price momentum slows or ceases for home prices, job growth

will slow or disappear in the sector as well. How many more mortgage brokers or real estate agents do we really need or

can we legitimately support?.....

Quote:

http://realtytimes.com/rtapages/20060112_arello.htm
ARELLO Announces Number Of Licensees For 2005
by Blanche Evans

If you think everyone you meet is a real estate agent, you're not far wrong. According to new figures from ARELLO, the licensing officials, there are more than 2,636,783 licensees in the United States.

With a U.S. population of about 297,889,053, that's about one licensee for every 113 men, women and children.

Quote:

http://realtytimes.com/rtapages/20041115_lowhours.htm
Published: November 15, 2004
...Still, Marguleas frets, "In California, the number of Realtors has increased 44 percent in the last five years. Now there are almost 400,000 people with real estate licenses in California, 66,000 of them in Los Angeles. In the early part of 2004, the number of real estate agents in Los Angeles outnumbered properties for sale at a ratio of 7:1. These figures make for a cut-throat industry.".....

Quote:

http://rismedia.com/index.php/articl...iew/13478/1/1/
.....Real estate has been so hot -- and the workplace alternatives so tepid -- that membership in the Tampa Bay Association of Realtors swelled by about 2,000 agents the past year.

Statewide, the number of Realtors and sales people has nearly doubled from 79,331 in 2001 to 154,558 in 2005.........

What do you predict, will take the place of the following economic stimulus when real estate no longer "goes up", when there is no more equity to "cash out", and the layoffs in residential construction and realty sales occur, when foreclosure auctions rise as unemployment rates rise and real estate values fall?

Quote:

http://www.mortgagenewsdaily.com/852...efinancing.asp
Refinancing May Be Pumping Billions Into Economy

......Ms. Cutts said that she expected cash-outs from refinancing to total $162 billion for the year but, as rates continue to rise, the figure would fall back to $69 billion for the whole of 2006. In 2004 homeowners extracted $140 billion in equity through refinancing their homes. While Ms. Cutts did not draw any parallels, she pointed out that this was close to the amount that the Harvard Joint Center for Housing Studies recently reported that Americans spent last year on home improvements and remodeling.........

Quote:

http://www.sfgate.com/cgi-bin/articl...EGHHHM7MV1.DTL
A BULL, A BEAR AND THE BUBBLE
What's ahead for the real estate market? Two respected analysts -- and now authors -- hold markedly different views

Dana Perrigan, Special to the Chronicle

Sunday, March 12, 2006

....Novato's RealFacts puts the average Bay Area apartment rent in the fourth quarter at $1,324; DataQuick calculates that the typical home buyer in December committed to a $2,867 mortgage payment.

"It paints a very scary picture," Talbott says. "Something has economic value because it has cash flow. If you discount for general inflation and go back 120 years in history, you'll discover that, in real terms, housing prices were
relatively flat until 1997 -- then (they) shot up about 70 percent."

To buy these overvalued homes, he says, many consumers overextend themselves financially by borrowing more from banks. They end up paying an inordinately high percentage of their monthly income on mortgages. In Los Angeles, he points out, the average new homeowners, usually a young couple, are spending 55 percent of their monthly income on a mortgage payment.

"They have to make decisions about whether they're going to pay the mortgage or go to the movies," Talbott says.Banks are lending more, he says, because they are sticking to their old qualifying formula of computing the ratio of the loan applicant's salary to the mortgage payment. They're doing this, he said, without adjusting for inflation.

"So the banks are using the same stupid formula. They convince these young couples to borrow a million-dollar note that they're never gonna get out from under."

To make matters worse, Talbott says, an increasing number of borrowers are taking out variable-rate and interest-only loans. According to San Francisco's LoanPerformance.com, half of all Bay Area home buyers used interest-only loans to make their purchases last year. With so much of their income already relegated to their mortgage payment, says Talbott, even a small rise in interest rates will push many to -- and beyond -- their limit. For others, a divorce or job loss will spell financial ruin....

There was excessive "artificial demand" as prices rose.....

Quote:

http://www.realtor.org/PublicAffairs...5?OpenDocument

Second-Home Market Surges, Bigger Than Shown in Earlier Studies

WASHINGTON (March 1, 2005) – A new study shows sales of second homes surged in 2004, and that investment property and vacation homes make up a significant portion of the overall housing market, accounting for more than one-third of residential transactions, according to the National Association of Realtors®.

The new study, based on two surveys, shows that 23 percent of all homes purchased in 2004 were for investment, while another 13 percent were vacation homes. In addition, there was a record of 2.82 million second home sales in 2004, up 16.3 percent from 2.42 million 2003. The investment-home component rose 14.4 percent to 1.80 million sales in 2004 from 1.57 million in 2003, while vacation-home sales rose 19.8 percent to 1.02 million in 2004 from 850,000 in 2003.

host · 03-15-2006, 02:55 AM

Duplicate Post..........

host · 03-15-2006, 02:57 AM

Quote:

http://www.freemarketnews.com/Analys...id=28&nid=4097

......“They’re both mad,” said a colleague yesterday. One spends money it hasn’t got. The other sells to people who cannot pay. Maybe China and the U.S. represent equal and opposite delusions: One over-spends. The other over-saves. But while the delusions are opposite, they are not equal. There is a great Exodus of power and money from West to East. There is a big difference between being on the prospering end of that passage as opposed to the losing end. China’s working class is getting richer; America’s is not. China’s treasury piles up credits; America’s piles up debits. China’s consumers have savings that they could spend, if they wanted to. America’s consumers have only credit...made available to them at present rates only so long as it accords with the whim of the market and the will of lenders. The Chinese are owners...Americans are becoming renters. The Chinese are free from debt; Americans are chained to it.

More news from our currency counselor...

Chuck Butler, reporting from the EverBank world currency trading desk:

“The Jobs Jamboree on Friday saw job creation jump to 243,000, with last month's 193,000 revised down to 170,000 and the unemployment rate tick back up to 4.8%. But, the dollar bulls basked in the sun anyway!”

For the rest of this story, and for more insights into the world currency markets, see today’s issue of

<a href="http://dailyreckoning.com/Writers/Butler/Articles/031306.html">The Daily Pfennig</a>

Bill Bonner, back in London with more views...

*** “More than $2 trillion of U.S. mortgage debt, or about a quarter of all mortgage loans outstanding, comes up for interest-rate resets in 2006 and 2007,” reports the WSJ this morning. “...some borrowers will have trouble meeting the higher payments and may be forced to sell their homes or could lose their homes to foreclosures.”

Hmmmn. Who could have seen that coming?

*** “China keeps buying the dollar to defend the yuan's peg...There are many reasons for this, but one major consideration continues to be the perception of China's dependence on an export driven economy. That may not be the case much longer,” writes Chris Hancock, a regular contributor to our editorial e-mail threads.

“There's a good article in the FT today highlighting Long Yongtu, Chinese diplomat who worked on the WTO entry, and is comments that China's economic development is driven more by domestic demand than many realize. That could either be diplomatic smoke blown at the US or a typical Chinese style warning that a policy change is on the horizon. Meaning, they might seriously consider stop buying the dollar.

“As of February '05, Japan and China hold approximately a combined $900 billion, or 46 percent of foreign Treasury holdings......

The preceding description sums up nicely where we are, and where we're headed. We live in a country with no trade policy, no energy management/conservation policy, and....no sound, trade or budget deficit management policy.

We are headed for both massive deflation of domestic assets and currency, and massive inflation, too. Nobody can be sure what the sequence of the two opposite events will be, or if our political leaders and "the Fed" will have any control or even influence, in the outcome, or in the speed in which events unfold.

IMHO, as a citizen/resident of the U.S., I believe that our situation is dire enough to consider endorsing the leadership of, and voting for, politicians who would candidly state plans similar to the following:

The only option that I see as offering a hope of extending the duration of a domestic level of prosperity that even approximates what we currently enjoy, is to use the military immediately in an "all out" ultra imperialistic assault on the military and industrial assets of rest of the non-aligned world. The military strikes would be followed up by siezing and securing petroleum fields and raw material deposits, all over the world, and a declaration by the U.S. of default on existing trade debt and on federal bond obligations. We must act quickly before we can no longer afford to maintain our military forces in their existing state, and before those who would resist us, become stronger.

tecoyah · 03-15-2006, 03:56 AM

Quote:

Originally Posted by host

The only option that I see as offering a hope of extending the duration of a domestic level of prosperity that even approximates what we currently enjoy, is to use the military immediately in an "all out" ultra imperialistic assault on the military and industrial assets of rest of the non-aligned world. The military strikes would be followed up by siezing and securing petroleum fields and raw material deposits, all over the world, and a declaration by the U.S. of default on existing trade debt and on federal bond obligations. We must act quickly before we can no longer afford to maintain our military forces in their existing state, and before those who would resist us, become stronger.

This is by far....the most rediculous suggestion I have ever heard. World War III is not a cure for the United States Financial Woes.

host · 03-15-2006, 11:50 AM

Quote:

Originally Posted by tecoyah

This is by far....the most rediculous suggestion I have ever heard. World War III is not a cure for the United States Financial Woes.

tecoyah, I strongly suspect that the "rest of the world" already knows what the U.S. will "end up" doing, and if we're going to "do it", the best chance for a survivable outcome is to do it sooner, before the countries that we go up against become better prepared to oppose our attacks, and before the dollar erodes our ability to finance preparations and the initial offense.

I say this because I see no alternatives, other than the description in my last post, of half the families in North Carolina sliding below an minimum income that even then, budgest only necessities....it does not even include paying down debt or budget for cable TV fees. Do the Chinese grow richer, while we grow poorer, do we sit on our military assets, while they rust, as the Soviets did, or do we attempt to make our military "pay it's own way", via the "plunder" it might bring back to the homeland. I think that our elected federal leaders already have decided to do, what the rest of the world suspects that
we will do....and that the only ones who have yet to mull over the idea, and to have it sink in, are the American people.

Quote:

http://news.bbc.co.uk/2/hi/business/4807844.stm
US Federal Reserve chairman Ben Bernanke has voiced concerns over the size of the US budget deficit.

Mr Bernanke warned persistent deficits need to be curbed, particularly as an ageing population will raise pressure on government spending.

Widening the deficit would put future living standards at risk, he added.

"As a result, I think it would be very desirable to take concrete steps to lower the prospective path of the deficit," he said.

The comments came in a letter - dated 9 March - to Senator Robert Menendez following his statement to the Senate Banking Committee on February 16.

Ageing population

The letter said Mr Bernanke was quite concerned about the "intermediate to long-term federal budget outlook"....

Quote:

http://www.usatoday.com/money/econom...con-usat_x.htm
Posted 3/14/2006 10:28 PM
U.S. trade deficit balloons to $805B
By David J. Lynch, USA TODAY
WASHINGTON — The most complete scorecard of the United States' international trade performance deteriorated to a record $804.9 billion deficit in 2005, the Commerce Department said Tuesday.

The "current account" deficit, including trade in goods, services and investment income, was 20.5% greater than 2004's $668.1 billion figure and more than twice as large as just four years earlier. "It's going to start to snowball. ... We're at a tipping point," says Catherine Mann of the Institute for International Economics.

No industrial nation has ever run a deficit this size, equal to 6.4% of economic output.

The dollar buys less than half the gold or silver that it bought in 2001
http://www.kitco.com/gold.londonfix01.html
March 15, 2001 Gold $262 oz. Silver $4.42 oz.

http://www.kitco.com/gold.londonfix.html
March 15, 2006 Gold $551 oz. Silver $10.25 oz.
The dollar buys less than half the oil that it bought in 2001

Quote:

http://www.globalsecurity.org/military/intro/oil.htm

......In November 1998 the Energy Information Administration released a forecast of World Oil Prices out to the year 2020. At that time, oil prices were some of the lowest since the early 1970's, and that even by 2020 we expect oil prices in real 1997 dollars to reach only $22.73. These projections are from the reference case of the Annual Energy Outlook 1999...........

......In the AEO2005 reference case, the annual average world oil price increases from $27.73 per barrel (2003 dollars) in 2003 ($4.64 per million Btu) to $35.00 per barrel in 2004 ($5.86 per million Btu) and then declines to $25.00 per barrel in 2010 ($4.18 per million Btu) as new supplies enter the market. It then rises slowly to $30.31 per barrel in 2025 ($5.07 per million Btu). As recently as April 13, 2005 Guy F. Caruso, Administrator of the Energy Information Administration, was briefing these results.

But The EIA's Short-Term Energy Outlook – April 2005, released 07 April 2005, told a very different story. During the first quarter of 2005, West Texas Intermediate (WTI) crude oil near-month contract futures prices averaged $49.77 per barrel, rising nearly $14 per barrel over the 3-month period. Higher crude oil prices over this period reflected, in part, market expectations of robust world demand, limited increases in non-Organization of Petroleum Exporting Countries (OPEC) production, and uncertainty about crude oil supplies from continuing volatile situations in Iraq, Nigeria, and Venezuela. Traders and oil market analysts seemed focused on the latter part of 2005, projecting continued strong demand growth with very little spare production capacity available. Nevertheless, since their April 1st peak, crude oil prices tumbled more than 9 percent to $51.86 per barrel by April 12, 2005.

The average West Texas Intermediate (WTI) crude oil price for the first quarter of 2005 was $49.77 per barrel, approximately $14.50 per barrel higher than in the first quarter of 2004 and $1.10 per barrel above the first quarter 2005 projection in the previous Outlook. WTI prices are projected to remain above $50 per barrel for the rest of 2005 and 2006. Oil prices are likely to be sensitive to any incremental oil market tightness. Imbalances (real or perceived) in light product markets could cause light crude oil prices to increase to levels above the $55 per barrel average projected in the Outlook.......

.......On 09 August 2005, New York's main contract, light sweet crude for delivery in September 2005, climbed 54 cents to $63.61 per barrel in electronic trading. The contract had struck $64.27 late on 08 August 2005, the highest level since it was first traded in 1983.

In contrast to most other oil-price-spike episodes, this time the far futures price of oil -- that is, the price for contracts seven years out -- has also risen sharply. This correlation seems to indicate that the present oil price increase is not viewed as a purely temporary shock. It is virtually inevitable that shocks will result in some combination of higher inflation and higher unemployment for a time.........

Hurricane Katrina did not strike until three weeks after the oil futures contract reached $64.27 per bbl.....

Quote:

http://www.commondreams.org/views04/0105-08.htm
Published on Monday, January 5, 2004 by CommonDreams.org

How Will Bush Deal With the Deficits? Connecting the Dots to Iraq
by Robert Freeman

How does a nation deal with debts that so greatly outrun its ability to pay? There are basically only five strategies. All are unappealing. Most are calamitous.

The most difficult strategy is, not surprisingly, the honest one: raise taxes and pay your bills. This is what King George III did following the Seven Years War with France in 1763. England had quadrupled its national debt in fighting the War and needed money to pay it off. It turned to the richest people in the realm, the Colonists, and began taxing paper, glass, paint, lead, and, of course, tea. The result, as we know, was the American Revolution......

....Finally, there is plunder. When a nation's debt load becomes so huge it cannot plausibly reassure creditors regarding repayment, it must seek some source of wealth, any source, to keep the borrowed money flowing. This, naked predation, is what kept the Roman Empire alive for the last two hundred years of its existence. It is the strategy adopted by the Spanish Empire-silver and gold from America-and which eventually destroyed the vitality of its own merchant and civil servant classes.

Government economists are not unawares of these imperatives. So, which of the five above strategies has the U.S. adopted to deal with its exploding debt problem?.........

.......So what to do?.........

.......Clearly, the Bush administration will not adopt the first strategy, raising taxes.......

.....Finally, then, we come to the most sensitive and incendiary debt management strategy of all. Plunder. The purported rationale for the U.S. invasion of Iraq-that it possessed Weapons of Mass Destruction-is now known to have been a wholesale fiction. Not a single one of the administration's dozens of claims of WMD possession or imminent threat have borne the scrutiny of the most massive inspection regime in history. Of all the world's people, only the thuggishly propagandized American people ever believed (or still believe) this to have been the real purpose for the War. Not even Bush himself pretends otherwise anymore.

And the ex post facto rationale-that we are bringing Democracy to Iraq-is equally fictive given Paul Bremer's statement that the U.S. will not allow a Shi'ite government to take control there. Shi'ites, as Bremer well knows, make up 60% of Iraq's population. And no, it's not links to terror. And no, it's not connections to 9-11. What then? A simple thought experiment demonstrates the real truth about the U.S. invasion: would the U.S. have carried it out if, instead of sitting on the world's second largest supply of oil, Iraq was the world's second largest producer of, say, pomegranates? Or figs? Only the most pathologically Republican of cynics can even pretend to give this question a thought.

Control of oil gives the U.S. control of the industrial world and effective control of its own strategic competitors, Europe and China. This is the same strategy that made Alexander the Great so Great. As he entered new territories in pursuit of conquest, the first thing Alexander always did was capture and fortify the local water well. Within a day, two at the most, resistance collapsed. Oil is the water of today. It is the most widely traded commodity in the world. It is the one commodity without which modern civilization cannot function.

Control of oil allows the U.S. to extract all of the surplus wealth created by its rivals, ensuring that they remain forever subservient. This explains why Europe and China were so vociferous in their denunciation of the War. It also ensures that the U.S. has a universally desired, fungible, liquid commodity to collateralize its massive debts. Iraqi oil is a magical two-fer: it solves the U.S.'s primary strategic and economic challenges in a single fell swoop. But its capture can only be justified by deceit and accomplished through plunder.

The problem for most of Bush's Democratic challengers is that they know the above situation to be true. That is why-Howard Dean and Dennis Kucinich excepted-they went so sheepishly along with Bush's notoriously transparent casus belli in Iraq. They are left with petty quibbling about the adequacy of post-invasion planning. It is why they raised hardly a peep of protest over the ramming through of the Medicare package. It is why they bleat only procedural protests about the incivility of discourse as the three-quarters-of-a-century legacy of the New Deal is being peremptorily dismantled.

There was a time in the late 1990s when it looked as if the U.S. might be able to regain control of its fiscal destiny. Bill Clinton reversed the suicidal predations of Reagan's Supply Side Economics and produced the longest sustained economic expansion in U.S. history. One of the byproducts of that expansion was a series of budgetary surpluses that allowed the government to begin paying down the crippling debts run up under Reagan and Bush I.

But that halcyon era is already just a memory. Bush's massive debts are the nation's new fiscal master. And they have been run up solely to further enrich the already extremely wealthy the expense of the still desperately needy. The staggering costs of servicing these debts will drive interest rates into the stratosphere, destroying all possibilities of rebuilding a competitive economic infrastructure. The conservative British business magazine, The Economist, said it most presciently: "Long after Dubya is back on his ranch, Americans will be trying to recover from the mess he created."

It is breathtaking to imagine it could have happened so quickly but all federal policy, indeed, decisions concerning war and the very character of the nation itself, will now be defined by the stark new fact of our collective indenture.

aceventura3 · 03-17-2006, 04:00 PM

Among the fears of labor unions had when NAFTA passed in '93 was that the impact would be depressed wages and the exportation of jobs. Large multinational corporations supported NAFTA, ironically NAFTA was passed and was signed into law while Clinton was in the White House.

Anyone think the Unions were right?

Halx · 03-17-2006, 04:36 PM

host, I think I told you a while ago to stop quoting impossibly long articles while only adding a few sentences for your argument. Post with your own words please. Nobody wants to read your posts when they are like that.

03-10-2006, 02:18 PM	#1 (permalink)
unlawflcombatnt Upright Location: California	Real Wages Still DECLINING Though nominal wages have increased 3.5% over the last year, when adjusted for inflation they have DECLINED 0.6%. January's real (inflation-adjusted) hourly wage was $8.18/hour (in 1982 dollars). This is a -0.6% change since January 2005's $8.23/hour. Worse still, this is a DECLINE of 1.1% since January 2004's $8.27/hour. This information can be found at the United States Bureau of Labor Statistics at http://data.bls.gov/PDQ/servlet/Surv...=CES0500000049. Despite Bush Administration spin, American workers are losing ground. They're ability to purchase production through wages is steadily declining. Since consumer spending is 2/3 of all economic activity, this erosion in purchasing power spells trouble for our economy. Over the last 2 years, consumer spending increases have been sustained through increased borrowing alone. Home equity extraction for 2005 was $243 billion, according to Bloomberg News http://www.bloomberg.com/apps/news?p...d=aE50ss.wrOM0 Home equity extraction would account for 63.3% of our economic growth in 2005. As such, home equity extraction could account for nearly all of the 66.7% (2/3) fraction attributable to consumer spending. of the consumer spending increase in Thus it is increased home equity extraction, not wages, that have maintained consumer spending, consumer demand, and GDP growth. Consumer spending increases are necessary for continued economic growth. According to Bloomberg News, home equity extraction is expected to DECLINE $126 billion from $243 billion down to $117 billion in 2006. This would be a 52% decline, and a 52% decline in consumer spending power. This source of spending is nearly equal to all of our spending growth. With a 52% reduction in consumer spending power, spending would also decline 52%. If 2006 consumer spending remains 2/3 of of economic activity (and GDP), it would reduce our GDP growth by the same 52%. A 52% reduction in this year's 3.2% GDP growth would leave a 2006 GDP growth of only 1.54%. Considering 2 straight years of declining real wages, there is no reason to think real wages will rise in 2006. As such, wages won't make up for the spending loss from decreased home equity extraction. Less consumer spending will result in less consumer production demand, less demand for workers to provide that production, and declining wages and employment as a result. It definitely looks like we're in for a year of significantly slower economic "growth." How much slower remains to be seen. With a December Durable Goods Order decline of 10%, the biggest decline in 5 years, the economy is not looking good.

03-12-2006, 02:43 AM	#3 (permalink)
tecoyah Illusionary	The minimum wage was not designed to make life comfortable, but rather as a way to guarantee a "Minimum" income to those entering the workforce. Current attempts (relatively successful) to increase the Min. have addressed the worst of the discrepency, though it will never be enough to rise above the poverty level. Though it can be said that the current Administration did not help the situation for the most part, they certainly did not cause it, nor in my opinion, have they made it significantly worse. This is simply the reality of our economics at this time, and I am not smart enough to figure out how to make it better. __________________ Holding onto anger is like grasping a hot coal with the intent of throwing it at someone else; you are the one who gets burned. - Buddha

03-13-2006, 07:35 AM	#4 (permalink)
aceventura3 Junkie Location: Ventura County	I assume many see this as a failure of the Bush administration. He certainly has to take a share of the blame. But the lack growth in real wages is a part of a long-term trend. We are not saving and investing in the future at the rate we should. Government spending is wasteful and out of control. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

03-15-2006, 02:55 AM	#9 (permalink)
host Banned	Duplicate Post.......... Last edited by host; 03-15-2006 at 02:57 AM..

03-17-2006, 04:00 PM	#13 (permalink)
aceventura3 Junkie Location: Ventura County	Among the fears of labor unions had when NAFTA passed in '93 was that the impact would be depressed wages and the exportation of jobs. Large multinational corporations supported NAFTA, ironically NAFTA was passed and was signed into law while Clinton was in the White House. Anyone think the Unions were right? __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

03-12-2006, 01:55 AM	#2 (permalink)
pandaman87 Upright	this isn't good, seriously in many areas of the states, the cost of living is becoming outrageous compared to the minimum wage. It needs to be revised, and badly.

03-13-2006, 08:53 AM	#6 (permalink)
flstf Easy Rider Location: Moscow on the Ohio	Our local paper had an article in it this Sunday that claimed incomes were flat and the reason the economy did so well last year was due in large part to people getting equity out of their houses. They were speculating that if there is a housing bubble this year that people wouldn't have the money to spend and the economy would take a dive.

03-17-2006, 04:36 PM	#14 (permalink)
Halx Please touch this. Owner/Admin Location: Manhattan	host, I think I told you a while ago to stop quoting impossibly long articles while only adding a few sentences for your argument. Post with your own words please. Nobody wants to read your posts when they are like that. __________________ You have found this post informative. -The Administrator [Don't Feed The Animals]