But We're the Richest Nation Right?

Not so much. We've got a lot of billionaires but that comes at the expense of the rest of us. As the 1% get richer the rest of us get poorer. In fact, when compared to other developed countries, when it comes to per-adult median wealth, we rank #27:

Country Median Wealth per Adult
1. Australia $193,653
2. Luxembourg $153,967
3. Japan $141,410
4. Italy $123,710
5. Belgium $119,937
6. United Kingdom $115,245
7. Iceland $ 95,685
8. Singapore $ 95,542 (non-OECD)
9. Switzerland $ 87,137
10. Denmark $ 87,121
11. Austria $ 81,649
12. Canada $ 81,610
13. France $ 81,274
14. Norway $ 79,376
15. Finland $ 73,487
16. New Zealand $ 63,000
17. Netherlands $ 61,880
18. Ireland $ 60,953
19. Qatar $ 57,027 (non-OECD)
20. Spain $ 53,292
21. United Arab Emir. $ 47,998 (non-OECD)
22. Taiwan $ 45,451 (non-OECD)
23. Germany $ 42,222
24. Sweden $ 41,367
25. Cyprus $ 40,535 (non-OECD)
26. Kuwait $ 40,346 (non-OECD)
27. United States $ 38,786

If you take a close look at the list you will see that all the "socialist" countries...you know...the ones that provide everyone with healthcare and all that crap are, in many cases, well ahead of us. Even poor old Cyprus, who got "gang banged" by Germany and the rest of the EU and even struggling Spain are better off than the average American.The secret is that this is all a result of the great American idea that making more money from money is more important than making anything real.

You can read more about this over at Firedoglake.

Inside Job

I'm not sure I want to see this movie:

If you don't quite get what happened to the global economy over the last two years, or who's at fault, you're not alone. Indeed, that's nearly everyone's situation. The big crash of 2008 and 2009 and its ongoing ripple effects -- such as the European fiscal crisis that's rendering my visit to France a little cheaper every day -- seemed to come from nowhere as if by natural causes, as unpredictable and unmanageable as the Icelandic volcano or a Gulf Coast hurricane. Charles Ferguson is here to tell the world that the crisis that wiped out trillions of dollars in wealth, threw millions of people out of their homes and out of work, and further widened the gulf between rich and poor was no accident. It was a crime. Ferguson, a former software entrepreneur and policy-wonk scholar turned filmmaker, is definitely no left-wing bomb-thrower or closet Marxist. But he plays one in the movies, you might say. His new documentary, "Inside Job" -- arguably the smash hit of Cannes so far -- offers a lucid and devastating history of how the crash happened, who caused it and how they got away with it.
[...]
There was nothing reasonable or decent or redeemable about the world of high finance, in Ferguson's judgment, by the time the 21st-century bubble reached its peak around 2006. As he illustrates with a damning parade of interviews, images and public testimony, the financial industry had ridden 20-plus years of manic free-market deregulation and neoliberal fiscal policy from one crisis to the next, surfing a rising tide of greed and corruption. (There are several people in this movie, prominent among them former George W. Bush advisor Glenn Hubbard and Harvard economics chairman John Y. Campbell, who will rue the day they agreed to talk to Ferguson.)

In a captivating conversation with former New York Gov. Eliot Spitzer (who looks here like a knight in shining armor, believe it or not) Ferguson suggests that the financial industry has become a criminal class insulated from society, where profit justifies everything and morality and ethics, not to mention basic human decency, are totally irrelevant. Gaining remarkable access to a wide range of financial insiders, experts and academics, he builds a persuasive case that by conquering Washington with piles of campaign money and conquering the economics discipline with free-market ideology (and more piles of money), the financial industry built a fortress of deregulation that allowed it to plunder the peasantry with no control or oversight

From the sound of it this movie will probably push me over the edge. I'm already supremely pissed off at the mess that the financial insiders have created. Maybe if this thing gets a big enough audience it will push some real financial reform instead of the pablum we are being fed as reform The sad truth is the reality that the Democrats are too complicit in this mess for political purposes and the GOP is just beyond the pale.This folks are bought and well damn well stay bought.

Let the Good Times Roll

I just checked and my retirement savings is still about 30% of what it should be. Yes, it has improved in the last year but it still has a way to go. I doubt I am the only sucker out there in the same position but you can't say that about the poor, poor slobs on Wall Street who are expecting to see their income up by about 40% over last year. Yes, it's a big win for the boys on Wall Street after we taxpayers bailed them out of their self created mess to the tune of a trillion dollars or so.

Wall Street cash bonuses are set to increase by about 40 percent this year, the Wall Street Journal said citing a report by compensation consulting firm Johnson Associates.

In a report to be released later on Thursday, Johnson Associates projects that the biggest increases in year-end cash bonuses and equity awards will go to employees in rebounding businesses such as fixed income and equities, the paper said.

The well connected folks at Goldman Sachs are expected to see bonuses averaging of $526,814 this year. This really rubs me the wrong way and this kind of excess is not acceptable... at all. Yeah, I am concerned about health care reform, environmental legislation, military spending and the black money holes in Afghanistan and Iraq but this 'in your face' coddling of the financial sector is rapidly gaining a very high profile in my discontent. These numbers have been rubbing salt in the wounds for way too long and my sense is that the Democrats will see this anger show itself at the polls next year if they don't get off their dead asses and do something about it.

Speaking of Scary

If you have a few minutes and want to really give yourself a scare this Halloween then read Matt Taibbi 's piece on the true story of how Bear Stearns and Lehman Brothers were brought down and how utterly corrupt the players on Wall Street really are. He doesn't leave out President Obama's financial team either. It's a fairly long article but worth the few minutes it will take to read it.

Scared the hell out of me.

What Needs to Be Done in the U.S.

Once again the U.S. is late to the game. The UK and EU are taking the lead in addressing some of the root causes of the financial meltdown and we are still playing patty cake. The Dutch led the way, though pushed by the EU, with the break up of ING and now this. It is time for the same thing to begin happening in the U.S. The 'too big to fail' lie has been proven wrong and it is time we got back to a system where competition is a vital part of the everyday financial world.

The European Union will today approve the split of Northern Rock into two sections, a "good", profitable, bank with no bad debt, and a "bad" bank. Ministers will begin exploring sale options at the start of next year when the split happens and a deal could be finalised before the general election. The remaining "bad" bank will remain in state hands for the time being although sales of "tranches" of the more risky mortgages it holds will be explored in the longer term.

The Lloyds and RBS sell-offs will follow over the next three to five years and will be supervised by UK Financial Investments, the government body set up to oversee taxpayers' investment in the banks.

The Government is understood to have made clear that existing larger operators will be banned from participating in the sales.

Excuse Me!

Via Bloomberg:

Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind, said two people familiar with the sale. ...

Two years after the credit markets began to seize up, costing the world's biggest financial institutions $1.47 trillion in writedowns and losses, banks are again taking so- called structured finance securities and turning them into new debt investments with top credit ratings. While the Morgan Stanley deal is the first to involve CDOs of loans, banks have been doing the same with commercial mortgage-backed securities in recent weeks.

Can someone explain to me why this is any different from the practices that screwed us the last time? Isn't turning toxic crap into AAA rated investments with without any rational justification kinda, sorta what precipitated the financial crisis. If I am missing something here please let me know.

When Did It Change?

While I was working in the garden today and pondering the ways of the world, it suddenly came to me to ask, when did it all change? What was the trigger or event? Can we point to a calendar and say then?

When did your banker become your enemy? He used to be your friend. If you had some money to save, he would keep it safe and actually give you a little interest. He would take your money and that of others and loan it to others on fair terms when he had checked and felt sure that they were good to pay it back. For that he charged a little interest and all in all made a decent living facilitating commerce in the community. No one resented his profit and actually appreciated the service he provided the community. He was one of the "pillars" of the town.

Now your bank is your enemy. They will take your savings but pay niggardly interest. They'll service your financial needs but it will come at a steep price with fees and surcharges for everything. It has become, somehow, an adversarial relationship. You resent your bank and you just know they merely tolerate you and spend a good part of their day figuring out how to screw you out of a little more of your money. They're evil.

We need to figure out when, where and why things changed and get back there. I am getting real tired of feeling like I have no choice but to put my money in the pockets of someone who, if they really don't hate me, just tolerate me as a necessary evil.

Too Big a Piece of the Pie

An article at the New Rules Project by Stacy Mitchell talks about about credit card fees. We're not talking about the myriad nuisance fees like late fees and overdraft fees that you can avoid with diligence but the transaction fees that are skimmed by the credit card companies on every single credit card purchase:

Although the exact rate charged on any given transaction varies widely depending on many factors, including the size of the business and the type of card, the average interchange fee in the U.S. is now about 2% of the value of the sale — two to six times the regulated rates imposed on Visa and MasterCard in Australia and much of Europe.

....Interchange fees now comprise a substantial share of the income these companies make on credit cards. In 2004, card issuers took in $28 billion in interchange. By 2008, that figure had shot up to $48 billion. That's more than one-quarter of all credit card revenue and more than the total collected by banks in credit card late fees, over-the-limit fees, and ATM fees combined.

Business owners are helpless since they can hardly stop taking credit cards and they aren't allowed to directly pass along transaction fees to consumers. You can rest assured though that these fees wind up coming out of our pockets eventually. Merchants have absolutely no bargaining power at all as to turn away credit card and debit card users would be a disaster in today's world. To understand how bad we are getting screwed you should understand that in Europe, transaction fees have been cut to 0.3% by the EU government.

We can chip away at the credit card companies with various limits and caps on interest rates and all sorts of nickle and dime rules but until we force them to restrict their take of American business to a reasonable percentage then we are just pissing into the wind. If I am not mistaken adding a percent or so to the profits of American business might be a pretty stimulus in itself.

Credit and debit cards are supposed to facilitate business by providing a symbiotic way for consumers to interact with merchants. Somehow, in the U.S. at least, this has turned into a parasitic relationship with the credit card companies slowly bleeding the American economy by taking an unwarranted share of each transaction. I am not against Visa, MasterCard, Discover or American Express and I expect them to make a fair profit. Fair being the operative word. This is just another example where, on many fronts, the EU is ahead of the U.S. in making sure the playing field is somewhat level with respect to the relationships between business and consumers.

H/T Kevin at Mother Jones

HP is Cutting 24,600 Jobs

Ouch! The Bush/McSame economy takes its toll, once again. After the third quarter GDP numbers come out, we are going to see much, much more of this.

P.S. One of McCain's top economic advisers, Carly Fiorina, used to run HP. She got herself a "$21 million severance package" when she was booted out the door. She got hers.

Update: I actually left off the fact that HP gave her $21.4 million in severance pay, plus another $21.1 million in stock options and other benefits. All this for terrible job including 20,000 laid off on her watch.

You Want Fries with That?

Or maybe "Paper or plastic?" All of us reaching retirement in the next few years better start practicing our work phrases for retirement. Yesterday we all got to watch at least 20% of our retirement savings vaporize while we listened to Alan Greenspan tells how bad the McCain tax plan was. Hello Alan? Don't you remember telling everyone that ARMs were the way to go and that the financial industry was fully capable of managing itself.
It's ironic, I was driving through Westchester County, NY last week among all the giant gated mansions and private schools and luxurious country clubs. I didn't really realize it at moment but I was looking at your and my savings sitting there. All the "fat cats" have skimmed theirs off the top and have their huge bank accounts(mostly offshore) and they have their private jets sitting at the Westchester Country airport just waiting for a quick trip to the islands and we are cocerned about filling up the car next week.
Yeah, I know I am one of the lucky ones that actually have had an opportunity to save a little for retirement, have a job and a mortgage that will be paid off in a couple of years but that doesn't mean I can't be pissed at what these "financial wizards" have done to us as a whole.
When you think that over $700 billion in American wealth( a large part of it the savings of regular working stiffs) disappeared in a few short hours yesterday it really boggles the minds. The worst thing is that it is not over.
All you people in Texas and Lousianna buck up and get through your immediate crisis and try not to think about where the money is going to come from to get you back on your feet. Somehow we will get it worked out. It will take some time but it will get better just as soon as we get the Republicans out of the driver's seat.
Have a nice day!