Walton$ Mountain

Today on the internet I saw a list posted by Forbes Magazine of the 5 richest women in the United States. The top 2 were Christy Walton and Alice Walton of the Walton family and Wal-Mart fame. Christy’s brother-in laws (Alice’s brothers) Jim and S. Robson, are also quite wealthy and together they are numbers 6,7,8 and 9 on the top 10 list of the richest people in America. All together they have over 107 billion dollars between them.

Isn’t it amazing that a company whose employees are mostly poor and whose shoppers are mostly poor creates enough wealth to produce 4 of the 10 richest people in America?

In fact Wal-Mart CEO Michael Duke’s (not a member of the family…too poor) earns about $20 million a year, or about 9,615 dollars an hour. Which when you think about it is only about 9,606 dollars more per hour than your average Wal-Mart employee who makes around $8.75 an hour and who would gross about $13,650 a year. So Mr. Duke earns about as much as 1,465 of his employees put together.

On the other hand, the 4 richest Walton’s earn more than 7.8 million of their employees put together…but that’s OK because Wal-Mart only employs about 1.5 million Americans…so there is still plenty of Wal-Mart work to be done. Yet just to be fair, that is a lot of employees and Wal-Mart does pay its taxes…but still…

There are many ways to make one’s fortune in this world, and building one on the backs of the poor is still the best way to make the biggest ones possible. And why is that? Because…

On an interesting and ironic side note, if you Google “The Waltons” you’ll see a list featuring the story of John-Boy and all of his favorite relatives who live with him in Walton’s Mountain, a fictitious television town in rural Virginia. If you watched this show then you learned about how a very large and extended family could  live happily together during the great depression in the United States even though they were poor and didn’t have much money… and yet they had a town and a mountain named after them….go figure.

But of course in America art imitates life almost every day…on television.

To the Mattresses

This is basically a re-post of something I wrote a few months ago about savings and banks and sending your children to college but since then it appears that our federal government is up to their old shenanigans again and soon there might be no safe place for your money to reside except…you guessed it… So let’s review:

First of all a word to parents: Parents, I highly recommend college for your children. A college education is a great way to boost your child’s future earning potential but, how can we parents possibly save for it and then pay for it without saddling ourselves and our children with more and more debt?

Well, a few years ago I would have said, buy United States Savings Bonds! Money that I put into U.S. Bonds when my children were little doubled and even tripled by the time they reached college age. But in 2006 Congress voted to reduce the interest rate on bonds from 6 percent annually to .04 percent. That is unbelievably a 93 percent reduction in interest on U.S. Savings bonds and 93 percent is like…well…everything! So thanks U.S. government and forget bonds.

I’d say put your money in a savings account but remember that for every 10 thousand dollars you save this year, next year you’ll have 10 thousand dollars and about… 3 gallons of gas, because unless you haven’t been paying attention banks no longer give interest to you even as a thank you not to mention fair payment for using your money to make money for themselves… So, forget savings accounts.

How about a nice mutual fund or stock portfolio? Well, mutual fund agents used to guarantee 8 to 12 percent average interest over the life of your fund but of course that was a “market based” guarantee which was not actually a guarantee of any kind as they’d always remind you when you were signing up for the fund. And when they say no guaranteed interest boy they sure don’t kid around! No guarantee. No interest, period. The stock market (just like you suspected) really is for people with 14 billion dollars, who really don’t need all that money and who really do have 100 years to not care whether it’s here today, gone tomorrow and back again. So forget the stock market. It’s become tantamount to gambling so you think you will make lots of easy money there but just like at the casino, you won’t make any money there at all.

What about 401ks? Stock Market again! See above. Plus you get a 10 percent penalty and taxed another 20 percent if you use it before you are 59 and ½. Hopefully your kids are gone by then because you’re going to need that money. Trust me! (And what’s the ½ for? Just to screw with us?)

And now the following bill is being proposed in Congress and recent reports say that it has a 79% chance of passing. It’s called H.R. 992: Swaps Regulatory Improvement Act and as you probably can guess it will not be an improvement of any kind to anything. What it will do as I understand it, is weaken the already weak Dodd-Frank Act that is supposed to protect us from another big bank money grab and public bailout like the one we had in 2008.

Instead this amendment to Dodd-Frank will make it easier for banks to speculate with depositors money again and allow for a future where the FDIC will no longer need to guarantee depositor funds; it can just confiscate them  to recapitalize the banks should they go south once again. This would mean that your money in your bank could be used to bailout your bank’s theft of your money. So the bank of the not too distant future, for all intents and purposes can rob you!…legally!

So, how do we save for college and our children’s future or save for anything if this is what we have to look forward to? The mattress! Yep, you heard me! Every dollar in gets you 1 dollar out plus when you consider adding all of the spare change that falls out of your pocket and lands under the bed your mattress has a higher average annual yield then most government securities! So parents of America, To the Mattresses I say! To the Mattresses!

That’s How We Do: Juxta-Posers

Today I took a drive to the Philadelphia airport and on the drive home, thanks to major construction and the worn out, pot-holed, crumbly highway, I was forced to a crawl just as I passed the relatively new South Philadelphia Stadium Complex. Where the Philadelphia Phillies, Eagles and Flyers play.

I couldn’t help but notice how shiny and new and spectacular the stadiums looked…however I also couldn’t help but notice that the names on the stadiums were Citizens Bank Park Stadium, Lincoln Financial Field and The Wells Fargo Center. And I also couldn’t help but notice that the surrounding neighborhoods were about as shiny and new and spectacular as the interstate highway  that I was traveling on.

And that got me to wondering…Why do we almost always put sports stadiums in the worst parts of big cities where then millions of people have to travel from the suburbs to spend millions of dollars to watch millionaires play? Probably you’ll say it’s so we can get all of that money that is being spent back into the cities…but that’s just not the case

Most if not all of these stadiums are financed by the crumbling cities themselves rather than by the wealthy teams and owners and financial institutions that have their names on them. And even though banks like Wells Fargo and  Citizens bank and Lincoln Financial pay millions for the naming rights, when you consider the recent trillions of dollars spent by the federal government in bailing out these banks then just about all of the money spent on these ballparks comes from…the citizens…not banks.

 That’s just plain crazy.

Many politicians and proponents of these publicly financed stadiums argue that new stadiums bring new jobs and economic expansion but when new sport stadiums are financed with public money, all research has shown that the population is actually worse off economically than before the stadium. 

In fact arenas and stadiums rarely live up to the promises teams, owners, and city politicians use to justify their construction. Cities are often left holding unsustainable amounts of debt because the economic development that is promised never shows up, and as a result, other services that provide more benefit to taxpayers like new roads and bridges and jobs and boring things like that are slashed to pay the bills.

Which when you think about it is insane.

Almost 40 years ago my home state of New Jersey borrowed $302 million to  construct  the Meadowlands and was supposed  to pay off the bonds in 25 years. Today because of refinancing, and redirecting funds for other stadiums the authority that runs the Meadowlands owes $830 million…on a stadium that was just torn down.  

That’s nuts!

Did you know that according to a new study from Harvard: when public-private partnerships are used to build such stadiums, taxpayers finance more than three-quarters of the investment, with teams and owners picking up just 22 percent of the tab…And every NFL franchise is today worth over 1 billion dollars!

It’s so ridiculous that it’s unbelievable!

And while our cities and infrastructures are crumbling around us we are cheering ourselves up by yelling, screaming and cavorting in the midst of abject poverty on urban oases as green as the piles of cash we spend there, named after banks that wouldn’t lend us a dollar under the very same deals and interest rates that they broker to build these coliseums.

Shouldn’t we  really be building these monuments to fame and fortune in the places where they belong like Beverly Hills, Wall Street and Fort Knox?

 It’s so ridiculous that it defies explanation…

But after all…that’s just how we do…isn’t it?

 

 

 

 

 

 

If It Ain’t Broke…Break It!

 

It’s been almost 5 years but the stock market has finally made it all the way back to where it was when the great financial crash began way back in 2008! Yes, the Dow Jones Industrial Average has finally made it all the way back from its lowest low of 6,547.05, more than doubling to over 14,000!

But for some reason the American people haven’t made it back nearly as far since then. In fact they haven’t even begun the return journey yet! What gives? The stock market’s resurgence is obviously great news for finance but someone forgot to tell people!

We’ve gone from 31 million to 47 million citizens on food stamps since the stock market crash. That’s 15% of our population now using food stamps!

11.1 million people were out of work back in 2008. Now we have 14.8 million people looking for work…but the stock market is all better?

Less food, no work, but more money? For who?

And the news gets better…

 according to Citigroup economist Steven C. Wieting, there are more than 3 million Americans still without work who lost their jobs following the financial crisis.

And…

The National Employment Law Project found that 58 percent of all jobs created over the past two years paid $13.83 an hour or less while just 22 percent were in the “mid-wage” class of $13.84 to $21.13 an hour, even though that group lost 60 percent of the jobs during the recession.

So mid-wage jobs are being replaced with low wage jobs and we’re still 3 million jobs short.

But the financial market is feeling just fine!

I think we can finally close the book on Supply Side, Trickle Down, Reaganomics.

Cut taxes on the wealthy, bailout the richest banks when they fail and what you get in return is not greater largess from a thankful and benevolent upper class. What you get is wealthier wealthy people, banks with lots of money and hungrier poor people, and fewer and crappier jobs.

The verdict is in:

Wall Street loves America and democracy…It’s just the people they can’t stand!

Les Minimunwage MMXIII

In 1776 when we declared our nation’s independence and announced to the world that all men were created equal slavery was still an option for America’s employers but in 1865 or four score and nine years later we put an end to that and began paying all workers for their labor. And today, still another seven score and 6 years later workers can happily expect a minimum of $7.25 per hour for their labor. Not bad huh? From nothing to $7.25 in 148 years; that’s a raise from nothing, of 5 cents per hour per year!  However, don’t forget that today’s employers no longer have to provide room and board for their employees like they did in the good old days of slavery. (not in favor of slavery, just making a point) That’s a savings for employers right? So slavery equaled no pay plus room and board (albeit, crappy room and board) while today’s’ workers enjoy a federal minimum pay of around $15,000 minus room and board. So how much of an advantage is that for today’s workers and high school graduates? Hmmm…let’s see if we can figure that out…

We’ll put you in one of the cheapest areas to live in the U.S: Fargo, North Dakota (oh boy!) where your minimum wage is a whopping $7.25/hr. That’s $15,080 dollars a year but of course you’ll have to pay taxes first before you get to bring that money home. You can expect to pay about $1,470 for FICA and SECA taxes and the North Dakota state tax. That will leave you with $13,609. The average rent in Fargo for a nice little 1 bedroom apartment will cost you about $650/month or $7,800 plus those pesky utilities like heat, water, and electricity so we’ll tack on another $2,700.

Now you have $3,109 left for fun and entertainment… or do you? I bet you’re probably going to want to watch television and use a cell phone and You do want the internet don’t you?! Let’s be conservative and say that all costs you $75 a month. That’s $900 for the year so now you’re down to $2,209 left but you are planning to eat aren’t you? You’ll need groceries and other supplies for your apartment too but if we just concentrate on food the USDA recommends $175-$200/month for food and groceries. That would cost a total of $2100 to $2400 for food and anyway you calculate it you are now officially broke and in debt and you haven’t even gotten around to transportation and figured in the cost of owning a car and paying for gas and repairs and we haven’t even mentioned entertainment yet.

You’re going to need another job even though you are already working full time! Or you’re going to have to live with someone who has a better paying job than you and who doesn’t need as much as you do. Or you are going to have to do without something. Of course there is always debt too but when you consider interest even debt is something that you have to buy.

So all in all, 7 score and 6 years after the end of slavery, our country will guarantee its citizens a wage for free workers that will place you above the national poverty line but unfortunately will not cover the price of living.

Today’s high school students need to know this. They need to be taught and they need to understand and they need to learn this sad fact more than they need to pass a basic skills exam. (Although they of course need those skills too)

Our society has given you the right to pursue your happiness. However, you have to provide the vehicle. Nothing comes easy and there are no guarantees. That is the price of student failure and all other lessons are for naught if this lesson is not acknowledged, fully understood and well learned!

And just to add some more perspective, in 1979 I began my first full time teaching job and was paid $10,000 per year. (that’s $5/hr by the way) That wasn’t a lot even then and when I went to apply for a rental at the local garden apartment complex I was turned away because I did not earn enough. Wow, I thought. I have a full time job in a public school and I can’t afford to live in that public’s town? Anyway, I managed… with a little help from my dad who let me use his car and paid for my car insurance and from a colleague who had a part time job as a realtor and helped me find an affordable apt. and even from the school board because they supplied health benefits along with my meager salary.

Today, with the help of an inflation calculator my $10,000 salary would be worth…

$10,000 of 1979 dollars would be worth: $31,545.74 in 2012 ($10,000 of 2012 dollars would be worth $3,170.00 in 1979)

That works out to be $15.16/hr in today’s dollars, which in my mind would be a realistic minimum wage to ask for in 2013.

What do you think?

Les Minimumwage

I remember my first job back in 1973 working in a factory in New Jersey. I made 2 dollars an hour which at that time was the minimum wage and at the end of a 40 hour work week I brought home close to 80 dollars. That certainly doesn’t seem like much today but over the 12 weeks of the summer I earned enough money to put myself through a NJ State college.

If I tried to do that today on our current minimum wage of $7.25/hour I would fall about 9 thousand dollars short in tuition and fees at that same school.

But back in 1973 I was working alongside workers who were there working in that factory to make a  living for themselves and their families. Those workers were earning slightly more than I because I was only a summer employee but still their hourly wage was not that much more than mine and I couldn’t help but wonder how they did it…but they did.

This year, In his State of the Union speech, President Obama proposed raising the federal minimum wage to $9 per hour by the end of 2015. That would restore its real value to what it was at the beginning of the Reagan administration in 1981, which, by the way,  in constant dollars, would still be worth less than the 2 dollars per hour that I earned in 1973.

It would also mean that The lowest-paid U.S. workers would continue to lag behind their counterparts in many industrial countries because data from the Organization for Economic Co-operation and Development  show nine nations where the minimum wage is more than $9 per hour.

Australia has the world’s highest minimum wage, at $16.91 an hour. France has boosted its level to $12.68 per hour, while U.K. workers earn at least $9.50 per hour. CNNMoney reports that “there are some developed economies with lower minimum wages than the United States, but not many.”

So my question is simply this:

Do you believe that in what is arguably the wealthiest nation on earth with the world’s largest economy that a worker who spends 40 hours at work each week for 50 weeks per year with 2 weeks of vacation should be able to earn enough money to support his/herself and a child on his/her wages alone, without additional government help in the form of food stamps, housing subsidies etc…

In other words should the minimum wage of the worker described above provide a salary commensurate to the basic costs of housing, health, transportation, utilities, food and childcare within the town, city, country in which he/she lives in the United States of America?

I do believe that it should. Otherwise why do we recommend working?

The changeling…

“And you are?”

 

 

Here’s another thing that I just don’t understand about my bank. Perhaps you have a similar experience at yours?

I’ve been banking at my bank for almost 30 years now and even though my bank has been swallowed up by other banks over the years, each one larger than the one before it, I have remained constant…a little older and worse for wear perhaps but still the same me with the same name, street address, telephone number, and most importantly I like to think, the same harmless and friendly expression and face that I’ve always had.

And when I hand over my checks, cash and deposit slips the teller happily smiles and takes my money and asks if there is anything else they can do for me.

And when I smile back and say, “Oh yes, I’d like to cash this check and take out some of that money that I’ve stored here for the past 30 years.” The teller always smiles back and says,

“May I see some ID please?”

Does this happen to you? Or am I the only person who is suddenly transformed into an unrecognizable life form whenever I ask for money from my bank?

 

 

 

Arthur Shmarthur 2… On the Rocks is Right!

 I guess we can’t all be Arthur’s because statistically, less affluent Americans stand only a 4 percent chance of becoming part of the upper middle class. That’s a number that is lower than in almost every other industrialized nation. Did you know that only in México and Turkey does someone born poor stand less of a chance of escaping poverty than in the United States?…good thing Turkey isn’t where Canada is, isn’t it? And if we could actually swop places with Canada on the map, we wouldn’t have to worry about illegal immigration anymore. How’s that for a happy thought?

But sadly, I still meet so many working class people who believe that it is the fault of the 150 million for dragging everyone else down, as though half of the country’s population gets up every morning and lays down again for a refreshing day of welfare and handouts while the 400 who have been soaking up America’s assets like giant self absorbent money sponges are simply hardworking, entrepreneurial, god-graced souls who are trying to help everyone else as best as they can, by acquiring all of the money so they can then trickle it all over us… And while it is true that One in eight American adults and one in four children now survive on government food stamps aren’t those unbelievable numbers for what is still, despite the lack of our social mobility, the world’s richest nation?

…. As Warren Buffett, the second richest man in America, said, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

In 1980, 30 percent of the profits the country produced went to the richest 1 percent of American society. Today it’s almost 60 percent, while the other 99% of Americans have consumer debt that now totals about $13.5 trillion!

Personally, I believe that we who are among the working classes in America do not need to worry about stock piling our guns in order to be ready to fight off an ever growing and all encompassing socialistic government who will want to take all of our hard earned goods and money so as to distribute it amongst the poor, hungry, downtrodden, lazy, and illegally “alien” masses.

What we need to worry about is that if this trend continues and the rich continue to get richer while the poor…you know… wonder if they should begin emigrating to Mexico and Turkey… then  perhaps someday soon the new American Billionaire Arthurs and their few friends will decide to take their 99% share of America’s wealth and do what the rich always like to do when their surroundings get too crowded, too dirty, too smelly too old or too “passé” for their gentile likings…

take the money and move elsewhere!

That’s what I am beginning to worry about, and…

That’s when we’ll most likely need our guns… to go hunting…for food.

 

Arthur Shmarthur!

I was switching channels this morning and happened upon the movie Arthur, staring Dudley Moore as a lovable drunken millionaire who lives in NYC. And the funny thing about the movie was that all of Arthur’s associates and relatives kept referring to themselves and each other as millionaires and I thought to myself, how quaint. They had millionaires back then who thought they were really rich! I mean really! By the end of the movie it was revealed that Arthur would inherit 750 million dollars and he and his fiancée and driver and apparently everyone else thought that was more money than a person could use. Can you imagine that?! Isn’t nostalgia so amusing?

But Back in 1981 when the movie was made there were only 12 billionaires in the USA and some 200,000 millionaires so Arthur really was among the elite persons of means. Today however, a mere 30 years later, we have 70 Billionaires in NY state alone and over 400 in the USA and over 5 million millionaires! I wonder what they do for a living because I know not one of them…do you?

Coincidentally, 1981 was also the year that saw the inauguration of President Ronald Reagan and the advent of “Reaganomics”  and it was President Reagan’s new way of looking at the economy and how to grow it and  it espoused lower taxes, deregulation, and entrepreneurism. And for the real “Arthur’s” of the United States it was just what the economic doctor ordered, but along with the rise of wealth in America, poverty  began to rise steadily again too  and today the nation’s poverty rate is 15.1%  with close to 50 million citizens living in poverty.

Today A minimum wage job of $7.25 an hour will bring you about $15,000 a year before taxes, placing you right in the middle of America’s poverty line. Imagine getting up every day and going to work, 5 days a week, 52 weeks a year and coming home dirt poor in the year 2013…or perhaps you don’t have to imagine? I know a lot of these people and it just doesn’t seem fare that someone who works hard and who works every day, should still have to be considered poor and in need of financial help just to make the basic ends meet.

In fact since the 1980′s  the overwhelming majority of Americans have derived almost no benefit from the boom in stocks and real estate and 30 years of economic growth in the U.S. that Arthur and his ilk have enjoyed. In 1980, the average per capita income for  a middle class American was $45,879. Today, adjusted for inflation, that figure is $45,113… But for today’s Arthurs,  incomes have almost tripled since the 80s began and right now The 400 richest people in the U.S.  have the combined income of the bottom 150 million American citizens!

Trickle Down Downer?

Legislation passed by the Senate on Tuesday night as part of the effort to avoid the dreaded “fiscal cliff” will limit the amount wealthy people can claim for charitable deductions on their taxes. The cap will apply only to individuals who make 250 thousand dollars or more and married couples making $300,000 or more, and It could save the government up to 50 billion dollars in tax breaks.

And now in response rich folks are apparently up in arms claiming that if they can’t deduct all of their charitable gifts they may not be so charitable in the future. Ari Fleischer, a former White House press secretary under President George W. Bush, tweeted: “This deal limits my deductions so I, & many others, will likely donate less in 2013.”

So why give if the giving can’t get you something good? That’s the exact opposite of what it means to be charitable isn’t it?

And According to Philanthropy News Digest, the new cap on tax deductions could potentially deter giving by anywhere from 0.4 percent to 2.3 percent –- up to $7 billion a year.

So 2013 may finally see revealed the answer to whether or not the trickle down theory of economics really is just economic theory or indeed economic fact.

Will the rich be truly generous enough to keep trickling on the poor…or will it all Depend?