Big darkness, soon come
About 1,500 people live in this shantytown, huddling in tents and makeshift shelters built of scrap lumber and plastic tarps, cooking meagre meals over communal fires less than a mile away from wealthy property owners who are barricaded in walled compounds protected by a private army of a hired security guards. The police, who have become increasingly violent in recent years, cruise the shantytown hoping to keep a lid on drugs, gangs and violence and to make sure the have-nots don't wander off to trouble the haves. The shantytown is growing by about 50 residents a week. It's not in some distant underdeveloped third world hellhole -- it's Sacramento, California.
The divide between rich and poor grew faster in the last 35 years than at any point in recorded economic history, certainly since the 1920s and probably since the industrial revolution - but we don't have the facts and figures for that. But we do know a lot of homes have been lost to foreclosure, a lot of people have lost their jobs (more than a million jobs lost this year so far) and the market crash has wiped out a lot of middle class portfolios intended to as retirement savings. People are ending up on the street while abandoned homes are left to rot. In Georgia alone, 1 in 8 mortgages are in foreclosure or 90 days past due in payments.
How bad is it? According to Consumer Reports, pretty bad:
The number of U.S. homeowners with mortgages whose homes are worth less than their loans is 8.3 million, according to an analysis by First American CoreLogic that was reported on by CNN. The number means that about 20 percent of mortgages are underwater.
Eight percent of all mortgages are delinquent, and 6,600 homes go into foreclosure each day, says the Center for Responsible Lending; foreclosures could total 8.1 million by 2012. Some banks suspended foreclosures, but the moratoriums are set to expire this month.
And while all this is going on, all we seem to hear about is Rush Limbaugh's takeover of the Republican party, whose economic policy at this point in time is damn the torpedoes, full speed ahead on tax cuts for the wealthy. I keep hearing the same old upper middle class spoiled white man's refrain: "I got mine Jack. If you make me pay another couple of percent in tax on the money I make over a quarter million dollars, me and the other five percent of Americans priviledged enough to be making the big money are gonna take out ball and move to Galt's Gultch."
More factual fun from the esteemed R.Porrofatto in comments at the Alicublog post linked above:
The total tax rate (including all federal, state and local taxes) for the top 80% of the country is essentially flat. According to the Tax Foundation, here is the effective total tax rate in the U.S. by income quintile:
Highest income quintile: 35%
Second-highest income quintile: 31%
Middle-income quintile: 28%
Second-lowest income quintile: 23%
Lowest income quintile: 13%
- The average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years.[IRS]
- The top 1% of wage earners have more wealth than the entire lowest 95% of wage-earners.
- The top 1 percent of households saw income gains of over 45% in the last eight years. The bottm 90% saw gains of less than 4%. Since 1976, average income of the top 1% grew by 232%, average income of bottom 90% grew by 10% [IRS]
- The share of the nation's income flowing to the top 1 percent has increased sharply, rising from 15.8 percent in 2002 to 22.1 percent of all adjusted gross income for 2006. Not since 1928, just before the Great Depression, has the top 1 percent held such a large share of the nation's income[IRS]
- The 400 U.S. taxpayers with the highest incomes pay income taxes worth only 18 percent of their income on average, compared to 25 percent for the typical American. Because of reduced capital gains taxes, the top 400 taxpayers cumulatively saved $10 billion between 1995 and 2005. [CBPP]
- The campaign to repeal the federal estate tax was financed by 18 of the richest
families in America-including 23 billionaires-who spent nearly $500 million on it.
According to a recent study 1 in 50 American kids experiences homelessness at some point. The study is based on figures from 2005 and 2006 - anyone want to bet that the situation has improved during the current crisis? I didn't think so.
In Japan, all of the senior excutives of these bank and financial institutions that are failing would have resigned in ignominous shame by now and several would have probably had the decency to hang themselves. Meanwhile at AIG et al, it's bonuses all around while the U.S. taxpayer is left holding the bag.
I've said it before and I'm sure I'll say it again: The only surefire investments right now are in pitchforks, torches, tar and feathers.
Other Recommended Reading.