Bankrupting the Common People

America's Underclass: The Growing Gap Between the Rich and Poor

May 18, 2010

Yahoo Finance! & Huffington Post - Macro economic data suggest the great recession is over. But the gap between the haves and the have-nots is growing, thanks, in large part, to a jobless recovery. Wall Street Cheat Sheet’s Damien Hoffman says the growing underclass now accounts for about 10% of the U.S. population.

In this clip, he and his brother Derek, who jointly run the Wall Street Cheat Sheet website, point to several signs America is turning into a two-class society:

5) Dollar Tree Stores is at All-Time Highs

Whoever says a dollar doesn't buy anything anymore hasn't been to a Dollar Tree store (DLTR). Store revenues are up 12.5%. That's 12.5% more dollars chasing ultra-cheap products rather than higher quality goods. But when your wages are either flat or nonexistent, choices are slim to none.

4) 2.8 Million Homes were Foreclosed in 2009

The number of homes in foreclosure across the U.S. in 2009 climbed to 2.8 million, an increase of 21% over 2008 and a staggering 120% jump since 2007. According to Irvine CA-based foreclosure-tracking company RealtyTrac, 2.21% of all U.S. housing units--one in 45--received at least one foreclosure filing last year. According to Rick Sharga, SVP of RealtyTrac, 2010 is expected to see between 3 and 3.5 million foreclosures.

3) 24.5 Million Americans are Unemployed

Do you think the unemployment rate is 9.9%? That's not the broadest measure of unemployment. The broader number more appropriately includes those who need work but have given up the search, and those who have taken part-time jobs while still seeking full time employment. And that number is 17.1% or 24.5 million Americans. That's like multiplying the population of New York City by 4 and taking away every single person's job. Ouch.

2) 32 Million Americans Don't Have Health Insurance

They will soon. But at the moment it's worth noting this number because it shows approximately how many people cannot afford health insurance. As my grandfather says, "All you have is your health." These people pray everyday that they don't lose their health because the costs can drive the average person into bankruptcy.

1) A Record 40 Million Americans are on Food Stamps

If you can't eat, you can't live. The Agriculture Department said a record $40 million Americans, or 1 in 8 Americans, may not be able to eat without government assistance. This is the ultimate sign of an under class. And the U.S. has been setting new records consistently since December of 2008.

5 Ways that Wall Street and the U.S. Government Punish the American Saver

Artificial low interest rates, understating inflation, pushing people into the stock market casino, and destroying yield on traditional safe investment vehicles.

May 18, 2010

MyBudget360 - The only savers in the U.S. seem to be the investment banks. Four of the big banks on Wall Street turned out a perfect quarter as they have managed to leverage the zero percent funds from the Federal Reserve into government securities. At the same time, middle class Americans would be lucky to get 0.1 percent at a bank on their savings account. Then you have Social Security coming out stating that there will be no cost of living adjustment since inflation is supposedly under control (except for food, healthcare, and other daily use items).

Americans are being punished if they are savers and prudent with their finances. The current system is based on turbo capitalism and the fuel that runs this system is debt.

Punish Saver Technique Number 1 – Transfer money from savers to big banks

The “perfect quarter” for the banks is really an insult to the rest of America:

May 12 (Bloomberg) - “Four of the largest U.S. banks, including Citigroup Inc., racked up perfect quarters in their trading businesses between January and March, underscoring how government support and less competition is fueling Wall Street’s revival.

“The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California- based Institutional Risk Analytics. “It’s a transfer from savers to banks.”

This is a disgrace to Americans that actually bailed out these banks (although the majority did not consent). It was our representatives in D.C., in particular the Senate that have been selling out to Wall Street for decades.You get 0 percent for savings accounts at big banks that then can charge you 19 percent on a credit card. Next, they borrow at zero and basically buy anything that yields a bit better and you have a system that can’t lose. But middle class Americans have no access to this system and that is why the underemployment rate is still at 17 percent today.

Punish Saver Technique Number 2 – Beat those on fixed incomes

In 2010 Social Security offered no cost of living (COLA) adjustment to the millions that receive benefits:



Now many middle class Americans actually depend on Social Security as a primary source for their retirement. No adjustments yet daily goods keep going up like food. Many retirees might own their home outright and as local government scramble for money, they hike up taxes. For example in California sales tax rates are getting close to 10 percent in some areas while those on fixed incomes have no adjustments.

Many on fixed incomes don’t have the timeframe to gamble in the Wall Street casino so they want to minimize risk. They usually stick their money into banks that offer 0.1 percent rates on savings accounts or if you are lucky, maybe 1 percent on a CD. In other words they basically have the same return as stuffing money into a mattress ...