Americans are quickly getting poorer as the much-touted economic “recovery” remains elusive. Household wealth plummeted by more than four percent from July to September according to a report released last week by the Federal Reserve, marking the steepest drop since 2008 and the second quarterly decline in a row. That represents an average loss of about $21,000 per household in just three months.
At the end of the third quarter, household wealth plunged by $2.4 trillion, from a total of about $60 trillion down to slightly less than $57.5 trillion. The dramatic drop in net worth — the value of all assets minus total debts and liabilities -—was led by still-declining housing prices and crashing stock values.
Despite wild money printing by the Fed in recent years, home values are not expected to recover any time soon. During the third quarter, American real estate assets lost about $100 billion from the previous quarter. And banks are still sitting on an unknown but huge number of foreclosed properties expected to keep prices depressed for years to come.
Stocks performed terribly last quarter, too, though they have recovered some of those losses so far. The S&P500 Index lost around 14 percent from July to September. And according to the Dow Jones U.S. Total Stock Market Index, equities shed $2.6 trillion for the quarter.
The current political debate over “jobs” ignores a vital component of jobs and the economy: Government make-work jobs are simply another form of welfare; jobs produced by the private sector that help the economy are productive jobs. In places like North Dakota, where the economy is now benefiting from an oil boom, the importance of genuinely productive labor has been understood from the beginning of frontier America. The winter wheat farmers of the Dakotas led an unglamorous like of rising before dawn, eating a big breakfast by a hard-working wife who herself had worked long, hard days, and then turning the land into crops. These families created wealth; they work produced goods and services that people wanted.
Perhaps no job in America is more important than generating energy. Yet many parts of West Virginia today have high unemployment because the environmental regulations have made it virtually impossible or cost-prohibitive to extract coal, despite the fact that our nation has a huge reserve of this proven fuel. Oil, however, is considered the most vital fossil fuel for our nation.
Increasing the domestic production of oil would allow our nation to pursue a foreign policy guided only by our wish to remain independent, free, and peaceful. Buying more of our own oil, and less foreign oil, would lower America’s balance of trade as well. Expanding the supply of oil also would put downward pressure on the price of this vitally important product.
In his interview at King World News, James Turk, founder of GoldMoney and author of The Collapse of the Dollar, noted in his travels around Europe that “there is one common trait, regardless of which country I am in: people are really frightened about the possibility of the collapse of the euro. Money continues to move out of the European banking system, which explains why central banks stepped in with some money printing last week.”
Investors are bullish on Europe yet again after a two-day summit in Brussels produced a triumphant agreement on the part of the 17 eurozone member nations to get their collective fiscal house in order. The options for Europe going into the conference were stark — at least, according to the doomsday rhetoric emanating from European leaders and media commentators on both side of the Atlantic. Failure to reach the foreordained agreement at Brussels would have been “a luxury we cannot afford” opined French President Nicholas Sarkozy, who added that “maintenance of the eurozone is our duty. We have no other choice.”
Well, actually, the other choice, according to the powers that be, was continental and global financial ruin. “Merkel and Sarkozy have been clear — back the plan or face catastrophe. It is a simple as that,” wrote CNN anchor Richard Quest. “The unfortunate point, often overlooked, is that the eurozone countries really have little choice. The euro doesn't work as currently constituted (it never has). They either change it or the project will collapse.” And a collapse of the eurozone would probably reverberate worldwide, possibly leading to a financial panic that would dwarf the 2008 debacle.
Cowed into submission, the eurozone countries feverishly agreed to subject their fiscal policies to international supervision, with the EU empowered to impose fines and sanctions for failure to keep budget deficits essentially at zero and other transgressions.
President Obama and congressional Democrats vowed to cancel Christmas break and stay in Washington over the holidays if Congress refuses to pass a payroll tax cut extension that is set to expire at the end of the year. The President is slated to take his family on a 17-day Christmas vacation to Hawaii beginning December 17, but unless the extension is reached next week his vacationing plans will be canceled.
"[W]e are going to stay here as long as it takes to make sure that the American people's taxes don't go up on January 1st, and to make sure that folks who desperately need unemployment insurance get that help," Obama pledged. "And there's absolutely no excuse for us not getting it done."
House Minority Leader Nancy Pelosi (D-Calif.) reinforced Obama’s vow, asserting that House Democrats are prepared to stay in town for Christmas, Hanukkah, Kwanzaa, and New Year’s if that’s what it takes to get the payroll tax cut extension pushed through. "Republicans have another chance to decide whose side they're on — all Americans or the one percent," said Pelosi, recapitulating the infamous Occupy Wall Street catchphrase. "We must not leave Washington, D.C., for the holidays without extending the payroll tax cut for our working families or unemployment benefits for those who lost their jobs through no fault of their own."
In testifying yesterday before the House Committee on Agriculture, Jon Corzine, former head of failed MF Global — which took customers' funds for its own use when it had financial difficulties because of risky investments — expressed repeatedly his grief over what went wrong with his company, and his sympathy for the “plight” of his customers who lost millions if not billions of their money with its downfall: “Their plight weighs on my mind every day — every hour. And as the chief executive officer of MF Global at the time of its bankruptcy, I apologize to all those affected.”
Ron Paul has garnered support from a great variety of different groups, as well as from celebrities such as Vince Vaughn and Barry Manilow, and even hip hop performers Prodigy and KRS-One; however, perhaps one of the most interesting and welcome endorsements for the Texas Congressman came this week from an editorial in Forbes magazine.
After being asked about the walkout of a few of his students from his Economics 10 class on November 2, Harvard professor Greg Mankiw responded with an open letter in the New York Times. The walkout involved only about 30 or 40 of the 750 students who usually attend, he noted. In addition, some other students entered his class as a “counter protest,” and at least one of the original protesters returned to his class because he didn’t want to miss his lecture.
In his candid appraisal of the letter from Germany’s Angela Merkel and France’s Nicolas Sarkozy to the European Union meeting that starts Friday in Brussels, Dan Murphy makes clear that this summit will be different from the previous 20: This one is determined to override national sovereignty to save the euro. The core of the letter is the offer of the fatal alternative to the euro zone nations: Either give up essential sovereign control over your budgets to the EU, or destroy the euro.