The financial world is tres concerned that after 30 yrs of outsourcing, globalizing, union destroying, automation, and stock-friendly lay-offs, there isn't much left in the way of employees. (Via FDL's Blue Texan)
Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.
“The U.S. economy has become alarmingly dependent on government stimulus,” said Madeline Schnapp, director of Macroeconomic Research at TrimTabs, in a note to clients. “Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.”
The economist gives the country two stark choices. In order to get welfare back to its pre-recession ratio of 26 percent of pay, “either wages and salaries would have to increase $2.3 trillion, or 35 percent, to $8.8 trillion, or social welfare benefits would have to decline $500 billion, or 23 percent, to $1.7 trillion,” she said.
Guess which option is on the table and which isn't?
Despite the fact that it seems that a few are having second thoughts, only one answer is acceptable to the aristocracy and, as we all know, that answer isn't to create more jobs and bring those attempting to live on a govt pittance back into the employed fold with a steady private paycheck. No no no. The answer, obviously, is to eliminate a bigger percentage of those deadbeats, thus bringing the ratio back into line.
“You’ve got to cut back government spending and the Republicans will run on this platform leading up to next year’s election,” said Joe Terranova, Chief Market Strategist for Virtus Investment Partners and a “Fast Money” trader.
Terranova noted some sort of opt out for social security or even raising the retirement age.
End of discussion. Cat food for us old farts and voluntary starvation for kids. Makes sense to me. What else can we do?
One relatively simple measure is to subsidize employers who are willing to reduce hours rather than lay people off. Germany has demonstrated the success of this approach in the last couple of years. Unemployment in Germany was 7.4 percent just before their recession began in the third quarter of 2008. Today it is 6.7 percent. And Germany had a much steeper decline in output than we did.
The idea is straightforward: employers who are faced with reduced demand can either lay off workers or reduce hours. If they reduce hours for any worker, the government in Germany puts up 60 percent of the lost pay for these reduced hours. The worker keeps her job, with reduced hours but the pay is not reduced nearly as much.
Another proposal that would help boost the economy, and wouldn’t cost the taxpayers anything would be to allow homeowners who are underwater on their mortgages to become long-term renters. An independent appraiser would set the fair market rent for their home. Millions of homeowners who bought homes at bubble-inflated prices would see a sizeable reduction in their monthly payment. Others would find that their bank, not wanting to be a landlord, would negotiate a reduced mortgage payment. This program would free a lot of people from the prolonged stress and uncertainty of unpayable debt, and boost consumer demand.
Oh no! SOCIALISM!!!! Even if it works, we can't have SOCIALISM!!! What about the banksters' profits? Wouldn't they have to sacrifice a % or 2? That would be SOCIALISM!!! Yuch. Better we starve than be reduced to SOCIALISM!!!!