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Where did the MIDDLE CLASS GO???

I watched a lecture given by Senator Elizabeth Warren from 6 years ago.  Yes, maybe that sounds old, but trust me it answered a lot of questions as to why our parents generation was much better off economically then ours, and how the next generation will be  worse off if we don’t change.  In the 70’s, most households were one income households and managed to not only buy a house, have a car, but also had a savings account.  Today, most of us are living pay check to pay check barely holding on.  So how does that happen when more households have two income earners.  After all two pay checks are better than one, or logic would dictate that is true.

Senator Warren went though some surprising research to essentially find where we went wrong.  We make more money, so we must be spending more, right?  What are we spending on if we are not saving?  Well let’s do some comparisons between the 70’s and 2000.  In the 70’s, families were able to save about 11% of there income, by the year 2000, families had no savings to speak of, and most were in a negative savings situation.  How can one be in a “negative savings” situation? It happens when your revolving debt increases to or over your income. There is no extra money to save, it all goes to pay debt.  In general, all debt increased between the generations.  Again, if we make more money and we are not saving, we must be spending.  But what are spending it on?

At the beginning of the research, the easy answer would be high end clothes, food, etc…  Well the research showed Americans spent less in the year 2000, than in the 70’s on food, clothing, and appliances.  Also, the cost of owning a car went down in general, because we hold on to them longer, less repairs, etc…  So where the heck did the money go?  All the research done and all numbers were adjusted to inflation.  Meaning, they are real!

The first place our money goes is to our mortgages.  American families spend 76% more on mortgages than the last generation, even with lower mortgage interest rates.  You might believe that the houses are bigger, we sell them quicker, we move frequently, etc…, nope, not true.  The generational difference between was narrowed down to maybe a second bathroom or extra bedroom, not both.  In truth, the housing market just become more expensive, not bigger, not better, just more expensive.

The second big ticket item, Health Insurance cost have risen 74% in the last generation.  This number  comes from those lucky enough to have an employer sponsored health care plan. Most employers have dropped coverage, so many families are still without coverage, and for those that do have private coverage, or ObamaCare, the cost is even higher.  Most plans not only include a higher monthly premium, but more out of pocket expense.  Dropping coverage from 100% to 80%, and in all cases, the burden of health care has been transferred from employers to the consumer.

Next up,  cars and Child Care.  Yes, I know I said cars were in the other non-spending category, but our parents only needed one.  The extra cost comes in when you have two people that need to get to work, now you need two cars.  Most households simply can’t survive with one car.  So now we have double the cost of insurance, repairs, payments, etc… Let’s add in child care.  As you know, if women are working somebody needs to watch the kids.  Our parents generation had a parent in the household full time, this is no longer the case so it would be considered a %100 increase, or an added expense that the last generation did not have.  Two income households are now adding on expenses that may not be covered by the extra income.

Lastly, Taxes.  The “progressive” tax structure actually taxes the 1st dollar of the 2nd earner after the last dollar of the 1st earner.  Meaning it’s not taxed as a whole, but in some cases double taxed as extra income.  This accounts for another 25% increase in cost between the generations.  Another cost our parents did not have to deal with.

What this research shows in a nut shell is simply “flexible” costs have decreased and “fixed” costs have increased.  The difference?  Flexible costs are things like food, clothing, and household appliances.  A consumer can always cut down the food bill, go without a new pair of shoes, or toaster.  The big fixed expenses are unchanging.  You can’t pay less on your mortgage, health care premiums, car payments, insurance, or child care.  These are fixed, and the same amount paid every month.  In the year 2000, three quarters of all household income goes to just paying the fixed expenses.  Leaving 25% of monthly income to pay for things like credit cards, food, clothing, and if your lucky entertainment or household appliances.  There is nothing left of that 25% to put away in a savings.

The other issue is higher education.  90% of American consumers now believe a high school diploma will not get them a job or a career. The debt from higher education has a major impact on our economy for the simple fact graduates are not a part of it.  They are paying school debt, not starting a family, not buying new cars, houses, or starting new a new business.  They are already trapped in debt that must be paid, (student loans are not dischargeable in bankruptcy), before they can literally start their life.  Again the burden of paying for higher education has been shifted to the consumers and students.

So what does this mean?  When we have lost the middle class, we move into a system of two economic status’.  The very rich and the very poor.  The middle class has always been the hand up for the poor.  The middle class created the business opportunities for the poor to move up and out of poverty, paid a bulk of the taxes to fund programs (welfare), and donated more to charities.  Now the middle class is declaring bankruptcy more, being foreclosed on, and falling into poverty.  The economic  and political stability the middleclass provided is disappearing, which will bring us to a two status system.  The ultra rich, or those well on their way, and the rest of us that will never have economic stability.  Those that are never able to get out of debt, and are basically living on the edge of a financial cliff, and never know financial stability.

The above situation is the reason for Frank Dodd Act and the CFPB (Consumer Financial Protection Bureau).  The reason we are in this situation is really because we have not been living up to our end of the deal.  We should be educated, informed consumers.  We ended up here because we believed we should be at the mercy of an oppressive political and economic structure.  If you continue to believe that, you will be the one that never knows financial peace or stability.  The CFPB has shown you your power to change this dynamic, it starts with the changing of your mind.  You can be a slave to the former system, or be an empowered, educated, CONSUMER.  The world revolves around you, the consumer.  Senator Warren and the CFPB realize this FACT, and have shown you the way.  Now it’s time for you to step up, the next generation is depending on it.Wonder-Woman

T.

 

 

 

What’s so wrong with TTIP?

Well the 3 pillars of TTIP don’t sound so bad….Deregulation, Privatization, and Corporate Courts?  There is very good reason why most of the European Union and Consumers on both sides of the Atlantic don’t want this deal to go through.   For now, the talks and negotiations have failed, hopefully for good!

The whole idea of “trade deals” is to improve the economy by removing regulations, tariffs, etc… so trade is fair, competition increased, and boost the overall economy.  Keep in mind that the EU and US tariffs are already at minimal levels. The aim of TTIP is to reduce the regulatory barriers to trade for big business, it compromises things like food safety laws, environmental  legislation, banking regulations, and the sovereign powers of individual nations.

Let’s start with food and environmental safety.  As we have already spoken about GMO foods and seeds, and how the EU already has very strict controls, meaning virtually no GMO foods.  That in comparison to the US regulations which are less strict; 70% of all processed foods sold in the US supermarkets now contain genetically modified ingredients.  The US has far less regulations on the use of pesticides, and growth hormones in it’s beef, where both of these are tightly restricted in the EU due to links to cancer.  Also the EU is tougher on potentially toxic substances, for example the EU currently bans 1200 substances from use in cosmetics, the us only bans 12.  The EU would have to lower many of it’s standards in order for TTIP a reality.

Banking regulations would be the opposite of the above.  In the US, the Frank Dodd act has imposed tougher financial rules on banks, while the EU’s financial regulations are not nearly as strict.  TTIP would reverse the progress the US has made in this area, and would mean handing the power back to the banks.

Privacy: While we as Americans have grown used to the NSA’s phone spying and internet monitoring, the people of the EU are not so forgiving. Passing TTIP could bring back ACTA (the Anti-Counterfeiting Trade Agreement), which would ease data privacy laws and a restriction of public access to pharmaceutical companies’ clinical trials.  ACTA also would require internet service providers to monitor people’s online activity.

Jobs:  The EU has admitted that TTIP would shift jobs from the EU to the US, because our labor standards and trade union rights are lower.  Much like NAFTA cost the US one million jobs.  The US would cost the EU upwards of 600,000 jobs by the latest estimates.

One of the big pushes of TTIP would be access to the EU’s NHS.  Which are public utilities, public health care, education and water services would be opened up to US companies.

The thing is the big thing… ISDS or Investor-state dispute settlement, or “secret courts”. This would allow companies to sue governments if those governments’ policies cause a loss of profits. It would allow unelected transnational corporations to dictate policy to democratically elected governments.  Much like the US labeling law for meat products.  In order to protect American Consumers, the US law dictates that all meat products must state the “country of origin” on it’s label.  The US was sued by Canadian and Mexican corporations and won in the World Trade Organization (WHO) courts.  The US was fined, and will continue to be fined until it changes the US law.

Another similar case is the Swedish energy company Vattenfall, which is suing Germany over it’s decision to phase out nuclear power plants after the Fukushima disaster in Japan.  The German government is making public health policy for the people of Germany, and are being sued by a energy giant for a potential loss of profit.

The arbitrators are usually commercial lawyers and academic experts in international law.  These tribunals have been criticized for being secretive and favoring business over public interest.

France has already left the negotiation table, and other members of the EU are following suit.   All 28 member states of the EU must agree in order for TTIP to pass.  The fate of TTIP, and the Canadian-EU trade pact CETA, are both in trouble.  These trade pacts do not benefit consumers, but large corporations.  The EU would have to lower environmental and consumer standards, in addition to changing some of it’s laws, or be at the mercy of corporations.

TTP the Trans Pacific Partnership is being voted on in congress as we speak.  Again, this trade pact has many of the same elements as TTIP.  You should be aware, both were co-authored by large corporations, big Pharma, big energy, Monsanto, and Banks.

T.