I was watching Shark Tank a few days ago. A guy from the middle of America came in with an invention for small trucks.
The invention was a useful one for truckers (I am not one of them), but required some serious investment.
The guy was adamant about producing his invention in America. He was talking about his hometown, where all the big employers have left, and unemployment and poverty are rampant. He was talking about his love for OUR country and that he dreams to contribute somehow to OUR prosperity, and to that of his hometown in particular.
The Sharks raised the issue of the costs of production in the U.S. (US) being much greater than that of overseas.
The guy countered, raising quality and trustworthiness issues with overseas production, citing some examples.
There was no doubt that the Sharks were impressed with the guy and his position. One of the Sharks actually cried remembering his dad, a factory worker, who was so proud of being a factory worker.
But none of them chose to invest in the guy’s invention out of concern that manufacturing it in the U.S. (US) would cost them more than that of overseas.
I understand their position, being a business woman myself, no matter how morally wrong that might be.
When I choose my contractors for a job, their rates are one of most important factors in my consideration. After all, I am in business to make money
Of course, the money I make are so slim (barely keeping my family above water), that I am in no position to follow my principles.
But the Sharks are. The Bush’s tax cuts, financial deregulations, and the NAFTA agreement (signed by Clinton) made them so much richer while the rest of us are so much poorer.
Yes, it’s true that the economy now is global and the labor market is in particular. Yes, Americans now compete for jobs with Chinese, Russians, Indians, etc., who can afford much lower wages. So the whatever jobs in America are left also offer lower wages (and that is how we get poorer).
As we get poorer, our government gets poorer (it’s income is our taxes). It can no longer offer comfortable retirement plans, etc., and must borrow to keep the poorest of the poor from hitting the pavement and rioting.
Talking to that guy, the Sharks cited Apple as an example of the company that manufactures offshore, yet employs 45,000 people in the U.S. thanks to great long-term planning.
But these 45,000 American employees are mainly salespeople who sell Apple products to us. As we get poorer (and we will – until the global labor market’s wages get equal everywhere, we are going to see our incomes slide), we would be able to afford iphones, Macs, ipads less and less (I cannot afford neither of them as we speak). Apple would have to then reduce its American sales force more and more, until it may get out of American market altogether. As its market shrinks, so will its production, and Apple itself will get poorer and poorer.
But that is really long term planning, and no business nowadays plans that far ahead.
Our “truck” guy is but a Don Quixote of our times. He is fighting the tsunami of changes that swept our world with the onset of the global economy.
I see Obama as such a Don Quixote as well. He is fighting the losing battle too, as he believes in compromises with the other side of the political isle to the point that he almost committed political suicide last August (remember the deficit ceiling debacle?). He seems to ignore the political reality, where Republicans are being ruled by 1 person, Grover Norquist, who is financed by the likes of brothers Koch, and the policies Republicans endorse and push are being carefully prepared and fed to them by ALEC, the group of 18 large corporations.
In such political reality, the welfare of the U.S. (US, the people) is pushed aside for the sake of winning the power and making more money for ALEC and the likes of Koch brothers (even though it is ultimately short-sighted goal).
One cannot even blame them. We all are faulty in that we want our prosperity now, counting that the future would take care of itself. This is true for Democrats like me just as much as it is true for Republicans.
Even though our money bills say “In God we trust”, we trust in money bills so much more.
It takes people with more money than their possible life span may require, like Warren Buffet, to raise above the Green God and put the welfare of their country first. But their voices are the lonely voices lost in the wilderness.
Everybody admires them and aspires after them, but no one hears them.
When Warren Buffet said that Bush’s tax cuts were intended to create the tide that lifted all boats, but in reality only all yachts were lifted, the yacht owners chose to ignore their idol.
The GOP now is months from nominating Mitt Romney, one of these yacht owners. He would surely uphold the policies that lifted his yacht. Even though his background shows more concern for the fellow Americans (like his health insurance reform in Massachusetts, for instance) then the greater majority of GOP leadership, one cannot forget that he is a Shark. He too would cry out of sympathy with a trucker and then send him away with nothing.
I’ve heard Obama talking about the same tax reform I’ve been screaming in the wilderness on these pages for years now: the reform where companies get financially rewarded for keeping jobs here and financially punished for sending them overseas. I am not counting on these reforms even if he gets to them (if he wins the election and has enough political capital to get the ball rolling), because he may compromise the life out of these reforms too – just as he did with health care, financial regulations, etc.
I think if our leaders cannot or are unwilling to take care of our country, we, the people, should start doing it ourselves. Please read New Economy, or Buy American, Stupid!
Archive for the ‘personal finance’ Category
SHARK TANK
Posted by Ella Moss on April 8, 2012
Posted in American economy, economy, FINANCES, global economy, labor market, opinion, personal finance, politics, predictions, Uncategorized | Tagged: ALEC, economy, Grover Norquist, labor market, Mitt Romney, Obama, politics, Shark Tank, taxes, Warren Buffet | Leave a Comment »
THE ENEMIES IN OUR MIDST OR HOW TO KILL THE WORLD’S LARGEST ECONOMY
Posted by Ella Moss on June 11, 2011
I just heard on the news that the 3rd Al Queda biggie was killed, giving the U.S. the edge on that murky shapeless war on terror we have been officially waging since 2001.
While I am happy to hear these news, I think that even we were to win the 4 wars (1.this “war on terror”; 2. in Afghanistan; 3. in Iraq; 4. in Lybia), we’ve been waging since the fateful 2001 (and I am not counting the “war on drugs”), we are heading to lose our way of life.
It’s not the democracy I am worried about here, but material comfort and relative peace on the streets (outside of occasional shootings and muggings).
It appears that there has been another war waging, and it is on American economy.
It’s beginnings are murky. But I would trace it as far back as Reagan’s Administration, that first began an unofficial war on unions. Unions make labor-intensive manufacturing very expensive and eat into profits of investors.
Well, nobody likes unions (except for unions’ bosses), so what’s the big deal?
The big deal is that everybody likes the middle class.
The middle class is as essential to any economy, as an engine to a car. Without it, economy is dead.
Even if we were to end up with a few thousands of super rich dudes, while the rest of us would struggle to survive (i.e. the middle class would disappear completely), all the many billions of these super rich would not create the job growth a multi-million population requires. They would invest into emerging markets, not the dying ones.
Why would they create a factory of any kind in the U.S., where people are struggling to stretch a dollar to pay rent, bills and buy groceries and their discretional income is so tight that all they can afford is cheap Chinese goods in Walmart, when these super rich investors can build a factory in Brazil, or India, or same China, where people are eager to spend their increasing earnings?
By the way, is not it one of the main reasons, that the numbers of unemployed right now stay where they are despite us giving continuous tax breaks to these super rich?
Yes, the second attack on American economy began during the prosperous 1990s, when Clinton Administration signed away any kind of protection of American labor force, and internet was born (internet makes outsourcing a breeze).
Suddenly, American labor force had to compete with the labor force of other countries, and American people could no longer ask for wage increase, because the majority of the world’s labor force was so much cheaper and just as good.
It took about 10 years for Americans to notice that their incomes were stagnating while their bills grew. They kept waiting for their personal prosperity to come, while changing jobs, professions and investing into 401K and increasingly expensive real estate.
But Clinton Administration also approved the deregulation of financial markets.
Suddenly, the credit was so cheap and so available, that the American people have not noticed that their actual discretional income was dwindling to nothing.
Why worry, if one could still buy a McMansion, and buy even more stuff by turning the McMansion into an ATM machine?
Yes, 1990s were prosperous. The economy was booming as people were eager consumers. The problem was that everything was bought on credit rather then with actual money.
Everyone was expecting the actual income to catch up, as it used to.
But it did not, because so many jobs have either left the country or paid as much as in other (read CHEAPER) countries.
Eventually, the credit bubble had to burst, and it did in 2008.
If the federal government did not pump money into the banks that lost the money by lending it to population so indiscriminately, The economy would have simply collapse like it did in Argentina in 1990s.
Americans were saved, although suddenly they came face to face with their economic reality and realized they were so much poorer than a decade ago.
So many of them have lost their job, that those who did not no longer dared to ask for a wage increase or benefits or union perks. In fact, they started giving up their last benefits and perks just so they could keep a job.
And that is when the final attack on American economy began.
Since it was now the federal government that was pulling the economy down the road as its engine, the middle class, stalled, the enemies in our midst began to attack the federal government.
The ideas Obama put on the table were nothing short of brilliant: invest federal dollars into aging crumbling infrastructure and green economy – labor-intensive enterprises that must hire domestic labor force. Every created job would spur on 10s of other jobs, and the economy would begin humming again.
But the enemies in our midst thought otherwise. Suddenly, federal deficit began to be used as a panic-inspiring weapon of choice.
Of course, the surplus that Clinton Administration left the country with would have been a much better deal. But if credit is sparse everywhere else, how else would you come up with money needed to pump the economy?
The enemies in our midst said, “Let starve the federal government of tax income, let’s keep taxes low so the few super rich would invest their money into economy. The government is too big and lives beyond its means. Its deficit is going to bankrupt our children”.
Americans love their children, so anything threatening the kids works as a great scarecrow.
They are also badly educated (read my American Education Reform ).
So Obama’s proposals were decimated, the government began shedding its work force, unemployment came back to its pick numbers, and unions everywhere lost their power and benefits.
Now there is no one to pull our economy from the brink. Those who are employed, work at REDUCED wages, that are getting closer to the 3rd world range.
Meanwhile, every single life staple, like groceries, rent, cable bills, insurance, etc. doubled or more in price (as compared to 10 yrs ago or less). Even those who work at median salaries have less money to buy desirable but unnecessary things.
This means that businesses producing and selling anything that is not a life staple make less profit so they begin to shed their labor force.
The less there is labor force, the less income the government gets. Since deficit is now a dirty word, the government has no choice but shed its work force and cut services to the impoverished population.
Now the time came to put the final nails into the coffin of what used to be the largest world economy: refuse to raise the ceiling on federal credit.
Once the federal government loses its credit-worthiness, watch American economy collapse into THE GREATER THAN THE GREAT DEPRESSION ditch.
The idiot dream of labor-intensive manufacturers like Koch brothers would come true:
labor in America would become as cheap as in Africa.
Unfortunately, the American workers would no longer be able to afford using the toilet paper they manufacture for Koch brothers. Like their African brethren, they would have to use tree leaves to wipe their asses. So Koch brothers would eventually go broke too.
No, it is not the federal deficit that threatens the future of our children. It is our inability to discern the enemies in our midst.
As for the scary federal deficit, it was Reagan administration that first racked it up into the trillions. Then Bush administration turned the surplus into another multi-trillion dollar debt. No one screamed of deficit while republicans were in power. The congress did not attack neither of the republican presidents for taking us into expensive wars (Reagan’s Panama blitz, Nicaragua fiasco, etc.; Bush’s Afghanistan, Iraq and the amorphous war on terror).
No, I am not happy at all with Lybia war either. I just don’t think it matters much anymore.
Like I predicted in 2008, “FINANCIAL CRISIS – IT’S NOT OVER UNTIL IT’S OVER”
Posted in American economy, economy, education, education reform, FINANCES, global economy, labor market, opinion, personal finance, politics, predictions, Uncategorized | Tagged: Al Queda, Bush, deficit, economy, financial crisis, global economy, great depression, India, Iraq, money, news, Obama, outsourcing, politics, predictions, Reagan, recession, taxes, unemployment, war, worry | 4 Comments »
LIBERATION
Posted by Ella Moss on December 5, 2010
The buildings blocks of human life are not DNA (that is just software). The building blocks of our lives are concepts: the concept of oneself, the concept of surrounding reality; the concept of happiness, etc.
When our concepts are wrong, so is the life that we build for ourselves, and we end up unhappy.
We may mask our unhappiness with chocolate, sex, drugs and/ or shopping – buying a temporary fix of serotonin so we don’t notice our true emotional state.
But when we refuse to see that our concepts are wrong, we get sick. Chronic illnesses are the result of chronic unhappiness.
Since most of us barricade ourselves behind the wrong concepts, most of us end up ill, and so pharmaceutical and medical industries are the major industries of the modern world.
Most of our concepts are wrong, because most of us watch TV and read newspapers.
But it is not negative news that kills us, it is the advertisement.
We all are victims of relentless marketing, because advertisement slips in the suggestions to our subconsciousness on what concepts we should acquire.
The beloved American Dream is: a wife / husband + 2.5 kids + dog / cat in a spacious McMansion with formal dining room, family room on top of living room, more bedrooms and bathrooms then one can count; manicured front lawn and a large backyard with a swimming pool, 2+ cars garage; college education and successful careers.
The suburbs are full of such families, and most of them are uniquely unhappy.
I too had a concept of happiness similar to that, except that I hate suburbs and prefer to live in a city but would love a house in a country as well.
This dream fell apart 3 years ago when I found myself physically ill because I no longer could stomach my marriage. So we’ve separated.
In fact, my concept of happiness began to destruct 5 years ago, when my husband said, “Let’s make a girl you’ve always wanted”. It’s true: since I was a little girl, I always wanted to have 2 children: first, a boy, and then a girl.
When my son was born, I wanted to wait at least 5 years before another pregnancy as he was a difficult baby and I always favored a larger age separation between children.
The timing of my husband’s offer was perfect. Yet I felt physically nauseated at the thought and knew the minute he said it that I really don’t want another child.
I underlined “really”, because that is when I began to realize that my concept of happiness did not suit me in my reality.
My life got only tougher in 2007, when, 2 months after I separated from my husband, I lost my major client and The Great Financial Crisis walked into my door.
Three years later, I am a single mom working 60+ hours / wk and on the verge of losing $300/ month of my child support and the babysitter (who is my estranged husband), because his unemployment benefits are set to expire in January. The only job he may get at this point would only cover his rent and food, so he would not be able to spare a dollar for his son. Once working, he would also be unable to pick his son from school twice a week for guitar lessons and choir practice.
That means, life for my son and I is going to get so much tougher.
As I was contemplating this while doing my X-Mass shopping, suddenly my thoughts went into completely different direction:
I started thinking of what REALLY makes me happy, and here’s list:
1) Watching TV with my son, while laying next to him on the couch
2) Dancing with my friends at my annual New Year’s Eve party (the only time I get to dance lately)
3) Talking with my friends in the park, while we watch our kids play and enjoy the beauty of the park
4) doing yoga by the lake in the summer
And then I started thinking back, collecting the very best moments in my life in my memory:
1) I was about 13 y.o. in a summer camp, when I discovered laying in the boat watching the sky. The boat would lull softly under me to the swishing of light waves, and the ever changing beauty of the sky would engross me completely
2) I was about 14 y.o. when I looked out of the window and was caught by the beauty of the falling snow so much that I ran outside and was dancing in the night with the snowflakes
3) I was 17 y.o., laying in the sweetly smelling summer field and feeling THE ONENESS with the earth, the grass, the sky….
4) I was 19 y.o., homeless, living in someone’s basement when THE LIGHT came over me and I SAW AND SPOKE TO GOD.
5) I was in my early twenties, galloping on the naked horse up the hill, when I suddenly thought, “This moment makes the whole life worth living”
6) The same thought occurred to me when in 1993 I was skiing down a sunny slope on Mount Snow, the day after I witnessed the first WTC bombing and quit my job.
7) In 1997, in the jungles of Nepal, I have encountered such a breath-taking peacefulness and beauty that, as I was sliding in the canoe next to man-eating crocodiles sunning by the shore, I could almost pet them, while Himalayan picks were hovering in the distance and the yellow flowers all around me went so well with the blue shades of the sky and the mountains….
8) The kiss I shared with my husband when our son was born
9) The first time my son was skiing the green slope
10) My son singing Santa Lucia at a concert, and strangers screaming “Bravo”, because he sang so beautifully…
Please, don’t get me wrong. I had many, many wonderful moments in my life, and many exciting adventures.
Still, if I die today, these 10 moments would be the crown glory of my life.
Meanwhile, I am killing myself making a buck so I could spend it on some thing I am told would make me or my son happy, worrying about his education, because he would need a good job in order to have his McMansion, 2.5 kids, a wife and a pet.
And no time to watch the sky, dance with the snow flakes, smell the roses…..
I was rich, and I was poor, I had 2 husbands and 3 weddings, and many, many interesting happenings in my life, but only 10 moments of pure and absolute joyful happiness.
Interestingly, most of these moments came to me when I’ve liberated myself from some concept of happiness so I could be one with naked reality.
So I am not going to stress myself of what is going to come in January once my ex’ unemployment benefits run out. I am going “to smell the roses”, making a point of noticing the beauty of each day around me, snuggling next to my son every evening and NOTICING MY HAPPINESS, instead of struggling to fit a concept of happiness and cry about what’s missing from it or MAY GO MISSING.
In fact, it is our fears of not getting something or losing something that make us miserable and cheap away at happiness that is our true Divine nature and so is always there, if only we could take time to notice… Everything else is but a concept.
I am liberating myself from concepts and fears created by them – that’s my New Year resolution.
Posted in American economy, economy, education, enlightenment, personal finance, spirituality | Tagged: advertisement, American dream, economy, fears, financial crisis, God, HAPPINESS, health care, Himalaya, illness, jobs, liberation, life, Love, marriage, money, mother, New Year resolution, parenthood, real estate, recession, relationships, smelling the roses, spirituality, unemployment, worry, X-Mass, X-Mass shopping | 3 Comments »
ON TAXES, UNIONS, JOBS AND DANGEROUS POLITICS
Posted by Ella Moss on October 25, 2010
1. JOBS
What job would you prefer:
a) a job that has annual wage increase specified in the contract, over-time pay for all work done beyond 40 hours on weekdays, all benefits and pension one can live on after 10 years or so of service
b) 60+ hours per week, high stress job with no benefits, no over-time pay, no pension whatsoever and wages just above minimum specified by congress
If you said “a”, you prefer either government or a union job, if “b” (WHO ARE YOU?!) – you’re gunning for a private sector.
Since it is a buyer market, whether we talk real estate or jobs, that’s how private sector job looks like right now.
Our government is putting even more teeth into the buyer market by trying to cater to those we do not name who want less government, less unions, and, yes, less taxes. The government cuts down on hiring, and laying off as many people as possible. Our future governor Cuomo promises to cut agencies and authorities by another 20%. New York 18b panel is going to put another 1000 lawyers on the street.
Last December, a partner of a medium size law firm told me of a job interview for a associate position:
“She told me, ‘I was making $120,000 at so and so. I’ve said, ‘We do not pay above $75,000. And she took it!”
I would not be surprised, that next year he would offer $35,000 for the same job.
Now, you need at least 7 years of higher education to become a lawyer (all those student loans), and then you take on a 60+ hrs / wk high stress job. It used to be that at least salary was worth it. Not anymore.
Make no mistake, employers (me included) would really prefer slave labor. So with no competition, we would do our best to get as close to that ideal as possible.
Once “Tea buggers” are elected, we may even pass a slave law in congress.
2.Unions
We all hate unions. They make everything more expensive. Look at MTA: every year we pay more for public transportation despite lack of tangible improvements, while their workers get paid more than lawyers, have all benefits and can comfortably retire at 55 years of age. I personally may never be able to retire at all. And then they even have a nerve to strike once in a while!
Now teachers union is under fire. Just think, once you have a tenure, all you need is to show up at work – working itself is not required.
But do you know that before unions came into being, there was no tangible middle class at all? Do you realize that the U.S. became a prosperous country only when unions gained strength and created huge middle class?
When 90% of people earn subsistence wages only, they have no discretional income to buy all that producers of goods and services want them to buy. So producers cut on production and lay people off, and economy contracts even further. Take a look at how people used to live before unions: their houses hardly had closets (most people had only one or 2 dresses), the houses were much smaller and often 10 people would live in 1 room. Oh, by the way, most people in Africa or Bungladesh, or Mexico still live that way. They have no unions and lots of almost-slave labor.
Do you still want to get rid off unions?
3. TAXES
Like everyone else, I try to pay as little tax as possible. After all, it’s my money that the government takes away. The government is so wasteful, and it has no clue that I need another computer, or that I have to take my kitten to a vet.
But the grown up in me knows that taxes in a democratic society is really a money pool for services we all collectively need like:
schools, public transportation, law enforcement, firefighters, and even a helping hand when we become old and feeble or lose a job, etc.
Sometimes, of course, this money pays for something we don’t like. I don’t like wars. Some don’t like welfare.
But a strong society should have some military might (we do get attacked – 9/11 comes to mind, for instance), and a strong society should take care of its needy (or we may have riots, revolutions, or, at least, whole a lot of crime).
It tickles me that “Mama Grisly” and her brood are so against taxes and government. Alaska gets more government subsidies than any other state. What are they going to do out there once they cut our taxes: eat snow?
So the Republicans and people who drink spiked tea say that stimulus has not worked (even though their leader Bush Jr. approved it first – because they collapsed our economy). They want less taxes, less government jobs and strangle the unions out of existence. In other words, they want to create African way of living in North America (this way they would not have to import slaves, as we would have plenty of them right here).
Interestingly enough, many of them are not rich. They simply drink spiked tea and think they may become so.
They may be faithful followers of trickle-down economics. The latter was not invented by Reagan. It has been in existence until 20th century. But now the rich invest wherever they find the cheapest labor, and it is not the U.S. (yet).
The truly rich, by the way, tend to be democrats and are ready to pay taxes, because they are much better educated and they dig history and economics.
But they are spineless, and as soon as those on spiked tea yell at them, they too begin to talk cutting government (good jobs), unions (good jobs) and taxes that create those good jobs…
Posted in American economy, economy, FINANCES, global economy, labor market, opinion, personal finance, politics, predictions, Uncategorized | Tagged: Bush, economy, economy solutions, financial crisis, global economy, great depression, jobs, money, politics, taxes, trickle-down economics, unemployment, unions | 14 Comments »
THE SILENT BANG
Posted by Ella Moss on August 16, 2010
For more than 10 years, ever since I’ve got ephemeries for the 21st century I was expecting something huge happening around 8/1/2010. In fact, I’ve marked that day as a possible start of the World War III.
When the financial crisis was officially announced, and I took a look at the charts for the U.S., I figured the time period around 8/1/2010 would mark a true low of that crisis.
I prayed to my avatar guru, yet still waited to see what would occur.
Well, apparently, nothing loud and big happened in the world except for hustoric flood in Packistan.
Yet something was happening: I have not received a single order since the week prior to August 1.
Of course, for a while, I thought it was my bad luck – just like at the end of 2007.
You, my reader, probably, had no slightest idea there is a financial crisis going on in the fall of 2007. Most of the people had no clue until the summer of 2008.
Well, people in legal industry had no idea either. Everyone was blaming their personal bad luck just like I did, until we were told that everyone is in the hole.
Legal industry suffered the blows before everyone else did, because the ultimate Payer in all civil litigations is the insurance industry. In this financial crisis, it is the insurance industry that suffered well before anyone else did, so the first people to fall off the ladder were the legal professionals and, of course, everyone who offers their services to them – like me.
When my mind finally drew this parallel, I’ve decided to check on the news specifically pertaining to insurance and legal industries, and this is what I found:
In June, 3,600 attorneys were laid off in NYC alone. In July, 800 more there were let go.
These are not front page news (yet). I found them in one little noticed article in some financial news on insurance industry.
But it told me more than hours of CNN watching. It told me what the article did not mention: the insurance industry is once again in the red ink, and it curtailing all the litigation, preferring to settle instead.
Why would it be in troubles now? Well, quite possible, the commercial real estate is defaulting now – that is something that economists were expecting for awhile now.
If we are watching repeat of 2008 problems, in about 6 – 8 months from now the financial industry would be buckling, and we may finally hear about the second coming of financial crisis on CNN.
So astrology, once again, proved itself right, but this big bang is truly silent – for now, of course.
Posted in American economy, astrology, economy, FINANCES, labor market, personal finance, predictions, Uncategorized | Tagged: astrological predictions, astrology, CNN, economy, financial crisis, financial industry, insurance industry, legal industry, money, news, Pakistan, predictions, unemployment | 5 Comments »
SHRINKING DOLLARS
Posted by Ella Moss on June 25, 2010
A few days ago a friend of mine confided that she did not have a raise in 10 years, and now her company is cutting her hours.
My friend is a physical therapist.
I am an owner of a tiny business in a completely different field. My income is neither wages nor salary. It is the net profit from my business. Yet I have the same predicament. My income remained flat for 12 years.
When I was single, living in a posh building in a posh part of town and paying $900 in monthly rent, which included utilities, that was a pretty good income, and I was certainly a middle class girl.
Moreover, my income increased steadily through the nineties, and I was certain of a decent future for myself.
I was so certain, in fact, that I did not bother to save for a rainy day.
I did whole a lot of traveling, skiing, and other fun things.
Then I got married, had a kid, moved to a cheaper part of town where I got an apartment twice as big for monthly rent just a bit higher than my previous digs.
My income remained the same because my subcontractors kept raising their rates but my clients began to cheapen out. Excuses were understandable: we did have a recession in 2000, then in 2001 (“9/11″), then in 2003, etc.
I probably could get out of my shell and get more clients to increase my income, but my kid and failing marriage kept me busy.
Then in the fall of 2007 I finally became a single mom, and 2 months later the FINANCIAL CRISIS hit me (my business is closely related to the insurance industry so I’ve experienced the crisis long before the rest of America did).
In 2008, my income went down significantly. So now I had no choice and got out of my shell, and got myself many more clients. I have also reduced rates of my subcontractors.
Yet my income did not jump. It simply went back to the pre-crisis level, because I had to cut my rates also. Everyone is in the bind.
I am not even talking about payment time-table that is now 4 times as long. Before the crisis, if a company took 2 months or longer to pay, I was on their case already. Now I don’t even bother with inquiries till 4 months past due.
It is my flat income that gets me, because my life is twice as expensive now. My rent now is $1510/mo, plus utilities that are twice what they used to be in 2000. My ground phone line that I use for fax only is also twice of what it used to be in 2000. So is my transportation expense, internet, my cell phones, etc.
My monthly grocery bill has grown now more than twice, even though my son and I eat much less than my ex (it used to be that half of my monthly grocery budget went to his propitiation).
In other words, it takes now twice the amount of dollars to cover living expenses, and they say there is no inflation.
There is no inflation, because our incomes have deflated.
It used to be that incomes would grow almost at the same rate as inflation of overall prices. It was called inflation, and was supposed to be a bad thing for economy.
Now I miss inflation. Because the value of my dollar has shrank 50% or more, but I don’t have more paper in my wallet to make up the lost value. My paper income remains flat, but the real income has shrank.
I am no longer a middle class girl, I am a working poor one, and my future looks pretty bleak. I have no extra dollar to save, I have no pension coming, and as an entrepreneur I have no other safety nets like unemployment benefits, which my ex is enjoying now.
Instead, I am working 3 times as much as I used to, and spend so much more just to get the same shrinking dollar.
I would not be writing about it, if it was just my predicament. I am writing about it, because 90% of Americans are in this shrinking boat.
Even the super-rich (like Warren Buffet or Bill Gates) have lost some dollar value thanks to real estate and stock market deflation. I am sure though that they are offsetting their rising living expense by paying less those who work for them or do business with them.
The simply rich (like Donald Trump) may actually feel much poorer because they lost just as much on stock market, real estate, Bernie Madoff and their leverage in reducing cost of business / living is not as great.
The upper middle class is now, for most part, is what middle class used to be, for the same reason.
Middle class… What middle class? Unless you are a civil servant, you would no longer fit that category. I bet your 401K keeps you awake at night.
There are so many things that went wrong for the dollar that there are not enough fingers on a hand to point them all out: derivatives, run-away credit, the cost of oil, global labor market…
Honestly, it is the global labor market that is the main culprit in stagnation of American income. But that is 10,000lbs gorilla in the room that no one is talking about. Trust me, immigration is the least of our problem. It is competition with the guys safely in their native third world countries that is doing us in. No one is talking about it on CNN, because business is happy with reduced labor costs. Except that most businesspeople don’t realize yet that spending their dollars in China or Africa shrinks consumption in America, which, inevitably, leads to their profit remaining flat too despite the reduced labor costs.
Simple economy101: wealth is produced where goods are produced.
The great minds who decided to open the labor market in 1990s must have thought as follows:
As other countries get richer, there are going to be more markets for American goods, so America would get richer too.
They did not take in consideration, however, that American production would not be able to compete with cheaper labor costs elsewhere and would shut down, impoverishing our country for the sake of China, Uganda and so on.
The only reason we did not feel the pinch right away was the inflated real estate market that was still producing local wealth. With wind taken out of real estate, we are finally facing reality.
And, since Obama Administration was not able to push through another emergency unemployment benefits bill, we soon are going to see the third world reality right here at home.
These changes cannot really be amended anymore. With the advent of the internet, Jinny of American wealth has completely left the bottle and cannot be re-captured. We are looking at the dawn of new world, where Russia (the richest country in natural resources), China (the richest country in labor resources) and India (the richest country in intellectual resources) are going to compete for new super-power title (my money is on China, since it is much more organized); the U.S., Europe, Canada, Australia and Brazil are going to be the second world, and the rest remain in the 3rd place. The jury is out on Arab countries rich with oil. If the green economy takes hold, they are going to be pushed back into the third world. They may also simply kill themselves with suicide bombers, expanded Taliban, etc.
SO, PLEASE, AMERICA, BUY AMERICAN PRODUCTS AND USE LOCAL SERVICES!
But, then, again, who can afford American products now when American dollar has shrunk so much…
Well, I am griping now, yet I know there is going to be more to gripe about a month from now… Read my previous article on that.
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