Unemployment Vacation

As I enjoy my fourth recession and second market crash since graduating college in 1981 I am reminded of the statement by President Reagan that unemployment is a “prepaid vacation for freeloaders.” Reagan’s recession was made possible by drastic tax cuts with no way to pay for it, resulting in government layoffs and state budget cuts that saw unemployment rise to over 10%.

The unemployment benefit then was $260 a week in the metropolitan area, average rents at $600 a month. Today, the weekly NYC benefit is $435 a week with an additional $25 thanks to the Federal government, yet average rents regardless of borough is $1000, more if you want a bedroom. That’s just under $2,000 a month (slightly below the NYC poverty rate) before one considers utilities, food or public transportation. Add on the cost of a computer and job search materials i.e. resumes, postage, faxing, etc and we get to the real P & L, excluding the realistic costs of healthcare, auto insurance and maintenance.

Oh yeah, one could be married with children, or paying alimony or child support, but I digress.  As I experience my fourth recession I know the lifestyle. In addition to the hopefully “breakeven” status thanks to unemployment, a benefit paid because workers, not freeloaders, had an insurance policy whose premiums were paid for by the employer (much like health insurance, but at a lot lower rate) there are all those other costs of daily life which are put on hold or disappear. In the post 9/11 recession I had a car repossessed. We cancel our vacations and terminate our health club memberships. Friends and family gather for dinners, holidays or celebrations and we are AWOL or show up with the miniscule of gifts if any at all.  We look at new clothes or jewelry in store windows and divert our eyes. We reuse disposable blades. There is that woman we’d like to date but now can’t approach, concerts, sporting events and weekend getaways we won’t be attending. Let’s not forget those credit card bills manageable as long as we were employed. We struggle with bouts of self worth repeating the mantra “it’s not our fault,” as we watch TV and remember “hey I’m on vacation!”

In 2007 I hedged myself against the oncoming storm and became part of the 7.5% of children in the US over 29 who have moved back home with their parents from a generation when “doing nothing” was considered a vacation. No it’s not as much fun as it sounds.

What are unemployed parents doing for fun when the tuition bill comes? Mr. Reagan is in no position to answer, but I would like to know “when does the vacation start?”

Fortunately I have chased my unemployment with periodic bouts of “temp” work, which is the “better than nothing” alternative. This employment pays one at 60% less than what they previously made with an equivalent hourly rate (the other half of one’s pay) going directly to the agency. Companies now get to test the water before hiring, but that doesn’t help the purchasing power of the temp.

Adding insult to injury, Cato Institute fellow Alan Reynolds has declared the stimulus created extended benefits are the reason unemployment remains high because he believes, much like Reagan, the unemployed are happy with their “time off.” This is an extraordinary, self serving belief in light of an $11 trillion mortgage and housing industry collapse, continued layoffs and the bankruptcies and depression avoided with the extended benefits. No, Mr. Reynolds, the unemployed are merely waiting for a living, deserving wage.

Vacation will end when employers take the chance and rehire workers, paying them a wage to stimulate the economy back to full throttle. Until then the unemployed will be at the local tanning salon….waiting.

David DiBello

The mentality of narcissistic greed was created during our first supply side debacle during the Reagan Revolution, which created Yuppies, Junk Bonds, and Mergers and Acquisitions which ended in the market crash of October 1987.

We are now suffering from another crash and burn supply side voodoo economics created by Bush Jr., the new "Uber rich" because rich wasn't good enough, and a fraudulent real estate market that provided that mirage of 55 months of consecutive GDP growth - we thought.

We should have always taxed those who make more in one year than a person makes in a lifetime at the 50% level. That would have provided a balanced budget, not the mess Bush Jr. left us.

Then we should raise the minimum wage which is ludicrously below the poverty level (as sane as war time tax cuts) and adjust the working class salaries, the ones who ultimately bear the brunt of this disaster.

We’ll never hear a capitalist talk about that inequitable wage distribution, and now it has come back to bite them wear it can really hurt. Americans are screaming for wage EQUITY and not falling for the "have's" argument of redistribution; As Lincoln said, one can only make a fool of people for so long.

 If wages were fair we wouldn't be in this mess today, and wouldn't be resorting to living on credit while our wages stagnate, yet health premiums, tuition and rent have all doubled in a decade thanks to NAFTA and our competition with third world economies.

I feel sorry for Timothy Geitner who was first demonized for failing to pay taxes amounting to 1% of his overall tax burden, an oversight at worst, and then making the mistake of thinking “the have’s” wouldn't have the audacity to want a bonus after their company failed.

That’s the new America. While 1% of our nation endures the military sacrifice, the rest wear flag lapels and scream "Me, Me, Me!"

David DiBello

Listening to the righteous indignation of the working class demand Congress not bail out greedy Wall Street scoundrels leaves one to wonder why the finger of blame isn’t being pointed at not only the architects of risky investments, but at the people who benefited by such investment decisions, namely every individual who liked 12% dividends and exploding asset appreciation of their securitirized mortgage portfolio chosen to back their 401K’s. We liked mini mansions no money down, no income or credit check and “interest only” loans ballooning balances to exceed home valuations – upside down loans with a “sky’s the limit” attitude toward appreciation, staking our house as our only nest egg.

Our ego and rage is channeled at multimillion dollar beneficiaries of selling such products, along with their annual bonuses. It is always more palpable for us to direct our anger at our co conspirators forgetting the role we played, like blaming one’s drug dealer for one’s own addiction. Our wrath is so great, we will cut our nose to spite our face, rejecting (and rejoicing) the bailout of conniving stockbrokers, ignoring the fact the ca-ca will hit the fan in a few months due to a lack of action to save this economy. Portfolios will shrink or disappear, home values will deteriorate, and jobs will be lost (Friday’s Job Report another big hit). Our revenge will be similar to the Captain of a sinking ship; we will win the battle, but lose a war.

This is the same canard we played out a months ago during the oil crisis, blaming Oil companies for the increase in crude oil, along with the stranglehold on our economy by Middle Eastern countries (with Big Oil’s complicity) who hate us. After two decades of talk we have no renewable energy and only two versions of Hybrids. It seems Oil companies are happy (or is it collusion?) Detroit never developed a car with more economically efficient gas mileage.

Like our stock portfolios, we bought their product, Hummers and SUV’s with gas mileage ranges that pre date our 70’s oil crisis. It’s like we didn’t learn, or forgot the past? We insisted Congress block drilling in America so we could be environmentally friendly. No oil, no renewables, and no Hybrids is no small wonder why our economy is beholden to Saudi Arabia.

House Republicans are forcing us to live out the truest nature of “win some, lose some” capitalism, and the GOP will decline any attempt to adopt socialistic measures to bail out failed “anything goes” laissez faire economics. Adherence to doctrine will translate to lots of medicine and pain for the sake of principles and ego.

What the Republicans are really leery of is the slippery slope; if we nationalize businesses, why not healthcare, education or housing, and the citizens anger is playing right into GOP hands.

Kudos to Wall Street. They have learned the important lesson that one should always grab onto the person pushing you off a cliff – it provides the perfect perspective we are currently overlooking by rejecting the bailout bill. The fault ultimately remains with us – the people who remained both silent and benefited from high risk gluttony and “good times.”

In the future don't overlook regulations because so much dividend income is filtering to one's 401K’s on risky investments; something too good usually is no good in the end, when it matters the most. No one complained then, so let’s not blame Wall Street as the lone gunman. Pride goeth before the fall, and we all bear the fruits of our labor, and our greed.

Sit back and relax. It ain't over.

David DiBello

The right wing wealthy in this country are raising the specter of unfairness in claiming that Democrats are seeking to tax them and give their hard earned money to the lower class of the population. They are waging a Robin Hood defense, skimming over the fact that their class, as in the ‘80’s decade of greed, have benefited overwhelmingly while only representing a small fraction of the country. In actuality the working class is questioning how they got those earnings in the first place.

Bill O’Reilly nightly bemoans taking “his money” but little is mentioned by any of this ilk about hard working people losing health coverage or the victimization of minimum wage workers who haven’t gotten an increase in 16 years and work hard for below poverty wages. No mention is made about unchecked CEO pay, agreed upon via the collusion of non employee board members who themselves are of the same ilk as the candidate CEO – wealthy white males mostly – to the ignorance of the stockholders.

The wealthy have manipulated corporations into not only paying golden parachutes, but golden coffins for those executives who die in office. Not only do CEO’s enjoy higher proceeds from life insurance policies, their estate receives salaries if they die where the working class would be left flailing in the wind, with lower death benefits to boost.

Everything is done to protect the wealth of this class. Not only do they benefit by paying significantly less these past eight years, they have no representation in the military. It’s a win-win; don’t fight and enjoy your money while others do the fighting for you. A kind of income protection at socialized government level wages, with veterans treated as yesterday’s news when fighting ends. Their sacrifice, if any, is limited to the pin of a flag lapel piercing their Armani suit and a hand held over their heart as they recite diatribe they will never live up to.

Thanks to capitalism, the “haves” always have the upper hand. Capitalism, while being the best form of economics, also needs to be tweaked.  We created rules to eliminate monopolies, a direct violation of the competition addendum, to the behest of business, which seems to like unfairness when it is to their advantage. They have beaten down the working class by eliminating their defined pension plans and reducing more employee health premiums via payroll deduction.

The nature of capitalism dictates that money makes money, so those with more money watch their nest egg grow multiple times faster than those scrimping to save in a "rich get richer" ponzi scheme. This is why our economy is now based on wealth not work, and old money is dictating the rules over the working class struggling to survive, many times at the expense of their very own children. We have not only rich versus poor, but generations now pitted against one another.

Suppose the working class got wise and boycotted outlandishly priced items like Yankees tickets, or clothing and electronics, or automobiles. If we cancelled our cable and Fox News' revenue decreased, Mr. O'Reilly would eventually find out whose money he does have, after his assistants get laid off first. The haves will threaten layoffs not of their own, management or high priced prima donnas making more money in one year than twenty men in a lifetime, but of the vendors and ticket takers first – high class blackmail termed “negotiation” when done from behind a white collar. Of course with the addiction of wanting one’s son to see a ballgame, the “haves” can revel like drug dealers at the trough. Protection is needed to defend against the inequities and injustices perpetrated by the wealthy.

There’s a solution. Restore Clinton era tax schedules, the ones where the budget was balanced while the economy was humming along, with the exclusion of the first $20,000 of income for all taxpayers in calculating tax obligation. On paper there can be no declaration of unfairness, yet the wealthy will argue that the first $20,000 means nothing to them. They still want the inequity that currently exists on the tail end, the level of income few Americans get to reach thanks to the fact that the purse strings of American firms are held by the “haves,” and they don’t want to see anyone touch their nest egg, no matter how unfair. They rather pit working class against each other, giving them the illusion that they can one day be at their level with hard work, a scam due to current cost of living increases along with our induction into a global economy with no protection for the American worker who currently competes with third world wages.

Let’s forget all that. Here’s an alternative theory perhaps the wealthy could understand – it’s the working class’ turn.

David DiBello

Those 55 months of consecutive GDP growth based on a fraudulent mortgage growth bolstered by loan shark credit criteria are now a memory, and not one that filtered down to the average American. All they saw was stagnant wages while they competed with foreign workers in the new world global economy that tears at the fabric of the standard of living for Americans.

Our health care payments, whether co-pays pr premiums themselves are up an annual 6%. Tuition is now the size of a medium sized mortgage, and pensions are disappearing. In NYC a monthly Metro card that cost $63.00 in 1994 now costs $81.00, an increase of 28.6 % in 14 short years. Pell grants for education are the same amount now, as they were two decades ago, even though there is a greater emphasis on completion with foreign countries.

What is the reaction of our President Bush, who in last year’s press conference declared he got a B in economics, but A in tax cuts, something that defies logic since taxes are a subset of the economy; he wants more tax cuts. It’s not enough that he has crippled our government with multi trillion dollar deficits bringing the value of our dollar to an all time low, he wants more. The party that believes in less government is tying government hands by restricting access to tax revenues because they are failing to get their way in Congressional vote.

Here’s an idea; cut the purse string monopoly held by employers and give an adult minimum wage and fair salaries to those who need to spend, most times to survive in today’s world. Like the tax rebate, this economy will recover when money is placed in the hands of the working class, whose compensation has stagnated over the past decade while CEO’s, Hollywood and ballplayers make more money in one year than 20 people make in a lifetime.

We are suffering from a President who “knows tax cuts” and is leaving office with economic levels that match his polling numbers, and rightfully so. He got us in a war we can’t get out of, and can’t afford. He blacklists those who disagree with him. He is an unindicted criminal. We can no longer avoid what we are told was an unfair critique of his abilities – he is dumb.

David DiBello

During the "good times" our economy was inflated due to junk bonds, over priced stocks, dot-coms and a mortgage bubble created by fraudulent credit criteria. Our economy has ballooned on perception: the buying and selling of others hard work as our manufacturing sector hits an all time low. Reagan's Presidency ended with the market crash, trillion dollar deficits and high unemployment that ballooned under Bush Sr. 

We are on the threshold of another collapse, with a deficit that dwarfs prior periods, and living costs burying the working class while their wages stagnate due to the globalization of economies, a lose-lose for the American worker. Thankfully and ironically, we are sustained by a falling dollar.

Of course the wealthy disproportionately benefited both times, yuppies created under Reagan, and the “uber class” under Bush Jr.

The most important part of a movie is the end. As said in the movie The Untouchables, "you can always tell the winner, he's the last man standing." Supply Side is down and out on the canvass.

Again.

David DiBello