Quote:
Originally Posted by TropicCat
Which brings me to a question or two. How long will unemployment benefits last for the out of work folks? One in eight Americans, and one in four children, are on food stamps. Some six million Americans, according to an article in The Times on Sunday, have said that food stamps were their only income. Can we afford this? When benefits do end, what happens then? Do we just call them lazy and let them live under bridges? Do we watch them starve?
While I'm asking questions, just how do we get into real positive GDP numbers if 20% of our workforce doesn't work? Just how does the new economic math calculate believable numbers?
Lastly, how long with the stock market remain disconnected from the real economy? Is there a major correction looming?
Food for thought.
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I agree with your prediction about hyper inflation, but not the timeline. What everyone seems to be missing is that we ARE experiencing inflation right now!
Salaried people are having to work longer hours for less pay. Everyone that I know with a job has had a pay cut. (My wife just realized that between her salary and variable compensation, she's been hit 50%!) While prices have not risen dramatically (yet!), if you are working more yet able to afford less, you
are experiencing inflation.
Regarding your questions (Speaking from experience
)
Massachusetts, which has one of the more generous Unemployment Insurance policies, normally offers 26 weeks of UI Benefits. (yes it is
insurance - employer's premiums are raised when they fire or lay people off.) UI Benefits are based on a percentage of your prior wages. (In my case, it was less than 1/5. ) However, because of the current situation, there have been several extensions (both state and federal) which have increased the number of weeks that an individual could collect. My benefits were exhausted after 59 weeks.
In
my case I'm not lazy, and I have been searching for work that will leverage my education, training and experience. (Thanks to the two SailNetters that have already contacted me.) Unfortunately, I am tied to the Boston / Providence area by my family. I have also looked into a career change. I paid for education and earned a certificate Marine Electronics, and will jump at any marine related opportunity, but this downturn is affecting all industries. In the meantime I have been doing handyman jobs for friends and family. They pay me what they think the job is worth... I have not yet decided to apply at Walmart or Home Depot, but I have started to think about it.
I considered UI as my "bailout package." However I took an 80% hit to my income, and I did not get a bonus (as AIG employees did). I did not travel to Washington DC in my private, or chartered, jet to beg for a loan. I have never filed for bankruptcy.
Instead I have sold assets (car, truck, and motorcycle), and have deferred all discretionary spending. When I worked I saved my money for times like these. I could sell investments to pay off my mortgage and outright buy the boat that I want, but it would be irresponsible for me to do so in my current situation.
Back to the bigger picture; I believe that we are seeing, not a re-distribution of wealth, but a consolidation of it. Large corporations that have been doing well, are doing better (look at profits, not stock price). Exxon/Mobil has had two pretty good years. Verizon and Comcast too. Oracle has had a nice run. I expect that both will do well this year too.
In my (former) industry, EMC, has been buying smaller companies like a tuna eating mackerel - increasing their access to new customers, and providing a barrier to competition (just wait for them to start integrating products and sales teams). Can anyone tell me how many other companies Bank of America has acquired? I know that it's a LOT.
With all of these industries consolidating, there are job redundancies (marketing/sales/management), which leads to "trimming." This consolidation also tends to stifle innovation within a specific market as well as competition. (No one in the storage industry wants to go head to head with EMC.)
Large corporations that did poorly, are being excused from accountability. AIG is still around, as are Fannie May, and GM. I watched the house committee Bernanke's defense of the AIG bailout was essentially; iIf AIG failed, the consequence to the [banking] industry would have been disaster. When asked to describe the disaster, he replied the failure of AIG.
I have to agree with Senator Bernie Sanders of Vermont; too big to fail
is too big to exist. Having many and smaller businesses breeds innovation. The FTC used to police this... Does anyone remember when AT&T was broken up? In the '70s IBM was afraid of being broken up too, and started to lay the business foundation for when the FTC might order it to happen. The FTC's reasoning was to "dissipate the enormous market power of the current IBM Computer Manufacturing and marketing structure." After the danger passed, IBM had layoffs.
Outstanding debt to the Federal reserve bank is now about $2.2 trillion, a 132 percent increase from the start of 2008. Can the US afford this? - NO! The burden of the "stimulus package," "Cash for Clunkers," TARP, and even my extended UI will be placed on our children, and their children. Politicians have continued to kick the can down the road.