The Working Poor

[decoy409]

Quote: You thinking that new immigrants will become savers is very off.

Now that's hilarious!

[bimetalaupt]

Jan 21, 2011 8:13:23 GMT -5 @vl said:

BiMetal... your history lesson was off. Review the events after 1900 to 1905. They describe today most appropriately. We had-- banks over-extending on speculation they knew little about beyond the theorized return. That credit extended caused financial crimes. Big business used the readily available credit to manipulate the worker, all while retail sold everything it could to ignorant and mesmerized consumers through marketing and media manipulation. When the turnip couldn't be bled dry any longer, he withered and stopped making payments. That caused chain reaction collapse EXACTLY as it did in 2008 to-date.
Sadly... the same BANKS are engaged but the offset... an alternative to banks and no lawyers invested in big banks to suppress correction, are able to rise to resolve this. In short, history cannot repeat itself and we arrive at the conclusion without a catalyst.
You thinking that new immigrants will become savers is very off. No one will trust banks again and as long as we continue to import, there will be no cash to save. If we don't alter course by New Year 2012, We the People- as the United States of America, will not see New Year 2013.

Banks-- gotta go. Regulation and oversight trumps a Federal Reserve Shanking System.

Sorry I dod not recall talking about 1900 to 1905..Implied Equity Risk Premium (US)

I will be posting my updates on the implied equity risk premium (ERP) on the S&P 500 on a monthly basis at the end of each month. (To see my explanation of the implied equity risk premium, please download my paper on the ERP)

Implied Premium on 1/1/11 =5.20%
Implied Premium in previous month = 5.08%


Implied ERP (US) on 12/31/09= 4.36%
Implied ERP on 12/31/08 = 6.43%
Implied premiums by month for recent months

Download spreadsheet to compute implied premium The data I have is a great( long) depression from 1870 to 1900 in England / European was caused by the Rothschild's bank in Austria becoming insolvent in 1873. That was the period of time where German / Prussian Capital did a lot better then the working class.. Industrial production increased 100%.. I think ERP was at a all time high in the USA as Rail Roads were reaching new parts of the USA and Canada. As above indicated ERP has not return to the area of 12/31/2008 ,yet.. So you can have great profits in a depression as profits are not inflated by price increases but market share.

As I recall the panic of 1905 was controlled by Warburg and Morgan. We did not see the huge decrease in consumption as we did after WWI in 1918-1920 with the Spanish Flu outbreak that killed 20-25 million people world wide. ( Dr. Robert Barro.. Speech at Scranton).
Bi metal Au Pt
The last panel in Figure 5 plots results for the United States. Relative to most other countries
in our sample, the United States was a tranquil place during our sample period. The model
identifies two disaster episodes for the U.S. The first disaster begins in 1914 and lasts until 1922,
encompassing both WWI and the Great Influenza Epidemic of 1918-1920. The Great Depression
is identified as a second disaster for U.S. consumption. The Great Depression is the larger of the
two disasters with a 26% short-run drop in consumption and a 14% long-run drop.
According to our model, there have been no world disasters since the end of WWII.18 It is
natural to ask whether this pattern provides evidence against the model. In fact, the rare nature
of world disasters implies that the posterior probability of experiencing no world disasters over a
61 year stretch is roughly 27%. One could also ask whether the relative tranquility of the U.S.
experience since the Great Depression provides evidence that the United States is fundamentally
different from other countries in our sample. However, the posterior probability for a randomly
selected country experiencing no disasters over a 73-year stretch is 0.31 according to our model.
The posterior probability of at least one out of 24 countries experiencing no disaster over a 73-year
stretch is 0.88. Therefore, the tranquility of the U.S. experience (which is not randomly selected)
does not provide evidence against our model.
Tables 2 and 3 present the remaining parameter estimates for our empirical model. Table
2 presents country-specific estimates of the mean growth rate of potential consumption for the
countries in our sample. Recall that our model allows for breaks in the mean growth rate of
17
Countries such as Indonesia and Thailand that likely also experienced disasters during the Asian Financial Crisis,
are not in the data set.
18
Our sample period ends in 2006 and thus does not cover the current world-wide recession, which may in the
future be identified as a world disaster.
17
table five Dr. Barro

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[bimetalaupt]

Jan 21, 2011 8:13:23 GMT -5 @vl said:

BiMetal... your history lesson was off. Review the events after 1900 to 1905. They describe today most appropriately. We had-- banks over-extending on speculation they knew little about beyond the theorized return. That credit extended caused financial crimes. Big business used the readily available credit to manipulate the worker, all while retail sold everything it could to ignorant and mesmerized consumers through marketing and media manipulation. When the turnip couldn't be bled dry any longer, he withered and stopped making payments. That caused chain reaction collapse EXACTLY as it did in 2008 to-date.
Sadly... the same BANKS are engaged but the offset... an alternative to banks and no lawyers invested in big banks to suppress correction, are able to rise to resolve this. In short, history cannot repeat itself and we arrive at the conclusion without a catalyst.
You thinking that new immigrants will become savers is very off. No one will trust banks again and as long as we continue to import, there will be no cash to save. If we don't alter course by New Year 2012, We the People- as the United States of America, will not see New Year 2013.

Banks-- gotta go. Regulation and oversight trumps a Federal Reserve Shanking System.

Sorry,
I did check and the 1900 to 1905 did not appear to reduce consumption by 10% so it did not appear on the chart.. see Dr. Barro Figure 5 chart... Also have Chile where you can see some problems in 1900-1905..[/img]

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[decoy409]

Hey Bruce, Sorry you missed the news on your call down in Texas. But then again I know that numbers are hard on ones eyes at times.

Just a thought, Decoy409

[bimetalaupt]

Jan 21, 2011 16:25:26 GMT -5 decoy409 said:

Hey Bruce, Sorry you missed the news on your call down in Texas. But then again I know that numbers are hard on ones eyes at times.

Just a thought, Decoy409

Decoy409,
Price per square foot is up 15% in my zip code.. Smaller houses are selling better then the Mcmantions..

Bruce

[bimetalaupt]

Working Poor and how investment in America will help everyone. We need to save.. But is SS and investment or a savings. Current investment for a person is paid out to the receptive who spent 40 years of life investing in a system that pays out money as fast as it is received. IE ZERO Inflation risk in the system... This is like the French and German system..

So what is Social Insurance??? First it was started by Bismarck in Germany about 1876.. During the Great depression of 1873. It was aimed at replacing the income of workers as they because less productive. The German system was much more generous then the system then SS .. as it replaced about 70% of the earning power of the worker. It was both a forced saving plan and insurance plan.. Our Rail Road Retirement plan is closer to the German Social Insurance plan as RR has unemployment benefits also.

If in fact is is a saving plan we need to repay the Trust fund of money taken and if it is like the RR system .. They need to earn money on the bonds used in the Trust fund. So for those who depend on the Social Security system for retirement we need to put the system on a solid foot of financial. It is all about unit of risk and how the government will assume risk for replacing earning power for workers that have reached the retire milestone..
from the 1935 retirement part of the act!!!
OLD-AGE RESERVE ACCOUNT

Section 201. (a) There is hereby created an account in the Treasury of the United States to be known as the Old-Age Reserve Account hereinafter in this title called the Account. There is hereby authorized to be appropriated to the Account for each fiscal year, beginning with the fiscal year ending June 30, 1937, an amount sufficient as an annual premium to provide for the payments required under this title, such amount to be determined on a reserve basis in accordance with accepted actuarial principles, and based upon such tables of mortality as the Secretary of the Treasury shall from time to time adopt, and upon an interest rate of 3 per centum per annum compounded annually. The Secretary of the Treasury shall submit annually to the Bureau of the Budget an estimate of the appropriations to be made to the Account.
(b) It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired
(1) on original issue at par, or
(2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended, are hereby extended to authorize the issuance at par of special obligations exclusively to the Account. Such special obligations shall bear interest at the rate of 3 per centum per annum. Obligations other than such special obligations may be acquired for the Account only on such terms as to provide an investment yield of not less than 3 per centum per annum.
(c) Any obligations acquired by the Account (except special obligations issued exclusively to the Account) may be sold at the market price, and such special obligations may be redeemed at par plus accrued interest.
(d) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Account shall be credited to and form a part of the Account.
(e) All amounts credited to the Account shall be available for making payments required under this title.
(f) The Secretary of the Treasury shall include in his annual report the actuarial status of the Account.

OLD-AGE BENEFIT PAYMENTS

SEC. 202. (a) Every qualified individual (as defined in section 210) shall be entitled to receive, with respect to the period beginning on the date he attains the age of sixty-five, or on January 1, 1942, whichever is the later, and ending on the date of his death, an old-age benefit (payable as nearly as practicable in equal monthly installments) as follows:
(1) If the total wages (as defined in section 210) determined by the Board to have been paid to him, with respect to employment (as defined in section 210) after December 31, 1936, and before he attained the age of sixty- five, were not more than $3,000, the old-age benefit shall be at a monthly rate of one-half of 1 per centum of such total wages;
(2) If such total wages were more than $3,000, the old-age benefit shall be at a monthly rate equal to the sum of the following:
(A) One-half of 1 per centum of $3,000; plus
(B) One-twelfth of 1 per centum of the amount by which such total wages exceeded $3,000 and did not exceed $45,000; plus
(C) One-twenty-fourth of 1 per centum of the amount by which such total wages exceeded $45,000.
(b) In no case shall the monthly rate computed under subsection (a) exceed $85.
(c) If the Board finds at any time that more or less than the correct amount has theretofore been paid to any individual under this section, then, under regulations made by the Board, proper adjustments shall be made in connection with subsequent payments under this section to the same individual.
(d) Whenever the Board finds that any qualified individual has received wages with respect to regular employment after he attained the age of sixty-five, the old-age benefit payable to such individual shall be reduced, for each calendar month in any part of which such regular employment occurred, by an amount equal to one month's benefit. Such reduction shall be made, under regulations prescribed by the Board, by deductions from one or more payments of old-age benefit to such individual.

PAYMENTS UPON DEATH

SEC. 203. (a) If any individual dies before attaining the age of sixty-five, there shall be paid to his estate an amount equal to 3 1/2 per centum of the total wages determined by the Board to have been paid to him, with respect to employment after December 31, 1936.
(b) If the Board finds that the correct amount of the old-age benefit payable to a qualified individual during his life under section 202 was less than 3 1/2 per centum of the total wages by which such old-age benefit was measurable, then there shall be paid to his estate a sum equal to the amount, if any, by which such 3 1/2 per centum exceeds the amount (whether more or less than the correct amount) paid to him during his life as old-age benefit.
(c) If the Board finds that the total amount paid to a qualified individual under an old-age benefit during his life was less than the correct amount to which he was entitled under section 202, and that the correct amount of such old-age benefit was 3 1/2 per centum or more of the total wages by which such old-age benefit was measurable, then there shall be paid to his estate a sum equal to the amount, if any, by which the correct amount of the old- age benefit exceeds the amount which was so paid to him during his life.

PAYMENTS TO AGED INDIVIDUALS NOT QUALIFIED FOR BENEFITS

SEC. 204. (a) There shall be paid in a lump sum to any individual who, upon attaining the age of sixty-five, is not a qualified individual, an amount equal to 3 1/2 per centum of the total wages determined by the Board to have been paid to him, with respect to employment after December 31, 1936, and before he attained the age of sixty-five.
(b) After any individual becomes entitled to any payment under subsection (a), no other payment shall be made under this title in any manner measured by wages paid to him, except that any part of any payment under subsection (a) which is not paid to him before his death shall be paid to his estate.

AMOUNTS OF $500 OR LESS PAYABLE TO ESTATES

SEC. 205. If any amount payable to an estate under section 203 or 204 is $500 or less, such amount may, under regulations prescribed by the Board, be paid to the persons found by the Board to be entitled thereto under the law of the State in which the deceased was domiciled, without the necessity of compliance with the requirements of law with respect to the administration of such estate.

OVERPAYMENTS DURING LIFE

SEC. 206. If the Board finds that the total amount paid to a qualified individual under an old-age benefit during his life was more than the correct amount to which he was entitled under section 202, and was 3 ½ per centum or more of the total wages by which such old-age benefit was measurable, then upon his death there shall be repaid to the United States by his estate the amount, if any, by which such total amount paid to him during his life exceeds whichever of the following is the greater: (1) Such 3 ½ per centum, or (2) the correct amount to which he was entitled under section 202.

METHOD OF MAKING PAYMENTS

SEC. 207. The Board shall from time to time certify to the Secretary of the Treasury the name and address of each person entitled to receive a payment under this title, the amount of such payment, and the time at which it should be made, and the Secretary of the Treasury through the Division of Disbursement of the Treasury Department, and prior to audit or settlement by the General Accounting Office, shall make payment in accordance with the certification by the Board.

ASSIGNMENT

SEC. 208. The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

PENALTIES

SEC. 209. Whoever in any application for any payment under this title makes any false statement as to any material fact, knowing such statement to be false, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.

DEFINITIONS

SEC. 210. When used in this title-- (a) The term "wages" means all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash; except that such term shall not include that part of the remuneration which, after remuneration equal to $3,000 has been paid to an individual by an employer with respect to employment during any calendar year, is paid to such individual by such employer with respect to employment during such calendar year. (b) The term "employment" means any service, of whatever nature, performed within the United States by an employee for his employer, except- (1) Agricultural labor; (2) Domestic service in a private home; (3) Casual labor not in the course of the employer's trade or business; (4) Service performed as an officer or member of the crew of a vessel documented under the laws of the United States or of any foreign country; (5) Service performed in the employ of the United States Government or of an instrumentality of the United States; (6) Service performed in the employ of a State, a political subdivision thereof, or an instrumentality of one or more States or political subdivisions; (7) Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual. (c) The term "qualified individual" means any individual with respect to whom it appears to the satisfaction of the Board that- (1) He is at least sixty-five years of age; and (2) The total amount of wages paid to him, with respect to employment after December 31, 1936, and before he attained the age of sixty-five, was not less than $2,000; and (3) Wages were paid to him, with respect to employment on some five days after December 31, 1936, and before he attained the age of sixty-five, each day being in a different calendar year.

[itstippy]

Social Security enables the working poor to quit work at age 66 and join the ranks of the retired poor. Supplemental Security Income picks up the slack for the very poorest of the working poor. At age 66 they slip seamlessly into the category of the retired poor; it's an improvement for many. They're still poor, but they're used to that. And they no longer have to work! They have time to pursue their own interests, something they haven't had since they entered the workforce in their teens.

For millions of "Working Middle Class" Americans the transition to retirement won't be so seamless. They have little or no equity in their homes, meager savings, a pile of consumer debt, and they're used to living comfortably. They think Social Security will support their current lifestyle when they get old. They're in for a rude awakening. Their old-age prospects are bleaker than those of the acknowledged "working poor".

For middle-class wage earners, Social Security replaces 40% of pre-retirement income. If you supplement your current lifestyle by borrowing against future income (via a mortgage, home equity loan, car loan, student loan, credit card balance, etc.), you had best pay the loans off before age 66. Continuing to make loan payments when your income is reduced by 60% may prove burdensome.

www.ssa.gov/pubs/10024.html

[decoy409]

I get a kick how others dress the Pig up with lipstick! That's funny! A Pig is a Pig!

itstippy, that's a humdinger of a example, thumbs up!

[frankq]

I thought dressing up pigs was pretty standard fare for you backwoods boys. Not many sheep up North.

[decoy409]

Next time your out, at least pick that dirty old Pampers Diaper up you leave in the trail over and over and over again!

[itstippy]

You guys are ruining the "Working Poor" thread! Why don't you send each other Personal Messages? It's unseemly. Get a room.

[decoy409]

toughtimes, your dam straight with that! My Daddy always said as long as you can read,write,add and subtract, why you will do just fine. But that was not the case as you point out. Now hundreds of thousands of (school colege kids) are simply screwed as all those fancy degrees do little for this society that has been ramsacked. But it's a great Cash Cow by those running it!

[itstippy]

The young working poor used to have opportunities to move up to the middle class if they were hardworking and reasonably bright. I know a lot of folks that did just that. There's a difference between ignorant and stupid. Stupid is stupid. But ignorant doesn't equal stupid.

So Grandpa starts work with a 5th grade education, ignorant as a stump. But he's bright; he learns the ropes and moves on up. Maybe his first job is shoveling manure out of barns. Within ten years he knows all about farming and animal husbandry - how to breed & train horses, fix milking machines, maintain tractors, rotate crops, etc. Within 20 years he also understands the economics and logistics of farming. He can run the place. He's obtained valuable skills through on-the-job, hands-on training. His labor is worth a lot more than a manure mucker's.

The same thing happened in factories, businesses, etc. Grandpa, if bright & hardworking, moved from production grunt to line supervisor to floor supervisor. Or from shipping clerk in the mailroom to the front office.

Today, bright kids (and some not-so-bright kids) all go to college and learn a specialty. They graduate from higher education and seek employment in their area of expertise. They're pretty well screwed if there's no work in that field.

[bimetalaupt]

Jan 23, 2011 12:54:06 GMT -5 @itstippy said:

The young working poor used to have opportunities to move up to the middle class if they were hardworking and reasonably bright. I know a lot of folks that did just that. There's a difference between ignorant and stupid. Stupid is stupid. But ignorant doesn't equal stupid.

So Grandpa starts work with a 5th grade education, ignorant as a stump. But he's bright; he learns the ropes and moves on up. Maybe his first job is shoveling manure out of barns. Within ten years he knows all about farming and animal husbandry - how to breed & train horses, fix milking machines, maintain tractors, rotate crops, etc. Within 20 years he also understands the economics and logistics of farming. He can run the place. He's obtained valuable skills through on-the-job, hands-on training. His labor is worth a lot more than a manure mucker's.

The same thing happened in factories, businesses, etc. Grandpa, if bright & hardworking, moved from production grunt to line supervisor to floor supervisor. Or from shipping clerk in the mailroom to the front office.

Today, bright kids (and some not-so-bright kids) all go to college and learn a specialty. They graduate from higher education and seek employment in their area of expertise. They're pretty well screwed if there's no work in that field.

Its Tippy,
I went to an University where the 3rd and 4th generation Farmer were learning a lot more about farming then how to fix a tractor. Yes the class I took with Dr. G. represented a parking lot full of high $$$ pick-up trucks but not all of the drivers were males. Farming today is more about cost control and "Market TALK."

In fact some of the best dairy farmers are in fact trained in the old country, Holland. Now their grandsons are Going to school to get an education. They will return to the farm as managers and one day will own the farm. Tarleton is world know for Horse Husbandry.

During WWI the area around Fort Worth was know as the Power Horse Capital of the world and supply more draft houses to the French and Americans then all other put together. The made a lot of money for the area and made Tarleton World famous with Pulling championship they held for 10 years in a row.

It is also interesting to note the numbers of huge agricultural enterprises run by the Grand daughters. Just look at Gina Gallo.. Try her wine!! please

One last thought, If you are making less then 36,000 a year at age 66 you can start to collect your SS check and still work without any reduction in your SS check. Often the farm has other benefits...

Just a thought,
Bi Metal Au Pt

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[itstippy]

Precisely, Bruce.

There are no longer any opportunities to move up for the muckrakers, mailroom clerks, assembly line workers, and the like. All gone. They are doomed to careers raking muck, sorting mail, and mindlessly assembling widgets for 40 years, no matter how naturally bright they are.

Sadly, we will never again see people in corporate management who've worked their way through the ranks to obtain great success, either. That's a loss. I mentioned the difference between stupidity and ignorance earlier. There's also a difference between knowledge and wisdom.

[Deleted]

itstippy

That may be true in some environments and industries...but not all

It is still possible to work ones way up the career ladder...but i do agree that in the past it was almost the norm for management to have come from the bottom

Now it is definitely the EXCEPTION...but it can be done...especially in sales/retail

[bimetalaupt]

Jan 23, 2011 17:04:12 GMT -5 @gdgyva said:

itstippy

That may be true in some environments and industries...but not all

It is still possible to work ones way up the career ladder...but i do agree that in the past it was almost the norm for management to have come from the bottom

Now it is definitely the EXCEPTION...but it can be done...especially in sales/retail

gdfyva,
When I did my MBA one our professors told use how few firms were founded by MBA. Most MBA's do not want to step down in income to start a new firm. Like GE was founded by two High Schools teachers and a drop-out... I think the farming system has produced more multimillionaires then sales but this is also closing down with most large farmers are now MBA grads from schools like Tarleton.. That I know !! Many started out poor and a few were German POW in Texas that did not go back to Germany.

As before , most farming families know farming and the original generation owner the farm and collect rent so this has no effect on the Social Security Income that is steady vs highly volitional farm income. What is interesting is the average age of our farmers.. It takes a lifetime to pay off the farm. I think the average income for farmers in Texas for 2009 was about $22,500 ( make that means).. So most Farmers could keep farming. Most farms pay rent for the land so only the very large makes the big buck.. The average SS check is about $1100 a month...The most any of them I know have made was when they sell the Farm to the neighbour. Or is that the north 40 Acres [/img]

Just a thought,
Bi Metal Au Pt

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[itstippy]

It's so very hard now for the working poor to break out. Construction jobs are scarce, what little manufacturing is left has "two tier" setups where the new guys get much less than the established guys, etc. The working poor are demoralized.

On top of that, there are social programs that enable one to survive without working. Why work your ass off with little hope of bettering your life if you can not work, get similar food and lodging, plus health insurance for you and your kids?

Worse yet, in many communities it's become socially acceptable to not work. There's no stigma to "not pulling your own weight". They feel entitled to sit around and bitch about how bad they have it, and to call the folks who do work at crummy jobs "stupid". We're killing the working poors' incentive to succeed.

It makes me sad. I worked my way through college. I worked 60-70 hour weeks all summer, I never had any "Spring Break" vacations, I lived in dumps with a bunch of other students, I had no car, I loved it all. I lived very poor but I knew it was a temporary condition. If I'd thought my condition as working poor was permanent I'd have been extremely depressed.

I owed $6,000 in student loans when I graduated and I paid it off in three years. I'm now a professional and make a decent living. I got mine and I want others to have the same opportunities I had. They shouldn't have to borrow hundreds of thousands of dollars and graduate to working poor jobs.

[Deleted]

Too many take the easy road....and leave the heavy lifting for others. Then wonder why their sociology degree which they paid handsomely for, is only paying them 40k annually, while the average starting wage for a mathematician is 80k +.

No one ever said this was supposed to be easy.....but a lot of people are thriving, and succeeding. What makes them special? Why do they do so well, while others fall flat on their face? Could it have something to do with the character of the individual?

Yes....some win the so called ovarian lottery...and are born to the right parents, under the right circumstances...and are destined for greatness. But for the average Joe....it is a combination of grit, determination, initiative, and perseverence. You fall down...dust yourself off, and get back into the ring.

[bimetalaupt]

Jan 21, 2011 8:13:23 GMT -5 @vl said:

BiMetal... your history lesson was off. Review the events after 1900 to 1905. They describe today most appropriately. We had-- banks over-extending on speculation they knew little about beyond the theorized return. That credit extended caused financial crimes. Big business used the readily available credit to manipulate the worker, all while retail sold everything it could to ignorant and mesmerized consumers through marketing and media manipulation. When the turnip couldn't be bled dry any longer, he withered and stopped making payments. That caused chain reaction collapse EXACTLY as it did in 2008 to-date.
Sadly... the same BANKS are engaged but the offset... an alternative to banks and no lawyers invested in big banks to suppress correction, are able to rise to resolve this. In short, history cannot repeat itself and we arrive at the conclusion without a catalyst.
You thinking that new immigrants will become savers is very off. No one will trust banks again and as long as we continue to import, there will be no cash to save. If we don't alter course by New Year 2012, We the People- as the United States of America, will not see New Year 2013.

Banks-- gotta go. Regulation and oversight trumps a Federal Reserve Shanking System.

V.L.,
I spent half the afternoon trying to find the reference to 1900-1905.. The only reference I had was with Duff for the crash of 1905. Most the the references I found on the decrease in consumption over 10% was done by Dr. Barro of Harvard. The 1914-1922 " WWI and Spanish Flu"...The 1905 panic was about stocks and few in America owned stocks.. The Rothschilds and Morgans bought stocks until the panic was over.
As you can see on the chart the economy did not have a major move like 1931 with the crash of Rothschild's Austria base Investment Bank Credit-Anstalt . The decrease or depression in sale of 10 % lasted from 1930 to 1935 in the USA.

MORE ON THE CREDIT-ANSTALT... SOUNDS A LOT LIKE LEHMAN...
Created in 1855, with links to the Austro-Hungarian nobility and Rothschild banking family, Credit-Anstalt was the world’s first investment bank. It was the catalyst of many of the most important infrastructure projects in the last decades of existence of the Hapsburg Empire. In the years after World War I, this Austrian bank engaged in major speculation throughout Europe, giving all the appearances of being a highly profitable financial institution.[img src="[/img]"][/img]

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[vl]

*** 1905 *** By 1905, 4 out of every five families in cities with populations of 25,000 or more were over indebted to Loan Sharks (slang term coined that year). America's economy ground to a halt and was rescued by non-BANKERS creating the Small Loan Act or, legitimization of credit as we know it today.
With the onset of the Industrial Age, old money in America conspired to CONTROL the outcome by building giant factories just off established settlements, tracting the surrounding acreage for residential development with established infrastructure that included water, sewer and electric hook-ups. BANKS distorted farmer credit into merchant notes with time payments both at the basic consumer level AND what we would refer to as commercial mid-tier credit today. Basically, it really was Loan Shark credit- extended at rates that exceeded 400% (think- Pay Day Loans).
Jewelers and Goldsmiths had already become Pawn Shop Lenders, so leveraging lines of credit through BANKS secured by other people's pawned jewelry became to steadfast business. These Multi-Level Money-Grubber initiatives drained mainstream cash flow until the noose tightened around the nation. People stopped working to live and became enslaved to credit obligations that were not necessarily voluntarily created, they were literally a mandate to get the job. A lot of factories were heavily indebted AND invested in the notes extended to their personnel. It didn't take long for bad thinking to start pinching over-indebted personnel- because they could.
FIGHTS ensued and major urban areas spawned GANGS. Home-wrecking was all too common.

When you add the likes of Warburg, Mellon and Morgan... you start to smell why the Federal Reserve System was conjured up and it's purpose. In short... seeing the handwriting on the wall to END BANKS, BANKSTERS created a means to control the cash at a discount putting the onus of obligation on We the People but not They the Banksters.
WE ARE in-- exactly the same place we were in 1905, sans the ability to create a new Small Loan Act. We are heading for an identical trend pair of decades leading to yet another Great Depression if we don't END the FED.

[Stumpy]

Sure, lots of kids go to college and find that the degree they got in underwater basketweaving just isn't in demand...

While kids that "pay their dues" in the sciences or technology/engineering are still doing quite well.

Wonder why that is?

Like the old Fram oil filter commercial -"you can pay me now or you can pay me later"

Improvise, adapt, overcome.

[Stumpy]

Toughtimes,

I think that is SOMEWHAT true. I started college at age 30. I knew LOTS of kids that were way smarter than me who didn't "make the cut".

While I was working my keister off, they were drinking beer -hence the "you can pay me now or you can pay me later" quote.

To me the bottom line is that you don't get something for nothing.

Now, as a scientist, a 60 hour work week is a short one for me. How many want to work 60-80 hours on salary? It sure cuts down on the twitter/facebook/TV/Wii time, and that is just -unacceptable!

Contrast the children of my American born friends with those of my Asian born friends -the Asian American kids are working their butts off studying because their parents are involved and telling them what they expect. The American kids are playing sports, watching TV, and eating because thier parents are too busy for them, and they themsleves are watching sports, TV, and eating...

It takes an enormous amount of energy to keep Entropy at bay...

[Deleted]

Great Post!

Technical professions are underpaid...but still make far more than the average non technical field.

So college as a whole costs too much....and whether you get an engineering degree or a liberal arts degree...you probably paid too much for either

But i would still rather my kids get the technical, math or science degree...with those jobs are more plentiful...and eventually with hard work, you will see a return on the dollars spent

With the liberal arts...it is hit or miss....a lot of them are selling clothes at JC Pennys.

[bimetalaupt]

Jan 24, 2011 7:31:34 GMT -5 @vl said:

*** 1905 *** By 1905, 4 out of every five families in cities with populations of 25,000 or more were over indebted to Loan Sharks (slang term coined that year). America's economy ground to a halt and was rescued by non-BANKERS creating the Small Loan Act or, legitimization of credit as we know it today.
With the onset of the Industrial Age, old money in America conspired to CONTROL the outcome by building giant factories just off established settlements, tracting the surrounding acreage for residential development with established infrastructure that included water, sewer and electric hook-ups. BANKS distorted farmer credit into merchant notes with time payments both at the basic consumer level AND what we would refer to as commercial mid-tier credit today. Basically, it really was Loan Shark credit- extended at rates that exceeded 400% (think- Pay Day Loans).
Jewelers and Goldsmiths had already become Pawn Shop Lenders, so leveraging lines of credit through BANKS secured by other people's pawned jewelry became to steadfast business. These Multi-Level Money-Grubber initiatives drained mainstream cash flow until the noose tightened around the nation. People stopped working to live and became enslaved to credit obligations that were not necessarily voluntarily created, they were literally a mandate to get the job. A lot of factories were heavily indebted AND invested in the notes extended to their personnel. It didn't take long for bad thinking to start pinching over-indebted personnel- because they could.
FIGHTS ensued and major urban areas spawned GANGS. Home-wrecking was all too common.

When you add the likes of Warburg, Mellon and Morgan... you start to smell why the Federal Reserve System was conjured up and it's purpose. In short... seeing the handwriting on the wall to END BANKS, BANKSTERS created a means to control the cash at a discount putting the onus of obligation on We the People but not They the Banksters.
WE ARE in-- exactly the same place we were in 1905, sans the ability to create a new Small Loan Act. We are heading for an identical trend pair of decades leading to yet another Great Depression if we don't END the FED.

V.L., Great Post!!
AS BEFORE.. WE ARE USING DIFFERENT SETS OF DATA. THE ECONOMY WAS GROWING AT THE EXPENSE OF EUROPE.. US STEEL WAS AT ITS HEYDAY.. MOST POOR DID NOT HAVE A SAVINGS ACCOUNT IN 1905 BUT THERE WERE BANKS AIMED AT THEM LIKE THE EMIGRANT BANK IN NEW YORK WAS FOUNDED BY THE IRISH BANKERS FOR THE POOR.. YOU NEEDED A SPONSOR TO OPEN AN ACCOUNT.. I DO NOT HAVE THE NUMBERS FOR LOAN SHARKS BUT THEY WERE REAL BAD ESP IN CANADA. THE USUAL AMERICAN RESPONSE TO A PROBLEM IS TO MAKE IT AN OPPORTUNITY.. LIKE BANK of NORTH DAKOTA to serve poor farmers...
Post the other Barro's chart.. Again 1905 did not come up as 10% plus decline in Spending!!! The large crash was 1907 rather then 1905 I posted.. Me Bad
Just a thought,
Bruce

Attachments:

[usaone]

Bruce

JP Morgan himself bailed us out of the 1907 crash if I remember correctly.

Made a good profit too! ;D

[bimetalaupt]

USA WON,
I gave you a new handle.. There is two sides to the story with Paul Warburg using this event to start the Federal Reserve...The Federal Reserve Helped win WWI and WWII....javascript:adds("%20%20").. The story I recall was he locked a whole room full of bankers in a large room until they solved the problem of the panic and did something.

The 'panic' which Morgan had created, he proceeded to end almost
single-handedly. He had made his point. Frederick Allen explains:

"The lesson of the Panic of 1907 was clear, though not
for some six years was it destined to be embodied in
legislation: the United States badly needed a central
banking system."


The man who was to play the most significant part in foisting
onto America that central bank was Paul Warburg, who along with
his brother Felix had immigrated to the United States from Germany
in 1902. They left brother Max (later a major bankroller of the
Russian (Bolshevik) Revolution) at home in Frankfurt to run the
family bank (M.N.Warburg & Co.).
Paul Warburg married Nina Loeb, daughter of Solomon Loeb of
Khun, Loeb & Company, America's most powerful international
banking firm. Brother Felix married Frieda Schiff, daughter of
Jacob Schiff, the ruling power behind Kuhn,Loeb & Co.. Stephen
Birmingham writes in his authoritative Our Crowd : "In the
eighteenth century the Schiffs and Rothschilds shared a double
house" in Frankfurt.
Schiff reportedly bought his partnership in Khun,Loeb with
Rothschild money.
Both Paul and Felix Warburg became partners in Kuhn,Loeb and
Company.
In 1907, the year of the Morgan-precipitated panic, Paul Warburg
began almost all of his time writing and lecturing on "the need
for banking reform". Kuhn, Loeb & Company was sufficiently public-
spirited about the matter to keep him on salary at $500,000 a year
while for the next six years he donated his time to 'the public
good'.
Working with Warburg in promoting this "banking reform" was
Nelson Aldridge, known as "Morgan's floor broker in the Senate".
Aldridge's daughter Abbie married John D. Rockefeller Jr. (the
late Nelson Rockefeller, Richard Nixon's Vice-President and long-
time Governor of New York, was named for his maternal
grandfather).
After the panic of 1907, Aldridge was appointed by the Senate to
head the National Monetary Commission. Although he had no
technical knowledge of banking, Aldridge and his entourage spent
nearly two years and $300,000 of the tax-payers' money being wined
and dined by the owners of Europe's central banks as they toured
the Continent 'studying' central banking. When the Commission
returned from its luxuriuos junket it held no meetings and made no
report for nearly two years. But Senator Aldrich was busy
'arranging' things. Together with Paul Warburg and other
international bankers, he staged one of the most important secret
meetings in the history of the United States. Rockefeller agent
Frank Vanderlip admiited many years later in his memoirs:

"Despite my views about the value to society of
greater publicity for the affairs of corporations, there
was an occasion, near the close of 1910, when I was as
secretive - indeed, as furtive, as any conspirator...I
do not feel it is any exaggeration to speak of our
secret expedition to Jekyl Island (Georgia) as the
occasion of the actual conception of what eventually
became the Federal Reserve System."
javascript:adds("%80%80")

IT IS ALL ABOUT MONEY!!!

[decoy409]

And don't forget to tell the rest of the story! That is that it mattered little (if at all) as to which side (as they borrow to both) who wins and who losses. As it was all for the ever precious piece of paper to be collected back. Check the North and the South as a example not to mention Germany and US and the list goes and goes.

[bimetalaupt]

The rest of the story.. About the time the Bank of the USA lost its Charter.. Lincoln Lost money for the State when the economy crashed dur to the banks loss of charter.. Law of unintended consequences. We got the Bank Panic of 1837

In 1839 the Illinois state legislature faced with gloom the complete ruin of its pioneering railroad system. The state had persisted in selling bonds for the construction of some 2,000 miles of rail lines, despite the national depression. Financial chaos had erupted with the closing of the Bank of United States, and the Bank of England stopping credit to the unprotected American economy. Quoting the Hay-Nicolay biography of Lincoln, "One banker and one broker after another, to whose hands [state bonds] had been recklessly [sic] confided in New York and London, failed, or made away with the proceeds of the sales."

The Whig Party leader in the Illinois legislature, 30-year old Abraham Lincoln, had led the fight for the state-built railroads. He was justifiably bitter against the aristocratic "free trade" faction which had brought down the Founding Fathers' economic system; the northeastern bankers, political followers of Swiss nobleman Albert Gallatin, president of John Jacob Astor's National Bank of New York; and the South Carolina-based slaveowners' secession movement, organized around the free-market doctrines of British revolutionary immigrant Thomas Cooper.

Alexander Hamilton's program of protective tariffs, government-sponsored transportation projects, and the national bank, enacted in the first Congress over the opposition of Albert Gallatin, had now been aborted. The bankers-planters alliance was rolling the U.S.A. back to colonial status, to be a mere producer of cheap raw materials for the British Empire, with themselves the colonial overseers.

Abraham Lincoln and the other Henry Clay Whigs were determined to rescue American financial, industrial, and political independence. From late 1839 through the presidential election of 1840, Lincoln led the Illinois Whig campaign by focusing his party's program around the restoration of the Bank of the United States.

Lincoln knew that national survival depended on their political success. This is the conclusion of his Dec. 26, 1839 speech on banking:

" confidently predicts, that every State in the Union will vote for Mr. Van Buren at the next Presidential election. Address that argument to cowards and to knaves; with the free and the brave it will effect nothing. It may be true; if it must, let it. Many free countries have lost their liberty; and ours may lose hers; but if she shall, be it my proudest plume, not that I was the last to desert, but that I never deserted her. I know that the great volcano at Washington, aroused and directed by the evil spirit that reigns there, belching forth the lava of political corruption, in a current broad and deep, which is sweeping with frightful velocity over the whole length and breadth of the land, bidding fair to leave no green spot or living thing, while on its bosom are riding like demons on the waves of Hell, the imps of that evil spirit, and fiendishly taunting all those who dare resist its destroying course, with the hopelessness of their effort; and knowing this, I cannot deny that all may be swept away. Broken by it, I, too, may be; bow to it I never will.

"The probability that we may fall in the struggle ought not to deter us from the support of a cause we believe to be just; it shall not deter me. If ever I feel the soul within me elevate and expand to those dimensions not wholly unworthy of its Almighty Architect, it is when I contemplate the cause of my country, deserted by all the world beside, and I standing up boldly and alone and hurling defiance at her victorious oppressors. Here, without contemplating consequences, before High heaven, and in the face of the world, I swear eternal fidelity to the just cause, as I deem it, of the land of my life, my liberty and my love. And who, that thinks with me, will not fearlessly adopt the oath I take. Let none falter, who thinks he is right, and we may succeed. But, if after all, we shall fail, be it so. We still shall have the proud consolation of saying to our consciences, and to the departed shade of our country's freedom, that the cause approved of our judgment, and adored of our hearts, in disaster, in chains, in torture, in death, we never faltered in defending."

The Whig candidate, Gen. William Henry Harrison, was elected U.S. President. He appointed as Treasury Secretary Thomas Ewing of Ohio, stepfather of future Gen. William Tecumseh Sherman and co-leader of the Whigs with Sen. Henry Clay. But the boisterously healthy President Harrison mysteriously died of pneumonia complications one month after inauguration; the disloyal vice-president, John Tyler, assuming Harrison's place, vetoed the Bank. Another Whig President elected in 1848, Gen. Zachary Taylor, also died early in his term.

Lincoln was forced to watch his country fall under the complete control of the free-trade faction. Instead of government-fostered industrial development edging out the slave plantation system, plantation cotton, supported by anti-industrial bankers in New York and London, spread westward and dominated national politics. The banking system itself was an unregulated, chaotic swindle. Each bank printed its own notes, redeeming what it would. There was no national currency. Bank-fed speculation exploded in 1857, collapsing much of the factory system.

Lincoln, the respected political leader of the Henry Clay tradition, was elected President in 1860, prompting the anti- nationalists to launch secession and civil war. It was a two-front war, militarily in the South...and politically against the London-allied Northern bankers, only recently the main brokers of slave cotton. The Associated Banks of New York were led by James Gallatin, a resident of Switzerland and the son of Albert Gallatin.

The Eastern banks had agreed to a $150 million government loan package just after the Civil War commenced in 1861. They would resell U.S. bonds in England with the Barings and Rothschilds, putting the United States at the mercy of the British aristocracy.

In December 1861, President Lincoln's own financial plan was presented by Treasury Secretary Salmon Chase (a free-trade liberal sweating and agonizing in the President's harness), and by Lincoln himself. Its measures included:

* a nationally regulated private banking system, which would issue cheap credit to build industry;

* the issuance of government legal-tender paper currency;

* the sale of low-interest bonds to the general public and to the nationally chartered banks;

* the increase of tariffs until industry was running at full tilt;

* government construction of railroads into the middle South, promoting industrialism over the Southern plantation system.

Lincoln spelled out his underlying republican philosophy, and shot his barbs at the aristocratic bankers, in his Annual Address to Congress, Dec. 3, 1861:

"Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital, producing mutual benefits. The error is in assuming that the whole labor of the community exists within that relation. .... In most of the southern States, a majority of the whole people of all colors are neither slaves nor masters; while in the northern a large majority are neither hirers nor hired....

"Many independent men everywhere in these States, a few years back in their lives, were hired laborers. The prudent, penniless beginner in the world, labors for wages awhile, saves a surplus with which to buy tools or land for himself; then labors on his own account another while, and at length hires another new beginner to help him. This is the just, and generous, and prosperous system, which opens the way to all-gives hope to all, and consequent energy, and progress, and improvement of condition to all. No men living are more worthy to be trusted than those who toil up from poverty -- none less inclined to take, or touch, aught that they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which, if surrendered, will surely be used to close the door of advancement against such as they, and to fix new disabilities and burdens upon them, till all of liberty shall be lost .... "

On Dec. 28, 1861, the New York banks suspended payment of gold owed to their depositors, and stopped transferring to the government the gold which they had pledged for the purchase of government bonds. The banks of other cities immediately followed suit.

James Gallatin headed a delegation of bankers who came to Washington to meet with the administration and Congress. His program contradicted the President's. First, the Treasury must deposit its gold in private banks, and let those banks pay the government's suppliers with checks, keeping the gold on deposit for the investment use of the bankers. Second, the government should sell high-interest bonds to these same banks, for them to resell to the European banking syndicate. Finally, a great deal of the war should be financed by a tax on basic industry.

Gallatin was shown the door. While Lincoln fought the Eastern bankers over the national banking system, the Treasury issued several hundred millions of the new green-colored currency. Banker Jay Cooke was hired to sell small government bonds to the average citizens; with 2,500 sub-agents Cooke sold over $1.3 billion worth of bonds from 1862 to 1865. President Lincoln pushed for his measure of control over the banking system, using more of his influence in Congress than on any other issue. The New England and New York bankers instructed their congressmen, such as New York's cynical Sen. Roscoe Conkling, to defeat the bill. But Lincoln's prestige and authority won out, and he signed the National Currency Act on Feb. 25, 1863, and the National Bank Act on June 3, 1864.

National Banking was, in truth, only a compromise with the old European oligarchs. But it was a bold and necessary stride toward national sovereignty.

The office of Comptroller of the Currency was established. No National Banking Association could start business without his certificate of authorization. He could at any time appoint investigators to look into the affairs of any national bank.

Regulations covered minimum capitalization, reserve requirements, the definition of bad debts, reporting on financial condition and identity of ownership, and other elements of safety to depositors.

Every bank director had to be an American citizen, and three-quarters of a bank's directors had to be residents of the state in which the bank did business.

Each bank was limited, in the interest rate it could charge, by the strictures of its state's usury laws; or if none were in effect, then to 7%. If it were caught exceeding this limitation, it would forfeit the loan in question and would have to refund to the victimized borrower twice what he had paid in interest.

Banks could not hold real estate for more than five years, aside from bank buildings.

A national bank had to deposit with the Treasury, U.S. bonds amounting to at least one-third of its capital. It would receive in return government-printed notes, which it could circulate as money. Thus the banks would have to lend the government substantial sums for the war effort, to qualify for federal charters, and a sound currency would be circulated to the public for an expanding economy.

Meanwhile, national banks could not circulate notes printed by themselves. In order to eliminate all competition with the new national currency, the notes of state-chartered banks were hit with a massive tax in the following year.

Most large commercial banks organized themselves according to the new system, and many new large banks were formed, as national banks. Despite historically unprecedented financing needs, the government raised, and printed, the cash to fight and win the Civil War. With the combination of banking, tariff, educational, and agricultural measures enacted under Abraham Lincoln, the United States began the greatest period of industrial development ever seen anywhere.

But the banking system was only a compromise, a truce between Lincoln and the Eastern bankers. The free-trade New York Times, whose owner Leonard Jerome was closely identified with the British and Austrian oligarchies, publicly supported the passage of the National Banking Act. As part of the bargain, an open enemy of the new system, Hugh McCulloch, was appointed first Comptroller of the Currency! The Times printed a letter from McCulloch on May 21, 1863:

"Dear Sir: From what you may recollect of the opinions I have heretofore expressed to you upon the subject of the currency, you may be surprised at my acceptance of the office of 'Comptroller' under the National Banking law enacted by Congress at their last session...."

In a position similar to that of Salmon Chase at Treasury, McCulloch enforced the regulations as the National Banks came into the system, all the while blasting "paper money as evil" in public reports.

Lincoln appointed McCulloch as treasury secretary in March, 1865. The following month the war ended, and Lincoln was assassinated. McCulloch and his international banking allies quickly went on the offensive against Lincoln's entire economic program. Secretary McCulloch called for the greenbacks to be retracted, so that only gold would once again be legal tender -- and so that farm prices and other values would fall so fast that the country could be bought for a song by the British banking syndicate. (McCulloch later helped the syndicate destroy the patriotic banker Jay Cooke, and took over Cooke's company when it failed.)

The calling-in of greenbacks, and the redemption of Civil War bonds for gold, were fiercely debated until 1879. The growing power of the British banking syndicate finally passed Specie Resumption over the dead body of Lincoln's chief financial adviser and teacher, Henry Carey. Tariffs and government-sponsored development of the West survived longer, until Teddy Roosevelt's presidency. The American industrial system was never allowed to spread to the tropical countries, as Lincoln and his allies had planned.

Today, 125 years after President Lincoln's inauguration, the world is divided between a slave-system -- the Soviet bloc -- and the Western area dominated by a lawless banking system, a system more criminal and unstable than that of the King Cotton era of the 1850s. Illegal narcotics profits pour through the system as its major prop of liquidity. Over 100 major American banks have been found guilty of "money laundering" for the dope mob. Speculation increases in hot Eurodollars and in the worthless debts of starving tropical countries, while industrial plant construction is simply not funded. Since the Kennedy administration, debt-service payments have climbed from 6% to about 30% of the national income. In this destructive work the de facto privately controlled Federal Reserve Board is complicit.

The present, chaotic tyranny of unregulated international banking creates, in Lincoln's words, a "great volcano at Washington, aroused and directed by the evil spirit that reigns there, belching forth the lava of political corruption." Have we the courage, and can we revive the cultural and political heritage of Lincoln's day, to restore freedom to our country?

[usaone]

Bruce

Great post as usual!! ;D ;D

My Mom was born in 1945 also...great year!

Here is some Karma for you. ;D