Americans now in recession mode

Stretched like a balloon, budgets have reached their breaking points. A Money magazine poll shows that 88% of us will be more frugal, and 89% are making changes in how we manage our finances (Money, June 2009).  Most of us had become accustomed to living beyond our income.

 Unlike the generation which survived the Great Depression, U.S. households today are in far greater debt today than ever before.

Coping with the Recession Video-Philadelphia ABC News

http://abclocal.go.com/wpvi/video?id=6645748

Living in a recession broadcast from ABC News

http://www.abcnews.go.com/WN/story?id=7024989&page=1

Is the Day of Reckoning Close?

A reader of our Poor Man Bulletin did a great job of describing the economic decline and economic despair that we are now seeing all across America....

I have recently traveled from coast to coast and then some. This is a synopsis of what is really going on. Californians seem to be in lalaland. Look good and spend money, lots of it that you don’t have. LA has become very dangerous. Police will knock on your van if you stop to rest with a coffee even if you are at a convenience store. It is illegal to sleep in your vehicle and you will be arrested. Las Vegas is full of poor and homeless wandering around aimlessly. Tent cities and blocks of people living on the streets. dirty and super dangerous. The decline is in your face. Police and security presence are at ‘ad nauseum’ levels. AZ and NM are ****holes. My family refused to get out of the van in Albuquerque. Sedona is still nice but its surrondings make it on borrowed time. Little artsy towns will be taken over quickly when TSHTF. The only city I went to in TX was Amarillo. Didn’t see much but it looked seedy and dirty along the highway. OKlahoma- ***. If I didn’t stay on a military base, I would have broke the speed limit to get through it. The thought of getting gas in Little Rock still gives me nightmares. Enough said. AK- Lots of boarded up towns. Saw this all along Route 40. TN- Stay away from Memphis if you want to live. Nashville is the craziest city I have ever seen. Everyone acts like they are on speed. When you get around Pigeon Forge, Maggie Valley and Gatlinburg, you see the true beauty of this state but they are tourist traps. W. VA is beautiful, but the people are very backward. I could live in Northern W. VA. East coast- VA. Beach has been in decline and was just dubbed the “most drunken city in the U.S.” They must be proud. Lots of trouble here. Big police presence. Took 10 minutes for me to get questioned about my out-of- state plates. N&S Carolina- Bigger cities are dangerous, especially Columbia, SC. Big police presence. Baltimore- be afraid, be very afraid. Keep going. NJ- Something like a horror movie. Do people really live here? Scary and smelly. NYC- Was advised by thruway attendent to “keep going and don’t stop” Overturned cars, tons of high rise ghettos, not a safe place. I was terrified my van would break down. Albany, NY.- my destination. Ghettopolis. Stopped by police within minutes as to why I was driving in city so late. ? Informed it was not safe. Stopped again the next day regarding my plates at a police check. They threatened to tow my van because my “license didn’t come up”. [he was holding it] Stopped again for seatbelt violation. I always wear it but he said he couldn’t see it. Am I imagining it or did I really see National Guard walking around with rifles? Well, I promply left NYS and will never go back. The Florida panhandle is far from perfect and has an ever expanding police force, but it is quiet. Not safe, but quiet.

 Consider these excerpts from 60 Minutes:

In the two years since the "great recession" wrecked their economies and shriveled their income, the states have collectively spent nearly a half a trillion dollars more than they collected in taxes. There is also a trillion-dollar hole in their public pension funds.

The states have been getting by on billions of dollars in federal stimulus funds, but the day of reckoning is at hand. The debt crisis is already making Wall Street nervous, and some believe that it could derail the recovery, cost a million public employees their jobs and require another big bailout package that no one in Washington wants to talk about.

"The most alarming thing about the state issue is the level of complacency," Meredith Whitney, one of the most respected financial analysts on Wall Street and one of the most influential women in American business, told correspondent Steve Kroft. ...

"It has tentacles as wide as anything I've seen. I think next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy."

Next, 60 Minutes provides a rundown of the woes of states. It's shocking. But it barely scratches the surface:

California, which faces a $19 billion budget deficit next year, has a credit rating approaching junk status. It now spends more money on public employee pensions than it does on the state university system, which had to increase its tuition by 32 percent.

Arizona is so desperate it sold off the state capitol, Supreme Court building and legislative chambers to a group of investors and now leases the buildings from their new owner. The state also eliminated Medicaid funding for most organ transplants.

Then there's New Jersey. It has the highest taxes in the country, a $10 billion deficit and a depressed economy when first-year Governor Chris Christie took office. But after looking at the books, he decided to walk away from a long-planned and much-needed project with New York and the federal government to build a rail tunnel into Manhattan. It would have helped the economy and given employment to 6,000 construction workers.

Gov. Christie acknowledged that's a lot of jobs. ... "The bottom line is I don't have the money. And you know what? I can't pay people for those jobs if I don't have the money to pay them. Where am I getting the money? I don't have it. I literally don't have it. ... The day of reckoning has arrived. That's it. And it's gonna arrive everywhere. Timing will vary a little bit, depending upon which state you're in, but it's comin'."

But if You Think California and New Jersey
Are in Bad Shape, Wait Till You See Illinois!

60 Minutes also interviewed Illinois state paymaster Hynes — a man who currently has about $5 billion in outstanding bills in his office and not enough money in the state's coffers to pay them.

Care to know how far he's behind in paying his bills?

Six months!

How the government operates for too many

America's Middle Class
Becomes the New
Working Poor

What recovery? Working poor struggle to pay bills

By Stephanie Armour, USA TODAY

Cathy Gardner faces difficult choices. With barely enough money to cover her bills and the rent on the home she shares with her brother, she sometimes can't afford to buy food. Other times, she goes without the prescription drugs she takes for her depression.

It's a constant struggle, even though Gardner holds a full-time job as a hospital food service worker, dishing up trays of pizza, pot roast and beef stroganoff for patients.

"There's a manufactured home selling for $7,500, and I can't even afford that," says Gardner, 54, of Salem, Ore., who earns $1,200 a month. "I have a good job, but I have to choose between buying gas or getting food. It's very hard."

The ranks of the working poor are swelling as more families slip into poverty, health benefits are lost and low-wage employees bear the brunt of many corporate cutbacks. That means more employees — many of them in service jobs that are essential to the economy — are working full-time, only to find they can barely support their families.

Nearly 40% of working-age poor people were employed, and the percentage working full time all year increased 45% from 1978 to 2002.

A new class of poor

The fate of the working poor is becoming a major issue for politicians, union groups and activists who are now calling for reform. Unions are launching membership drives and protests — part of an effort to preserve benefits and boost pay for service-sector jobs in much the same way that union muscle helped raise the standard of living for manufacturing workers in the mid-20th century.

The rise in low-wage workers is also a catalyst for activists who are waging campaigns to pass living-wage ordinances, which are local laws that require some businesses to pay employees more than the federal minimum wage of $5.15 an hour. The grass-roots effort is having an impact. So far, more than 120 ordinances mandating living wages have been passed. In San Francisco, a citywide wage of $8.50 an hour went into effect in February.

More at:

http://www.usatoday.com/money/economy/2004-06-08-low-wage-working-poor_x.htm

Who are the working poor? The working poor are the new American middle class. This exciting, fast growing demographic includes: military personnel, most minorities, and a growing percentage of the middle class. Even payday loan firms target the retired poor, who often use payday loans for their prescription drug co-pays…more at:

  http://www.rense.com/general59/usmid.htm

 Working Poor Families Project

* There were more than 10 million low-income working families in the United States, an increase of nearly a quarter million from the previous year.

* Forty-five million people, including 22 million children, lived in low-income working families, an increase of 1.7 million people from 2008.

* Forty-three percent of working families with at least one minority parent were low income, nearly twice the proportion of white working families (22 percent).

* Income inequality continued to grow with the richest 20 percent of working families taking home 47 percent of all income and earning 10 times that of low-income working families.

* More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the recession began in December 2007.

Unfortunately, things are not going to be getting any better for the working poor. In the new "one world economy" that our politicians keep insisting is so good for us, millions upon millions of American workers now find that they have to compete for work with laborers on the other side of the globe that are willing to work for slave labor wages. This is causing millions of jobs to leave the United States and it is forcing wages down.

Millions of Americans now find that they are making substantially less than they used to. If that has happened to you, perhaps you can take comfort in the fact that you are not alone. Or perhaps it is not that comforting. In any event, American workers are not just competing with each other anymore. Now there is the constant threat that all the jobs could just be sent overseas.

As wages are forced down, a record number of working Americans are finding themselves forced to turn to food stamps and to other government anti-poverty programs. Millions of Americans have been forced to take part-time jobs in order to supplement their incomes. Millions of others have been forced to take part-time jobs because that is all they can find.

This is all part of a long-term trend. The numbers don't lie. About the only people doing well are those on Wall Street and the very rich. Nearly every other segment of the population is getting poorer.

The following are 10 statistics that I have shared previously, but I think that they do a really good job of highlighting the plight that the working poor in this country are now facing....