Loading ...Market Orgy Ignores Middle Class Death Spiral
by Rick Ackerman on December 8, 2014 12:01 am GMT · 0 comments[edit]
What’s the difference between a flood tide and the bull market? The answer is that flood tides do recede. Not this bull, however. Having long since decoupled from economic reality, the bull market that began in 2009 will soon enter its seventh year, presumably accompanied by new record highs that have become almost as predictable as the next sunrise. This is occurring even as the U.S. economy continues to languish in what we euphemistically refer to as the Great Recession. When a reporter or pundit uses that term, the not-so-subtle innuendo is that the recession has yet to end for most middle class Americans. Workers have said as much when polled — not that Wall Street seems to have noticed. The last few years have been an orgy for financiers, paper-shufflers and deal-makers in the U.S. and around the world. Exchange-listed companies have joined in the revelry, promiscuously borrowing untold billions for stock buybacks that push earnings per share higher without generating a dime’s worth of economic growth.
How long can the stock market continue to rise parabolically when the economic recovery pushing it is too feeble to raise real incomes or create good jobs? No one can say, but the spectacle has become wearying for those who have yet to have their boats floated, of which there many. Their ranks will only swell as Obamacare’s staggering tax bite hits more and more Americans. Not surprisingly, a left-tilting, suck-up news media continues to ignore the deepening Obamacare disaster, and to mischaracterize it with brazen lies such as this one, which cropped up in a guest editorial in the Boulder Daily Camera: “Coloradans are finding what appears to be a pleasant surprise: Average premiums are only increasing by 2 percent. The Affordable Care Act’s naysayers predicted ‘double-digit’ spikes or worse.” Two percent?? What planet does this guy live on. My own “pleasant surprise” came recently when Humana canceled my family policy and I learned that it would cost me 40% more to duplicate its benefits on an Obamacare exchange.
Nothing Left to Hock
The true picture is one of an American middle class in an incipient state of collapse. For a sobering statistical account of this in the Wall Street Journal, click here for the story, Basic Costs Squeeze Families. Americans are broke, notwithstanding the debt-financed boom in auto sales and glowing reports of employment growth that ignore the subpar wages and part-time hours associated with most new jobs. With softening home prices starting to undermine the only significant source of financial leverage available to most households, it’s only a matter of time before the financial crisis of 2007-08 resumes with a vengeance.